- DFCU Financial, based in Dearborn, Michigan, announced its intention to acquire First Citrus Bank, based in Tampa, Florida in a press release Thusday.
- The purchase price has not been officially disclosed, but Tampa Bay Times estimates the deal is worth around $105 million.
- DFCU is the seventh credit union this year to announce plans to acquire a bank, after CoVantage Credit Union said it would buy LincolnWay Community Bank end of April.
Overview of the dive:
DFCU Financial is seeking to acquire a bank to expand its Michigan footprint into an enclave in Tampa, Florida.
The South and the Midwest appear to be particularly attractive markets for mergers between credit unions and banks. DFCU is the third Midwest-based credit union to announce plans to acquire a bank so far in 2022 and First Citrus would be the third Southern bank to be acquired by a credit union this year.
“First Citrus represents DFCU’s initial expansion into Florida and a significant increase in commercial lending presence and expertise. CEO Jack Barrett’s leadership has fostered a customer-centric culture that closely aligns with DFCU’s core values. We look forward to benefiting from his leadership in the future,” said Ryan Goldberg, President and CEO of DFCU, in the press release.
DFCU will acquire First Citrus in an all-cash transaction, and First Citrus shareholders will receive $47.75 per share – a premium to Wednesday’s closing share price of $29.25, Tampa Bay Times reports. DFCU will also cash in the outstanding shares of the target bank.
First Citrus was overseeing $689 million in assets, $398 million in loans and $622 million in deposits as of March 31, according to the press release. The bank currently operates six branches in the Tampa Bay area.
The combined entity will have $7.1 billion in assets and nearly $800 million in capital, and 33 branches in Michigan and Florida. This would make DFCU the second largest credit union in Michigan, according to Credit Union Times.
The board of both institutions unanimously approved the deal, which is expected to close in the fourth quarter of 2022.
Upon completion of the transaction, the entire First Citrus management team will join DFCU, and the bank’s CEO, Jack Barrett, will be named Florida Market President for DFCU. The credit union does not plan to close any First Citrus branches, according to the press release.
“We are thrilled that DFCU has chosen Tampa Bay as its Florida headquarters and honored to have entrusted our leadership team to build on its 72-year history,” said Jack Barrett, President and CEO. the management of First Citrus.
“This merger is not just a win for our shareholders, it’s a win for our associates, our customers, Tampa Bay and, frankly, the State of Florida. DFCU’s Midwestern values align well with ours. We’re proud to fly the DFCU flag and can’t wait to raise it across our state!”
DFCU is the seventh credit union to announce plans to buy a bank in 2022. 2021 saw 13 such deals, near the all-time high of 19 such deals set in 2019, according to American Banker.
Trade groups like the Independent Community Bankers of America argue that credit unions’ tax-exempt status allows institutions to offer higher purchase prices on acquisitions than banks.
And According to the American Bankers AssociationTies between credit unions and banks can have a detrimental impact on communities because credit unions are not beholden to the federal Community Reinvest Act and consumer protection standards like banks.