ANTIGO, Wis.—The $2.7-billion CoVantage Credit Union has agreed to purchase the $277-million LincolnWay Community Bank, nearly 300 miles south in New Lennox, Ill.
The buy marks the seventh CU purchase of a bank in 2022.
LincolnWay Community Bank is a wholly-owned subsidiary of LWCBancorp, Inc.
The transaction has been unanimously approved by the boards of directors of both organizations, but is awaiting bank shareholder and regulatory approvals.
Plans are being made to combine the staff, CoVantage stated.
“We are pleased to have found a partner whose culture and values are well aligned with CoVantage,” said CoVantage CEO Charlie Zanayed. “LincolnWay Community has focused on making exceptional service a priority for their personal and business banking customers like we do for those we serve at CoVantage.”
As have many credit unions that have purchased banks in the past, a focus of the deal with LincolnWay is commercial lending expertise.
‘Size and Scale’ Cited
“They are extraordinarily successful commercial lenders, particularly in commercial development and commercial real estate lending,” said Zanayed. “CoVantage is also a highly successful commercial lender and is one of only a few credit unions nationally that has been serving commercial members the entire time we’ve been in business, which for CoVantage Credit Union is going on 70 years. By partnering with LincolnWay Community businesses, we can deliver the size and scale that is needed to survive and thrive today.
“We are excited about the opportunity to help more businesses grow by expanding our commercial relationships through competitive loan rates, low or no cost business deposit services, and providing the service businesses expect,” continued Zanayed. “CoVantage is also a leading mortgage lender throughout the communities we serve, and our rates and fees are consistently rated among the best-of-the-best. We feel this is an opportune time to provide outstanding value and exceptional service to Northern Illinois.”
Added LincolnWay Community Bank CEO Mark Stevens, “CoVantage Credit Union is a high-performing, growing, and successful community-minded organization. We chose to partner with CoVantage because its culture, leadership, and commercial real estate lending all align very closely. Our customers can feel confident that this partnership only strengthens our ability to serve them in the manner they have come to expect from LincolnWay.”
Additional Driver
In his statement, Zanayed also said growth into new markets is a driver of the deal.
“Partnering with LincolnWay Community provides us an opportunity to serve a new market with the award-winning products and services CoVantage delivers to our 140,000 member-owners,” said Zanayed. “With growth, we can provide more value and services that benefit all members, like the elimination of all overdraft fees on CoVantage checking accounts that was announced last fall.”
LincolnWay had has total deposits of approximately $243 million, total loans of approximately $197 million, and operates two branches located in New Lenox and Mokena, Ill.
LincolnWay made $4.1 million in net income in 2021, and $3.4 million in the previous year, according to FDIC data.
CoVantage reported $33 million in net income during 2021, and has 10.52% net worth and ROAA of 1.35%, according to Call Report data.
More Deals Expected
The pioneer of credit union purchases of banks, Michael Bell, said the deal underscores how more banks looking to sell continue to see the value of having credit unions as bidders.
“Despite misplaced and illogical pressure from the bank trade groups, the free market continues to function,” said Bell, a partner and co-chair of the Financial Institutions Practice Group at Honigman, LLP, which is representing CoVantage.
Bell has been involved in more than 45 whole-bank agreements, plus additional bank branch purchases. “As I stated earlier this year, I expect a record year for deals announced—and more are imminent.”