Bank-credit union deal in Midwest is sixth this year

Another credit union is acquiring a community bank.

CoVantage Credit Union in Antigo, Wisconsin, said Wednesday it has agreed to purchase LincolnWay Community Bank in New Lenox, Illinois. The $2.7 billion-asset CoVantage said it expects to close the deal for the LWCBancorp subsidiary in the fourth quarter. The price was not disclosed.

“They are extraordinarily successful commercial lenders, particularly in commercial development and commercial real estate lending,” CoVantage CEO Charlie Zanayed said in a press release, referring to the $277 million-asset LincolnWay. “CoVantage is also a highly successful commercial lender and is one of only a few credit unions nationally that has been serving commercial members the entire time we’ve been in business.” 

Founded in 2005, LincolnWay Community Bank has total deposits of approximately $243 million, total loans of approximately $197 million and operates two branches, one in New Lenox and one in Mokena, Illinois.

"We chose to partner with CoVantage because its culture, leadership and commercial real estate lending all align very closely with ours,” LincolnWay Community Bank CEO Mark Stevens said in the press release.

Including CoVantage-LincolnWay deal, there have been six deals with a credit union agreeing to buy a bank in 2022, after 13 such deals in 2021. Most recently, Arizona Federal Credit Union in Phoenix agreed to buy Horizon Community Bank in Lake Havasu City, Arizona. As credit unions continue to buy banks, regulators in a half-dozen states have pushed back by attempting to make the practice more difficult by blocking deals or pushing to tax credit union-bank mergers. 

“The free market continues to function,” said Mike Bell, an attorney at Honigman, which advised CoVantage on the deal. “I still expect a record year for deals announced, and more are imminent.”

LincolnWay would be the seventh Illinois-based community bank to be sold to a credit union in the past couple of years, said Randy Hultgen, president and CEO of the Illinois Bankers Association. He said the trend is “troubling” for the future of community banking.

“Congress should tax large credit unions over $500 million in assets, and federal credit unions should comply with federal CRA requirements to demonstrate that they aren’t abandoning Illinois communities,” he said in an email, referring to the Community Reinvestment Act. 

CoVantage's earnings rose 36% to $33.4 million in 2021, according to call report data from the National Credit Union Administration. LincolnWay Community would be its first bank acquisition.

CoVantage serves more than 140,000 members across 20 branches in Wisconsin and Michigan.

Mercer Capital served as financial advisor and Honigman served as legal advisor to CoVantage Credit Union. Olsen Palmer served as financial advisor and Barack Ferrazzano Kirschbaum & Nagelberg served as legal counsel to LWCBancorp.