Wings Financial, Minnesota’s largest credit union, is buying Neighborhood National Bank of Mora in its first outright acquisition of a bank.
With the deal, Wings picks up a firm with $216 million in assets and branches in Mora and four other Minnesota towns: Aitkin, Alexandria, Brainerd and North Branch.
Terms of the deal weren’t disclosed. Deal making in the banking industry has accelerated in the past several years as valuations have risen. Also, the need to keep up with technology is driving firms together to spread costs against a larger base of customers.
Executives at Neighborhood National, which is owned by about 100 shareholders in the Mora area, had been considering whether to be a buyer or seller in the current consolidation wave. They began to test the market for buyers and several emerged.
“There were other potential buyers and then Wings was the one,” said Doyle Jelsing, its chief executive.
Wings, which started in 1938 to serve Northwest Airlines employees, in 2009 decided to change its charter and open its membership to anyone in the Twin Cities region. Over the next few years, it acquired several smaller credit unions. But for much of the past decade, the credit union has grown organically, more than doubling its asset base to $5.6 billion.
Wings last year bought three branches in the metro area from KleinBank, giving it some experience in converting bank customers into credit union members.
“We’ll just convert them over into membership,” said John Wagner, a senior vice president at Wings. “There’s a lot of technical work on systems to be done, but we’ve also done that before.”
The takeover of an entire bank creates the prospect that some overlapping jobs may need to be cut. But Wagner said the company will offer jobs to 54 of Neighborhood National’s employees.
The purchase must be approved by both state and federal regulators. Executives aim to close the deal by the late summer or early fall.
After the transaction was announced Monday, Jelsing said the reaction he heard was “generally positive.”
“With any change, there is some anxiety about what the future is going to look like,” Jelsing said. “A merger of a credit union and a bank is unique. So the ability to forecast is a little bit more challenging.”
He said that Wings’ sizable presence in the Twin Cities, with 23 branches or offices, is appealing to customers of Neighborhood National, many of whom are likely to visit the metro area with some frequency.
“Any connections we have with the cities have brought that favorable impression back to our community,” he said.