Linkbancorp Sells New Jersey Branches to American Heritage FCU

Linkbancorp agrees to sell three New Jersey branches and $228 million in assets to American Heritage Federal Credit Union. The deal, expected to close in 2024, marks the eighth credit union-bank transaction this year.

Bijay Laxmi
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Linkbancorp Sells New Jersey Branches to American Heritage FCU

Linkbancorp Sells New Jersey Branches to American Heritage FCU

Linkbancorp, a $2.8 billion-asset bank based in Camp Hill, Pennsylvania, has agreed to sell its three branches in New Jersey and approximately $105 million of deposits and $123 million of loans to American Heritage Federal Credit Union, a $4.9 billion-asset credit union based in Philadelphia.

The transaction is expected to close in the second half of 2024. Financial terms were not disclosed. The branches were previously part of a division of The Bank of Delmarva, which Linkbancorp acquired when it merged with Partners Bancorp in Salisbury, Maryland, in November.

Why this matters: This deal is part of a growing trend ofbanks selling to credit unions, which has sparked controversy over credit unions' tax-exempt status and their role in the banking industry. As more banks sell to credit unions, it could lead to a shift in the financial landscape and have implications for consumers and the economy.

According to Linkbancorp CEO Andrew Samuel, "As we continue to execute on initiatives to achieve the operational efficiencies and revenue growth of the Partners combination, we believe this divestiture will enable us to reallocate capital toward our core Pennsylvania markets and accelerate growth in the robust Northern Virginia and Maryland markets."

This deal follows similar transactions in recent months, where banks are selling to credit unions to achieve geographic and business line diversity through M&A. The trend is controversial, with bank advocacy groups arguing that credit unions are exempt from federal taxes and should focus on underserved niches, rather than buying banks and retaining nonprofit status.

The deal marks the eighth transaction in 2024 in which a whole bank announced it would sell to a credit union, putting this year on pace to eclipse the record 16 credit union-bank deals announced in 2022. Small banks are increasingly selling to both larger banks and credit unions due to the high regulatory costs and digital banking expenses associated with managing their operations.

Bruce K. Foulke, American Heritage's President & CEO, stated,"The acquisition from LINKBANK underscores our commitment to serving our members with enhanced accessibility and expanded financial offerings. We are excited to expand our products and service offerings further into South Jersey and provide our new members and business partners with the same best-in-class service standards we've offered for over 75 years."

The three branch locations being acquired are in Southern New Jersey, more than doubling American Heritage Federal Credit Union's brick-and-mortar footprint in the state and adding to its existing 34 locations across New Jersey and Pennsylvania. The completion of the acquisition is contingent on customary closing conditions, including federal regulatory approvals.