Dearborn, Mich.-based DFCU Financial plans to acquire Tampa, Fla.-based First Citrus Bancorp. Inc., in the seventh credit union acquisition of a bank announced this year.
The transaction is one of the largest credit union-bank deals so far in 2022 and represents one of the most expensive U.S. bank deals of this year based on deal value relative to tangible common equity. Just five months into 2022, credit unions are now halfway to breaking the current yearly record of 14 bank deal announcements in 2019.
"Credit unions' appetite remains exceptionally high and things are very, very active," Michael Bell, a partner and co-leader of the financial institutions practice group at law firm Honigman LLP, which advised DFCU, said in an interview.
Expensive price tag
DFCU Financial agreed to pay $47.75 in cash for each share of First Citrus. The total purchase price of $93.2 million values First Citrus at 197.64% of tangible common equity as of March 31, making it the fourth-
Credit union purchases of banks now make up two of the four most expensive U.S. bank deals announced this year. Fellow credit union Arizona FCU holds the second-place spot with its planned purchase of Horizon Community Bank.
Deal size keeps climbing
Among the seven bank buys announced by credit unions this year, DFCU Financial is the largest credit union buyer and First Citrus is the second-largest bank seller, based on total assets. DFCU Financial had $6.40 billion in total assets as of March 31, while First Citrus had $689.3 million as of the same date.
The announced deal brings the total assets of banks sold to credit unions this year to $3.53 billion.
Further, the total average assets of the seven banks selling to credit unions stand at $504.5 million this year, above the record high of $458.7 million across the 13 targets in 2021.
Michigan credit unions eyeing Florida banks
The deal marks the 13th announced sale of a Florida-based bank to a credit union since 2015, the most of any state.
Three of the 13 deals have involved Michigan-based credit unions purchasing Florida-based banks. Lake Michigan CU purchased Florida-based banks in 2018 and 2021.
While Michigan and Florida are geographically far apart, the jump makes sense for the credit unions given the number of people that migrate to Florida from the Midwest and the attractive economic environment in Florida, Bell said.
"Geographically, it seems crazy, but in reality, it's actually very low-risk," Bell said.
DFCU Financial was advised by law firm Honigman LLP, and Donnelly Penman & Partners was the financial adviser for the credit union. Hovde Group was the financial adviser for First Citrus while Smith Mackinnon PA served as legal adviser to the bank.
The companies expect the transaction to close in the fourth quarter.