Dive Brief:
- Grand Blanc, Michigan-based Dort Financial Credit Union has agreed to acquire West Palm Beach, Florida-based Flagler Bank, the companies announced Monday.
- The purchase price for Flagler has yet to be disclosed, but Dort said it expects the deal to be complete by the second or third quarter of 2023.
- The tie-up marks the 13th proposed acquisition of a bank this year by a credit union. The sector saw the same number of credit union-bank acquisitions last year.
Dive Insight:
By acquiring Flagler’s four branches and $489 million in assets, Dort will push its own asset total (now hovering around $1.4 billion) to the brink of $2 billion.
The deal is hardly unique, though, in linking institutions in Michigan and Florida. Dearborn, Michigan-based DFCU Financial said in May it would acquire Tampa, Florida-based First Citrus Bank, in a deal that was set to close this quarter. Additionally, Grand Rapids, Michigan-based Lake Michigan Credit Union bought Tampa-based Pilot Bank in an estimated $100 million deal announced in June 2021.
“This is a big step in Dort Financial’s strategy, allowing us to better serve our members who spend winters in Florida,” Dort CEO Brian Waldron said in a statement. “This growth allows us to live up to our mission by making our diverse suite of financial services and innovative technology as accessible as possible to residents and businesses in a new region in Florida.”
Once the deal is complete, Flagler will operate as “Flagler Credit Union, a division of Dort Financial Credit Union,” Waldron said.
Edward Sterling, Flagler’s CEO, will be staying on at Dort in an executive role, the credit union said.
“This is a great opportunity to provide our existing customers with expanded services and our employees with even better benefits as members of the Dort team,” Sterling said.
Dort pledged to retain all 44 of Flagler’s employees.
The 13 credit union-bank deals (thus far) for 2022 fall short of the 16 such tie-ups the sector saw in 2019. The number also is far lower than the “25-plus” Honigman attorney Michael Bell predicted in January.
Bell told American Banker last month “there are a few more that should announce prior to year’s end.”
He told Banking Dive this week that once the economic tumult stabilizes, there will be a sharp rise in activity.
“I believe, depending on that factor, you will hear about the deals getting larger,” he said.
The Midwest, too, has served as a particular hotbed of credit union-bank M&A activity. Iowa-based Veridian Credit Union agreed this month to buy Minnesota-based American Investors Bank and Mortgage.
Additionally, Minnesota-based Wings Financial Credit Union agreed last month to acquire Wisconsin-based Settlers Bank. Illinois-based Credit Union 1 and NuMark Credit Union each said in June they would acquire banks in the state. Wisconsin-based CoVantage Credit Union said in April it would buy substantially all of Illinois-based LincolnWay Community Bank’s assets and liabilities. And Summit Credit Union said in March it would buy substantially all of the assets and liabilities of fellow Wisconsin firm Commerce State Bank.
Bell said, though, that credit union-bank deals won’t be limited to the Midwest.
“I think continued geographic expansion [and] diversity will occur,” he told Banking Dive last week. “You're going to see these deals occur in places where they haven't before. I expect growth in that regard, both in size and geographic scope.”
Such transactions are expected to be a continued thorn in the side of trade groups like the Independent Community Bankers of America (ICBA), which argues that credit unions’ tax-exempt status allows them to offer a higher purchase price in bank acquisitions and lets them grow more freely.
Dort’s board chair, Wayne Natzke, however, cheered the Flagler acquisition.
“Dort Financial’s focus has really been on serving consumers, and Flagler has been very successful with meeting the needs of businesses in their region in Florida,” Natzke said. “It’s a perfect combination.”
