Big Mergers Shake Up Markets In MI & FL, Shore Up Troubled CUs
DEARBORN, Mich.-Several large credit union mergers were announced last week.
In Michigan, DFCU Financial, the state's biggest credit union, announced plans to acquire troubled MidWest Financial FCU, a one-time $200-million credit union with five branches in Ann Arbor and Ypsilanti. The deal follows closely DFCU's acquisition of troubled Capital Community FCU, a one-time $320 million based in Lansing.
The $2.7-billion DFCU is among the nation's large, well-capitalized credit unions that are being sought out by regulators to acquire troubled credit unions and Michigan is among the states, along with California, Nevada and Florida, where a flurry of dealmaking is occurring.
In Lakeland, Fla., meanwhile, MidFlorida CU has agreed to acquire troubled Bay Gulf FCU, a one-time $210-million institution. The deal comes a year after MidFlorida's agreement to acquire troubled Sarasota Coastal FCU and its network of Gulf Coast branches fell apart (Sarasota Coastal eventually merged into Achieva CU).
The Bay Gulf merger will give the $1.1 billion credit union seven locations in Sarasota and Hillsborough counties on Florida's Gulf Coast.
"Kevin Jones (MidFlorida's CEO) and I have been talking about a merger for several years now and my board gave me permission to start formal negotiations and we came to an agreement," said William DeMare, president of Bay Gulf, which lost $4.4 million in 2008 and $2.1 million in 2009, and $825,000 for the first quarter of 2010.
DeMare predicted a return to profitability for BGCU's operations, even as the credit union is merged out. "We expect to report a net for the second quarter," he told Credit Union Journal.
But DeMare lamented the condition of the local economy, one of the worst real estate markets in the country. "It's a deep hole and the economy in our area is not rebounding the same as in other parts of the country."
DeMare, 67, who worked his way up from volunteer director to chairman of the board to president and CEO in 1999, plans to retire after the merger. The merger is the latest Florida combination involving big credit unions, including Eastern Financial Florida CU into Space Coast CU; Sarasota Coastal CU into Achieva FCU and more recently, Keys FCU into Dade County FCU.