MEMPHIS–A Tennessee court has issued a temporary injunction blocking the sale of Memphis-based Financial Federal Bank to Orion Federal Credit Union.
According to the ABA Banking Journal, the Tennessee Department of Financial Institutions challenged the acquisition, claiming it is prohibited under the Tennessee Banking Act.
In the complaint, TDFI said that the definition of “acquire” should be “limited to the acquisition of a bank’s stock or charter,” and accordingly prohibits Orion’s purchase of all or substantially all of the assets and assumption of the liabilities of state-chartered Financial Federal Bank, the ABA Banking Journal reported.
This is not the first time a credit union acquisition of a community bank has been challenged in court. As CUToday.info has reported, such sales were have previously been blocked in Iowa and Colorado.
In August, the $1-billion Orion FCU announced plans to acquire the $751-million Financial Federal Bank, which would nearly double its assets if completed.
At the time the acquisition was announced, Financial Federal had reported $11.2 million in net income in 2020 and $3.9 million through March of 2021. Orion FCU reported $5.3 million in net income at midyear with 10.97% capital.
Orion FCU said the deal will expand its products and services and deepen its market share in private banking, residential and commercial lending.