Atlanta Postal Credit Union (APCU) and its subsidiary,
Center Parc CU, announced the purchase of Affinity Bank, making the
Georgia-based credit union the 11th to acquire a bank this year. Such
acquisitions have caused trade advocates for community banks to call for
legislative action to address concerns about the implications of tax-exempt
credit unions buying tax-paying banks.
APCU holds approximately $2.5 billion in total assets, which
is expected to increase to over $3 billion with the pending purchase of
$870-million Affinity Bank, headquartered about 35 miles east of the credit
union in Covington, Ga.
APCU plans to purchase substantially all of Affinity Bank’s assets
and assume all associated liabilities in an all-cash transaction. Affinity Bank
reported $6.7 million in 2023 net income and $1.5 million through March of this
year, according to data published by the Federal Deposit Insurance Corp. (FDIC).
Atlanta Postal posted $3.1 million in net income for 2023, but recorded a $3.6
million loss through the first quarter of 2024, according to the institution’s
published call report data.
The purchase will help APCU expand its reach throughout
Atlanta and surrounding communities, while also bolstering its market share,
according to the company.
“For nearly 100 years, Affinity Bank has successfully served
both small businesses and individuals throughout Atlanta and the entire
region,” APCU President and CEO Blake Graham said in a statement. “Through this
agreement, we look forward to welcoming Affinity Bank’s customers as new
members and exceeding their expectations in every way as we work to help them
financially flourish. We are also excited to enter into this agreement as a way
to drive our member-centric growth strategy forward.”
The transaction is expected to close during the fourth
quarter of 2024 or the first quarter of 2025, subject to necessary regulatory
approvals and approval from Affinity Bank shareholders.
“During our proud history, Affinity Bank has been committed
to serving our clients and local communities,” Affinity Bank President and CEO
Edward Cooney said in a statement. “Through a consistent level of superior
quality service, our dedicated staff has grown a loyal commercial and retail
customer base. We are very excited about joining the APCU/Center Parc team.
APCU/Center Parc share our core values, and have demonstrated a similar
commitment to their members, employees and the communities they serve.”
Concern among community banking advocates
While the deal is being celebrated by both entities, Independent
Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey
issued a statement saying it “illustrates much of what is wrong with U.S.
financial services regulation.”
“The dangerous trend of tax-exempt credit unions buying
banks expands the federal tax exemption for more than $2 trillion in credit
union assets, displaces trusted providers of credit in local communities, and
demonstrates the urgency of addressing the burdensome regulatory environment,”
Romero Rainey said.
She pointed to corresponding economic consequences
associated with the growing prevalence of such transactions as reason for
regulators and Congress to act, by holding hearings, initiating a Government
Accountability Office study and considering charging an “exit fee” to recapture
tax revenue lost when a bank’s business activity becomes tax-exempt.
“The loss of community banks to tax-advantaged credit unions
clearly shows the harmful and irreversible impact of the excessively burdensome
regulatory environment that only continues to grow, with a rash of rulemakings
adding 7,000 pages of new rules since July and driving industry consolidation,”
Romero Rainey said. “Further, the sluggish merger approval processes of federal
banking regulators constrain bank-to-bank deals, while National Credit Union
Administration’s bureaucratic obstacles and roadblocks to credit union
conversions and mergers make it more difficult for a bank to acquire a credit
union than vice versa.”
No intention of slowing down
Despite concern about credit unions purchasing banks,
Michael Bell, a partner and chair of the Financial Institutions Practice Group
at Honigman, told CUToday.info that the pace of credit unions acquiring banks
is only going to increase in the near future.
“The Southeast remains an exceptionally active area,” Bell
told the website. “You should expect to hear about more transactions soon. Community
banks are voluntarily choosing to sell, and credit unions are choosing to
participate in that free market.”
Bell has been involved in more than 60 whole-bank
agreements, as well as numerous bank branch purchases.