Dive Brief:

• Atlanta-based Georgia’s Own Credit Union said Monday it will send to regulators a proposal to buy Smyrna, Georgia-based Vinings Bank in the first move by a credit union in 2022 to acquire a bank.
• Georgia’s Own has been somewhat of a serial acquirer over the past six months. It said this month it would acquire Kingsland, Georgia-based United 1st Credit Union in a deal that would add six branches, roughly 26,000 members and $243 million in assets under management. Georgia’s Own also completed a merger with Atlanta-based Fort McPherson Credit Union on Oct. 1.
• Credit unions proposed 13 acquisitions of banks in 2021, a number Michael Bell, co-leader of the financial institutions practice group at Honigman, said might double this year. “I expect 25-plus to announce. … My prediction is based on the work and deal flow I am seeing,” he told American Banker last month. “I have never seen so much activity.”

Dive Insight:

An uptick in bank purchases by credit unions is bound to upset trade groups such as the Independent Community Bankers of America (ICBA), which argues credit unions’ tax-exempt status allows them to offer a higher purchase price for acquisitions than banks can, and lets them grow more freely.

Details of the proposed Georgia's Own-Vinings tie-up were not disclosed. The deal is expected to give Georgia's Own two additional locations — both in the Atlanta area — and $471 million in new assets, bringing its asset total to almost $3.9 billion, the credit union said in a Monday press release.

The credit union also said it would retain all 47 of Vinings Bank's employees.

“We are committed to making this venture a positive one for everyone involved," Dave Preter, CEO of Georgia's Own, said in the release. "Through this alliance, we feel confident that we can deliver added value and exceptional products and services to our members and the community.”

Bank acquisitions by credit unions have seen a slower start in 2022 than last year. Minnesota-based Wings Financial Credit Union announced it plan to buy Brainerd Savings & Loan just 25 days into 2021. However, deals can come in fits and starts. Five of last year's 13 deals came in a span of just more than two weeks

Just because a credit union floats a plan to buy a bank doesn't mean the deal will finalize. The Nebraska Department of Banking and Finance (NDBF) in December denied Omaha-based Premier Bank’s application to be acquired by Iowa-based GreenState Credit Union. The state regulator ruled Premier Bank lacks legal standing to sell its assets to GreenState because the credit union, established under Iowa laws, does not meet the definition of a "financial institution" that can participate in cross-industry acquisitions or mergers in Nebraska.

GreenState was 2021's most prolific proposed acquirer. Aside from the Premier deal, the credit union launched two efforts to expand into the Chicago area: a May move to buy Oak Brook, Illinois-based Oxford Bank & Trust, and an October deal for Midwest Community Bank.

Vinings would not be the first bank purchase by Georgia's Own. It bought Fayetteville-based State Bank of Georgia in 2018.

More pushback

Nebraska isn't the only state to see pushback against credit union-bank tie-ups based on statutes' language. A county chancery court judge in Tennessee issued an injunction in November, temporarily halting Memphis-based Orion Federal Credit Union's proposed acquisition of Financial Federal Bank over a disagreement on the meaning of of "acquire." 

The Tennessee Department of Financial Institutions argues the word, as defined in the Tennessee Banking Act, limits the scope of a bank acquisition to its stock and charter and would forbid the assumption of assets. The credit union and bank, however, argue the Tennessee Banking Act doesn't explicitly define “acquire" and point to the Tennessee Corporation Act, which states the purchase of all or substantially all of a bank's assets is a purchase transaction, not a prohibited acquisition.

Judge Patricia Moskal ordered a "speedy hearing" to resolve legal and interpretive uncertainties but cited "the need to maintain the status quo during the pendency of this action."

Bank trade groups bristled last year at another proposed bank acquisition by a credit union — Florida-based VyStar’s $195.7 million April 2021 deal to buy Georgia-based Heritage Southeast Bank.  

"VyStar has either closed, moved, sold or consolidated half of the branches acquired" from a bank acquisition the credit union undertook in 2019, the ICBA and the Community Bankers Association of Georgia wrote in a joint letter. 

VyStar and Heritage in October agreed to postpone — from Dec. 31 to Feb. 28 — the date by which they can terminate the proposed deal between them, noting the transaction still requires approval from the Federal Deposit Insurance Corp. (FDIC), the National Credit Union Administration (NCUA), the Georgia Department of Banking and Finance and the Florida Office of Financial Regulation.