DENVER–The Colorado State Bankers Association is challenging plans by a credit union to purchase a bank, while one state away another CU announced it is acquiring two bank branches and the related books of business.
As CUtoday.info reported here, in September of 2019 Elevations Credit Union said it planned to acquire the assets of Greeley, Colo.-based Cache Bank & Trust. The bank had $121-million in assets as of March 31, reporting net income of $161,000 through the first quarter with ROA of .53%.
At the time the bank issued a statement saying it chose to be acquired by Elevations CU “because it’s aligned with CBT’s culture to provide the best, personalized service for its customers, employees and community. They can rest assured that Elevations plans to preserve the local, community-minded culture in Greeley and Fort Collins, while providing even more opportunities for employees and clients.”
But in a Jan. 13 letter to the Colorado State Banking Board, the CBA said it is in “opposition” to the approval of the acquisition, which the State Banking Board is considering at its meeting on Jan. 16.
‘Beyond’ The Law
“We regard this proposed purchase as an effort to expand the credit union’s activities beyond what was contemplated in law and by a process to avoid the clear limitations and intent of Colorado statutes. But we are clear: we object to any purchaser not authorized by statute, any buyer that is a nonbank,” the letter reads.
The letter, which can be found here, goes on to challenge the legality of the purchase, challenge consumer protection issues, states Elevations is an “ineligible purchaser,” and raises questions around “future ramifications.”
“If this transaction is approved, other banks that may be interested in acquiring banks such as Cache would be at a competitive disadvantage because the result of the credit union tax advantage means an acquiring credit union has a huge competitive advantage over a potential acquiring bank,” the letter states. “In short, the tax advantage allows the credit union to out-bid a bank interested in buying a bank. The tax inequity thus creates an uneven competitive field in the purchase of banks.”
Bank Branches Purchased
Separately, in Cheyenne, Wyo., Blue Federal Credit Union said it is purchasing two Liberty Savings Bank branch locations. The transaction, in the works for over a year, according to the credit union, has been given the OK by regulators and will involve nearly $100 million in deposits and two physical branch locations in Denver and Granby, Colo.
The transaction is expected to close in February of 2020.
“We are excited to have the opportunity to welcome the 2,149 Liberty Savings Bank customers as member/owners of Blue, while providing great convenience for our existing members in this area,” said Stephanie Teubner, president/CEO, in a statement.
The $1.1-billion Blue FCU has more than 89,000 members. It is represented attorney Michael Bell with Royal-Oak Mich.-based Howard & Howard.