Dive Brief:

• Oklahoma City-based Tinker Federal Credit Union has agreed to acquire "substantially all of the assets and operations" of the $285 million-asset Prime Bank, based in Edmond, Oklahoma, the credit union announced Thursday. The deal is expected to close this year.
• Prime, which manages deposits of $245 million and $37.2 million in capital, specializes in commercial lending to small businesses and other commercial clients. Many of the credit union's partners "have been asking for member business loans and accounts, and this will allow us to bring on the expertise needed to provide those services in the best possible way," said Michael Kloiber, Tinker’s president and CEO, according to Credit Union Times.
• Bank acquisitions by credit unions have rankled community bankers and trade groups, who argue that credit unions' tax-exempt status enables them to afford such purchases much more easily than taxpaying banks.

Dive Insight:

Thirty-two credit unions have acquired bank assets over the past seven years, National Credit Union Administration Chairman Rodney Hood told the House Financial Services Committee at a December hearing. Hood defended bank-credit union deals, saying they’re dwarfed by the "roughly 250 bank-on-bank acquisitions just over the past year alone."

Bank-credit union transactions had been trending upward. Last year saw 16 banks acquired by credit unions, capped by Suncoast Credit Union’s proposed purchase of Apollo Bank. Apollo represented an inroad to the Miami market for Tampa, Florida-based Suncoast; it also was the largest bank acquired by a credit union since 2012, when the Federal Reserve Bank of St. Louis began tracking those transactions.

The terms of the proposed deal were not disclosed Thursday. The $4.2 billion-asset Tinker said it would retain all of Prime Bank’s employees and operate a newly formed commercial division out of Prime's sole branch.

Far fewer credit unions have made deals to buy banks so far this year, perhaps a consequence of the coronavirus pandemic. Trade groups have pushed back, too. The Colorado Bankers Association may have had a hand in derailing a proposed purchase of Cache Bank & Trust by Elevations Credit Union. Just days before the Colorado Banking Board was set to vote on the tie-up, the trade group wrote a letter arguing that credit unions can’t be "authorized purchasers" of banks, according to language in state statutes. The board voted against the Elevations-Cache deal, 7-1.

A nationwide trade group in October launched its own campaign against bank purchases by credit unions. "With credit unions abandoning their founding mission in the name of expansion and risky lending, it is long past time for Congress to level the playing field between community banks and credit unions," Independent Community Bankers of America President and CEO Rebeca Romero Rainey said in introducing the group’s "Wake Up" campaign.