Michigan State University credit union extends buying spree

Semma Burba

Michigan State University Federal Credit Union is once again on the deal path.  

Coming off a pair of bank acquisition announcements in September that would bolster its presence in Chicago, the $7.7 billion-asset credit union in East Lansing struck another deal this week closer to home. It plans to absorb the $32 million-asset Gabriels Community Credit Union in neighboring Lansing in a deal expected to close by the end of this year.

The combination, which needs regulatory approval from the Michigan Department of Insurance and Financial Services and the National Credit Union Administration, would expand MSUFCU's footprint in its home market as well as Michigan's Jackson County. MSUFCU is the second largest credit union in Michigan behind the $12.9 billion-asset Lake Michigan Credit Union in Caledonia.

"We are committed to helping members achieve financial security, and this merger will empower us to provide even more comprehensive financial solutions," April Clobes, president and CEO of MSUFCU, said in a press release Tuesday.

Financial terms were not disclosed.

The deal follows two MSUFCU acquisition announcements in September. It said then it had agreed to buy the $145 million-asset Algonquin State Bank and the $322 million-asset McHenry Savings Bank in the Chicago metropolitan area.

The cash transactions are projected to be completed in the first quarter.

The bank deals would continue MSUFCU's strategy to expand in the Chicago area, while also diversifying its assets and expanding its talent pool. Earlier this year, the company said it would open five branches in Chicago in 2024. More than 10,000 Michigan State University students and alumni now reside in Illinois' largest market.

Following the three acquisitions, MSUFCU would have approximately $9 billion of assets by the end of 2024 as well as 10 branches in Illinois and 25 in Michigan, the company said. It currently has more than 350,000 members.

MSUFCU has long offered digital banking services beyond Michigan, including mortgages. But Clobes said branches bolster membership and account balances faster than digital services alone. 

"Our members and eligible members are able to do all of their business with the credit union online, yet when we move into a market, the members appreciate having a branch location for complex transactions and financial education," she said in an interview earlier this year.

MSUFCU's move to acquire banks is part of an industry trend. Small banks have increasingly chosen to sell themselves to credit unions, allowing bank ownership to cash out and credit union buyers to acquire banking services and products.

Credit unions have announced 11 such deals in 2023, according to S&P Global Market Intelligence data. Excluding terminated transactions, there were a record-setting 14 such deals last year.