Why Credit Unions Are Losing More Bank Bids in 2026 — and Why That’s the Best News You’ll Hear All Year

If you judged the state of credit union acquisitions by the 2026 announcement count, you’d think the market had gone quiet. Only four or five credit union purchases of banks have been announced this year. But the quiet is an illusion — and understanding why matters for any credit union building its growth strategy.

On a recent episode of With Flying Colors, I talked with Michael Bell and Justin Gingerich of Honigman, the firm that has closed more credit union-bank acquisitions than any other. Bell’s explanation for the low count is not what most people expect: there has been plenty of activity, plenty of opportunity, and plenty of strong credit union bids. The reason so few have closed is that banks are bidding more aggressively than ever — and credit unions are losing.

Losing the bid, winning the argument

Bell can point to nearly ten instances in the last few months where a proven credit union buyer put in a great bid and finished second. His read on that is worth every CEO’s attention: it is the strongest rebuttal available to the banking lobby’s claim that credit unions overpay and compete unfairly. If credit unions were routinely overpaying, they wouldn’t be losing more often than they win. The free market is setting the price, and bank sellers are the ones benefiting from a deeper pool of bidders. Bell expects more credit union wins to be announced before the year is out.

When policy backfires

The competitive story shows up clearly at the state level. Washington State enacted a tax intended to raise revenue from credit union purchases of banks. Bell says it has raised zero dollars — and predicts it never collects a cent, because no credit union will structure a deal to trigger it. What it has done is remove credit unions from the bidding pool, which has lowered the value of Washington banks. Tennessee shows the same pattern. The irony is hard to miss: a law aimed at credit unions ends up hurting the community banks it was meant to protect. Meanwhile, Bell’s Washington clients are adapting — merging with other credit unions and looking at acquisitions beyond the state and beyond banks.

A new lever: buying mature CUSOs

One development Bell and Gingerich flagged as genuinely new: large credit unions acquiring mature CUSOs and bringing them in-house. Many CUSOs founded by groups of credit unions a few years ago are reaching maturity, and their founders — sometimes facing aging management — are deciding what comes next. Gingerich frames the buyer’s side as buy versus build. A sophisticated credit union could build its own insurance or title operation, but that path is slower, costlier, and more demanding from a regulatory standpoint. Acquiring an established CUSO, where the approvals and learning curve are already behind it, can be far more efficient — and, Bell noted, acquiring one you didn’t form yourself helps with corporate-veil separation.

Mergers of equals: from black swan to normal

The biggest shift is in credit union to credit union mergers of equals. For most of Bell’s 23-year career, these barely happened. Now he’s in active MOE conversations weekly — at one league CEO conference of roughly 40 CEOs, he was mid-discussion with about 30 of them. The early conversations are fragile: of ten “we had coffee” calls, maybe two or three advance. But once a letter of intent is signed, roughly eight of ten close. Gingerich attributes the rise to succession planning, the high fixed costs of technology and compliance, and real economies of scale — with expanded member services, not growth for its own sake, as the goal.

The regulatory reality

Gingerich pointed to the Wings/Ent merger — an institution north of $10 billion — which won NCUA approval in four to five months, a timeline he called unheard of. He credited Honigman regulatory partner Brandy Bruyere and the internal teams, and described the work as baking a cake when the recipe is only half written. From my years at NCUA, I’d add this: when a merger meets the regulatory requirements and the member disclosures are sound, NCUA honors the democratic vote. The worry about “what the regulator will think” is usually overblown. One practical caveat: NCUA is down roughly 30% of its staff after retirements, so as large-deal volume grows, deal teams are effectively re-educating the agency — which makes clean, thorough applications more valuable than ever.

The takeaway

As Gingerich put it, strategic non-organic growth will keep driving success for institutions looking to grow. It isn’t a playbook for everyone. But as boards build 2027 strategy around non-interest income and new member services, banks, branches, CUSOs, and mergers all deserve a place on the agenda. Bell’s bottom line is the one I’d leave you with: this doesn’t mean you should do a deal — but if you think it isn’t happening, your eyes are closed. Sticking your head in the sand is not a long-term strategy.