Credit Union 1, NuMark Credit Union buying Illinois banks

Two Illinois-based community banks have entered deals to be acquired by credit unions in the past three days.

On Friday, Credit Union 1 announced that it will bulk up its presence in Chicago’s northern suburbs with the acquisition of NorthSide Community Bank.

The $1.3 billion-asset credit union, which is based in Rantoul, Illinois, has agreed to acquire the assets and liabilities of the $311 million-asset NorthSide Community, the credit union said in a press release. The purchase price was not disclosed.

That news comes two days after $624 million-asset NuMark Credit Union in Joliet, Illinois, announced that it agreed to acquire $135 million-asset Pioneer State Bank in Earlville, Illinois, in an all-cash deal.

Following the completion of the transaction, Pioneer will liquidate and distribute its remaining assets to its holding company, NBE Bancshares. At that point, the holding company will dissolve and distribute its remaining assets to its stockholders. 

“It is clear to us that our organizations share a common vision in that we are both invested in the importance of putting people and community first in all that we do,” Lloyd Fredendall, president and chief executive of NuMark, said in a press release Wednesday.

The transaction is expected to close in the fourth quarter of 2022.

Credit Union 1’s deal is the ninth announced this year in which a credit union is buying a bank. Last year, 13 banks agreed to be sold to credit unions, approaching 2019’s record of 16 such announcements.

“We are excited about the commercial lending expertise NorthSide represents,” Credit Union 1 President and CEO Todd Gunderson said in the press release. “This acquisition for CU1 in the Chicagoland area perfectly complements our strategy of organic membership and asset growth through expanded products, services and technologies.”

The deal is expected to close in the fourth quarter of 2022 or the first quarter of 2023.

NorthSide Community, a subsidiary of Gurnee, Illinois-based AliKat Investments, has $198 million in loans and $247 million in deposits. The bank operates four branches in the Chicago Metropolitan area and Lake County, Illinois.

“We chose to partner with Credit Union 1 because its culture, leadership and lending culture all align very closely with ours,” said NorthSide President and CEO Patti Clausen in the press release. “With the size and scale Credit Union 1 adds, it not only strengthens our ability to serve our existing customers in the manner that they have come to expect but also allows us to increase the number of businesses that we can help grow across the new combined partnership.”

Michael Bell, an attorney with Honigman who advised Credit Union 1 on the transaction, said Illinois is fertile ground for M&A because of the number of small banks located there compared to other states. 

“You are seeing an increased amount of activity in general due to the amount of sellers and buyers in the marketplace and pricing that remains stable,” Bell said. “More deals will be announced soon.”

Bell had previously predicted there would be at least 25 deals announced this year.

NorthSide Community would be the eighth Illinois community bank to be sold to credit unions since 2019.

Earlier this year, the Community Bankers Association of Illinois submitted legislation that would require an exit fee when credit unions buy banks. A handful of states have pushed back on credit unions buying banks in part because of the potential loss of tax revenue that banks pay.

Credit Union 1’s branch network spans the Chicagoland, northern and central regions of Illinois along with the Las Vegas metropolitan area and the Indianapolis and South Bend, Indiana, markets. It has approximately 90,000 members across the country. 

Raymond James & Associates served as financial advisor and Honigman LLP served as legal advisor to Credit Union 1. Hillworth Bank Partners served as financial advisor and Barack Ferrazzano Kirschbaum & Nagelberg LLP served as legal counsel to AliKat Investments.

McQueen Financial Advisors served as financial advisor and Luse Gorman, PC served as legal advisor to NuMark Credit Union. Pioneer State Bank was advised by the investment banking firm of Olsen Palmer LLC while Godfrey & Khan, S.C. served as legal advisor.

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