On the podcast: strategic expansion through bank sales
In recent years, a quiet but powerful shift has been taking place in the financial services industry: banks are choosing to sell to credit unions. While the banking industry has tried to frame this trend as controversial, the reality is far more hopeful for the communities involved.
In this month's episode of A CU Seat at the Table, Bob Steensma, President and CEO of Five Star Credit Union in Dothan, Alabama, offers a firsthand look at how these acquisitions are not only reshaping the credit union landscape but also breathing new life into underserved towns.
How it all started
Five Star's journey into bank acquisitions began in 2014 with a simple phone call. A small rural bank in Georgia, unable to find a buyer within the banking sector, reached out directly to Steensma. That call led to Five Star becoming only the fifth credit union in the country at that time to acquire a bank.
What followed was a ripple effect. After the first acquisition, investment bankers began reaching out with more opportunities—specifically banks in small towns that were overlooked by traditional buyers. By 2024, Five Star had acquired four banks, each in communities where credit unions had no prior presence.
Challenges in transition
Transitioning a bank into a credit union isn't without its hurdles. In the early days, the process was so new that regulators had to write procedures on the fly. System conversions-everything from core banking platforms to phone systems—posed logistical problems. One particularly memorable challenge involved issuing 6,000 new debit cards and realizing too late that the authentication process was flawed.
But these challenges became opportunities. Lessons learned during the acquisitions led to better systems not just for new members, but for existing ones as well. As Steensma put it, "We learn as we go through these acquisitions and then we bring the best practices back to our members."
Creating competition and raising the bar
One of the most powerful impacts of these acquisitions is the introduction of competition. In towns where Five Star entered, fees dropped not just for new credit union members, but also at competing banks.
For example, eliminating a six-dollar monthly checking fee saved one small community $18,000 a year. That money stays local, supporting local stores, youth sports, and meeting community needs.
Meeting members where they are
Perhaps the most compelling part of Five Star's story is its commitment to serving small, often overlooked communities. In every acquisition, Five Star kept all branch locations open and focused on growing services, not scaling back.
These aren't just business decisions; they're community investments. "We come with a little more firepower," Steensma said, "to serve the community with the assets and the locations that you have."
And the impact is tangible. In one case, a newly acquired branch became one of Five Star's fastest-growing locations for nearly a decade.
Looking ahead: a model for the future
As community banks continue to consolidate or disappear, credit unions like Five Star are stepping in not just to grow, but to serve. These acquisitions are about more than balance sheets; they're about ensuring that every town, no matter how small, has access to fair, people-first financial services.
In Steensma's words, "It's a free market. Banks aren't shackled to sell to credit unions. But when they do, it's because they know we'll keep serving the community."
Read why Colchester State Bank decided to sell to a credit union to preserve the community's financial health.