The Midwest deal marks the fifth credit union-bank combination of 2024 | Credit Union Journal

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Empeople Credit Union in Moline, Illinois announced Wednesday that it has agreed to acquire TSB Bank in Lomira, Wisconsin. It represented the latter in a lasting bank sales trend involving credit union buyers.

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

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

Empeople, valued at $2 billion, is the sixth largest credit union in Illinois. It operates 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 region, where we also have members at the nearby John Deere Horicon Works facility,” Empeople President and CEO Kurt Lewin said in a press release. “The expertise of TSB Bank's staff and management will enable us to expand opportunities for our members who own and manage small businesses. Continued growth is important for the future and this partnership will enable both institutions to continue to grow together.”

The transaction marks the fifth time this year that a credit union has announced a bank acquisition. That puts 2024 on pace eclipse last year's total of 11 such deals and a 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 over the past five years have been steadily pursuing small community banks to expand their geographic footprint and, in many cases, scale and expand their commercial lending operations. Credit unions have historically served consumers in relatively narrow market areas.

Small banks, meanwhile, they sell to both larger banks and credit unions because many vendors lack the necessary scale to invest in increasingly in-demand digital services.

However, the Independent Community Bankers of America and other industry advocacy groups have opposed the development of credit unions through transaction banking. 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 the borrowing associated with the Community Reinvestment Act. Unlike banks, credit unions are not required to comply with the federal CRA Act.

But retailer banks often find such deals attractive because credit unions pay cash, making transactions relatively simple.

For its part, TSB trumpeted the merits of selling itself 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 chief executive Thomas O'Connor said in a statement. “The communities we serve will continue to experience a customer-focused approach from familiar people in existing locations.”