Arizona FCU Plans to Complete Proposed Acquisition of Bank by Year’s End
If approved, the combination of the financial institutions would create the second largest credit union in the state.
Arizona’s third largest credit union said Thursday it plans to buy the state’s second largest community bank.
By the end of this year, the $2.7 billion Arizona Federal Credit Union in Phoenix said it expects to complete the acquisition of the $539 million Horizon Community Bank in Lake Havasu City.
The deal’s financial terms were not disclosed. It was the fifth credit union-bank buy proposal in two weeks.
In a letter to members, AFCU President/CEO Ronald L. Westad said the bank buy should yield three benefits: Expansion into new markets, some of which have limited banking options to serve and grow the membership; diversification of the credit union’s assets that will enhance its financial soundness; and the generation of new revenue that will fund additional services and locations.
HCB ended last year with net income of $5.9 million, nearly double its net income of $3.9 million in December 2020, according to FDIC financial performance reports.
The bank, which specializes in commercial lending, posted an ROA of 1.12% in 2021, up from 0.94% in 2020. HCB manages $470 million in deposits and more than $43 million in capital.
Founded in 2002, HCB’s 88 employees operate seven office locations that serve approximately 12,000 customers. Two of the bank’s branches are in Lake Havasu City, and one each in Fort Mohave, Kingman, Parker, Quartzsite and Mesa.
“We believe growth in members and assets is critical to long-term success in the financial services industry. With greater scale we can continue to provide both the high-touch and high-tech services you’ve come to expect,” Westad wrote in his letter to members. “After successfully acquiring and integrating Pinnacle Bank in 2019, we’ve experienced the benefits of acquisition as a strategy to compliment organic membership growth.”
He also noted because of the Pinnacle Bank purchase, AFCU now offers a full suite of small business and residential lending mortgage services and has been designated as an SBA preferred lender.
“During the height of the pandemic we were able to provide our members with over $60 million in forgivable Paycheck Protection Program loans, keeping thousands of people employed throughout the Valley,” he wrote.
If the AFCU-HCB deal is approved by shareholders and regulators, the combined organization will manage more than $3.3 billion in assets and 21 branches that will serve more than 155,000 members, lifting it to the second largest credit union in Arizona behind the $8.2 billion Desert Financial Credit Union in Phoenix.