Credit Unions in Wisconsin & Tennessee Plan Bank Acquisitions

Credit unions in Wisconsin and Tennessee announced plans to buy two banks - the industry’s seventh and eight acquisition agreements this year – surpassing the six credit union bank-buy deals in 2020.

The $3.7 billion Royal Credit Union in Eau Claire, Wis., said on Thursday that it signed a definitive agreement to acquire the $438 million Lake Area Bank in Linstrom, Minn., continuing the expansion of the credit union’s market reach in that state. In 2016, Royal completed its purchase of the $35 million Capital Bank in St. Paul, Minn., and the Apple Valley, Minn.-based branch of the Deerwood Bank.

On Wednesday, the $1 billion Orion Federal Credit Union in Memphis, Tenn., said it inked a definitive agreement to buy the $751 million Financial Federal Bank, also based in Memphis, in an all-cash transaction. Orion said the bank purchase will expand its products and services and deepen market share in private banking, residential and commercial lending.

Financial terms of both acquisition agreements were not disclosed.

RCU said purchasing Lake Area Bank will expand its branch presence in Minnesota for its current members and to reach new members. The bank’s 115 employees operate branches in Forest Lake, Hugo, Lindstrom, Stillwater and White Bear Lake.

Founded in 1915, Lake Area Bank posted a total of 14,853 deposit accounts – excluding retirement accounts – that totaled nearly $340 million, according to its June 30 Consolidated Report of Condition and Income filed with the FDIC. The bank posted more than 300 retirement deposit accounts amounting to more than $4.7 million.

Specializing in commercial lending, the bank recorded net income of $5.6 million and managed capital of $52.3 million at the end of the second quarter. Lake Area Bank had 462 small business loans amounting to $72.4 million and 132 PPP loans totaling $13.4 million in the second quarter.

“Lake Area Bank is a family-owned financial institution that has served the community for over 100 years,” Royal Credit Union President/CEO Brandon Riechers said. “Royal’s values-driven and relationship-based approach to financial management made this acquisition a good fit for our credit union.”

Pending customary closing conditions, including obtaining regulatory approvals, the acquisition is expected to finalize during the first quarter of 2022.

Founded in 1973, Financial Federal Bank’s 60 employees operate one branch and specialize in commercial lending.

The bank posted a total of 3,951 deposit accounts that totaled $651 million, according to its June 30 Consolidated Report of Condition and Income filed with the FDIC.

Financial Federal recorded net income of $7.6 million and managed capital of $90.7 million at the end of the second quarter. The bank also managed 615 small business loans amounting to $100 million and 96 PPP loans totaling more than $21 million in the second quarter.

“Aligning these two organizations will bring depth and bench strength to Orion’s already well-established commercial real estate lending team while supporting Orion’s goal to grow our mortgage product lines and allow us to expand into commercial and industrial lending,” Orion EVP and CFO Ashley McAdams said.

Orion Board Chair Andre Fowlkes said he sees this acquisition as a partnership and a win for employees and the business community because it will position the credit union to deliver even greater community outreach activities throughout the City of Memphis.

The proposed transaction is contingent on customary closing conditions such as regulatory approvals, but the financial institutions did not provide an expected closing date in their joint statement.