Why credit unions are buying community banks faster than ever

More than a quarter of the bank acquisitions in the U.S. this year were led by credit unions. While it seems a win-win for the banking public, these transactions come with steep challenges post-merger, like culture, customer retention and compliance. Critics — including some prominent voices on Capitol Hill — say the deals create unhealthy competition.

Credit unions are beginning to look a lot like your corner bank.

The member-owned financial institutions, known for their local focus and pledges to help underserved communities, are snapping up community banks and branches at a faster clip than ever before. The deals are expanding credit unions’ footprints geographically, while boosting deposits and allowing them to offer a wider array of products. The trend is also turning them into competition for retail banks.

More than a quarter of the acquisitions in the U.S. this year were led by credit unions, according to S&P Global Market Intelligence data through March. That’s up from just 5% between 2019 and 2021. Three out of nine of the most recent branch sales also involved credit unions.

Hudson Valley snapped up eight bank branches in upstate New York last month, marking its second banking acquisition so far this year. Attorney Michael Bell of Honigman, who advised Hudson Valley on the deal, said he has potential buyers ready to make deals in all 50 states.


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