Credit Union REV plans to acquire West Virginia Bank
In a significant move reflecting the ongoing trend of credit unions expanding their reach, REV Federal Credit Union has announced its acquisition of First Neighborhood Bank. This marks the 15th proposed whole-bank purchase by a credit union this year, bringing us one transaction away from 2022's record of 16 announced acquisitions.
The acquisition aligns with the broader wave of credit union expansion through mergers and acquisitions. Credit unions are using bank acquisitions to expand beyond their traditional geographic and membership boundaries, enabling them to enter new markets and strengthen their community presence while maintaining their member-focused values.
Banks often look favorably on credit unions acquiring them because credit unions tend to keep branches open, retain employees, and continue serving the existing customer base, which aligns with their community-based nature. This acquisition by REV Federal Credit Union is no exception, as it will add First Neighborhood's five locations to its nearly 20 branches, gaining more than 7,000 new members.
The need for scale, efficiency, expanded market reach, and stronger member relationships amidst competitive and regulatory pressures is driving this trend. Larger credit unions, particularly those with over $1 billion in assets, are experiencing strong growth in loans and membership, enabling them to pursue acquisitions and diversification of services at a scale more typical of banks.
However, the increasing complexity and size of credit unions, along with their bank acquisitions, have attracted scrutiny and calls for review of their tax-exempt status, highlighting their evolving role in the financial ecosystem. The Independent Community Bankers of America (ICBA) has bemoaned the recent uptick in credit union-bank tie-ups, arguing that the loss of community banks to tax-advantaged credit unions is due to the burdensome regulatory environment and slow merger approval processes.
The financial terms of the First Neighborhood deal were not disclosed. Michael Bell, a partner at Honigman, stated that sellers are currently preferring cash over bank stock in transaction terms. The acquisition is REV Federal Credit Union's first bank acquisition and its first move outside the Carolinas.
Dave Righter, First Neighborhood's CEO, stated that REV has a proven track record of creating significant impact in the communities it serves. The law firm Honigman credits the sustained momentum of credit union-bank tie-ups to the "macro pressure of being a small financial institution."
The acquisition puts 2024 one transaction away from 2022's record of 16 announced whole-bank purchases by credit unions. As the trend continues, it will be interesting to see how this evolution in the financial landscape unfolds.
The acquisition by REV Federal Credit Union of First Neighborhood Bank is a testament to the business strategy of credit unions, utilizing finance sector transactions to broaden their influence beyond traditional boundaries. This move, along with other bank acquisitions in the industry, contributes to the growth of these financial institutions and diversification of services.
The financial industry is witnessing a surge in mergers and acquisitions, with stronger community presence and member-focused values driving these transactions. This trend is being fueled by the need for scale, efficiency, expanded market reach, and stronger member relationships, particularly among larger credit unions.
