Dive Brief:
- Decatur, Illinois-based Land of Lincoln Credit Union has agreed to acquire Colchester, Illinois-based Colchester State Bank, the companies announced last month.
- The purchase price of the all-cash transaction is yet to be disclosed, but the deal is expected to close by the end of 2023, the press release stated.
- By acquiring Colchester, Land of Lincoln will grow its total assets to $460 million and increase its footprint in McDonough County and its neighboring areas to 14 branches total.
Dive Insight:
With $375 million in assets, Land of Lincoln is one of the smallest credit unions to acquire a bank.
“The acquisition is part of Land of Lincoln’s strategic growth plan, which includes adding branches and markets to better assist our members in Illinois,” Robert Ares, president and CEO of Land of Lincoln Credit Union, said in the December statement. “Colchester State Bank’s customers will become members of Land of Lincoln with full access to our wide array of products and services.”
Colchester, a full-service community bank, has around $82 million in assets, $74 million in deposits, and $27 million in loans. The bank will liquidate and distribute its remaining assets to its stockholders after the deal is complete.
“After carefully considering what is best for our employees, customers, shareholders, and the communities we serve, we believe our decision to become a part of Land of Lincoln is the best path forward for our organization,” Mark Reynolds, CEO of Colchester, said in the statement.
The transaction will mark the 16th such proposed deal to be announced last year, creating a tie with 2019, which saw the maximum number of credit union-bank acquisitions. However, a couple of those deals did not go through, according to American Banker.
Tuscaloosa-based Alabama One Credit Union marked the 15th such deal in 2022 when it announced the acquisition of First Bank of Wadley, making it the fourth proposed purchase of a bank by a credit union within two weeks in December alone.
The aggressive acquisition rate of banks by credit unions last year will likely displease trade groups like the Independent Community of Bankers of America (ICBA), which argues that since credit unions are exempt from tax, it allows them to offer higher purchase prices and helps them grow more freely.
The Midwest has served as the hotbed of credit union-bank M&A activity. Illinois-based Credit Union 1 and NuMark Credit Union each declared in June last year that they would acquire banks in the state.
Minnesota-based Wings Financial Credit Union agreed to acquire Wisconsin-based Settlers Bank in November. While in December, Iowa-based Veridian Credit Union decided to buy Minnesota-based American Investors Bank and Mortgage.
In April, Wisconsin-based CoVantage Credit Union said it would substantially buy all Illinois-based LincolnWay Community Bank’s assets and liabilities. Michigan-based DFCU Financial said in May it would acquire Florida-based First Citrus Bank. And in March, Summit Credit Union said it would substantially buy all of the assets and liabilities of fellow Wisconsin firm Commerce State Bank.
“The Midwest has been and will continue to be a very active region for these deals. Next week we should announce a new transaction that is in the Midwest,” Honigman attorney Mike Bell said in an email response to Banking Dive. “Expect 2023 to be a very active year for these transactions.”
