Credit union assets have grown approximately 3.7% year-over-year, according to early third quarter performance data available through Callahan & Associates. That’s quite a bit slower than the 6.5% annual growth recorded in the third quarter of 2022.
Some credit unions looking for new sources of growth have turned to bank acquisitions. Credit unions completed 13 bank acquisitions in 2021 and 16 in 2022. Those numbers were down through the first three quarters of 2023.
Such acquisitions, however, represent just the first piece of the growth puzzle. To succeed in new communities, expansion-minded cooperatives must build trust and a positive reputation. That can be difficult even if the credit union has an established brand in nearby markets. It becomes more challenging when a credit union moves into unfamiliar territory.
Such is the case with Dort Financial Credit Union ($1.6B, Grand Blanc, MI). The Wolverine State cooperative is awaiting final regulatory approval for its purchase of Flagler Bank, a community financial institution headquartered in West Palm Beach, FL. The acquisition which will expand the credit union’s field of membership to four counties in a brand-new state.
Here, Dort president and CEO Brian Waldron shares why the purchase is a good fit for Dort Financial and how the credit union plans to serve its Florida community as Flagler Credit Union.
Why is Dort Financial, based in Michigan, purchasing a bank in Florida? What does the credit union hope to achieve?
Brian Waldron: We did a study and found we already have members in Florida. Some of it is the snowbird effect — with members spending a few months at a time there — but we also see a region that is economically booming.
Our board had already discussed moving to Florida, but we wanted to find the right partner. The Flagler Bank deal was brought to my attention, and it was clear we were culturally and financially aligned, which made this a relatively simple decision.
We want to serve our existing members who are there and gain geographic diversification for our portfolio. In the West Palm Beach area, specifically, there is lots of growth and an opportunity to offer small business and consumer products alike.
How does the credit union plan to build trust and relationships within the community?
BW: Maintaining all the employees from Flagler Bank will ease the process, especially for existing customers. We’re keeping the same faces in the branch that customers know and trust.
The second part of our plan is to establish ourselves as a community partner. In Michigan, we value our community spirit and have credit union volunteers consistently giving back to the areas we serve. We plan to establish a similar model in the new Florida region as well.
Flagler Bank was based largely on commercial relationships. Although we think that’s vitally important, it’s also a priority for us to serve the consumers in the region. Offering consumer products will help differentiate Flagler Credit Union from the bank.
And, of course, we have great products and services, which is another reason to become a member.
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What will the first 12 to 18 months look like?
BW: We’ve built a lot of excitement internally, so the most challenging part now will be tempering our growth expectations. There is a big difference between the legal day one and the operational day one when all systems are converted and we can truly start assisting members. We must take a crawl, walk, run approach to everything we do.
Of course, we’ll be in the community and start giving back right away. We’ll also start building our brand presence and have done a good deal of background and prep work in advance. For example, we’ve already done a full comparison of products and services, deciding which to continue and which to sunset. We’ve also aligned our fee schedules and have built a commercial online and mobile banking product with our current vendor so when those transactions come over, it will be seamless. Anything we can do ahead of time is helpful, but the core conversion will take time.
We’re marrying the best of both worlds. Whether it’s a consumer or commercial product, we’re choosing the better option to offer our members.
What lessons have you learned from the process so far?
BW: It’s important to set the expectation that things take time. Internally, that is my lesson. We thought things would happen sooner. My advice to other credit unions would be to take the time to align products and services but also take a deep breath and be patient.
For me, it was also helpful to tap into my CEO network and talk with others who have gone through bank acquisitions to learn from their experiences. I’ve found other industry CEOs, in Michigan and other states, are happy to help.
Last, but not least, constant communication is key. It’s amazing how many of our employees in Michigan wanted to know more about what we were doing in Florida, and the bank employees’ in Florida needed to understand the acquisition. There can be trepidation on both sides, which makes it important to keep both teams informed.
— This interview has been edited and condensed.