Indiana Members Credit Union is joining a small but growing movement in the financial services industry by agreeing to acquire a community bank for nearly $35 million.
IMCU, the largest Indianapolis-area credit union, announced Tuesday that it plans to purchase Evansville-based Commerce Bank in a deal expected to close in the first quarter of 2020.
First Light Bancorp, the holding company for Commerce Bank, said its stockholders will receive an estimated cash consideration of $11.25 to $11.40 for each share of First Light Bancorp common stock.
With more than 3 million shares outstanding, the acquisition is valued at $34.3 million to $34.7 million.
Commerce Bank, founded in 2006, had assets of $195.8 million as of June 30. The state-chartered bank serves 2,000 customers through two branches in Evansville, a branch in Clarksville and a loan-production office in New Albany. It has 31 full-time employees.
IMCU, a state chartered, federally insured credit union founded in 1956, has more than $2 billion in assets, 127,000 members and 27 locations in central Indiana. It has 317 full-time employees.
The deal was approved by the boards of both institutions.
Commerce Bank’s locations will operate as IMCU offices after the deal closes. ICMU plans to retain Commerce Bank’s employees, including CEO Luke Yaeger.
“Our combined size will provide even more opportunities for Commerce Bank commercial borrowers to grow, and our robust consumer offerings will assist individuals in these communities to reach their financial goals,” IMCU chief executive Ron Collier said in written remarks.
Historically, credit unions haven’t acquired banks, but that has changed in recent years. There was only one such acquisition in 2012, but that grew to nine in 2018 and eight announced this year as of late June, according to American Banker.
Industry experts say community bank owners that previously sought to cash out are finding a shortage of traditional buyers among larger banks.
More credit unions are now becoming big enough to pull off such deals, something that wasn’t common in the past. And such deals often provide the quickest way for credit unions to expand into business lines that they couldn’t enter organically.
“We are thrilled to join Indiana Members Credit Union because of the expanded opportunities it brings to our customers, our employees, and our communities,” Yaeger said in written remarks. “IMCU has the financial strength, systems infrastructure and expanded products to help us tap into a larger customer base and accelerate growth.”
First Light Bancorp, Inc. and Commerce Bank are being represented in this transaction by Smith Amundsen and Keefe, Bruyette and Woods. IMCU is being represented by Krieg DeVault and Renninger & Associates LLC.