DUNEDIN, Fla.–For what is believed to be the first time in history, a credit union is looking to merge with a bank, rather than do a purchase-and-assumption.
The $1.1-billion Achieva CU has signed an agreement to acquire the $165-million Calusa Bank based in Punta Gorda, Fla. The transaction is expected to close during the fourth quarter of 2015, and must be approved by bank shareholders and state and federal regulators.
Since CUs began to buy banks around 2011, with Michigan's $1.6-billion United FCU acquiring $81-million Griffith Savings Bank in Indiana, five deals have followed.
But if the Achieva buy goes through it will be the first time a credit union has merged in a bank, according to Michael Bell, attorney and counselor with Royal-Oak, Mich.-based Howard & Howard, who is representing Achieva.
Bell said that Florida state regulations permit the deal between the state-chartered Achieva and state-chartered Calusa.
“The Florida Credit Union Act gives state-chartered CUs the right to do a purchase-and-assumption of a bank, as well as a merger,” said Bell, noting that the right to merge is not clear in the Federal CU Act and it’s a “mixed bag” with other states.
“This may simply seem like a legal distinction—a merger and not a purchase and assumption—and it certainly is,” continued Bell. “But there are benefits to doing a merger. CU purchase and assumptions have gotten much easier to do and move faster the more we do them, refine the process, and regulators become more comfortable with the deals,” added Bell, who has been an integral part of the five deals in which CUs have purchased banks.
“But merging in a bank 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 will purchase all of the issued and outstanding shares of privately held Calusa Bank. A price for the shares was not disclosed.
“As we expand our presence on the Gulf Coast, we are excited to be able to offer Calusa Bank customers the tremendous benefits that come from being members of Achieva Credit Union,” said Achieva CEO Gary Regoli. “We are also looking forward to becoming an integral part of these great Florida communities. Being strong partners in all the communities where we have members is a big part of who we are as an institution.”
Unlike many previous CU/bank buys, Calusa is not losing money, 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 bank also believes the merger is a good fit.
“It was immediately evident that Achieva’s service culture and attention to the customer was in lockstep with ours, giving us assurance that our customers will continue to receive the unparalleled level of service they have come to expect,” said Lew Albert, Calusa chairman and CEO.
Bell said there are many small banks in Florida that should be ripe for merger partners, whether that be a bank or credit union.
“Florida is a hotbed for these kids of deals—there are a lot of bank targets, a lot of Calusas out there,” said Bell. “Now we have another way in this state to get these agreements done.”
The other CU/bank deals to date: In addition United FCU, the $318-million Alabama-based Five Star CU purchased the $23-million Flint River National Bank and expects to close a deal with $47-million Farmers State Bank; 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.