DENVER—The Colorado State Banking Board has denied the sale of a Colorado community bank to one of the state’s largest credit unions.
The board found that the deal—in which Boulder, Colorado-based Elevations Credit Union would purchase the assets of Cache Bank and Trust, headquartered in Greeley—did not meet the requirements of state law, the ABA Banking Journal reported.
Sarah Schupp, director, member strategy and communication at Elevations, stated that the CU is not "commenting at this time, as we are waiting to receive and review the written order from the Colorado State Banking Board.
As CUToday.info reported, in a letter to the state regulator earlier this week, the Colorado Bankers Association (CBA) cited a state statute regarding the sale of assets between state-chartered banks, which essentially establishes “that a bank may only sell the bulk of its assets to another bank.”
That letter also stated that the banking group regarded the 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.”
CBA CEO Don Childears welcomed the board’s decision, emphasizing the need for a level playing field between taxpaying banks and tax-exempt credit unions. “We welcome the (sale) transaction between Elevations and Cache,” he told the ABA Banking Journal. “Elevations simply needs to convert from a tax-subsidized credit union to a taxpaying bank.”
Michael Bell with Royal-Oak Mich.-based Howard & Howard—a the pioneer of these deals—noted the decision is limited to only Colorado state chartered banks.
“Second this is the first state to make a decision like this,” said Bell. “Every other state that has considered this and all federal bodies have approved these deals. I suspect the Colorado bankers feel victorious, but I don't understand how limiting rights of Colorado banks is a victory. Sadly a selling bank in Colorado has lost its ability to sell to all cash CU buyers that treat customers, employees and the community extremely well. We will certainly carry on doing these deals everywhere except Colorado for now. Hopefully Colorado comes around.”