- Jacksonville, Fla.-based VyStar Credit Union and Georgia community bank Heritage Southeast have agreed to end their merger plans, the two financial institutions announced Wednesday.
- The termination of the $195.7 million comes after the two companies agreed in April to extend the deadline for closing the deal from March 31 to June 30, the third such delay since the merger was announced in March 2021.
- The termination was approved by the boards of directors of both companies “after careful consideration of the proposed transaction and the lack of a clear path to obtain the necessary regulatory approvals for closing,” VyStar and Heritage said.
Overview of the dive:
As early as April of this year, Heritage CEO Leonard Moreland said the deal with VyStar “remains a priority.”
On Wednesday, however, Moreland said the two companies decided to end the combination after it became clear that all required regulatory approvals would not be obtained in a timely manner.
“The termination of the purchase agreement allows HSBI to benefit from a better post-COVID 19 economic climate, a stronger capital position and to focus on the steady growth and value creation we have achieved in over the years,” Moreland said in a statement. “Additional strategic initiatives that were delayed and designed to improve efficiency can now be pursued with strategic partnerships that will enhance shareholder value.”
In a statement on Wednesday, VyStar President and CEO Brian Wolfburg said moving forward separately “is a prudent decision.”
“VyStar will continue to expand its services in Georgia,” Wolfburg said. “We would like to express our sincere gratitude to the VyStar and HSBI teams who worked diligently through an extensive process.”
Both parties will bear their own costs and expenses related to the terminated transaction, and neither party will pay any fees as a result of the termination, the companies said.
The termination of the deal will be welcome news for commercial banking groups, which in recent years have lambasted the growing number of credit union acquisitions of community banks.
Community banking advocates argue that the tax-exempt status of nonprofit institutions gives credit unions greater buying power and an unfair advantage over community banks.
“VyStar has either closed, moved, sold or consolidated half of the acquired branches” in a bank acquisition the credit union undertook in 2019, ICBA and the Community Bankers Association of Georgia written in a joint letter at the Federal Deposit Insurance Corp. last year, urging the regulator to reject the proposed acquisition.
The deal would have made VyStar the 13th largest credit union in the United States, with total assets of $12.5 billion, 88 branches and more than 850,000 customers, VyStar said last year.
The end of VyStar’s planned acquisition of Heritage comes as the credit union’s mobile and online banking platforms have experienced a series of disruptions and outages over the past month, according to News4Jax.