United Federal Credit Union Inks Deal to Buy Its Second Bank
UFCU, which started the credit union bank acquisition trend in 2012, expects to close the purchase of Edgewater Bank next year.
After starting the credit union bank acquisition trend in 2012, the $3.2 billion United Federal Credit Union in St. Joseph, Mich., said Tuesday it signed a definitive purchase and assumption agreement to buy in an all-cash transaction the $249 million Edgewater Bank, also based in St. Joseph.
Edgewater estimated its stockholders will receive between $39.47 and $43.22 per share in cash. As of Sept. 30, the bank had 733,310 shares outstanding.
The approximate $30 million acquisition is expected to close in the second quarter of 2021, pending certain closing conditions and approvals of Edgewater’s stockholders and regulators.
This deal is UFCU’s second bank purchase. In January 2012, the credit union became the first federally-chartered credit union to buy the assets of a state-chartered, FDIC-insured mutual savings institution, Griffith Savings Bank in Indiana, according to then UFCU President/CEO Gary Easterling. The acquisition began an industry trend of credit union bank purchases.
Founded in 1910, Edgewater Bank currently serves 5,600 households and operates five branches in Berrien County and two loan production offices in Fremont and Greenville that are staffed by more than 40 employees.
All Edgewater banking locations will operate as UFCU offices except for the Buchanan office, which will be merged into UFCU’s Buchanan office, according to a prepared statement.
Edgewater’s second quarter financials showed that it posted a net income of $634,482, compared to $949,575 net income at the end of last year’s second quarter. The bank posted an ROA of 0.62% and managed total equity of $17.7 million at the end of this year’s second quarter.
“This acquisition will allow us to serve more people and communities in Berrien County, and it will result in expanded product, service and technology offerings for Edgewater Bank’s customers as well,” Terry O’Rourke, UFCU’s current president/CEO, said in a prepared statement. “We believe this is an ideal fit, as we are both deeply engaged in the communities we serve, have a strong organizational culture, and strong commitment to our members’ and customers’ financial wellness.”
Richard E. Dyer, president/CEO of Edgewater Bank, will serve as a community president at UFCU in Michigan and Indiana, leading the commercial lending team after the acquisition is finalized next year.
“We are thrilled about our new partnership with United Federal Credit Union because of the expanded opportunities it brings to our customers, our employees and our communities,” Dyer said. “In addition, United shares our strong commitment to community support.”
The number of credit union bank purchases has slowly grown. From 2012 to 2017, there were two to three deals annually. That number jumped to 11 in 2018 and 14 in 2019.
However, the impact of the coronavirus health and economic crisis has substantially slowed down this industry trend. The UFCU/Edgewater Bank acquisition is only the sixth credit union bank purchase deal that has been publicly announced so far this year.