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  • | 11:00 a.m. June 19, 2015
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Executive Summary
Company. Achieva Credit Union Industry. Banking Key. The battle between credit unions and banks hasn't prevented an unusual merger.
Many of today's banks — especially the nation's largest -- owe history to mergers and acquisitions.

Even regional banks like SunTrust Banks have a history filled with acquisitions: The Atlanta-based chain formed from the 1985 merger of Trust Company of Georgia and SunBanks Inc. in Orlando.

Bank mergers and acquisitions over the last century measure in the hundreds. However, it's only been in recent years where the worlds of banks and credit unions -- two sides of the financing industry that seemingly always have been at odds -- started to collide, with less than 10 deals of credit unions buying banks to date.

The latest was the announcement in May that Dunedin-based Achieva Credit Union would purchase all the shares of Calusa Bank in Sarasota and Charlotte counties for $23.2 million. The deal creates what executives call the first “whole bank” acquisition by a credit union.

“It's one of a kind, and definitely unique,” says Gary Regoli, Achieva's CEO, who previously led Kansas' largest credit union, the Boeing Wichita Credit Union, for nearly a decade.

But outside of its tax structure, Regoli says there's actually a lot in common between a credit union and a community bank like Calusa, which operates branches in North Port, Port Charlotte, Punta Gorda and Venice. Both typically put customer service ahead of products, and individual accounts ahead of commercial.

It's building a bridge between rivaling banks and credit unions that's expected to be more difficult, especially when regulatory bodies such as the National Credit Union Administration and the Federal Deposit Insurance Corp. weigh in.

Multiple suitors
When Calusa President Todd Katz got the call from Achieva last year looking to buy, he wasn't necessarily surprised — even though deals like that are rare. He wasn't surprised because the surprise had already come.

“We heard from another credit union at the end of last summer, and we were just shocked. We were blown away,” Katz says. While he won't identify the credit union, he did say it was headquartered up north and wanted to open a branch or two in Florida. It toyed with the idea of acquiring a small bank instead.

The talks broke off, however, after Katz discovered the emissaries sent to explore Calusa did not have approval of its board to pursue such an acquisition. That only soured Katz's opinion of credit unions even more.

“I sat and wondered if all credit unions were like this, you know, groups that were not very sophisticated and organized,” he says. “I had never heard of a company reaching out to another company, but never having the authority of the board to do it.”

Achieva stepped in a few months after those talks broke off. Katz and longtime business partner Lew Albert were skeptical. But Regoli insisted the three get together for lunch and at least talk about the possibility.

It was that breaking of bread that changed Katz's mind.

“We do a lot of our business by looking people in the eye, and having a feel for them,” Katz says. “And sitting there with Gary, I got this really positive feeling from him. I knew talking to him that he would take good care of our team, and take good care of our customers.”

That was important to Katz and Albert. Although Calusa is just 8 years old, the two founded what could be described as Calusa's predecessor, Tarpon Coast National Bank, nearly two decades ago. With nearly 40 employees, Katz boasts about the personal interaction the bank has with each of its customers, not only knowing nearly all of them by name, but knowing their families and their lives.

That approach helped Calusa through the economic crash that claimed multiple competitors.

“For a while there, when you looked up and down the west coast, it was like almost every four months another bank got acquired or folded,” Katz says. “But we really had our hands dug deep into the dirt of this community. We really knew our customer base, and we didn't get burned on a lot of loans because we knew the people who were borrowing.”

It's the same type of customer experience at well-run credit unions, Regoli says, and could be an asset in the integration phase of the Achieva-Calusa deal. “Our focus has been on members so long, that we have developed a strong affinity and loyalty with our membership at the grassroots level probably better than any bank,” Regoli says.

Cash cow?
Merging the business sides under the Achieva name and structure might be the easy part, however.

There's still a lot of animosity between banks and credit unions, and growing concern this could begin a trend that would take many banks off tax rolls and into the nonprofit structure of a credit union.

That might make it a difficult sell in the financial community, and it also could create obstacles in the regulatory approval process. In an opinion column published last month in the Wall Street Journal, Florida Bankers Association President and CEO Alex Sanchez called credit unions a “$1 trillion tax-exempt cash cow.”

“For almost a century, credit unions have been allowed to parade themselves as banks, offering identical services,” Sanchez writes. “Unlike banks, they pay no federal or state corporate income taxes. This loophole should be closed.”

Credit unions, the head of the state's banking trade group says, were designed to help people of “modest means.” Today, however, there are more than 200 credit unions with more than $1 billion in assets, and are growing at a clip far faster than community banks. Sanchez has commented frequently over the last decade on the banks vs. credit unions issue.

With its acquisition of Calusa and its $165 million in assets, Achieva will reinforce its position above the $1 billion asset mark and bring its total branches to 24. That's a long way from when it started, with $99.25 in deposits from seven teachers in Pinellas County in 1937.

But Regoli says larger national banks aren't even looking at community banks anymore from an acquisition or competitive standpoint. And when those larger banks do look at smaller lenders, it ultimately destroys the customer-centric environment of what helps make community banks — and credit unions -- unique.

“Instead of arguing over taxing and applying a federal tax to credit unions, we ought to be trying to look at ways to provide some tax abatement to these community banks,” Regoli says. “Those banks could really use some relief themselves. That might not be as exciting as talking down credit unions, but it's what these community banks really need right now.”

The Next Chapter
When Achieva's acquisition of Calusa Bank closes, likely later this year, Todd Katz is going to have to find something else to do.

Katz and bank co-founder Lew Albert won't be a part of the merged financial institution. Instead, Albert will follow through on his previously announced retirement, and Katz isn't quite sure what his next move will be.

“I don't want to focus on the next chapter until I see this one through,” Katz says. “But I'll tell you, I get more questions about what I'm going to do next than about the merger. So I'll have to get back to you in August or September.”

Before getting into banking in the 1990s, Katz was a practicing lawyer, and is considering returning to the field. He also says at least one community leader has approached him about taking over his business, and helping it grow like he did Calusa over the last eight years.

There might also be a career behind the mic looming.

“Lew and I used to do a radio show, kind of like Howard Stern meets the financial world,” Katz says. “It was interesting, and we had a great time doing it. It's a small market, and I have a chance to do something new and creative, so we'll just have to wait and see.”


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