Lake Michigan Credit Union in Grand Rapids buys community bank in Tampa, Florida, which focuses on aircraft financing.
Pilot Bancorp’s $ 656 million asset is the fifth bank this year to announce it will be sold to a credit union. The deal comes less than a month after $ 7.5 billion in assets Green State Credit Union in North Liberty, Iowa, said it would buy community banks in Illinois and Nebraska.
$ 10 billion in assets VyStar Credit Union in Jacksonville, Fla., announced what would be a bank’s biggest buyout by a credit union in April, agreeing to pay $ 196 million for Heritage Southeast Bank’s $ 1.6 billion assets in Jonesboro, Georgia.
Founded in 1933 as the Grand Rapids Teachers Credit Union, Lake Michigan’s $ 10.4 billion in assets serve all who live, work, or worship in Michigan’s Lower Peninsula and Florida, where it operates. 13 branches. Lake Michigan acquired the Encore Bank’s $ 397 million in assets in Naples, Florida in 2017 for around $ 60 million in cash.
Pilot, which opened in 1987, operates four branches in Tampa, as well as one in St. Petersburg and one in Lakeland. Pilot reported net income of $ 2.8 million for the quarter ending March 31, down from $ 822,000 a year earlier and sufficient to generate a 21% return on equity, according to the Federal Deposit Insurance Corp.
The pilot’s profit for all of 2020 was $ 6.2 million, up 169% from $ 2.3 million in 2019.
Lake Michigan has agreed to pay $ 6.25 per share in cash for Pilot, which is nearly $ 97 million based on the bank’s outstanding shares as of Feb. 12. When stock options are factored in, the transaction price is around $ 100 million, said Roy, CEO of Pilot. Hellwege said Thursday.
Pilot is the holding company of Pilot Bank and National Aircraft Finance Company.
“This is another step in our plan to enhance the value and experience of our members for our many wonderful members who are living or vacationing in Florida,” said Sandy Jelinski, President and CEO of Lake Michigan, in a press release.
The deal is expected to be finalized in the fourth quarter; then Hellwege would join Lake Michigan as president of Central Florida. The president of National Aircraft Finance Co., Kevin Buckland, will be the president of Lake Michigan for aircraft financing.
According to Hellwege, former Enterprise Bank CEO Tom Ray introduced Pilot to Lake Michigan at the end of 2019. Although Pilot “was never officially for sale,” the board agreed to discuss of an agreement, and the two sides met for dinner in Tampa in December, Hellwege said in an interview Thursday.
The coronavirus halted negotiations shortly after, but Lake Michigan asked to resume talks earlier this year. Pilot was looking for a deal that took care of its employees and customers, benefited the Tampa community, and reflected its high-level performance metrics, Hellwege said.
“We have no doubt that this is an exceptional result for all parties involved,” added Hellwege.
Hellwege said the business models of the two institutions are largely complementary, with Pilot focusing on aircraft financing and Small Business Administration loans, and Lake Michigan on residential and consumer loans.
With the trend of banking sales to credit unions accelerating in 2021, banking advocates have intensified their lobbying against exempting credit unions from paying state and federal income taxes, which they say allows credit unions to pay multiples that taxpayer banks cannot afford.
Lake Michigan’s $ 100 million price tag is nearly twice the tangible book value of Pilot Bancorp, Florida Bankers Association CEO Alex Sanchez said in an interview on Thursday.
Sanchez called the deal “an act of hypocrisy.”
“Congress never intended for the Lake Michigan Credit Union to use its tax exemption to expand into some of the wealthiest markets in the country,” Sanchez said.
A spokesperson for Lake Michigan Credit Union did not answer a reporter’s phone call.