Dive Brief:

• Apple Valley, Minnesota-based Wings Financial Credit Union agreed to acquire Wisconsin-based Settlers Bank, the bank announced Wednesday.
• Financial terms of the deal, which is expected to close during the first quarter of 2023, were not disclosed.
• “We are excited that the approach to the transaction will keep the systems and team of Settlers Bank intact to allow us to continue to serve our markets without disruption,” said David Fink, Settlers Bank’s president.

Dive Insight:

After the transaction closes, Settlers locations will be rebranded as Settlers Best Credit Union, a division of Wings.

Settlers Bank CEO Tom Spitz said the partnership with Wings would “allow us to build on our already strong market momentum.”

Wings will gain a three-branch foothold in Wisconsin with the deal, adding to its 28-location presence in Minnesota, along with branches in Atlanta, Detroit, Seattle and Orlando, Florida.

"We've been exploring opportunities to expand into Wisconsin,” said Wings CEO Frank Weidner. “This opportunity will jump-start our market presence."

The transaction will mark the 11th instance this year of a credit union buying a bank. That type of combination has traditionally rankled trade groups such as the Independent Community Bankers of America (ICBA), which argue credit unions’ tax-exempt status allows them to offer a higher purchase price in acquisitions than banks can, and lets them grow more freely.

Wings has been a relatively frequent acquirer of banks. Its acquisition of Brainerd Savings & Loan marked the first credit union-bank deal of 2021. Its February 2020 agreement to purchase Neighborhood National Bank kicked off that year’s credit union-bank mergers-and-acquisitions season. Wings, however, scrapped that deal about three months before it was expected to close and didn’t give an explanation, Neighborhood CEO Doyle Jelsing told CUTimes in 2021.

Credit unions bought a record 16 banks in 2019. And 2022 began on pace to surpass that, with nine deals announced in the first six months. Settlers’ announcement Wednesday, however, is the first of its kind since Harvesters Credit Union agreed to buy First National Bank Northwest Florida in August.

Michael Bell, a leading bank M&A attorney, predicted a record “25-plus” deals between credit unions and banks in 2022 when the year began. Some potential deals, however, appear to be “pausing until 2023,” he told American Banker on Wednesday.

“There are no regulatory issues,” Bell said. “There are a few more that should announce prior to year's end. The sellers will sell, but the question becomes when.”

The Midwest has served as a particular hotbed of credit union-bank M&A activity — a trend Wednesday’s announcement continues. 

Illinois-based Credit Union 1 and NuMark Credit Union each said in June they would acquire banks in the state. Michigan-based DFCU Financial said in May it would acquire Florida-based First Citrus Bank. Wisconsin-based CoVantage Credit Union said in April it would buy substantially all of Illinois-based LincolnWay Community Bank’s assets and liabilities. And Summit Credit Union said in March it would buy substantially all of the assets and liabilities of fellow Wisconsin firm Commerce State Bank.