Michigan CU Bank Buy Deal Would Place Nearly 25% of Its Branches in Florida

A Michigan credit union is extending its reach down Florida’s Gulf Coast through an agreement to buy two bank branches in Fort Myers and Naples.

The deal, expected to be completed next spring, would establish DFCU Financial Credit Union of Dearborn, Mich. ($6.4 billion in assets, 238,844 members) with nearly a quarter of its branches in Florida, where it had none at the beginning of this year. The price was not disclosed.

DFCU announced Monday that it has signed a definitive agreement to acquire the Naples and Fort Myers banking operations of MidWestOne Bank of Iowa City, Iowa.

The credit union now has five branches in the Tampa area and one in St. Petersburg following its purchase of the Tampa-based First Citrus Bank in January. NCUA data showed that besides DFCU’s six Florida branches as of June 30, the other 28 were in Michigan.

The Iowa bank had $6.5 billion in assets and 60 branches as of June 30, with Naples and Fort Myers its only presence in Florida. If the deal closes in the second quarter of 2024, as expected, DFCU would gain $159 million in consumer and $162 million in commercial deposits and loans.

DFCU President/CEO Ryan Goldberg said the planned purchase is strategic.

“This move enhances our capacity to serve our members and communities in Florida, providing additional convenience and local expertise. Plus, it opens up exciting financial solutions to MidWestOne’s clients on the southern Gulf Coast of Florida, adding even more value to our growing membership and community,” Goldberg said.

Upon completion of the transaction, all Florida employees of MidWestOne are expected to be retained by DFCU, fulfilling similar roles as they currently hold at MidWestOne, according to a news release from the bank and credit union.

“This is a tremendous market, and we are very proud of what the MWO Florida team has built,” MidWestOne CEO Chip Reeves said. “We are pleased to have found a partner in DFCU with a proven track record of growing in Florida with a focus on customers, team members and community.”

DFCU is being advised by the investment banking firm Donnelly Penman & Partners Inc., and the law firm Honigman LLP. MidWestOne is being advised by the investment banking firm Hovde Group LLC, and the law firm Barack Ferrazzano Kirschbaum & Nagelberg LLP.

DFCU is still lagging in overall growth. NCUA data showed DFCU’s assets grew 1% in the 12 months ending June 30, compared with 4.5% for all credit unions. Its membership grew 2.8%, compared to 4.6% for all credit unions.

However, it has a wealth of liquidity in an era of tight money. NCUA data showed the loan-to-share ratio of all credit unions rose to 83.1% by March 31. DFCU’s ratio remained an unusual 26.1% in March, but its first Florida foray had helped raise it from 18.1% in December.

And DFCU continues to pile up net income. It earned $24.0 million in the three months ending June 30, generating an annualized 1.48% return on average assets. ROA was up from 1.29% a year earlier, and down from 1.59% in the first quarter.