NORTH LIBERTY, Iowa—The $7.8-billion GreenState Credit Union’s bid to acquire $395-million Premier Bank, based in Omaha, Neb., has been rejected by the Nebraska Department of Banking and Finance.
According to court documents, Premier Bank lacked legal standing to sell its assets to GreenState. The court stated that GreenState, since it is a credit union organized under Iowa laws, is not qualified to purchase Premier Bank under Nebraska statutes.
“There is difficulty in finding in the statutes the authority of a bank to sell substantially all of its assets as being an incidental power to the carrying on of the business of banking, since Premier is not going to be carrying on the business of banking, but rather terminating it,” the court stated. “Therefore, Premier has not carried its burden of proof in this proceeding to show that there is express power under federal law for a national bank to sell substantially all of its assets under the factual circumstances presented in this proceeding.”
Premier argued state law provides specifically for the power of a national bank to transfer assets to any non-insured bank or institution in consideration of the assumption of liabilities for any portion of the deposits made in such insured depository institution.
“However, that is not precisely how the statute reads; instead, it is a provision where the statute says no insured depository institution shall take such action except with the prior written approval of the FDIC,” the court ruled. “Otherwise, in the statute under subsection (c), there are provisions for circumstances whereby the FDIC shall not approve the transaction and it includes factors to take into consideration such as the financial and managerial resources and future prospects of the existing and proposed institutions, the convenience and needs of the community to be served and the risk to the stability of the United States banking or financial system. This is not an empowerment statute, but rather a statute dealing with circumstances where approvals are necessary with the FDIC and where they are not.”
As CUToday.info reported, Iowa bankers worked last year to slow efforts of credit unions to buy banks. A bill that would have prevented Iowa’s state-chartered credit unions from buying banks passed out of the state’s Senate Committee on Commerce, but eventually died. In addition, the Iowa Division of Banking in 2021 initially objected to GreenState’s acquisition of First American Bank in Fort Dodge before eventually letting the deal move forward.
‘Blocking Consumer Choice’
GreenState Chief Marketing Office Jim Kelly told CUToday.info that while the CU was disappointed with the court’s decision, “As of today we understand Premier Bank is appealing and we expect to be successful in the end. The effort made by the Nebraska Bankers Association is simply blocking consumer choice for Nebraskans. GreenState will create jobs, give back to the local community, and put money back into the pockets of its Nebraska members.”
Kelly said the decision will not slow GreenState’s future merger plans, and also spoke to the question of whether bankers are targeting the large credit union.
“Many know that GreenState is efficiently run and, as a cooperative, the result is that we can give back by pricing aggressively. The players resisting these acquisitions simply do not want to compete on price,” he said.
GreenState CU reported $153.7 million in net income as of Sept. 30, with net worth of 10.61%.
‘Legally Flawed’
The pioneer of credit union purchases of banks, attorney Michael Bell, who represents GreenState, said the credit union “has the ability to buy this bank. The question of this hearing involved the bank’s ability to sell.”
Bell, a partner and co-chair of the Financial Institutions Practice Group at Honigman, LLP, Ann Arbor, Mich., added, "For some reason the Nebraska Bankers Association is aggressively arguing to take away their member banks’ rights to sell. The hearing officer’s decision, with all due respect, is legally flawed.”
Bell has been involved in more than 40 whole-bank agreements, plus additional bank branch purchases.
Multi-State Deals
GreenState’s agreement with Premier Bank was part of a deal in which it agreed to simultaneously purchase separate banks in states outside of Iowa—a first among credit union/bank buys. GreenState last year announced it intended to purchase not just Premier, but also the $731-million Oxford Bank & Trust in Oak Brook, Ill. The combined assets of both banks made the deal the second-largest CU/bank purchase to date, with Jacksonville, Fla.-based VyStar CU agreeing in April to buy the $1.5-billion Heritage Southeast Bank in Jonesboro, Ga.
The Nebraska regulator’s ruling can be found here https://www.cutoday.info/site/THE-vault/Whitepapers