In assuming what it called a trailblazer's role, the $1 billion Eau Claire, Wis., credit union formally won approval from two bank regulators, the FDIC and the Office of Thrift Supervision, to buy 11 branches, including $177 million in loans and deposits and equipment, from the ailing AnchorBank of Madison.

The NCUA and the Wisconsin Office of Credit Unions had given earlier endorsements of the milestone purchase though official notification did not come until June 11. The original application, seen as noteworthy because of its magnitude, had been submitted to the NCUA and the other agencies last November though discussions had been underway since July 2009.

The president/CEO of Royal, Charles Grossklaus, was quick to praise regulators for "doing an outstanding job in due diligence" and having the wisdom to allow a CU to fill what might become a financial void in nearly a dozen rural communities of central and northwest Wisconsin.

Under the acquisition timetable, put in place months ago, Royal said it now expects to complete converting the branches by June 28.

Since January, said Royal, a 100-employee team has worked on all aspects of the conversion deal from distributing welcome letters and direct mail pieces to 20,000 AnchorBank customers to arranging numerous meetings with civic and business leaders in communities where AnchorBank has the offices.

"I've made it to nine of the 11 communities and spoken to AnchorBank customers, taken part in golf outings and met with Chamber of Commerce and EDC officials," said Grossklaus, referring to the Economic Development Corp., a statewide agency.

Royal's conversion team, he said, has for months been training the 114 AnchorBank employees on CU operations as they seek to make AnchorBank customers, many who have never dealt with a CU, feel comfortable and secure about their accounts.

Once the acquisition is complete on June 28, RCU will have 26 offices, 23 across central and western Wisconsin and three in the Twin Cities metro area, serving more than 140,000 members.

AnchorBank has been in a troubled condition for two years, having lost $158.2 million in 2009 and $169.8 million in 2008 and was seeking suitors for its assets, according to reports by The Milwaukee Journal Sentinel.

As for Royal, Grossklaus said he has been receiving congratulations from CEOs across the U.S. since the deal was announced. "This is the largest bank branch acquisition that our state and federal regulators have considered," he said. "We are very proud to have received regulatory approval."

RCU, he stressed, "is strong, stable, and well-positioned for the purchase." He continued, "Our organization has a long history of successfully merging and growing financials, and we see great potential in these new locations." RCU, which holds a community charter, was organized in 1964 to serve employees of Uniroyal Corp. eventually adding 1,500 SEGs.

Among those congratulating Grossklaus was Washington consultant Chip Filson, president of Callahan & Associates, calling the bank deal a "very positive precedent" for the industry because it represents "a passing of the torch from banks to credit unions as providers of local finance."

By winning the endorsement of bank regulators, Royal demonstrated that it has the financial muscle and wherewithal to undertake the task of serving bank customers, he said, and those regulators recognize that ability.

Grossklaus acknowledged to Credit Union Times that he has long been aggressive in scouting out potential bank or CU properties for merger as part of the CU's five-year strategic plan for growth. Once the word on the street came out about AnchorBank, he and his staff, including outside counsel, began researching the purchase idea with AnchorBank management.

Negotiations first began on seven branches "and then we got up to 11, and part of the deal was we guaranteed jobs for the employees through December," said Grossklaus.

A few have since left, he said, but Royal is hopeful most will stay on through the transition.

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