Credit unions' bank buyout spree snags biggest fish yet

Register now

Credit unions are targeting bigger banks as the pace of acquisitions accelerates.

The latest example: Suncoast Credit Union in Tampa, Fla., agreed Tuesday to buy the $747 million-asset Apollo Bank in Miami. Apollo is the biggest bank to agree to be sold to a credit union.

With $10.4 billion in assets, Suncoast is the largest credit union to announce plans to buy a bank. It is among the 10 biggest credit unions in the country in terms of assets and members.

The Apollo acquisition quickly drew the ire of bankers who are concerned that 2020 could be the year where a credit union finally buys a bank with more than $1 billion in assets.

Credit unions "are getting bolder and bolder," said Alex Sanchez, president and CEO of the Florida Bankers Association.

Credit unions have announced 16 bank acquisitions this year, nearly doubling the nine deals announced in 2018. While most of the deals have involved smaller banks — many with less than $250 million in assets — Apollo and the $733 million-asset Community Bank and Trust of Florida are notably larger.

Michael Bell, a lawyer at Howard & Howard who has advised buyers in many credit union-bank deals, said he expects to see more transactions next year. Bell, who represented Suncoast, said it is realistic to expect a $1 billion-asset bank to be sold to a credit union, noting that discussions are already taking place.

Suncoast said acquiring Apollo will allow it to provide membership to a large underserved population in South Florida.

"Bringing the benefits of membership offered by Florida’s largest credit union to the diverse cultural population in Miami is a privilege that we take great pride in sharing," said Suncoast CEO Kevin Johnson.

Apollo decided to sell itself after realizing a merger would allow it to offer more products and gain scale, said Eddy Arriola, the bank's chairman and CEO.

"After considering a range of options, it became clear that Suncoast ... was the right partner," said Arriola, who will become the credit union's South Florida market president. "Suncoast is a Florida market leader that shares Apollo Bank’s deep-rooted commitment to client service and community involvement.”

Apollo, which has a commercial banking focus, opened in 2010. It has five branches in several key markets in South Florida. It held nearly $600 million in deposits in Miami on June 30, or roughly 0.56% market share, according to the most recent data from the Federal Deposit Insurance Corp.

Florida remains a hot spot for credit union-bank deals because of the state's population growth and the lack of an income tax, industry observers said. Six of the credit union-bank deals announced this year have featured a Florida seller.

"Whether you're selling shoes, computers or banking services, this is where you want to be," Sanchez said.

Sanchez said much of the blame for a spike in credit union-bank deals belongs to the banking industry, which he said has failed to keep credit unions in check.

"We better get going and push legislation," Sanchez said. "All other remedies and ideas are just talk. Our industry better respond to this."

Bankers have been more vocal about banks selling to credit unions, noting that those deals take a taxpaying entity out of the economy.

Ken Thomas, president of Community Development Fund Advisors in Miami, said his biggest issue is that credit unions are not subject to the Community Reinvestment Act. He noted that the $655 million-asset Power Financial Credit Union, which said in March it was buying the $204 million-asset TransCapital Bank, agreed to make a major investment in the community.

"We're hoping Suncoast will do the same," Thomas said.

Two banks have turned the tables this year, announcing deals for credit unions.

Alliance Bank Central Texas in Waco in April acquired the assets of Texas Farm Bureau Federal Credit Union, also in Waco. First Bank of Berne in Indiana agreed last month to buy Adams County Credit Union in Monroe.

Absent a jarring economic event, Bell said he expects the current pace of credit union-bank deals to carry over into 2020.

"Pricing is still good for buyers and sellers — and the marketplace is full of both," Bell said.

For reprint and licensing requests for this article, click here.
Community banking M&A Growth strategies Credit unions Florida