Traverse City, Michigan-based 4Front Credit Union will acquire the assets of Sault Sainte Marie-based Old Mission Bank and assume its liabilities, the credit union said Tuesday.
Financial terms of the transaction — the first instance in 2023 of a credit union purchasing a bank — were not disclosed. The deal is expected to close late this year, the credit union said.
Old Mission’s Sault Sainte Marie and Pickford locations will expand 4Front’s footprint to 20 branches and boost its asset total by roughly $130.2 million, giving it about $1.2 billion altogether.
Once the transaction is complete, the two Old Mission locations will operate as “Old Mission, a division of 4Front Credit Union,” 4Front CEO Andy Kempf said in a statement.
"We believe in making banking smart and simple," Kempf said. "We look forward to expanding our services in the Upper Peninsula to even more people through exceptional experiences, wherever they are on their financial journey."
Gary Sharp, Old Mission’s CEO, said the bank is “excited” to “bring expanded opportunities to our customers, employees and communities while keeping the hometown feel.”
4Front said it would retain Old Mission's employees but did not detail what role Sharp is expected to play in the future.
The acquisition marks an early start to deals at the intersection of banks and credit unions. It follows a December that saw five proposed transactions. That spurt pushed 2022 to tie 2019 for the highest number of proposed purchases of banks by credit unions, with 16.
"2023 is starting quickly," Michael Bell, an attorney at Honigman, told Banking Dive. "If the economic factors can calm sooner rather than later, I absolutely expect a record year."
Bell said last week that he expected a new transaction to be announced this week involving entities in the Midwest.
He has hailed the Midwest as a "a very active region for these deals." Indeed, the last credit union-bank tie-up of 2022 — Illinois-based Lincoln Credit Union’s proposed purchase of Colchester State Bank — has Midwest ties.
Two of last year’s deals, meanwhile, had Michigan roots. Grand Blanc-based Dort Financial Credit Union agreed in December to acquire West Palm Beach, Florida-based Flagler Bank. And Dearborn-based DFCU Financial said in May it would buy another Florida bank, Tampa-based First Citrus.
Credit union purchases of banks historically have served as a sore point in the eyes of trade groups like the Independent Community Bankers of America (ICBA), which argues that credit unions' tax-exemption privilege allows them to purchase banks for higher prices and lets them grow more freely.
However, Patty Corkery, CEO of the Michigan Credit Union League, characterized those transactions as a “win-win.”
"Bank customers become credit union member-owners and continue to thrive,” Corkery told American Banker. “Credit unions grow and enhance their products and offerings to all their members, and bank employees keep their jobs."