Dive Brief:
- Tucson, Arizona-based Pima Federal Credit Union has agreed to acquire substantially all of Phoenix-based Republic Bank of Arizona’s assets and liabilities in an all-cash transaction, the companies announced Thursday.
- The acquisition will boost Pima’s assets to more than $1.5 billion while adding Republic Bank’s Phoenix, Gilbert and Scottsdale locations to the credit union’s nine-branch network.
- The transaction is expected to close in the second half of the year — after which, Pima will retain Republic Bank’s customers and accounts, while the bank and its parent company, RBAZ Bancorp, intend to dissolve their operations.
Dive Insight:
The acquisition enables $1.2 billion-asset Pima, which also counts $849 million in loans and $1.0 billion in shares and deposits, to expand its footprint within its home state.
“This strategic move is not only rooted in our shared values but also aligns with our growth objectives, presenting an exceptional opportunity to enhance our service to the local community,” Pima CEO Eric Renaud said in a statement. “We are excited to bring our commitment to excellence and dedication to the businesses and people of Maricopa County. Together, leveraging the strengths and talents of both teams, we look forward to creating a positive impact in Maricopa County while continuing to offer an unmatched banking experience in our existing markets.”
Founded in 2007, Republic Bank counts $279 million in assets, $200 million in loans and $250 million in deposits. Upon liquidation and adjustments, the deal is expected to offer RBAZ shareholders roughly $22 per share, according to the release.
The deal, which received approval from both boards of directors, awaits the green light from RBAZ shareholders and regulators. Upon closing, Brian Ruisinger, CEO of RBAZ and Republic Bank, will remain with Pima as head of the Phoenix market, the company said.
“We are excited to announce our decision to join forces with Pima. We share similar values, and our partnership with another Arizona-based institution extends our legacy of promoting Shop Local Dine Local Bank Local,” Ruisinger said in a statement Thursday.
The move enables the bank to offer its customers a wider array of products and services, he added.
Bank-credit union deals have long irked trade groups like the Independent Community Bankers of America, which have argued that credit unions’ tax-exemption status allows them to offer higher buying prices than banks and help them to grow more freely.
The transaction is the ninth this year in which a credit union has proposed buying a whole bank. But in three other instances, credit unions have sought to acquire partial bank footprints. Alabama-based All-In Credit Union agreed in January to buy five branches from 22nd State Bank in the state. Hudson Valley Credit Union in March said it would acquire eight locations from Boston-based Berkshire Bank. And American Heritage Credit Union said last week it would buy New Jersey branches from LinkBank.
The Arizona deal puts 2024 on pace to see more than 20 whole-bank acquisitions by credit unions — well above 2022’s record of 16 proposed deals (though only 14 were completed). Eleven such deals were announced last year.
Michael Bell, a partner at law firm Honigman, who has been involved in closing a number of bank-credit union mergers, said via email that he believes “this will clearly be a record year.”
Pima’s proposed acquisition of Republic reflects the need to buy to achieve scale but also bring on added talent and capabilities, he noted.
“The macro and micro economic forces in the small banks space are forcing small banks to closely examine a sell strategy,” Bell said.
