ELGIN, Ill.–Corporate America Family Credit Union has purchased Ben Franklin Financial, the holding company for Ben Franklin Bank of Illinois, in an all-cash transaction. With branches in Arlington Heights, Ill. and Rolling Meadows, Ill., Ben Franklin Bank has $93.2 million in assets. Corporate America said the acquisition will boost its assets to approximately $700 million and its branch network to 22.
According to the credit union, the transaction will be the first time that a federal mutual holding company that converted to a stock holding company following the implementation of the Dodd-Frank Act will have its assets and liabilities sold to a credit union.
“As a result, we cannot predict at this time whether the liquidation accounts maintained by Ben Franklin Financial and Ben Franklin Bank will be required to be distributed to certain depositors of Ben Franklin Bank, the amount of any such distribution, and the ultimate impact of any required payments on the amount of cash to be received by Ben Franklin Financial stockholders in the transaction,” the credit union said in a statement.
Terms of the Deal
Under the terms of the purchase and assumption agreement, CAFCU said Ben Franklin Financial stockholders are currently estimated to receive between $10.33 and $10.70 in cash consideration for each share of Ben Franklin Financial common stock (the “per share consideration”). The credit union noted the per share consideration is subject to significant variation based on various items, such as, Ben Franklin Bank’s ability to meet a minimum equity target at closing; the regulatory treatment of and costs associated with the liquidation accounts maintained by Ben Franklin Financial and Ben Franklin Bank; the amount of cash held by Ben Franklin Financial at closing; costs related to terminating the existence of Ben Franklin Bank and Ben Franklin Financial and distributing the remaining assets to stockholders; and future operating results.
Other factors that may cause a reduction in the per share consideration include, among others, final costs associated with terminating specific employee benefit plans and any Ben Franklin Bank environmental problems with remediation costs over a threshold amount, Corporate America said.
Ben Franklin Bank had been losing money—dropping $215,000 in 2018 and $82,00 through the first quarter of 2019.
The transaction has been unanimously approved by the board of directors of each party and is expected to close in early 2020, subject to customary closing conditions, the approval of Ben Franklin Financial stockholders, regulatory approvals, and if required, approval of the depositors of Ben Franklin Bank. The distribution of cash to Ben Franklin Financial stockholders is expected to occur within several months after completion of the sale of assets to CAFCU, the organizations said.
Both banking locations of Ben Franklin Bank of Illinois will continue to operate as branches of CAFCU after the transaction is finalized. Ben Franklin Bank’s customers will become members of CAFCU, which has approximately 67,000 members. Ben Franklin Bank was established in 1893 as a building and loan association.
Making a ‘Meaningful Difference’
“Corporate America Family Credit Union (CAFCU) provides members with the tools, resources, and expertise to empower financial success,” said Peter Paulson, president and CEO of CAFCU. “Our mission is to make a meaningful difference in the financial lives of our members. We are looking forward to the acquisition of Ben Franklin Bank and feel this will be an excellent opportunity to provide even more individuals with the products and services CAFCU offers in furthering financial goals and dreams.”
AddedC. Steven Sjogren, president and CEO of Ben Franklin Financial stated “We have spent a long time seeking to maximize stockholder value and believe that we have negotiated an outstanding transaction for our stockholders. We are enthusiastic about our consolidation with Corporate America Family Credit Union as it significantly expands opportunities for our customers, our employees, and our community. Corporate America Family Credit Union has a history of focusing on the financial success of its members, and this collaboration ensures that customer-focused banking will remain in our community.”
Ben Franklin Bank currently operates two branches located in the Chicago suburbs. Established in 1893 as a building and loan association, the bank now offers a full range of financial services that focuses on the needs of the
"If you look back historically, credit unions have purchased virtually every type and kind of bank. The transaction offers a slightly new wrinkle with this type of converted thrift. This is an exciting transaction for the buyer, seller and both industries," said Michael Bell, attorney and counselor with Royal Oak, Mich.-based Howard & Howard, and an architect of the first-ever CU/bank acquisition in 2011. Bell, who is representing CAFCU, has represented credit unions in more than 95% of these deals.
Ben Franklin Financial is being represented in the transaction by Janney Montgomery and Scott LLC, Chicago, Illinois, as well as Luse Gorman, PC, Washington, D.C.