After waiting nearly 15 months for regulators to act on their merger agreement, VyStar Credit Union’s deal to buy a Georgia commercial bank is off.
Jacksonville-based VyStar and Jonesboro, Georgia-based Heritage Southeast Bancorporation Inc. announced June 15 they reached a mutual agreement to terminate the deal.
The two companies said in a joint news release they lacked “a clear path forward to obtaining the regulatory approvals for closing.”
VyStar announced the deal to buy Heritage in March 2021 but the deal faced opposition from bankers, who said credit unions have unfair advantages in making deals to buy commercial banks and pressed regulators to reject the merger.
Bankers argue credit unions’ nonprofit status gives them tax advantages and that credit unions are exempt from the Community Reinvestment Act, the federal law that requires banks to serve the lending needs of their local communities.
VyStar’s already completed the purchase of a commercial bank, Perry-based Citizens State Bank, in August 2019.
The two companies needed approvals from several regulatory agencies to complete the deal: the Federal Deposit Insurance Corp., the National Credit Union Administration, the Georgia Department of Banking and Finance and the Florida Office of Financial Regulation.
“After much contemplation and discussion, the Board of Directors of both institutions concluded the best path forward would be to discontinue the proposed transaction between our companies as all required regulatory approvals would not be obtained in a timely manner,” Heritage CEO Leonard Moreland said in the news release.
“Following a thorough evaluation of the transaction between VyStar and HSBI, we have mutually agreed that moving forward separately is the prudent decision. VyStar will continue to expand our services in Georgia,” VyStar CEO Brian Wolfburg said in the release.
VyStar did not announce terms of the deal but publicly traded Heritage indicated in news releases and financial documents that the value of the transaction was close to $270 million.
The termination of the deal was not related to VyStar’s issues with its mobile banking system, which went down May 13 when the credit union started the process of switching vendors for its digital products. What started out as a 48-hour outage for a planned upgrade continued.
The website has made progress. VyStar posts on vystarcu.org that in addition to making external and internal transfers, customers can access their accounts and balances, pay bills, view transactions and statements and more via their computer, tablet or mobile browser at online.vystarcu.org.