Oregon Credit Union Buys Bank

The $289 million Mid Oregon Federal Credit Union in Bend, Ore., completed the acquisition this week of the $20 million High Desert Bank also based in Bend.

According to the credit union’s website, conversion of the bank’s customer accounts occurred  June 15. Reportedly, it served about 500 customers.

The acquisition’s financial terms were not disclosed. This is the eighth publicly announced credit union bank purchase deal since November 2017.

“This was our first bank acquisition,” said Bill Anderson, president/CEO of Mid Oregon FCU. “It was not part of our long term strategy, but when the clearly beneficial opportunity arose, we took advantage of it.”

High Desert Bank was struggling financially, posting net income losses of $105,000 at the end of the first quarter, $817,000 last year, and $986,000 in 2016, according to FDIC financial reports. At the end of the first quarter, the bank posted  total equity capital of $221,000, an ROA of minus 2.06% and an ROE of minus 141.18 %, according to the FDIC.

Bankrate reported  High Desert Bank “exhibited a below-average condition,” earning two out of five stars for safety and soundness.

Anderson said as a community bank, High Desert invested heavily in local construction and real estate loans.

“During the economic downturn the bank suffered losses that eroded its capital position.  In 2013 High Desert Bank brought in new investors and management to implement a turnaround plan,” he said. “The bank tried repeatedly to raise additional capital or negotiate a transaction to insure its sustainability.  These efforts were unsuccessful.  The bank has operated under orders from the Office of the Comptroller of the Currency since 2014 and was critically undercapitalized according to FDIC standards at the time of the Mid Oregon Credit Union transaction.”

The OCC slapped High Desert Bank with a consent order that required sweeping changes and improvements to the bank’s operations in compliance, management, board oversight and loan portfolio management. A year later, the bank’s President/CEO Lawrence R. Snyder was banned from participating in the affairs of  any federally insured financial institution  after he admitted to overstating his monthly expense reports, causing the bank to reimburse him for personal and other illegitimate expenses, according to the OCC.

High Desert Bank was founded in 2007, employed five staffers, operated one branch, and managed net loans and leases worth $7.8 million, including real estate loans worth $7.1 million. The bank’s branch has been closed, according to a local media report.

Anderson noted that Mid Oregon is the last  financial institution headquartered in Central Oregon, continuing to invest locally, making loans to support members and small businesses. The credit union employs 115 staffers and now serves about 30,000 members.

Seven pending credit union/bank acquisition deals that are expected to close this year include the $2.3 billion Georgia’s Own CU in Atlanta/$90 million State Bank of Georgia in Fayetteville; the $916 million SRP FCU in North Augusta, S.C./ the $81 million Southern Bank in Sardis, Ga.;  the $1.5 billion Achieva CU in Dunedin, Fla./ the $119 million Preferred Community Bank in Fort Myers;  the $414 million Superior Choice CU in Superior, Wis./ the $77 million Dairyland State Bank in Bruce;  the $1.4 billion  Evansville Teachers FCU in Evansville, Ind./ $106 million American Founders Bank in Louisville, Ky.; the $1.2 billion  LGE Community CU/$92 million Georgia Heritage Bank in Dallas, and the $1.1 billion Credit Union One in Ferndale, Mich./$222 million Hantz Bank in Southfield.

Since 2012, 15 credit unions have completed 17 bank acquisition deals.