Experts are calling a deal between Advance Bank and MECU of Baltimore unprecedented in Maryland, marking the first time a credit union has acquired a bank within the state. Some commentators predict that similar business sales will become increasingly common as large scale acquisitions are becoming a popular way for financial firms to grow and mitigate the costs of banking regulations.
Representatives for both businesses say the purchase agreement could greatly benefit both parties, expanding the number of client services and reaching more customers. Upon the merger's finalization, MECU plans on rebranding Advance's Baltimore area branches as MECU locations. All of Advance Bank's 20 employees will retain their jobs.
Company officials say they expect to close the agreement by 2014, having recently been granted approval by the Maryland Commissioner of Financial Regulation. While the firms have yet to receive full approval for the merger, company spokespersons explained that getting permission from the Maryland Commissioner of Financial Regulation was the merger's last true obstacle.
Advance Bank is considerably smaller than MECU with assets of $52 million compared to MECU's $1.2 billion in holdings. Likewise, Advance currently operates two branches while MECU has nine branches across Maryland. Officials with both firms were excited about the prospects for the combined company. The financial details of the companies' purchase agreement have not been released to the public or press.
Advance Bank has an existing arrangement with the Office of the Comptroller of the Currency, agreeing to a 3-year plan aimed at refining the way Advance approves loans by teaching the bank how to identify and address potential risks in existing loans. MECU's leadership acknowledged the deal and emphasized that it would not influence the planned merger.
Baltimore Business Journal, "MECU gets Maryland OK to buy Advance Bank" Gary Haber, Oct. 31, 2013