Friday’s announcement that Atlanta-based LGE Community Credit Union will purchase Rome, Georgia-based Greater Community Bank does two things.
First, it means credit unions have proposed buying more banks in 2022 — 14 — than last year’s 13. And, second, geographically, it brings the year’s credit union-bank tie-ups full circle.
The first two credit union-bank deals of 2022 took place in Georgia: Atlanta-based Georgia’s Own Credit Union proposed buying Smyrna, Georgia-based Vinings Bank in February. And Warner-Robins, Georgia-based Robins Financial Credit Union announced it would acquire Forsyth, Georgia-based Persons Banking Company in March.
Additionally, a letter about the acquisition that Greater Community Bank addressed to its customers contained two pieces of radical honesty not typically seen with these transactions.
For one, CEO David Lance said the bank was “not seeking a merger opportunity,” but “it is no surprise that LGE contacted us given the bank’s solid financial performance, strong asset quality and our excellent customer base, along with our exceptional staff.”
“Our Board decided to proceed with the merger because it is believed to be in the best interest of our shareholders,” Lance added.
Second, Lance divulged a qualifier to LGE’s promise to retain the bank’s employees. Namely, the credit union pledged to keep them on “in their current roles for at least a year after the transaction is finalized.”
Financial terms of the transaction, which is expected to close by the third quarter of 2023, were not disclosed.
But purchasing Greater Community Bank will add $322 million in assets to the $2 billion LGE already counts. It will also add three locations to the credit union’s 14-branch footprint and expand LGE’s presence to two more counties in northwest Georgia.
“LGE Community Credit Union and Greater Community Bank coming together will deepen the commitment to consumers and businesses in these communities,” Chris Leggett, the credit union’s CEO, said in a statement Friday. “We are dedicated to improving the financial well-being of our members by delivering value through better rates and lower fees, convenience, caring service and sound financial management.”
The LGE deal is the third credit union-bank tie-up proposed in a 10-day span. (Iowa-based Veridian Credit Union agreed this month to buy Minnesota-based American Investors Bank and Mortgage. And Michigan-based Dort Financial Credit Union agreed last week to acquire Florida-based Flagler Bank.)
That marks a return to the furious pace at which credit union-bank transactions were being announced this spring. Credit unions had telegraphed their intention to buy nine banks over the first six months of this year.
While 2022’s final tally won’t be the “25-plus” Honigman attorney Michael Bell predicted in January — and may not match 2019’s record 16 credit union-bank tie-ups — it does back up Bell assertion last month that “a few more [would] announce prior to year’s end.”
Bell told Banking Dive last week that once the economic tumult stabilizes, there will be a sharp rise in activity.
“I think continued geographic expansion [and] diversity will occur,” he said. “You’re going to see these deals occur in places where they haven’t before.”
Bell also predicted deals would get larger.
That’s likely to displease trade groups like the Independent Community Bankers of America (ICBA), which argues that credit unions’ tax-exempt status allows them to offer a higher purchase price and lets them grow more freely than banks.
Greater Community would be the second bank LGE has bought. It acquired Georgia Heritage Bank in 2018.
“Greater Community Bank was built on the core values of integrity, respect, excellence, service and team,” Lance said Friday. “Our board of directors believes LGE Community Credit Union reflects similar values and this alignment will be a positive move for our customers, employees and the communities we serve.”
