Global Credit Union Plans Second Largest Bank Acquisition

The $11.8 billion Global Federal Credit Union based in Anchorage, Alaska said on Thursday that it plans to acquire the $1.5 billion First Financial Northwest Bank in Renton, Wash., for $231.2 million in cash.

This is the credit union industry’s second largest credit union-bank purchase deal ever. The largest agreement was announced in 2021 when the $13.4 billion VyStar Credit Union in Jacksonville, Fla., planned to buy the $1.5 billion Heritage Southeast Bank in Jonestown Ga. The deal, however, was called off in 2022.

The Global transaction is structured as a purchase and assumption agreement with the credit union substantially assuming all assets and all liabilities of First Financial Northwest Bank, which will significantly increase Global’s commercial loan portfolio and expand its market presence in Washington, where it first began operations 40 years ago.

At the end of last year’s third quarter, Global was ranked the 19th largest credit union by assets, but its portfolio of $1.3 billion in commercial loans was ranked 11th among the nation’s 4,745 credit unions, according to NCUA data. In the 12 months ending Sept. 30, Global’s total loans shrank 1.9% to $10 billion, but its commercial balances rose 11.6%.

Global currently has approximately 2,000 employees who operate 76 locations in five states and Italy, and serves more than 753,000 members who live in 50 states and 20 foreign countries.

“Global will receive tremendous value from this transaction,” Global President/CEO Geoff Lundfelt said in a prepared statement. “The projected future earnings from the acquisition of First Financial Northwest Bank’s franchise justify the pricing of the transaction and are expected to be accretive to Global from a financial perspective.”

Established in 1923 in Renton, First Financial Northwest Bank has transformed over the years from a single branch thrift to a full-service community-based commercial bank with more than 150 employees that operate 15 branches and serve approximately 13,000 customers. As of Sept. 30, the bank managed deposits of $1.21 billion and $1.1 billion in loans. At the end of last year’s third quarter, it posted income of $5.9 million.

“The ability to offer expanded business and commercial financial products and services to Global’s existing membership is a significant strategic step for the credit union,” Lundfelt said. “This acquisition also affords the customers of First Financial Northwest Bank access to the consumer products and world-class service Global members currently enjoy.”

Global operates 27 branches in Washington, serving more than 180,000 members across the state, which will increase to 42 branches following the purchase of First Financial Northwest’s 15 branches. The number of Global’s branches will be second only to the $29.1 billion BECU in Tukwila, Wash., which operates 63 locations that serve more than 1.4 million members.

“We are enthusiastic about combining two financially sound institutions that share a strong commitment to service and community engagement,” Lundfelt said. “This combination will continue to enhance service delivery and growth in a market that the credit union has been operating in for over four decades, adding numerous branches. First Financial Northwest Bank’s branch network has a technology-forward design, accelerating the transformation to an environment with a structure and atmosphere more suited to conducting business in the future.”

Until the transaction is finalized, which is expected during the fourth quarter, both organizations will continue to conduct business as usual.

“In today’s competitive environment, we believe this strategic transaction provides numerous benefits for our customers, our communities and our employees,” First Financial Northwest President/CEO Joseph W. Kiley III said. “In addition, this transaction delivers substantial value to our shareholders who have supported us over the years.”

This is the second credit union-bank buy agreement this year. On Wednesday the $6.8 billion Hudson Valley Credit Union in Poughkeepsie, N.Y., said it inked a definitive merger agreement to acquire the $592 million Catskill Hudson Bank in Kingston, N.Y., for $28.6 million.

The Independent Community Bankers of America (ICBA) has been speaking against these bank purchases for years and continues to do so.

On Wednesday, ICBA President/CEO Rebeca Romero Rainey said, “The surge in credit unions leveraging their taxpayer subsidies to acquire local community banks has devastating implications for local communities that go well beyond the expansion of the federal tax exemption for more than $2 trillion in credit union assets.”

She added, “With the nation’s community banks accounting for roughly 60% of U.S. small-business loans and 80% of agriculture loans, each credit union acquisition displaces a critical and trusted provider of credit, further consolidates the banking industry, and increases the portion of the industry exempt from Community Reinvestment Act oversight.”

The ICBA again called for the U.S. Congress to hold hearings and to request a Government Accountability Office study on the credit union industry, and to consider an “exit fee” on these acquisitions to capture the value of the tax revenue lost once the acquired bank’s business activity becomes tax-exempt.