Dive Brief:

• VyStar Credit Union announced Wednesday its intention to buy Heritage Southeast Bank, a $1.5 billion-asset institution headquartered in Jonesboro, Georgia.

• If approved, the acquisition would make Jacksonville, Florida-based VyStar the 13th-largest credit union in the U.S., with $12.5 billion total assets, 88 branches and a membership of over 850,000, the credit union said. 

• VyStar will pay $195.7 million for the bank, according to Hovde Group, the investment bank that advised Heritage Southeast.

Dive Insight:

News of the deal sparked a renewed call Thursday from the Independent Community Bankers of America (ICBA) meant to spur policymakers into reining in credit unions' buying power. At issue is the further acquisition of taxpaying banks by tax-exempt credit unions, a divide ICBA President and CEO Rebeca Romero Rainey said creates an uneven playing field regarding growth.

"While community banks have accounted for more than 60 percent of Paycheck Protection Program loans to lead the economic response to the pandemic, the dated credit union tax exemption and faulty National Credit Union Administration oversight are claiming another of these essential local institutions,” she said in a statement. “The current rash of taxpayer-funded credit union acquisitions exacerbates industry consolidation, shrinks state and local tax revenues, limits the reach of the Community Reinvestment Act, and again shows that tax-exempt credit unions have become virtually indistinguishable from taxpaying commercial banks.”

Credit unions bought 16 banks in 2019, an acceleration from nine the previous year. That number winnowed to seven in 2020.

The ICBA last week asked senators to hold hearings on the trend, over which it launched a campaign in late 2019. Last year, it sought a Government Accountability Office study on the evolution of the credit union industry and National Credit Union Administration supervision.

The VyStar deal, which is expected to close later this year, would be the credit union’s second purchase of a bank in two years. VyStar acquired $280 million-asset Citizens State Bank, based in Perry, Florida, in August 2019. 

"VyStar has made an ongoing strategic commitment to search for partnerships that help us bring the benefits of credit union membership to more people while reinforcing our position as a strong and reliable financial institution with better rates and lower fees for all our members," the credit union's president and CEO, Brian Wolfburg, said in a statement. "[Heritage Southeast Bank] has exceeded our expectations as the optimal partner to help us expand our footprint and ensure financial services are accessible to more Georgia residents."

Heritage Southeast Bank operates as Heritage Bank, Providence Bank and The Heritage Bank through 22 branch locations across southeast Georgia, Savannah and Greater Atlanta.

"We look forward to another seamless transition with HSB," VyStar Chief Strategy Officer Ryan McIntyre, who leads VyStar’s efforts in identifying potential strategic partners, said in a statement.

The acquisition also marks the second bank purchase by a credit union to be announced this year.

In January, $6.7 billion-asset Wings Financial Credit Union said it agreed to buy fellow Minnesota lender Brainerd Savings & Loan.