Banner year for CU-bank combinations extends with deal in Maryland

Hanscom Federal Credit Union in Littleton, Massachusetts, said late Friday it agreed to acquire Chestertown, Maryland-based Peoples Bancorp.

The $1.8 billion-asset Hanscom became the 21st credit union of 2024 to announce a bank acquisition.

Should the cash deal close as planned in the second half of 2025, Hanscom would enter Maryland, expand its business banking operations and acquire Peoples’ insurance agency subsidiary, Fleetwood Insurance Group.

Hanscom specializes in serving members of the military.

“With this enhanced geographic reach, and proximity to Washington D.C., we expect to further support our founding mission by bettering our ability to serve all individuals that serve our nation,” Peter Rice, president and CEO of Hanscom Federal, said in a press release.

“We are proud to honor Peoples Bank’s legacy and look forward to welcoming its talented team and nearly 20,000 customers to Hanscom,” Rice added. “Together, we will bring expanded financial opportunities to a region rich with potential.”

With the acquisition, Hanscom would have total assets of $2.1 billion, serve more than 115,000 members, and operate 23 branches across Massachusetts, Maryland and Virginia.

Financial terms of the deal were not disclosed.

“This combination ensures our customers and business partners gain access to a broader range of resources and innovative solutions,” Corey Duncan, chairman of Peoples, said in the release. “We are confident this partnership with Hanscom will bring lasting value to the communities we serve across Kent, Queen Anne’s and Talbot counties and create new opportunities for growth for our employees.”

The announcement Friday extended a record run of deals this year involving a credit union buying a bank. The previous all-time high was 16 set in 2022. There were 11 such deals announced last year.

Mike Bell, an attorney with the law firm Honigman in Michigan who advised Hanscom, projected credit unions would continue buying banks at a record pace in 2025.

Bell noted President-elect Donald Trump’s promises to scale back regulations during his second term in the White House and the Federal Reserve’s decisions to cut interest rates three times in the second half of this year.

Lower rates bring down borrowing costs and, by extension, decrease loan-loss risks for banks. This can make it easier for credit union buyers to assess bank targets’ health and finalize deal terms. Fewer regulatory hurdles could also simplify the deal process and attract more buyers.

Credit unions have been making these acquisitions to diversify into business lending and expand their footprints. More small banks have sold because they have struggled with high technology costs, compliance expenses, executive succession issues and overall challenges tied to competing with larger lenders.

Credit union-bank deals, however, are controversial.

The Independent Community Bankers of America and other banking industry advocacy groups argue that credit unions are exempt from federal taxes because they are supposed to focus on underserved groups or markets. When they buy banks, they move beyond their missions and simultaneously remove tax revenue and competition from communities, the ICBA contends.

“Congress should investigate the outdated policies driving the current acquisition trend and whether taxpayers should continue subsidizing consolidation among local institutions that undoubtedly pay taxes,” ICBA President and CEO Rebeca Romero Rainey said in an email.