The first deal this year in which a credit union would purchase a bank involves two institutions in Michigan, with 4Front Credit Union in Traverse City agreeing to buy Old Mission Bank in Sault Sainte Marie.
Financial terms of the deal were not disclosed. The transaction is expected to close late in 2023, the credit union said Tuesday.
Old Mission Bank, a subsidiary of Old Mission Bancorp, had $130.2 million of assets at the end of the third quarter. It has branches in Sault Sainte Marie and Pickford, Michigan.
The branches would operate as "Old Mission, a division of 4Front Credit Union," according to 4Front CEO Andy Kempf.
"We believe in making banking smart and simple," Kempf said in a press release. "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."
4Front has more than 98,000 members, with assets of more than $1 billion and 18 branches. This would be its first community bank acquisition.
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"We are excited about our new partnership with 4Front Credit Union, which will bring expanded opportunities to our customers, employees, and communities while keeping the hometown feel," Gary Sharp, president and CEO of Old Mission Bank, said in the press release.
McQueen Financial Advisors acted as financial advisors and Honigman as legal counsel to 4Front Credit Union on the transaction. Hovde Group acted as financial advisor and Varnum as legal counsel to Old Mission Bancorp.
Attorney Michael Bell of Honigman said if conditions are favorable he expects to see more than credit union-bank deals announced this year. "If the economic factors can calm, I absolutely expect a record year. If it does not, we should have around 15 deals," he said.
Bell added that he expects the geographic spread of those deals to grow with deals in new states being announced in 2023.
Four of the deals announced last year involved Illinois community banks, while Georgia and Florida had three each.
Patty Corkery, president and CEO of the Michigan Credit Union League, said in an interview that Michigan credit unions look to expand or enhance their footprint when banks seek to leave the community.
"Transactions where credit unions purchase bank assets are a win-win," she said. "Bank customers become credit union member-owners and continue to thrive. Credit unions grow and enhance their products and offerings to all their members and bank employees keep their jobs."
4Front earned $8 million in the first nine months of 2022, a 17% increase compared with a year earlier, according to call report data from the National Credit Union Administration.
