Union bank

Nebraska agency refuses GreenState Credit Union banking deal

Diving brief:

  • The Nebraska Department of Banking and Finance (NDBF), in one Order of December 30rejected Omaha-based Premier Bank’s request to be acquired by the Iowa-based bank green state Checkout.
  • Premier Bank does not have the legal capacity to sell its assets to green state because the credit union, established under the laws of Iowa, does not meet the definition of a “financial institution” that can participate in cross-industry acquisitions or mergers in Nebraska, a hearing officer said .
  • The Nebraska Bankers Association (NBA) and other trade groups filed formal objections to the deal ahead of a September 20 hearing, in which the NBA served as the opposing party. “Efforts by the Nebraska Bankers Association are simply blocking consumer choice for Nebraskas,” said Jim Kelly, by Green State Marketing Director, says CUToday.infonoting that Premier is appealing the decision.

Overview of the dive:

The GreenState deal isn’t the only bank acquisition proposed by a credit union from 2021 that has been pushed back due to the wording of a state law. A Tennessee County Chancery Court judge issued an injunction in November, temporarily halting the proposed acquisition of Financial Federal Bank by Memphis-based Orion Federal Credit Union as financial institutions and a regulator State haggle over the meaning of “acquire”.

The Tennessee Department of Financial Institutions argues that the word, as defined in Tennessee banking law, limits the scope of a bank acquisition to its actions and charter and would prohibit the assumption of assets. The credit union and the bank, however, argue that the Tennessee Banking Act does not explicitly define “acquire” and refers to Tennessee Corporations Act, which states that the purchase of all or substantially all – all of a bank’s assets are a purchase transaction and not a prohibited transaction. acquisition.

Judge Patricia Moskal ordered a “speedy hearing” to resolve legal and interpretative uncertainties, but cited “the need to maintain the status quo for the duration of this action.”

The NDBF would not be the first state agency in recent memory to reject a credit union’s offer to acquire a bank. In January 2020, the Colorado Banking Board rejected Elevations Credit Union’s bid to buy the assets of Cache Bank & Trust after that state’s banking lobby argued that credit unions could not be ” authorized purchasers” of banks under the language used in several Colorado statutes.

GreenState in 2019 found itself on the losing side of a similar decision, albeit temporarily. The Iowa Superintendent of Banks has denied an application allowing the credit union to buy seven branches and related assets from First American Bank, saying the deal was finalized without his decision. First American and the state superintendent have reached an agreement to move the deal forward.

Last year, GreenState was the most prolific credit union to offer bank acquisitions. Three of the 13 deals completed in 2021 involved GreenState as the buyer. Two of those deals — a May decision to buy Oak Brook, Ill.-based Oxford Bank & Trust and an October deal for Midwest Community Bank — would push the credit union into Chicago and its suburbs. The deal for Premier’s four sites would establish a presence for GreenState in the Omaha market. The transactions together would mark GreenState’s first expansion outside of Iowa.

“The players who are resisting these acquisitions just don’t want to compete on price,” Kelly told CUToday.info. “We can give back by pricing aggressively.”

Trade groups such as the Independent Community Bankers of America (ICBA) have consistently pushed back against the acquisition of banks by credit unions, arguing that credit unions’ tax-exempt status allows them to offer a price of buy higher than the banks and allows them to grow. more freely.

First CEO Chris Maher said American banker the bank is disappointed with the decision but remains confident that “a proper interpretation of Nebraska law will overrule the decision.”

Jim Titus, the hearing officer in the GreenState case, wrote on December 30 that “it is difficult to find in the statutes the power of a bank to sell substantially all of its assets as being a power incidental to the operation of the banking business, since Premier will not be continuing the banking business, but rather ending it.”

Premier asserted that Nebraska law specifically provides for the power of a national bank to transfer assets to any uninsured bank or institution in return for assuming liability for any portion of deposits made at that insured depository institution.

“However, that is not precisely how the statute reads,” Titus wrote. “Instead, it is a provision where the law states that no insured depository institution may take such action without the prior written approval of the [Federal Deposit Insurance Corp.].

“Otherwise … there are provisions for circumstances in which the FDIC will not approve the transaction and this includes factors to consider such as the financial and management resources and future prospects of existing and proposed institutions, the convenience and needs of the community to be served and risk to the stability of the banking or financial system of the United States,” Titus wrote. “This is not an enabling statute, but rather a statute dealing with the circumstances where approvals are required with the FDIC and where they are not.”

GreenState’s home state lawmakers also enacted a measure in 2021 to prevent state-chartered credit unions from buying banks. Bill died after leaving the Iowa Senate Commerce Committee, CUToday.info reported.

Banking trade groups bristled last year over yet another proposed credit union bank acquisition – Florida-based VyStar’s April deal for $195.7 million to buy Heritage Southeast Bank, based in Georgia.

“VyStar has either closed, moved, sold or consolidated half of the acquired branches” following a bank acquisition the credit union undertook in 2019, ICBA and the Community Bankers Association of Georgia wrote in a letter. joint in May.

VyStar and Heritage agreed in October to postpone – from December 31 to February 28 – the date on which they can terminate the proposed agreement between them, noting that the transaction still requires approval from the FDIC, the National Credit Union Administration ( NCUA), the Georgia Department of Banking and Finance and the Florida Office of Financial Regulation.