VyStar Credit Union buys Heritage Southeast Bank for $ 195.7 million

Dive brief:

  • VyStar Credit Union announced wednesday its intention to buy Heritage Southeast Bank, a $ 1.5 billion institution headquartered in Jonesboro, Georgia.

  • If approved, the acquisition would make Jacksonville, Florida-based VyStar the 13th largest credit union in the United States, with total assets of $ 12.5 billion, 88 branches and over 850,000. members, the credit union said.

  • VyStar will pay $ 195.7 million to the bank, according to the Hovde group, the investment bank that advised Heritage Southeast.

Dive overview:

News of the deal sparked a call renewed Thursday of the Independent Community Bankers of America (ICBA) intended to encourage policymakers to restrict the purchasing power of credit unions. The problem is the continued acquisition of taxable banks by tax-exempt credit unions, said ICBA President and CEO Rebeca Romero Rainey, which creates an uneven playing field for growth.

“While community banks accounted for over 60% of Paycheck Protection Program loans to lead the economic response to the pandemic, dated credit union tax exemption and flawed oversight by the National Credit Union Administration call for another one of these essential local institutions, ”she said. “The current wave of taxpayer-funded credit union acquisitions is exacerbating industry consolidation, reducing state and local tax revenues, limiting the reach of the Community Reinvestment Act, and again showing that tax-exempt credit unions tax have become virtually indistinguishable from commercial banks taxpayers. “

Credit unions bought 16 banks in 2019, an acceleration from nine the year before. This number rose to seven in 2020.

Last week, the ICBA asked senators to hold hearings on the trend, on which he launched a campaign end of 2019. Last year he research a study by the Government Accountability Office on the evolution of the credit union industry and the oversight of the National Credit Union Administration.

The VyStar deal, expected to close later this year, would be the credit union’s second purchase from a bank in two years. VyStar acquired Citizens State Bank with assets of $ 280 million, based in Perry, Florida, in August 2019.

VyStar has made an ongoing strategic commitment to seek partnerships that help us bring the benefits of membership in a credit union to more people while strengthening our position as a strong and reliable financial institution with better lower rates and fees for all our members ”, the credit union President and CEO, Brian Wolfburg, said in a statement. “[Heritage Southeast Bank] exceeded our expectations as the optimal partner to help us expand our presence and ensure that financial services are accessible to more residents of Georgia. “

Heritage Southeast Bank operates as Heritage Bank, Providence Bank and The Heritage Bank through 22 branches in Southeast Georgia, Savannah and Greater Atlanta.

“We look forward to another smooth transition with HSB,” said VyStar Chief Strategy Officer Ryan McIntyre, who leads VyStar’s efforts in identifying potential strategic partners, in a statement.

The acquisition also marks the second purchase of a bank by a credit union to be announced this year.

In January, assets of $ 6.7 billion Wings Financial Credit Union said he agreed to buy another Minnesota lender, Brainerd Savings & Loan.

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