Bank CEO Says Wings Financial CU Stopped Acquisition Deal With No Explanation

The $6.4 billion Wings Financial Credit Union was about three months from closing its deal to buy Neighborhood National Bank when the credit union suddenly stopped the acquisition process without explanation, Neighborhood National Bank President/CEO Doyle Jelsing said Wednesday.

“It has been terminated because they did not proceed forward, and they have never given us a reason why,” Jelsing said.

Though he remains puzzled about why the deal ended abruptly, he declined to speculate about the reasons.

The Apple Valley, Minn.-based Wings Financial said Wednesday that it did not have additional comments about Jelsing’s statements.

In a separate CU Times article that reported Wings Financial’s proposed new agreement to buy the $70.2 million Brainerd Savings & Loan in Brainerd, Minn., the credit union was asked about the status of the Neighborhood National Bank deal.

“Beyond the deal not closing, we don’t have any further comment on this transaction,” Wings Financial Vice President of Marketing Brent C. Anderson said on Tuesday.

In February 2020, Minnesota’s largest credit union announced an agreement to buy the $260 million Neighborhood National Bank in Mora. At that time, Wings Financial President/CEO Frank Weidner said the transaction was a “great fit” because the credit union had been exploring for opportunities to expand in central Minnesota.

The proposed acquisition included the bank’s six branches, two in Mora and one each in Aitkin, North Branch, Brainerd and Alexandria, which are located in the semi-rural central Minnesota region, north of Minneapolis.

During last year’s second quarter, Jelsing said Wings Financial stopped the acquisition process. The credit union previously stated that it had expected to close on the deal during the third quarter.

Up until the second quarter when Wings Financial stopped the acquisition process, according to Jelsing, the bank and credit union dedicated a considerable amount of time and resources that included exchanging computer files for the purpose of merging them, vendor contract cancellations and personnel discussions between 49 of the bank’s 55 employees and Wings Financial. Jelsing said those bank employees had been offered contracts.

After receiving no response from Wings Financial as to why it had stopped the acquisition process, Jelsing said he had no other choice but to send the credit union a notice that terminated the proposed deal. He did not say whether Wings Financial responded to his termination notice.

Although Jelsing said he is disappointed the deal was not finalized, he is more disappointed with how the acquisition process was handled.

“There were economic reasons for why we went into the transaction to start with, so for those reasons we are disappointed,” he said. “My customer base has been surprisingly neutral in the acquisition process and maybe somewhat relieved when it didn’t go through.”

Jelsing said when the deal was terminated, it deflated the morale of his employees because they were looking forward to working for Wings Financial.

“There were pay scale advantages for them,” he said.

Neighborhood National Bank, which serves 4,500 customers, posted a net income of $2 million, an ROA of 1.15% and an ROE of 9.94%, according to its financials filed with the FDIC.