The 2024 tally of deals involving credit unions reached 15 this week — one shy of the
The $1.1 billion-asset REV Federal Credit Union in suburban Charleston, South Carolina, said it planned to acquire the $150 million-asset First Neighborhood Bank in Spencer, West Virginia. REV executives touted the deal in a press release late Tuesday as a strategic move to gain scale and diversify its footprint. The credit union currently operates in the Carolinas and would enter West Virginia.
REV did not disclose financial terms or a targeted time frame to close the deal. First Neighborhood would give the 67,000-member REV another 7,000 members. REV has 11 branches in South Carolina and four in North Carolina.
"Our mission is growth with purpose," Jason Lee, president and CEO of REV, said in the release. "This purpose is centered around member impact, social impact, economic impact, and ensuring our long-term survivability…Through this partnership, we want to be actively engaged in the community and create this level of impact" in West Virginia.
REV previously
The credit union earned about $3.3 million for the first half of 2024, a 2% increase compared to the same period a year earlier, according to call report data from the National Credit Union Administration.
REV's agreement to buy First Neighborhood put the industry on pace to exceed the annual record of 16 for such combinations reached in 2022. The industry already surpassed the 2023 total of 11.
Most recently, U.S. Eagle Federal Credit Union in Albuquerque, New Mexico, said in August it would
REV's deal also added to a growing number of bank M&A transactions overall this year. More than 70 banks announced plans to sell so far in 2024, according to S&P Global Market Intelligence. The industry is on track to top last year's tally of 100.
Through July of this year, bank M&A deals had an aggregate deal value of $9.25 billion, far more than the $4.15 billion for all of last year, S&P Global data show.
"We're reaching more normalized levels," said Daniel Goerlich, U.S. banking and capital markets deals leader at PwC.
In addition to heavy regulatory scrutiny, M&A in 2023 was held back by spiking interest rates that sent banks' deposit costs higher, curbed loan demand and galvanized forecasts for a recession. While losing some momentum alongside a slowing manufacturing sector, the overall economy continued to grow through the first half of 2024. The Atlanta Federal Reserve forecast growth of 2% for the current quarter.
What's more, Fed Chair Jerome Powell said at an August symposium that monetary policymakers are on the cusp of
The trend of credit unions buying banks is a lightning rod for controversy in the banking industry. Despite this, such mergers are increasingly common.
Goerlich said clarity on the direction of interest rates could help to drive more deal discussions. Shares of publicly traded banks also have advanced this year, and this could draw more buyers into the M&A arena since buyers can use stronger stock prices to pay for larger deals, he said.
Meanwhile, credit union-bank deals are both increasingly common and perennially controversial. The Independent Community Bankers of America and other bank
Critics argue that credit unions are exempt from federal taxes because they are supposed to focus on underserved niches. When they buy banks, credit unions effectively become banks while retaining nonprofit status. This deprives communities of tax revenue and creates an unfair playing field for the traditional banks with which acquisitive credit unions compete, opponents say.
Yet small bank sellers often find such deals attractive because credit unions pay cash, making transactions relatively simple. Credit unions also say that, when they buy banks, they help to ensure communities
