Take the 10,000-foot view of tie-ups between credit unions and banks, and you’ll notice some trends at play: August has often been a fruitful month for deals. Illinois is a hotbed of activity — especially the prospect of expanding into the Chicago market. And Michael Bell, Honigman’s resident M&A expert, told Banking Dive this week he expected more deal announcements in the next several days.

So it may not be a surprise that the finance sector saw a second proposed bank acquisition by a credit union within 24 hours.

Michigan State University Federal Credit Union announced Monday it agreed to buy Illinois-based McHenry Savings Bank — a deal worth $36.3 million to $38.2 million, depending on the equity value of McHenry’s stock, Credit Union Times estimated. Stockholders can expect to receive $39 to $41 in cash for each McHenry share they hold, the financial institutions announced.

The transaction, set to close late in the first quarter of 2024, would give MSUFCU three added locations in the suburbs northwest of the nation’s third-largest city. The deal also comes a little more than a month after the credit union announced that it would open five branches in Chicago next year — MSUFCU’s first expansion beyond its home state.

“This adds exponentially to our growing market,” MSUFCU CEO April Clobes said in a statement Monday. “We look forward to the combined synergies our two organizations will achieve in our local communities while providing McHenry Savings Bank's clients with an expanded array of resources and products.”

For McHenry's shareholders, the deal “represents the culmination of [a] turnaround process begun in 2018,” the bank’s CEO, Donald Wilson, said Monday.

That’s the year Wilson led a $23 million recapitalization of the bank. McHenry will liquidate once the acquisition is complete, and distribute its remaining assets to its stockholders, according to Monday’s announcement. 

“Given the current environment, this is a really good win for all involved,” Wilson told Crain’s Chicago Business.

McHenry Savings Bank managed $223 million in loans, $261 million in deposits and $25.2 million in equity capital as of June 30, according to data from the Federal Deposit Insurance Corp.

Once the deal is complete, MSUFCU expects to hold $8.2 billion in assets, $6.3 billion in loans and $6.7 billion in shares and deposits. It will also count 31 branches and have access to McHenry’s approximately 5,000 customers.

Roughly 10,000 Michigan State alumni — the base around which MSUFCU is built — live in the Chicago area and “thousands” of the city’s residents are among its members, credit union spokesperson Danielle Deneau said last month.

Windy City potential

Chicago has stood as a long-sought expansion goal among Midwest institutions. Credit Union 1, based in Lombard, Illinois — west of Chicago — said last year it would acquire NorthSide Community Bank, based in Gurnee, a suburb north of the city. 

Iowa-based GreenState Credit Union in 2021 moved to acquire two Chicago-area institutions: Oak Brook-based Oxford Bank & Trust and Midwest Community Bank (along with its subsidiary, Blueleaf Lending, which had offices in Chicago’s West Loop and several neighboring communities).

But credit unions aren’t always looking to push into Chicago. Land of Lincoln Credit Union, based in Decatur, on the western edge of the metropolitan area, has sought to expand outward — proposing to buy Colchester State Bank, then Nokomis Savings Bank, in more rural areas of Illinois. Joliet-based NuMark Credit Union, likewise, said last year it would buy Pioneer State Bank in Earlville.

MSUFCU’s proposed purchase of McHenry came hours after Dothan, Alabama-based Five Star Credit Union, said it would buy Macon, Georgia-based OneSouth Bank. Altogether, seven tie-ups between banks and credit unions have been announced in 2023 — and three have come in August, including Lakewood, Washington-based Harborstone Credit Union’s play for Seattle’s First Sound Bank. 

Longtime observers may recall that in 2021, August saw five credit union-bank deals announced in a span of roughly two weeks.

Christopher Olsen, managing partner at Olsen Palmer, told Banking Dive on Tuesday that he was seeing “the start of a resurgence of bank M&A activity and discussions as is illustrated by the increased deal count for the month of August.”

The acceleration of activity will likely irk trade groups like the Independent Community Bankers of America, which argues that credit unions’ tax exemption allows them to offer a higher buying price and helps them grow more freely than banks. 

Bank acquisitions by credit unions are off pace this year compared with 2022, when a record-tying 16 deals were struck. Ten bank acquisitions by credit unions had been proposed by this point last year. 

But August isn’t over.