Frontwave Credit Union in suburban San Diego struck a deal to acquire neighboring Community Valley Bank as part of a strategic effort to expand its footprint and business lines.
It marked the first deal of 2025 involving a credit union buying a bank. Such deals
The amount of bank assets sold to credit unions doubled in 2024 compared to 2022, to $10.9 billion from $5.2 billion, according to S&P Global Market Intelligence.
The $1.4 billion-asset Frontwave said in a press release it would gain about $315 million of assets, $258 million of loans and $276 million of deposits with the Community Valley acquisition. Community Valley, founded in 2007, operates five branches in Southern California — one each in El Centro, Brawley, Indio, Julian and Borrego Springs.
Frontwave would acquire almost all of the assets and assume substantially all of the liabilities of Community Valley for cash consideration of $56.4 million. The deal is expected to close in the second half of this year.
Frontwave President and CEO Bill Birnie said the combination would provide a full suite of consumer banking products for Community Valley customers and enhanced business banking services for Frontwave members, in addition to greater overall scale that could support investments in technology.
"We believe that quality growth and diversification is essential to continued success in our industry, and we intend to achieve it both organically and through mergers or acquisitions," Birnie said in the release.
Frontwave has 13 branches across San Diego, Riverside and San Bernardino counties. It has more than 125,000 members.
Credit union-bank deals are increasingly frequent yet controversial. The Independent Community Bankers of America and other bank
Critics argue that credit unions are exempt from federal taxes because they are supposed to focus on underserved niches. When they buy banks, credit unions effectively become banks while retaining nonprofit status. This deprives communities of tax revenue and creates an unfair playing field for the traditional banks with which acquisitive credit unions compete, opponents say.
"Congress should investigate the outdated policies driving the current acquisition trend and whether taxpayers should continue subsidizing consolidation among local institutions that undoubtedly pay taxes," ICBA President and CEO Rebeca Romero Rainey said in a statement to American Banker.
Yet small bank sellers often find such deals attractive because credit unions pay cash, making transactions relatively simple. Credit unions also say that, when they buy banks, they help to ensure communities
Mike Bell, an attorney with the law firm Honigman in Michigan, advised Frontwave on its transaction this week and on a
Overall,
