PARCHMENT — Advia Credit Union’s proposed acquisition of Mid America Bank, a small community bank in southern Wisconsin, is the kind of deal that occurs infrequently in the financial services industry.
The last instance in Michigan of a credit union acquiring a bank was the 2011 deal in which United Federal Credit Union of St. Joseph acquired Griffith Savings Bank in northwestern Indiana, which had assets of $81 million.
“It’s a relatively unusual, but certainly not an unheard of circumstance,” said Ken Ross, executive vice president and chief operating officer of the Michigan Credit Union League.
The credit union trade publication CU Today reported that eight mergers have occurred since 2011 between U.S. banks and credit unions, including the United Federal Credit Union deal for Griffith Savings Bank.
Bank acquisitions by credit unions occur usually when a bank is in distress, or is too small to attract the interests of another bank and “has limited opportunities” to pursue, said Jason Byrd, managing director of the financial institutions practice at Charter Capital Partners in Grand Rapids.
“I don’t see this as an exit path for most banks,” Byrd said. “You could see them happening, but there will be special circumstances.”
With two branches and two loan offices and assets of $83.3 million at the end of 2015, Mid America Bank appears to fit that bill. The community bank lost money in each of the last four years, although the losses have been narrowing. Mid America recorded net losses of $34,000 in 2015, $86,000 in 2014, $630,000 in 2013, and $4.3 million for 2011, according to financial reports filed with the FDIC.
Mid America’s former CEO was fined $50,000 last April by the FDIC and prohibited from working in the banking industry without prior written consent from regulators because of “unsafe and unsound banking practices and breaches of fiduciary responsibility.”
The acquisition of Mid America Bank would give Advia Credit Union a larger presence in southern Wisconsin. Advia Credit Union has three offices in southern Wisconsin and one in nearby Rockton, Ill.
“Advia is financially strong and well positioned for continued growth in our multi-state regions and this acquisition will allow us to compete with even greater success in the financial services industry,” Advia CEO Cheryl DeBoer said in a statement announcing the deal.
Once complete, the deal would give Advia Credit Union 28 offices in three states with nearly $1.3 billion in assets and 400 employees. The merger could close in the second or third quarter pending approval by the National Credit Union Administration and the FDIC, plus state regulators in Wisconsin.
Michael Bell of the Royal Oak law office of Howard & Howard Attorneys PLLC served as legal adviser for Advia Credit Union. Mercer Capital was the financial adviser.
Advia Credit Union, based in Parchment, just north of Kalamazoo, presently has 24 offices – including 20 in Michigan. The credit union had 121,257 members as of Dec. 31, 2015, with assets of $1.18 billion, up 9.2 percent from a year earlier, and $10.9 million in net income, according to a quarterly financial report filed with the NCUA.