Union bank

NuMark Eyes Pioneer State Bank in 8th Credit Union-Bank Combination

Diving brief:

  • Joliet, Ill. NuMarkName Credit Union will acquire $135 million in assets from Pioneer State Bank, based 50 miles west of Earlville, the financial institutions announced Thursday, according to Credit union time and Olsen Palmer, a law firm advising Pioneer.
  • The value of the transaction, which is expected to close in the fourth quarter, was not disclosed. But Olsen Palmer said it was an all-cash transaction for nearly all of Pioneer’s assets and liabilities.
  • The deal marks the eighth case so far this year in which a credit union has offered to buy a bank.

Overview of the dive:

The proposed transaction further cements Illinois as fertile ground for recent credit union-bank tie-ups.

Wisconsin-based CoVantage Credit Union announced in April that it would buy substantially all of the assets and liabilities of New Lenox, Illinois-based LincolnWay Community Bank.

Iowa-based GreenState Credit Union deepened its penetration into suburban Chicago in October, agreeing to buy Midwest Community Bank and its subsidiary, Blueleaf Lending.

In these previous deals, out-of-state credit unions were aiming for a gateway or foothold in the nation’s third-largest market. Thursday’s proposal features the opposite: a credit union based 30 miles from Chicago pushing its footprint further into a mostly rural part of the state.

Pioneer operates four branches and one seasonal location. NuMark, meanwhile, has 11, according to Credit Union Times. Still, Olsen Palmer said NuMark will operate 13 sites once the transaction is complete.

NuMark did not explicitly disclose whether it plans to shut down any sites.

The NuMark-Pioneer deal has been unanimously approved by the board of directors of both organizations, but is subject to regulatory and Pioneer shareholder approvals.

The transaction is expected to bring NuMark’s total assets to $759 million, according to Olsen Palmer.

The move also comes in a year in which Michael Bell, a leading lawyer specializing in bank mergers and acquisitions, predicted a record “25 years and over” agreements between credit unions and banks. At the current rate, 2022 would see 19 – surpassing the previous record of 16, set in 2019, but not nearly 25.

Trade groups such as the Independent Community Bankers of America (ICBA) have opposed the deals, saying the credit unions’ tax-exempt status allows them to offer a higher purchase price in acquisitions than banks and allows them to develop more freely.

This year, credit union-bank activity began in February and March, with a pair of agreements based in Georgia, one in Wisconsin, one in Arizona and another between a Louisiana credit union and a bank in Arkansas. After several weeks of relative calm, trading resumed in mid-May when Michigan-based DFCU Financial announced it would acquire Tampa, Fla.-based First Citrus Bank.