Dive Brief:

• North Liberty, Iowa-based GreenState Credit Union deepened its push into Chicago, agreeing to buy Midwest Community Bank and its subsidiary, Blueleaf Lending, in a deal expected to close in the second quarter of 2022, the credit union said Monday.
• Midwest would become the third bank GreenState has bought this year, following its May agreements to purchase Oak Brook, Illinois-based Oxford Bank & Trust and Omaha-based Premier Bank. The Midwest deal would mark the 12th purchase of a bank by a credit union in 2021.
• Even though some of GreenState’s 280,000 members are in neighboring states, the May acquisitions pushed the credit union’s brick-and-mortar footprint outside Iowa for the first time — particularly, to six branches in Chicago’s western suburbs in the Oxford deal. With Monday’s purchase, GreenState would acquire Blueleaf Lending offices in Chicago’s West Loop and in neighboring communities Norwood Park, Park Ridge and Skokie and outer suburbs Naperville and St. Charles.

Dive Insight:

Financial terms of the transaction were not disclosed, but through Monday’s agreement, GreenState would purchase substantially all of Midwest’s assets and assume substantially all of its liabilities. That would encompass three Midwest branches, two loan production offices and the aforementioned Blueleaf footprint. Midwest counts 20,000 members and $411 million in assets.

“When we set out to find a potential partner, we wanted one that matched up well with our core value of nurturing long-term customer relationships,” Mark and Todd Wright, Midwest’s co-CEOs, said in Monday’s press release. “We found that alignment with GreenState Credit Union. Together we will be able to do great things for our staff, our customers, and the communities we serve.”

Midwestern states have proved a hotbed of bank-credit union tie-ups this year. Dubuque, Iowa-based Dupaco Community Credit Union agreed to buy Madison, Wisconsin-based Home Savings Bank last month.

Illinois-based Scott Credit Union said in August it would acquire another St. Louis-area institution, Tempo Bank. And Wisconsin-based Royal Credit Union agreed to buy Minnesota-based Lake Area Bank in the same month.

Michigan-based Lake Michigan Credit Union inked a $100 million deal in June to buy Tampa, Florida-based Pilot Bank. And Minnesota-based Wings Financial Credit Union kicked off the year with a January move to purchase Brainerd Savings & Loan.

This year’s 12 acquisitions of banks by credit unions surpass 2020’s seven but fall short of the record 16 sealed in 2019. The 2020 downturn in activity could be credited to the onset of the COVID-19 pandemic, but at least one mergers-and-acquisitions expert warned more than a year ago that bank purchases by credit unions would snap back to a torrid pace.

"Depending on when [the pandemic] ends, I expect all of those things that are paused to heat right up," Michael Bell, co-leader of the financial institutions practice group at Honigman, told Banking Dive last year. "2021 will be busier than it was going to be."

Honigman served as GreenState's legal counsel in Monday's deal.

“The combined resources of GreenState and Midwest Community Bank will produce excellent opportunities for their customers and the communities they live in," GreenState CEO Jeff Disterhoft said in the press release. "It means improvements in product pricing, expansion of branch locations, and additional digital convenience services that will improve the financial lives of their customers.”

But continued credit union encroachment on the community banking space has generated consistent pushback from 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.

Jacksonville, Florida-based VyStar Credit Union’s move in late March to buy Georgia-based Heritage Southeast Bank for $195.7 million, drew rebukes in May from the ICBA and the Community Bankers Association of Georgia (CBA), whose leaders wrote the regional director of the Federal Deposit Insurance Corp. (FDIC), urging the regulator to reject the deal.

"VyStar has either closed, moved, sold or consolidated half of the branches acquired from the Citizens State Bank transaction," the trade groups wrote, referencing the credit union's 2019 purchase of a Perry, Florida-based bank.

CBA President and CEO John McNair added that the tie-up would "substantially decrease Community Reinvestment Act loans and further branch consolidation in Georgia, harming low- and moderate-income consumers in our communities."

Bank-credit union tie-ups spiked in August, with five deals sparked in just over two weeks, including Tennessee-based Orion Federal Credit Union’s proposed acquisition of Financial Federal Bank; Florida-based Fairwinds Credit Union's move to buy Citizens Bank of Florida; and Alabama Credit Union’s proposed purchase of Security Federal Savings Bank.