GRAND BLANC, Mich.— Geographic expansion continues to be a major driver behind credit unions’ pursuit of mergers and acquisitions, with buying an established institution often offering a more cost-effective path than growing organically.
Some cooperatives are even finding that stepping outside the traditional credit union space—by acquiring a bank—can be an even more effective strategy.
That was the case for Dort Financial Credit Union here, which took the unconventional route of purchasing a bank in 2023 to expand its reach. The credit union shared the thinking behind the move with CUToday.info, and the business benefits.
The target of Dort Financial’s acquisition was $500-million Flagler Bank, located in four counties surrounding West Palm Beach, Fla. Because the Flagler name is so well known in area, the acquired Flagler branches are operated as Flagler Credit Union, a Division of Dort Financial.
The acquisition enabled Dort Financial to grow its assets to $2.3 billion while also achieving two compatible goals: breaking into the desirable area of Southeast Florida, and building its commercial business with a proven performer in the market, the CU explained.
An added benefit, the credit union continued, is that Flagler Bank aligned well with Dort Financial’s values of strong community involvement and volunteerism. All these factors collectively led Dort Financial to pursue the acquisition.
“The more we learned about Flagler, the more we saw the synergy between the two organizations,” said Dort Financial CEO Brian Waldron. “It turned out to be a great fit—not only geographically and strategically but culturally as well.”
Waldron came to Dort Financial in March 2022 following the retirement of the credit union’s previous CEO. As a means of facilitating growth, the board agreed with Waldron’s assessment that entering a new market through a bank acquisition would be the best path forward.
Brian Waldron
“We were saturated in the markets we serve, and Brian was ready to lead us in a different strategic direction to become a larger credit union,” said Board Chair Wayne Natzke.
Since many of Dort Financial’s members were retiring to Florida or at least spending their winters there, the Sunshine State emerged as an ideal location for the credit union’s expansion, the organization said.
“We felt there was a demand for credit unions in the area,” said Natzke, who is a Florida resident. “We saw it as a great opportunity to expand into a new market while serving our existing members who have moved here as well.”
While expansion into a new market was a primary goal, the acquisition also fulfilled Dort Financial’s desire to expand its commercial business.
“That’s one of the main reasons that Dort acquired us, because we were primarily a commercial bank,” said Ed Sterling, who was Flagler Bank’s president at the time of the acquisition and now serves as Dort’s COO. “Dort absorbed our whole commercial platform of lending and also adopted our business account deposit models.”
Waldron said the acquisition will allow Dort to build its standing in the commercial market more quickly than it could have done through organic growth.
“While we already offered commercial loans and commercial products prior to the acquisition, the Flagler team is providing us with the expertise that will strengthen our position,” he said.
Conversely, Dort Financial members who transitioned from Flagler Bank customers now have access to a full range of consumer products that commercial banks typically do not offer, the CU said.
“There are many underbanked people within our branch footprint who can benefit from our expansion on the consumer side,” said Sterling, who remains based in Florida. “That’s a whole new market we’ll be able to serve.”
As bank acquisitions become more common in the credit union sector, credit union executives need resources that help guide them in the process, asserts CEO Advisory Group, which served as Dort Financial CU's advisor on this transaction. Click here to read CEO Advisory Group’s three-part whitepaper that discusses how to get started with bank acquisitions, how to proceed with a deal, and how to manage post-merger integration.