BIRMINGHAM, Ala.—The $607-million Avadian Credit Union here has signed an agreement to purchase the $127-million American Bank of Huntsville, located in Huntsville, Ala.
The purchase and assumption has been approved by each institution’s board of directors and is awaiting approvals from both state banking regulators, the FDIC and the NCUA. The deal is expected to close by the end of 2015.
Avadian will assume operation of the American Bank's location on Memorial Parkway, giving Avadian 19 locations.
“As a growing credit union looking for opportunities to expand our services in North Alabama, we are excited about this forward-thinking collaboration and believe it is a great fit all the way around,” said Linda Cencula, president and CEO of Avadian. “We look forward to welcoming American Bank of Huntsville team members and customers to the Avadian Credit Union family."
Vernon Bice, president and CEO of American Bank of Huntsville, said the bank is looking forward to combining resources with Avadian and partnering with professionals “who are like-minded in their philosophy of offering personalized and professional financial products and services."
If Avadian’s deal is finalized, it will be the seventh time a credit union has purchased a bank since 2011, when Michigan's $1.6-billion United FCU pioneered such purchases by acquiring $81-million Griffith Savings Bank in Indiana.
In May, the $1.1-billion Achieva CU, Dunedin, Fla., signed an agreement to acquire the $165-million Calusa Bank based in Punta Gorda, Fla. The deal, which is expected to close by the end of the year, is believed to be the first time in history a credit union will merge with a bank, rather than do a purchase-and-assumption.
“These transactions are wonderful opportunities for credit unions to grow and strengthen their balance sheets and member equity. The benefits to the members and the communities being served are extensive,” said Michael Bell, attorney and counselor with Royal-Oak, Mich.-based Howard & Howard, who is representing Avadian. Bell has been part of six CU bank buys as well as the Achieva merger.
In most of the previous CU/bank deals, the acquired banks had been struggling. According to the FDIC’s website, American Bank lost $576,000 in 2014 and $295,000 through March. Assets have fallen to $127 million through March, down from $140 million a year earlier.
Call Report data shows the 70,000-member Avadian made $3.3 million net income in 2014 and $986,369 through June. Net worth has steadily climbed in recent years to 11.71% through June. Early this year the CU changed its name from Alabama Telco CU to appeal to a wider segment of consumers.
The other CU/bank deals to date: In addition to United FCU and Achieva, the $318-million Alabama-based Five Star CU purchased the $23-million Flint River National Bank and expects to close a deal with $47-million Farmers State Bank; the $1.2-billion Municipal Employees CU purchased $61-million Baltimore-based Advance Bank; Wisconsin's $2.1-billion Landmark CU acquired $190-million Hartford Savings Bank; and Massachusetts' $429-million GFA FCU bought New Hampshire's $83-million Monadnock Savings Bank.