DUNEDIN, Fla.–On Nov. 30 Achieva CU completed what is believed to be a first in credit union history—it acquired a bank through a merger rather than a purchase and assumption.
The $1.1-billion Achieva acquired the $165-million Calusa Bank based in Punta Gorda, Fla. NCUA, the final hurdle, approved the deal in late November after the FDIC and state regulators signed off earlier.
Michael Bell, attorney and counselor with Royal-Oak, Mich.-based Howard & Howard, who is representing Achieva, said that the Florida statutes allow CUs to merge in a bank.
“This deal has focused attention from Florida state-chartered credit unions on this additional avenue to acquire a bank,” said Bell. “I have talked with a number of Florida CUs about this option and I expect next year we will see at least two more of these kinds of deals.”
Bell said that depending on the situations at both the credit union and the bank, a credit union merging in a bank offers advantages to the seller and acquirer.
“For credit unions, the biggest thing about being able to do a merger is that it puts CUs on a level playing field with banks,” said Bell. “Typically bank-to-bank combinations are some form of a merger. Before we showed this type of deal can be done, the credit union was at a disadvantage when competing to acquire a target, since they could only do a purchase and assumption.”
Depending on the financial condition of the bank being acquired, a merger can present tax advantages for the bank, noted Bell.
“If the bank is profitable, there can be tax advantages to the seller,” he said. “There are also some accounting advantages for the seller and acquirer with a merger, as well,” said Bell.
Merging in a bank, too, can be an easier and simpler pathway, said Bell. “With a purchase and assumption, you buy the bank piece by piece—every branch, every asset . . . With a merger you just buy one thing—the institution and roll it right in.”
Under the terms of the merger agreement, Achieva exchanged cash for all of the issued and outstanding shares of privately held Calusa Bank. A price for the shares was not disclosed.
Bell said the first-ever CU bank merger required a lot of communication between regulators and all parties.
“Since it as the first time it happened, everyone had to check a lot of boxes, so there was an intense amount of communication that was needed,” said Bell. “The process will be simpler in the future.”
Unlike many previous CU/bank buys, Calusa Bank has been operating in the black, although income has declined. In 2013 the bank reported earning $2.6 million in net income, a figure that slid to $416,000 in 2014 when assets also rose by $10,000, according to the Dec. 31, 2014, FDIC report.
The Achieva deal is the eighth time a CU has acquired a bank. In 2011, Michigan's $1.6-billion United FCU pioneered CU purchases of banks by acquiring $81-million Griffith Savings Bank in Indiana. The $345-million Dothan, Ala.-based Five Star CU is the first CU to buy two banks—the $47-million Farmers State Bank in Lumpkin, Ga., and $23-million Flint River National Bank in Camilla, Ga. The other CU/bank deals to date: the $607-million Avadian Credit Union in Birmingham, Ala., signed an agreement in August to purchase the $127-million American Bank of Huntsville, located in Huntsville, Ala.; the $1.2-billion Municipal Employees CU purchased $61-million Baltimore-based Advance Bank; Wisconsin's $2.1-billion Landmark CU acquired $190-million Hartford Savings Bank; and Massachusetts' $429-million GFA FCU bought New Hampshire's $83-million Monadnock Savings Bank.
Bell has been part of six CU bank buys as well as the Achieva merger.