Arizona credit union buying bank to expand in Phoenix

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A pair of Arizona lenders agreed to the ninth U.S. bank-credit union merger this year.

The $1.2 billion-asset Pima Federal Credit Union in Tucson said late Thursday it would buy Phoenix-based RBAZ Bancorp's $280 million-asset Republic Bank of Arizona in a deal expected to close in the second half of this year. RBAZ estimated its shareholders would receive about $22 per share, though that calculation was subject to various adjustments, and the bank did not provide a total price tag. It has nearly 1.8 million shares of stock outstanding.  

The acquisition would add Republic Bank's three branches in Phoenix and surrounding markets to Pima's existing branch network in the Tucson metropolitan area. At the end of the first quarter, Pima had $849 million of loans and $1 billion of total shares and deposits. Republic Bank had $200 million of loans and $250 million of deposits.

Pima would have 12 branches and more than $1.5 billion of assets after the deal is completed. Besides geographic diversity, adding Republic Bank would allow it to expand its commercial and industrial lending.  

The "strategic move" into Arizona's largest market "aligns with our growth objectives," Eric Renaud, president and CEO of Pima, said in a press release announcing the deal.

Brian Ruisinger, president and CEO of RBAZ and Republic Bank, plans to join Pima and lead its Phoenix team.

The combination would create greater scale and "enables us to offer our customers a wider array of products and services," Ruisinger said in the release.

Credit union agreements to buy banks are on a record pace in 2024. The all-time high was 16 such deals in 2022. Eleven credit union-bank tie-ups were announced last year.

The $1.5 billion-asset First Financial Northwest Bank, which agreed in January to sell itself to Global Federal Credit Union, is the largest to announce a sale to a credit union this year. The $11.8 billion-asset Global, which was formerly known as Alaska USA Federal Credit Union, said it would pay $231.2 million in cash for the Renton, Washington-based bank.

Earlier this month, Lake Jackson-based Texas Dow Employees Credit Union said it would acquire the $1.2 billion-asset Sabine State Bank and Trust in Many, Louisiana.  

Trade associations representing banks have long cautioned that allowing credit unions to buy banks creates an unfair advantage since they do not pay taxes.

"With tax-exempt credit unions accounting for roughly a quarter of this year's bank acquisitions — each of which expands the federal tax exemption for more than $2 trillion in credit union assets and displaces a trusted provider of credit in local communities — Congress must act on this dangerous trend," said Rebeca Romero Rainey, CEO of the Independent Community Bankers of America trade group, in an emailed statement.

Community banks are selling to both larger banks and to credit unions to gain the size needed to manage high regulatory and digital-banking expenses.

Overall, in the first quarter of this year, 26 banks announced plans to sell. Those deals had an aggregate value of $1.1 billion, according to S&P Global Market intelligence. That was an increase from the year-earlier quarter, when there were 20 bank deals worth $433 million.

Last year was relatively slow on the M&A front, with banks distracted by high interest rates, elevated deposit costs and margin pressure.

U.S. banks announced 100 acquisitions in 2023 with a total deal value of $4.2 billion, according to S&P Global data. A year earlier, banks announced 157 deals with a total deal value of $9 billion.