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VyStar shrugs off community bank concerns, stays focused on growth | Credit Union J…

VyStar Credit Union’s latest bank purchase deal sparked renewed criticism from bank trade groups, but CEO Brian Wolfburg isn’t planning to let up.

The $10 billion-asset credit union recently announced an agreement to buy the $1.6 billion-asset Heritage Southeast Bank in Jonesboro, Ga. The acquisition would give the Jacksonville, Fla.-based VyStar a foothold in metro Atlanta.

The deal is notable not just for the added heft it will give VyStar but because the bank being acquired is twice the size of the seller in the previous record for a credit union deal to acquire a bank. In late 2019 Suncoast Credit Union in Tampa, Fla., agreed to buy the $747 million-asset Apollo Bank in Miami, but that deal was called off because of the COVID-19 outbreak.

“If we don’t continue to grow, if we don’t continue to gain scale … we are not going to have the resources necessary to provide the financial services that our members demand, and we are not going to be able to remain relevant,” said Wolfburg.

Heritage Southeast would be VyStar’s second bank acquisition in two years, following a 2019 agreement to buy Citizens State Bank in Perry, Fla. While the credit union has grown organically by adding new branches, M&A — including community bank purchases — remains part of the growth plan, said Wolfburg. But he was adamant that the $10 billion-asset institution hasn’t abandoned the cooperative business model or philosophy.

“We have not lost our way on being a credit union,” he said. “We are able to do some things — especially in small and underserved markets — that others who are looking specifically at ROI can’t.”

That includes a push to help bring underbanked consumers into the fold, he added. “We are moving into a lot of communities where we are going to be the only or one of two financial services institutions. And the fact is that our makeup, our model and our organizational structure with our members being our owners enables us to stay in those markets and make sure that people have access to financial services. That is what we’re trying to accomplish.”

Those good intentions haven’t stopped criticism from the Independent Community Bankers of America, which has renewed its calls for lawmakers to investigate credit union purchases of banks. However, VyStar pushed back against criticisms, suggesting in an April 8 statement that the ICBA “has obfuscated this partnership’s benefits for employees, customers, members and communities. While doing so, ICBA has continued its attempt to deceive the public about the purpose of VyStar and the credit union industry.”

That’s not likely to stop the criticism, though, in part because the deal is so large. VyStar will pay $195.7 million in cash for Heritage Southeast, according to details released by Hovde Group, which advised the bank. The price valued Heritage Southeast at 184% of its tangible book value.

Wolfburg said the pricing was in line with what is typical for bank…

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