VyStar CU Bank Purchase Terminated

Vystar Credit Union and Heritage Southeast Bank said in a statement released late Wednesday afternoon that they mutually decided to terminate a purchase and assumption agreement, ending the credit union industry’s largest ever bank acquisition deal.

“Following a thorough evaluation of the transaction between VyStar and HSBI, we have mutually agreed that moving forward separately is the prudent decision. VyStar will continue to expand our services in Georgia,” VyStar President/CEO Brian Wolfburg said in a prepared statement.

This news came during a challenging time for the Jacksonville, Fla., based Vystar, which continues to struggle with its new online and mobile banking system that initially crashed on May 13, frustrating many members who were unable to access their accounts and do transactions. According to a special FAQ page created by VyStar, it claimed online banking has been available since May 23, but many of the credit union’s 822,000 members are still reporting problems with the new platform and, according to VyStar, its mobile app “remains unavailable.”

However, on Thursday morning VyStar posted this notice at the top of its homepage: “We are currently experiencing an unexpected outage for Online Banking. We apologize for the inconvenience at this time and are working to resolve the problem.” The outage lasted roughly two hours.

Mounting frustrations have turned to anger among VyStar members who have called for Florida regulators to launch an investigation.

In March 2021, the $12.3 billion Vystar announced that it agreed to buy the $1.6 billion Heritage Southeast Bank of Jonesboro, Ga., for $189 million. Although the deal was expected to close at the end of last year, the financial institutions agreed to move up the deadline three times and indicated in prepared statements they were working to resolve certain regulatory hurdles.

When the deadline to close the deal was moved up for a second time to March 31, a VyStar spokesperson said, “as we await a decision by the NCUA board, VyStar stands behind their proposed purchase of Heritage Southeast Bank.”

After the financial institutions agreed to extend the closing deadline a third time until June 30, it was subject to the ability of either party to terminate the agreement in the event certain regulatory hurdles were not cleared by April 30.

“After much contemplation and discussion, the board of directors of both institutions concluded the best path forward would be to discontinue the proposed transaction between our companies as all required regulatory approvals would not be obtained in a timely manner,” Heritage South Bank CEO Leonard A. Moreland said in a prepared statement.

The credit union and bank also agreed to pay their own costs and expenses in connection with the terminated transaction, and that neither financial institutions will pay any termination fee, according to a prepared statement.

At 6 p.m. on Wednesday, Heritage South released a separate statement less than two hours after VyStar and the bank announced the deal’s termination at 4:05 p.m.

“The Board of Directors of Heritage Southeast Bancorporation, Inc. (“HSBI”) have initiated a formal review of strategic alternatives to enhance shareholder value,” the bank’s holding company said. “HSBI has engaged Piper Sandler and Co. as financial advisor to assist the Board of Directors of HSBI in connection with their review. No definite timetable has been set for the completion of this evaluation and there is no assurance that the process will lead to the pursuit, approval or completion of any transaction or other strategic initiative.”

On the OTC Markets where HSBI is publicly traded, its stock fell from $23.50 at the start of trading on Thursday to $20.47 at 11:47 a.m.

In addition to the month-long online and mobile debacle, VyStar settled a legal dispute in January of this year with the $2.6 billion Achieva Credit Union in Dunedin, Fla.

Achieva argued that VyStar’s tagline, “Do Good. Bank Better.” would create consumer confusion because it is similar to Achieva’s tagline, “Banking for Good,” a registered trademark. Vystar contended, however, that the two taglines do not look the same, sound the same or mean the same things.

Nevertheless, after the lawsuit was settled in January, VyStar changed its catchphrase to “Bank Better,” on its website at that time. However, VyStar since January has changed its tagline again to “Better Ways to Bank,” the home page of its website showed. Officially, the credit union’s tagline is “Do Good. Bank Better.”