EAU CLAIRE, Wis. — Financial problems faced by one bank in this state played right into the hand of Royal Credit Union, which has acquired 11 branches from troubled AnchorBank.
In the biggest deal of its kind, the $1.1-billion RCU plans to take over the locations in early 2010. RCU CEO Charlie Grossklaus expects the move will save the CU "millions."
While not disclosing the cost for the acquisition, Grossklaus said the deal meshed with the credit union's plans to significantly expand into western Wisconsin. "It is an opportunity of a lifetime," said Grossklaus. "We get 11 profitable branches. And we are getting them below their appraised value-at book value. AnchorBank, unfortunately, has to build capital, and you build capital by reducing your assets."
RCU will assume approximately $177 million in deposits and a proportionate amount in loans, real estate, and other assets. It will purchase nine of the offices and assume the lease on the other two.
The economy is creating opportunities that never existed before and may never again, said Grossklaus. To support its growth plans, the CEO said the credit union has built capital to 9.7%. The deal with Anchor, which is awaiting regulatory approval and is expected to be finalized in the first quarter of 2010, will likely take the RCU's capital ratio to 8.1%, estimated Grossklaus.
The proposal the credit union submitted included the purchase of the AnchorBank buildings and assets. RCU will retain all 114 AnchorBank employees who work at the acquired locations. The 25,000 customers from the 11 AnchorBank offices will become RCU members. The acquisition will boost the credit union's assets to $1.3 billion, members to 143,000, and branches to 26.
The AnchorBank branches immediately give RCU new profitable locations, Grossklaus pointed out, adding that it typically takes about five years for a brand new branch to break even.
