GRAND RAPIDS — Lake Michigan Credit Union plans to grow its Florida presence with a deal to buy a community bank.
The Grand Rapids-based LMCU said this week that it had signed a definitive agreement to acquire Encore Bank, which is based in Naples, Fla.
Encore operates six branches in Southwest Florida and reported about $418 million in assets as of March 31, according to a filing with the FDIC. The bank reported deposits of $368.4 million.
Terms of the deal were not disclosed.
“We are delighted that Encore Bank has agreed to join with Lake Michigan Credit Union, to help strengthen and expand our presence in the growing Southwest Florida region,” LMCU President and CEO Sandy Jelinski said in a statement. “Plus, Encore is a healthy, well-run bank with experienced staff that when joined with our staff will immediately make the combined team a key player in this market.”
The geographic footprints of both banks complement each other and do not overlap, according to Jelinski.
In a statement, the companies indicated they expected the transaction to close in the first quarter of 2018, pending regulatory approvals and closing conditions. The boards of both companies have already approved the deal.
A state-chartered non-member bank, Encore Bank traces its history back to 2007 as the National Bank of Southwest Florida, which it acquired in 2010 and renamed as Encore Bank, according to regulatory filings and prior statements. CEO Tom Ray is expected to stay on after the transaction and serve as regional president for LMCU of Florida.
With the acquisition, LMCU’s first deal for a bank, the combined company expects to have $5.6 billion in assets, 10 branches in Florida and 40 in Michigan. LMCU was advised by the law firm of Howard & Howard PLLC and financial adviser Donnelly Penman & Partners Inc.
Mike Bell, LMCU’s attorney, told MiBiz last month that he expected to see more deals in which credit unions acquired community banks.
Nationwide, there were three deals in 2015 involving banks that were acquired by a credit union and four in 2016, according to a recent report by S&P Global, a New York-based provider of independent ratings, benchmarks and analytics for the financial industry. There have been three credit union deals for community banks so far in 2017, including two that Bell is involved with: Berrien Springs-based Honor Credit Union’s proposed acquisition of Citizens Bank of Ontonagon and Parchment-based Advia Credit Union’s proposed deal for Peoples Bank in Elkhorn, Wis.
“This strategy presents a new option for credit unions to grow in their geography, their loans, their members, deposits and perhaps products and skillsets,” Bell told MiBiz at the time. “This is a tool to do that and it’s quite effective.”