Midwest deal marks fifth credit union-bank combination of 2024

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Empeople Credit Union in Moline, Illinois, said Wednesday it agreed to acquire TSB Bank in Lomira, Wisconsin. It represented the latest in an enduring trend of bank sales involving credit union buyers.

The deal, approved by the boards of both institutions, is expected to close in the fourth quarter. When finalized, the combined institution would have approximately $2.2 billion of assets. Financial terms were not disclosed.

Empeople said the acquisition would bolster its business and commercial lending services in addition to expanding its presence in Wisconsin. TSB has $182 million of assets and deposits of $151 million.

The $2 billion-asset Empeople is the sixth-largest credit union in Illinois. It has operations in seven states and serves more than 73,000 members.

"TSB Bank is an extremely well-run institution with a very long history in the area, where we also have members at the nearby John Deere Horicon Works facility," Empeople President and CEO Kurt Lewin said in a news release. "The expertise of the TSB Bank staff and management will allow us to expand opportunities for our members who own and operate small businesses. Continued growth is important for the future, and this partnership will allow both institutions to continue to grow together."

The transaction marks the fifth time this year that a credit union announced a bank acquisition. That puts 2024 on pace to eclipse last year's total of 11 such deals and the record 16 announced in 2022. Additionally, All In Credit Union in Daleville, Alabama, in January agreed to buy five branches from 22nd State Bank in Louisville, Alabama.

This would be Empeople's first bank acquisition.

Credit unions have over the past five years steadily pursued small community banks to extend their geographic footprints and, in many cases, to gain scale and expand their commercial lending operations. Credit unions historically have served consumers in relatively limited market territories.  

Small banks, meanwhile, are selling to both larger banks and credit unions because many sellers lack the scale needed to invest in the digital services that are increasingly in demand.

However, the Independent Community Bankers of America and other industry advocacy groups have railed against credit union growth via bank deals. They note that credit unions are exempt from federal taxes and, when they buy banks, deprive communities of tax revenue. They also argue that such transactions reduce Community Reinvestment Act-related lending. Unlike banks, credit unions are not required to comply with the federal CRA law.

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Yet small bank sellers often find such deals attractive because credit unions pay cash, making transactions relatively simple.

For its part, TSB trumpeted the merits of its sale to a credit union.

"We are very pleased with the transaction and believe TSB Bank's customers, employees, communities and shareholders will all benefit," Chairman and CEO Thomas O'Connor said in a statement. "The communities we serve will continue to experience a customer-focused approach from familiar individuals in existing locations."