Michigan’s Largest CU Plans $96 Million Florida Bank Buy

The $10.5 billion Lake Michigan Credit Union said Thursday it plans to acquire the $656 million Pilot Bank in Florida for $96.1 million in cash.

The boards of directors of the Grand Rapids-based credit union and Pilot Bancshares Inc., the holding company for the Tampa-based bank and its National Aircraft Finance Company, agreed unanimously to a definitive agreement by which LMCU will pay $6.25 per share to Pilot Bank’s 295 stockholders.

At of the end of the first quarter, Pilot Bank posted 15,379,859 shares outstanding.

Traded on the OTC, Pilot’s shares jumped 1.8% from $5.91 to $6.02 per share early Friday afternoon.

The transaction, contingent on approvals of Pilot shareholders and regulators, is expected to be completed in the fourth quarter of 2021.

Established in 1987, Pilot Bank, which specializes in commercial lending, operates four branches in Tampa, one location in St. Petersburg and the other in Lakeland. The bank’s 70 employees serve a customer base of about 7,000.

At the end of the first quarter, the bank posted a net income of $2.7 million and managed capital of $53 million. Pilot Bank’s ROA was 1.74% in the first quarter, according to the FDIC.

The bank’s National Aircraft Finance Company (NAFCO) provides general aviation financing to corporations and individuals. According to NAFCO, it is one of the few companies that provides a full suite of products to fund purchases of owner-flown aircraft, including pistons, turboprops, jets, vintage, experimentals and kits.

If the proposed acquisition secures all shareholder and regulatory approvals, it will expand LMCU’s footprint to 19 branches and total assets of more than $1.7 billion in Florida. In 2017, LMCU bought the $418 million Encore Bank in Naples, Fla.

The Pilot Bank deal will increase LMCU’s total assets to more than $11 billion with 65 branches and nine mortgage offices across Michigan and Florida.

As Michigan’s largest credit union by assets, LMCU also manages $12.5 billion in mortgages serviced and held in its portfolio, and currently serves more than 500,000 members.

“The combination of the two operations will further enhance LMCU’s product offerings for our members through Pilot’s aircraft finance business and SBA origination channels, while also adding a strong core deposit base in Hillsborough, Polk and Pinellas counties,” LMCU President/CEO Sandy Jelinski said.

Pilot Bank President/CEO Roy Hellwege will join the LMCU team as president of Central Florida and Kevin Buckland will be president of LMCU’s Aircraft Finance. He currently serves as the bank’s EVP and NAFCO’s president.

“We’re very proud of what we’ve built as a true community bank, but we always wanted to ensure that whenever we made a decision impacting the company that we address all four constituents that we serve, our employees, our clients, the community we serve and of course the shareholders,” Hellwege said. “I can tell you that we all believe that this is the best result for all of our constituents. Our team will remain largely intact, we will continue to service our clients with even more products than we have currently, we’re going to continue to serve the community and our shareholders received a very fair pricing valuation from Lake Michigan. We’re very happy about this and we think it is the right decision.”

This proposed transaction is the credit union industry’s fifth bank acquisition so far this year.

In May, the $7.4 billion GreenState Credit Union in North Liberty, Iowa, announced that it entered into purchase and assumption agreements with the $759 million Oxford Bank & Trust of Oak Brook, Ill., and the $383 million Premier Bank of Omaha, Neb.

In January, the $7.1 billion Wings Financial Credit Union in Apple Valley, Minn., agreed to acquire the $72.3 million Brainerd Savings & Loan in Brainerd, Minn. And in April, the $10.7 billion Vystar Credit Union in Jacksonville, Fla., agreed to buy the $1.5 billion Heritage Southeast Bank of Jonesboro, Ga., for $189 million, becoming the credit union industry’s largest-ever bank acquisition.