Alaska credit union to buy Washington bank in $231.2M deal

Dive Brief:

Anchorage, Alaska-based Global Federal Credit Union announced Thursday that it has agreed to acquire $1.5 billion-asset First Financial Northwest Bank in a $231.2 million, all-cash transaction.
Following the deal, which is expected to close in the fourth quarter of 2024, Financial Northwest, the bank’s holding company, and First Financial Northwest Bank will wind down and dissolve.
Based on First Financial Northwest’s outstanding shares as of Dec. 31, the company expects its shareholders to get $23.18 to $23.75 per share on liquidation, the statement said.

Dive Insight:

The move will expand Global Federal’s business and commercial services to all its member businesses and expand its branch footprint to western Washington — the place where it began operations 40 years ago.

The Renton, Washington-based bank’s customers will become members of the credit union with full access to its products and services, the statement noted.

“We are enthusiastic about combining two financially sound institutions that share a strong commitment to service and community engagement,” Geoff Lundfelt, president and CEO of Global Federal Credit Union, said in a statement. “First Financial Northwest Bank’s branch network has a technology-forward design, accelerating the transformation to an environment with a structure and atmosphere more suited to conducting business in the future.”

If the deal goes through, it would be the largest bank purchased by a credit union to date, according to American Banker.

Lundfelt said the deal would prove beneficial to the company. It would help to enhance service delivery and growth while adding numerous branches. “The projected future earnings from the acquisition of First Financial Northwest Bank’s franchise justify the pricing of the transaction and are expected to be accretive to Global from a financial perspective,” he noted.

First Financial is a century-old bank established in 1923 as the Renton Savings and Loan Association. Over the years, it has transformed into a full-service community bank with over 150 employees serving customers in the Puget Sound Region and 15 banking offices.

“In today’s competitive environment, we believe this strategic transaction provides numerous benefits for our customers, our communities, and our employees. In addition, this transaction delivers substantial value to our shareholders who have supported us over the years,” Joseph W. Kiley III, CEO of First Financial Northwest Bank, said in a statement.

Michael Bell, chair of the financial institutions practice group at Honigman, told Banking Dive via email that things are “busy” in the credit union-bank merger and acquisition space.

“As you can see 2024 is an active year for M&A transactions. These happen via a choice by buyers and sellers and only occur when both get a ‘win.’ There are no involuntary or hostile takeovers here, just two parties finding value for their stakeholders,” Bell noted.

The Global deal comes close on the heels of another such acquisition, in which Poughkeepsie, New York-based Hudson Valley Credit Union agreed to buy Catskill Hudson Bank and its parent company Hudson Bancorp for $28.6 million.

The Hudson Valley announcement was a credit union's first whole-bank acquisition deal this year. Earlier this month, Daleville, Alabama-based All In Credit Union agreed to buy five branches of 22nd State Bank in the state.

Though M&A activities in the bank-credit union industry have seen an uptick in recent years, 2023 saw a decline, with 11 such deals announced, compared with 16 in 2022.

Bank-credit union deals have long irked trade groups like the Independent Community Bankers of America, who have argued that credit unions’ tax-exemption status allows them to offer higher buying prices than banks and help them to grow more freely.

American Bankers Association Vice President Robert Flock claims the credit union industry has undergone a “metamorphosis” since the congressional hearing on the credit union tax exemption in 2005.

“Credit unions have a congressionally mandated mission to prioritize service to lower and middle income communities; however, they increasingly prioritize growth by advocating for changes to membership rules, raising money from investors, and even buying banks,” Flock said in a statement in October. “American consumers agree that Congress should conduct oversight of the $2 trillion credit union industry to ensure that its mission — the justification for its tax exemption — aligns with its activities.”