SOUTH BEND, Ind.–Teachers Credit Union here has announced the acquisition of New Bancorp, Inc., the holding company for New Buffalo Savings Bank. Under the terms of the purchase and assumption agreement. TCU is acquiring the assets and assume the liabilities of New Bancorp and New Buffalo in an all-cash transaction.
New Buffalo operates three bank branches in New Buffalo, Sawyer and Three Oaks, Michigan and had $119.5 million in assets as of Dec. 31, 2018. The acquisition will increase the TCU’s total number of branches to 57 and total assets to approximately $3.2 billion.
TCU said the transaction involves the first federal thrift that converted to stock following the implementation of the Dodd-Frank Act to have its assets and liabilities sold to a credit union. As a result, the credit union said it cannot predict whether the liquidation account maintained by New Buffalo will be required to be distributed to certain depositors of New Buffalo.
According to TCU, under the terms of the purchase and assumption agreement, New Bancorp shareholders will receive $28.42 per share in cash (which is subject to adjustment based on a minimum equity target) for each outstanding common share of New Bancorp. The deal is contingent upon TCU being permitted by regulators to assume a liquidation account that is currently maintained by New Buffalo for the benefit of certain depositors, which would increase the per share price to $31.23 per share (also subject to adjustment based on a minimum equity target).
For all outstanding options of New Bancorp, TCU said it will pay in cash the difference between the exercise price of each option and the per share merger consideration. New Bancorp has 718,031 shares outstanding, as well as 59,080 options with a weighted average exercise price of $14.09. The transaction is valued at $21.3 million ($23.4 million if the liquidation account is not required to be distributed to depositors), or approximately 128.5% of New Bancorp’s tangible book value as of December 31, 2018 (141.2% if the liquidation account is not required to be distributed to depositors), the credit union said.
Closing in Second Half
The deal is expected to close in the second half of this year and is pending approval by New Bancorp’s shareholders and regulators. Following the completion of the sale of its assets and liabilities, it is expected that the corporate existence of New Buffalo will be terminated and that New Bancorp will be dissolved. It is expected that this process may take up to 45 days following the sale to be completed, TCU said.
New Buffalo Savings Bank was founded in 1921, and upon completion of the deal its customers will become members of the credit union.
“We are excited to announce the acquisition of New Buffalo Savings Bank and look forward to welcoming their customers and employees into the TCU family,” said Paul Marsh, President and CEO. “This acquisition will allow us to expand our footprint and better serve our members in southwestern Michigan and it will result in better banking access for New Buffalo Savings Bank’s customers as well. I look forward to a positive transition as the cultures of both organizations are strong, and we share a commitment to the community and the members and customers we serve.”
Expanded SBA Lending
TCU said that in addition to growing its footprint in southwestern Michigan, the acquisition is expected to enhance its business lending efforts by adding New Buffalo’s expertise in Small Business Administration (SBA) lending.
Founded in 1931, TCU has more than 300,000 members.
New Bancorp is being represented in this transaction by Keefe, Bruyette, & Woods as well as Luse Gorman, PC. TCU is being represented by Boenning & Scattergood and Krieg DeVault LLP.