Lake Michigan Credit Union will gain a larger presence along Florida’s Gulf Coast with the acquisition of a community bank.
The proposed acquisition of Pilot Bancshares Inc. would bring the Grand Rapids-based Lake Michigan Credit Union six more offices in the Tampa Bay area, and more than $656 million in assets and $511.2 million in deposits. The deal would extend Lake Michigan Credit Union’s Florida footprint to 19 offices and $1.7 billion in assets in Gulf Coast markets.
The execution of a definitive agreement for the sale that was announced Wednesday afternoon includes Pilot Bancshares’ Pilot Bank and National Aircraft Finance Co. (NAFCO), which specializes in financing aircraft.
“We are thrilled that Pilot Bank and NAFCO have agreed to join with Lake Michigan Credit Union, bringing together two organizations that have a shared philosophy of putting our members and customers first,” President and CEO Sandra Jelinski said in a statement. “This is another step in our plan to enhance our member value and experience for our many wonderful members that live in or vacation in Florida, including those in this new thriving market, as well as future new members.”
Once the deal closes, Lake Michigan Credit Union will have 65 branches in Michigan and Florida and nine mortgage offices with more than $11 billion in assets overall. The deal should close in the fourth quarter, pending approvals from regulators and Pilot Bancshares shareholders.
Under terms of the deal, shareholders at Pilot Bancshares would receive $6.25 for each share. Pilot Bancshares Chairman and CEO Roy Hellwege will join Lake Michigan Credit Union as president for central Florida, and Kevin Buckland will become president of aircraft finance. Buckland presently serves as NAFCO president.
Investment banking firm Donnelly Penman & Partners Inc. advised Lake Michigan Credit Union on the transaction, and the law firm Honigman LLP was legal counsel. Pilot is advised by the investment banking firm Hovde Group LLC and the law firm Smith Mackinnon PA.
Chartered in 1987, Pilot Bank recorded $2.7 million in net income in the first quarter of 2021 and $6.1 million for 2020, with total deposits of $511.2 million, according to a quarterly report to the FDIC.
The largest credit union based in Michigan, Lake Michigan Credit Union at the end of the first quarter had $9.99 billion in total assets and total deposits of $8.59 billion with 406,861 members, according to a quarterly financial report to the National Credit Union Administration. The credit union had $6.55 billion in total loans, including commercial loans of $693.7 million.
Net income for the first quarter was $53 million, and $164.5 million for all of 2020, according to the quarterly NCUA report.
Lake Michigan Credit Union entered the Florida market in mid-2015 with the opening of a mortgage office in Bonita Springs, followed by a full-service branch that November in Ft. Meyers. The credit union expanded to four branches in southwest Florida over a few years, and more than doubled to 10 offices with the April 2018 acquisition of Encore Bank in Naples.
In 2019, Jelinski told MiBiz that the credit union moved into Florida for two strategic reasons: The state has a comparative lack of credit unions in some areas, and Lake Michigan Credit Union wanted to serve members who are retiring and either moving to Florida or living there during the winter.
“There are people who are down there who are our prominent members and we do not want to lose them,” Jelinski said at the time. “That drove us to go to Florida and to test the waters because we want to be where they are.”
The credit union planned to pursue additional acquisitions beyond the Encore Bank deal, Jelinski previously said.
The deal for Pilot Bancshares is the latest in an ongoing trend of credit unions buying community banks.
In Michigan most recently, St. Joseph-based United Federal Credit Union closed in May on a deal to acquire Edgewater Bank, also based in St. Joseph. The deal includes four Edgewater Bank offices in Berrien County, expanding United Federal’s footprint in its home market.