- Dearborn, Michigan-based DFCU Financial announced plans to acquire Tampa, Florida-based First Citrus Bank in a press release Thursday.
- The purchase price has not officially been disclosed, but Tampa Bay Times estimates the deal to be worth about $105 million.
- DFCU is the seventh credit union this year to announce its intention to acquire a bank, after CoVantage Credit Union said it would purchase LincolnWay Community Bank in late April.
DFCU Financial is looking to acquire a bank in order to expand its footprint from Michigan to an exclave in Tampa, Florida.
The South and Midwest are emerging as particularly attractive markets for mergers between credit unions and banks. DFCU is the third credit union based in the Midwest to announce intentions to acquire a bank so far in 2022 and First Citrus would be the third Southern bank to be bought 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 going forward,” 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 over the stock’s Wednesday closing price of $29.25, Tampa Bay Times reports. DFCU will also cash out the target bank’s outstanding shares.
First Citrus oversaw $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 across the Tampa Bay Area.
The combined entity will have $7.1 billion in assets and almost $800 million in capital, and 33 branch locations in Michigan and Florida. That would make DFCU the second-largest credit union in Michigan, according to CreditUnion Times.
The board of directors of both institutions unanimously approved the deal, which is forecasted to close in the fourth quarter of 2022.
Upon completion of the transaction, the entire management team of First Citrus will join DFCU, and the bank’s CEO Jack Barrett will be named Florida Market President for DFCU. The credit union does not expect to close any First Citrus branches, according to the press release.
"We're delighted that DFCU has chosen Tampa Bay as their Florida headquarters and honored they have entrusted our executive team to build upon their 72-year history,” said First Citrus President and CEO Jack Barrett.
“This merger is not only a win for our shareholders, it's a win for our associates, clients, Tampa Bay, and frankly, the state of Florida. DFCU's midwestern values align well with ours. We are proud to fly the DFCU flag and look forward to raising it throughout our state!"
DFCU is the seventh credit union to announce plans to purchase a bank in 2022. 2021 saw 13 such deals, close to the all-time record of 19 such deals set in 2019, according to American Banker.
Trade groups like the Independent Community Bankers of America contend that credit unions’ tax-exempt status allow the institutions to offer higher purchase prices in acquisitions than banks.
And according to the American Bankers Association, tie-ups between credit unions and banks can have a detrimental impact on communities, as Credit Unions are not beholden to federal Community Reinvest Act law and consumer protection standards like banks.