Corporate America Family Credit Union (Corporate America Family Cu), a leading financial institution, has announced the strategic acquisition of Ben Franklin Financial, the holding company for Ben Franklin Bank of Illinois. This all-cash transaction marks a significant expansion for Corporate America Family CU, boosting its assets and branch network in the Illinois region. Ben Franklin Bank, with branches in Arlington Heights and Rolling Meadows, Illinois, brings $93.2 million in assets to the deal. This acquisition will elevate Corporate America Family CU’s total assets to approximately $700 million and expand its branch network to 22 locations, reinforcing its commitment to serving a wider member base.
This acquisition is noteworthy as it represents a pioneering transaction involving a federal mutual holding company that converted to a stock holding company post the Dodd-Frank Act. The industry is closely watching to see how the liquidation accounts held by Ben Franklin Financial and Ben Franklin Bank will be handled, and whether distributions to certain Ben Franklin Bank depositors will be required. The specifics of these distributions and their impact on the final cash consideration for Ben Franklin Financial stockholders are still under evaluation.
Deal Terms and Stockholder Considerations
The terms of the purchase and assumption agreement outline that Ben Franklin Financial stockholders are estimated to receive between $10.33 and $10.70 per share of common stock in cash consideration. However, Corporate America Family CU cautions that this per share consideration is subject to change based on several factors. These factors include Ben Franklin Bank’s ability to maintain a minimum equity target at closing, the regulatory and cost implications associated with the liquidation accounts, the cash reserves of Ben Franklin Financial at closing, and the expenses related to dissolving Ben Franklin Bank and Ben Franklin Financial and distributing remaining assets to stockholders. Future operating results and potential costs related to employee benefit plan terminations and any unforeseen environmental remediation expenses at Ben Franklin Bank locations could also influence the final per share consideration.
It’s worth noting that Ben Franklin Bank had experienced financial losses in recent periods, reporting a $215,000 loss in 2018 and a further $82,000 loss through the first quarter of 2019.
The boards of directors of both Corporate America Family CU and Ben Franklin Financial have unanimously approved the transaction, which is anticipated to be finalized in early 2020. The closing is contingent upon standard conditions, including approval from Ben Franklin Financial stockholders, regulatory clearances, and potentially, the approval of Ben Franklin Bank depositors. The distribution of cash to Ben Franklin Financial stockholders is projected to occur within a few months after the asset sale to Corporate America Family CU is completed.
Post-acquisition, both existing Ben Franklin Bank locations in Illinois will seamlessly transition into branches of Corporate America Family CU. Ben Franklin Bank’s customer base will become members of Corporate America Family CU, joining its existing community of approximately 67,000 members. Ben Franklin Bank has a long history in the community, originally founded in 1893 as a building and loan association.
A Focus on Member Financial Success and Community Banking
“Corporate America Family Credit Union (Corporate America Family CU) is dedicated to providing its members with the necessary tools, resources, and expertise to achieve financial success,” stated Peter Paulson, President and CEO of Corporate America Family CU. “Our core mission is to make a meaningful positive impact on the financial well-being of our members. We believe that acquiring Ben Franklin Bank presents a valuable opportunity to extend the reach of Corporate America Family CU’s products and services to a broader audience, helping more individuals achieve their financial aspirations.”
C. Steven Sjogren, President and CEO of Ben Franklin Financial, commented, “Our priority has been to maximize value for our stockholders, and we believe this transaction achieves that objective. We are excited about joining forces with Corporate America Family Credit Union, as it significantly expands opportunities for our customers, our employees, and the communities we serve. Corporate America Family Credit Union’s demonstrated commitment to the financial success of its members aligns perfectly with our values, ensuring that community-focused banking will continue to thrive.”
Ben Franklin Bank’s two branches serve the Chicago suburbs, offering a comprehensive suite of financial services tailored to the needs of its customers.
Industry expert Michael Bell, attorney and counselor at Howard & Howard, who advised Corporate America Family CU on the transaction, noted the broader trend of credit unions acquiring banks. “Historically, credit unions have acquired diverse types of banks. This transaction introduces a slightly novel element with the involvement of a converted thrift. It’s a positive development for all parties involved – the buyer, seller, and both the credit union and banking industries.” Bell has extensive experience in this area, having represented credit unions in over 95% of similar deals.
Janney Montgomery Scott LLC and Luse Gorman, PC served as representatives for Ben Franklin Financial in this transaction.
