The head of a Michigan credit union buying an $80 million Indiana bank said he was “a little surprised” when the buyout offer, routed through an Indianapolis investment banker, was first extended last winter.
“It is interesting to know when we were approached last February or March that this bank had previously considered converting to a credit union charter,” said Gary Easterling, president/CEO of the $1.3 billion United FCU of St. Joseph, Mich. which began moving forward this week on an $81 million deal to take over Griffith Savings Bank of Griffith, Ind., in a purchase/assumption.
The purchase still must receive NCUA approval “though I’m confident we can clear” any lingering hurdles, including the FDIC safety/soundness insurance transfer, Easterling said.
The president/CEO of the northwest Indiana bank, which had previously been under a 2009 FDIC consent decree to raise capital following large loan losses, sought out a bank or CU suitor after the thrift’s capital dropped to 7 ½% “and we realized we were unable to bring it to 8% on our own.”
Through an Indianapolis investment bank adviser, Renninger & Associates LLC, Griffith began scouting both banks and CUs “in our area and though we had some interest by banks it turned out our board chose United,” said James E. Morris, Griffith’s president/CEO.
The Griffith bank had indeed looked at converting to a CU and decided “the culture” was right for the thrift, located in the Chicago/Indiana metro complex, Morris said.
Easterling told Credit Union Times that United’s entry into Indiana fits well into UFCU’s long-term expansion strategy and he also expressed pride his CU figures in a reversal “of all that noise and rhetoric” about CUs switching to banks.
“It’s kind of nice to see the trend go the other way, a bank embracing the credit union charter,” he observed.
In discussing precedents for the transaction, the Michigan CEO said the closest parallel is the June 2010 sale of 11 branches and $177 million in loans, deposits and equipment by the ailing AnchorBank of Madison, Wis. to the $1.2 billion Royal CU of Eau Claire, Wis.
Easterling also noted his CU had outside investment counsel, McQueen Financial Advisors of Royal Oak, Mich., and Detroit attorney Michael M. Bell of Kotz Sangster in providing advice on the planned purchase.
The McQueen firm had previously been used in UFCU’s 2009 purchase/assumption of the failed $140 million Clearstar Financial CU of Reno, Nev. That merger marked UFCU’s first entry into the Nevada market. Outside of Nevada, the St. Joseph CU has 22 branches in Michigan, Arkansas, North Carolina and Ohio.
