Dive Brief:

• Lakewood, Washington-based Harborstone Credit Union will acquire Burlington, Washington-based SaviBank, the institutions announced Friday in a press release.
• The deal, expected to be completed in the fourth quarter, will create an institution with roughly $2.7 billion in assets, $2 billion in loans, $2.3 billion in shares and deposits and will have 27 branches throughout Skagit, Whatcom, Island, San Juan, King, Pierce and Thurston counties.
• The purchase price was not disclosed, but the companies estimated that Savi Financial Corp. stockholders may receive between $16 to $17 per share before tax.

Dive Insight:

The Harborstone/SaviBank deal marks a mash-up of two institutions that made headlines last August. Harborstone that month announced it would buy Seattle-based First Sound Bank.

Two weeks later, Savi received regulatory approval from the Federal Deposit Insurance Corp. to form Orca Bank, a Washington state-chartered commercial de novo.

Savi Financial Chair Michal Cann told Banking Dive on Friday the Harborstone deal means “the Orca project will go away."

“We were in the process of putting together a multi-bank holding company, and Orca would have been the first of our other banks involved in that. But with this sale to Harborstone, we're taking a different route,” Cann said.

The Harborstone/First Sound deal is expected to close in the second quarter of this year.

The Savi Financial acquisition would help Harborstone Credit Union grow its presence in Skagit County, diversify its assets and add talent and expertise.

“The request from our members for more access and ever-improving technology has been at the forefront of our minds. This acquisition achieves that and more,” Harborstone CEO Geoff Bullock said in the release.

Cann said the $593 million-asset Savi Financial believes the additional services, products and locations Harborstone Credit Union provides will help it continue to meet the financial needs of its customers. 

“Through the unique structure of this acquisition by Harborstone Credit Union, we believe we are maximizing value to our shareholders who have supported us over the years,” Cann said in a press release. 

The all-cash transaction is structured with Harborstone purchasing all assets and assuming all liabilities of SaviBank.

The transaction is the seventh instance this year of a credit union agreeing to acquire a whole bank — and the third involving a Washington state institution. Tacoma-based Sound Credit Union said this month it plans to acquire Olympia-based Washington Business Bank. Renton, Washington-based First Financial Northwest Bank is being bought by Anchorage, Alaska-based Global Federal Credit Union, the institutions announced in January.

This year is on pace to shatter the previous high of 16 credit union-bank deals announced in 2022, although only 14 of those transactions ultimately closed.

Jeff Cardone, a partner at Luse Gorman, who served as legal counsel to Harborstone in the deal, said that while credit union-bank deals are likely to surpass their pace from 2022, the reason they are becoming a bigger part of the bank M&A landscape is not because of the number of deals.  

“Rather, it’s because bank-to-bank mergers are down significantly due to an uncertain economic and regulatory environment,” Cardone said. “Once the pace of bank-to-bank mergers normalizes, the percentage of credit union buyers relative to overall bank mergers will decrease.”

Eleven credit union-bank tie ups were reached last year.

In addition to the whole-bank deals, credit unions have also been acquiring bank branches at a healthy clip.

Daleville, Alabama-based All In Credit Union agreed to acquire five branches of 22nd State Bank, and Poughkeepsie, New York-based Hudson Valley Credit Union said recently that it will acquire eight branches from Berkshire Bank.

Harborstone earned $10 million in 2023, a 35% decrease compared with a year earlier, according to call report data from the National Credit Union Administration.

Net income for Savi Financial was $48,000 in 2023, compared to $3.7 million in 2022, according to S&P Global Market Intelligence data.