Houston area-based TDECU to buy Louisiana bank

Dive Brief:

Lake Jackson, Texas-based TDECU plans to acquire Many, Louisiana-based Sabine State Bank and Trust, the institutions announced Tuesday in a press release.
The deal, expected to be completed early next year, will create a credit union with roughly $6 billion in assets and 471,000 members.
The purchase price was not disclosed, but at more than $1.2 billion in assets, Sabine would be one of the largest banks acquired by a credit union.

Dive Insight:

Acquiring Sabine would more than double TDECU’s 39-location footprint — Sabine counts 51 branches — and give the credit union access to Louisiana.

The transaction — the eighth instance this year of a credit union agreeing to acquire a whole bank — will also expand TDECU’s lending to small-business owners in oil and gas, agriculture and energy, the credit union said. Sabine specializes in commercial loans in those spaces.

“TDECU is on a growth journey to expand across the state of Texas and beyond,” the credit union’s CEO, Isaac Johnson, said in the press release. “This acquisition extends our reach to more communities, diversifies our commercial portfolio and makes our balance sheet even stronger.”

Sabine also has long-standing depository relationships with municipalities and other public institutions including school districts, fire districts and law enforcement agencies.

TDECU’s balance sheet is focused on consumer deposits and lower-risk investment strategies, and Sabine’s commercial operations will further diversify the credit union’s loan concentration, the credit union said.

“We are excited to become a part of the TDECU family and we share their commitment to strengthening our communities and empowering our customers to build better financial futures,” Lee McCann, Sabine’s CEO, said in Tuesday’s release. “Our customers can rest assured that they will continue to experience the best-in-class service they count on from us. Best of all, that service will be enhanced with an even wider array of financial products.”

Jeff Cardone, a partner at Luse Gorman who served as legal counsel to TDECU in the deal, told Banking Dive that although he expects bank mergers to be down in 2024 as a whole, credit unions are increasingly buying banks in the South and Southwest.

“Closely held banks in these rural market areas are willing to explore a business combination with a larger cash buyer, such as a credit union, who wants to preserve bank’s branches, products and services and local community presence,” Cardone said.

With eight whole-bank acquisitions proposed by credit unions so far, 2024 is on pace to surpass the record 16 credit union-bank deals announced in 2022, although only 14 of those transactions ultimately closed.

Eleven credit union-bank tie ups were reached last year.

The Independent Community Bankers of America has long opposed credit unions buying banks.

In a February post on X, formerly Twitter, the trade group said 20% of bank acquisitions “are now by tax-subsidized” credit unions, and each one increases the portion of the financial services industry exempt from [the Community Reinvestment Act] and taxation.”

The only bank larger than Sabine to announce a sale to a credit union this year is $1.5 billion-asset First Financial Northwest Bank, which in January reached a deal with Global Federal Credit Union.

Jonesboro, Georgia-based Heritage Southeast Bank, at $1.6 billion in assets, agreed in 2021 to sell to Jacksonville, Florida-based VyStar Credit Union, but the deal was ultimately canceled.