Two Florida credit unions have agreed to merge.
The larger VyStar Credit Union and the smaller 121 Financial Credit Union — both based in Jacksonville — are aiming to complete the deal in the fourth quarter, the $657 million-asset 121 Financial said in a press release late last week.
121 Financial becomes one of the largest credit unions acquired through merger so far in 2023.
"Our members will benefit from best-in-class products and services that are more accessible than ever before through our network of more than 70 branches across Florida and Georgia," 121 Financial President and CEO David Marovich said in the press release.
No decision has been made about potential branch closings, and all 121 Financial employees will be offered employment opportunities at VyStar, the companies said.
The $13.7 billion-asset VyStar last year
VyStar also previously agreed to one of the largest credit union acquisitions of a community bank. But in 2022, VyStar announced it
The VyStar-121 Financial deal comes during a period marked by a
Economic pressures are mounting on more and more credit unions to merge, explains Peter Duffy, managing director for Piper Sandler.
Back in 2000, the optimal asset size to run a credit union efficiently was about $100 million, he said. Now, as competition intensifies and consumers' expectations for technology and services grow, the threshold has moved well beyond $10 billion, he said.
One of the main drivers is the need to diversify revenue sources. "The aggregate group of credit unions below $10 billion need fee income in order to produce a positive [return on assets]," Duffy said.
Piper Sandler is "in a half dozen discussions, and the smallest credit union of the group is around $1 billion in assets," he said. "Many boards want to understand the research, analysis and anecdotal evidence of the benefits of scale and therefore merger. And when given the opportunity to discuss, many are seeing this as a seminal moment where they can act proactively."
VyStar reported net income of $73.3 million in 2022, a 31% decrease compared with a year earlier, according to call report data from the National Credit Union Administration.
121 Financial produced $4.3 million of net income in 2022, a 16% decrease compared with a year earlier, according to call report data.
