Lake Michigan Credit Union in Grand Rapids is buying a Tampa, Florida, community bank that focuses on aircraft financing.
The $656 million-asset Pilot Bancorp is the fifth bank this year to announce it was to be sold to a credit union. The deal comes less than a month after the $7.5 billion-asset
The $10 billion-asset
Founded in 1933 as Grand Rapids Teachers Credit Union, the $10.4 billion-asset Lake Michigan serves anyone who lives, works or worships in Michigan’s Lower Peninsula and in Florida, where it operates 13 branches. Lake Michigan acquired the
Pilot, which opened its doors in 1987, operates four branches in Tampa, as well as one in St. Petersburg and one in Lakeland. Pilot reported net income of $2.8 million for the quarter ending March 31, up from $822,000 a year earlier and enough to generate a 21% return on equity, according to the Federal Deposit Insurance Corp.
Pilot’s profit for all of 2020 was $6.2 million, up 169% from $2.3 million in 2019.
Lake Michigan agreed to pay $6.25 per share in cash for Pilot, which amounts to nearly $97 million based on the bank’s outstanding shares as of Feb. 12. When stock options are factored in, the deal price rises to approximately $100 million, Pilot CEO Roy Hellwege said Thursday.
Pilot is the holding company for Pilot Bank and National Aircraft Finance Company.
“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,” Sandy Jelinski, Lake Michigan's president and CEO, said in a press release.
The deal is expected to be completed in the fourth quarter; then Hellwege would join Lake Michigan as its Central Florida president. National Aircraft Finance Co. President Kevin Buckland will serve as Lake Michigan’s president for aircraft finance.
According to Hellwege, former Enterprise Bank CEO Tom Ray introduced Pilot to Lake Michigan late in 2019. Though Pilot “had never been formally for sale,” the board agreed to discuss a deal, and the two sides met for dinner in Tampa in December, Hellwege said Thursday in an interview.
The coronavirus halted negotiations soon after that, but Lake Michigan asked to resume discussions earlier this year. Pilot was looking for a deal that took care of its employees and clients, benefitted the Tampa community and reflected its top-grade performance metrics, Hellwege said.
“We have no doubt that this is an outstanding outcome for all concerned parties,” Hellwege added.
Hellwege said the two institutions’ business models are largely complementary, with Pilot focusing on aircraft financing and Small Business Administration lending, and Lake Michigan on residential and consumer lending.
With the trend of bank sales to credit unions picking up speed in 2021, banking industry advocates have
Lake Michigan’s $100 million price amounts to nearly two times Pilot Bancorp’s tangible book value, Florida Bankers Association CEO Alex Sanchez said Thursday in an interview.
Sanchez called the deal “an act of hypocrisy.”
“Congress never intended for the Lake Michigan Credit Union to use its tax exemption to expand into some of the most affluent markets in the country,” Sanchez said.
A spokesman for Lake Michigan Credit Union did not return a reporter’s phone call.
