The FDIC's approval for a landmark deal combining the $1.3 billion United Federal Credit Union of St. Joseph, Mich. and the ailing $81 million Griffith Savings Bank of Indiana carried a Jan. 1 effective date, attorneys said Wednesday.
The transaction, which already won NCUA approval late last month, has been in the works for months but approval by FDIC was slow in coming, raising initial concerns that it might meet banker opposition, according to industry sources.
Late Tuesday, UFCU President/CEO Gary Easterling and the credit union's attorney hailed the agency approval as a victory for future bank-to-CU deals, particularly of troubled thrifts which seek out a healthy credit union for merger.
Michael Bell, a Niles, Mich. attorney representing UFCU, said the entire transaction "was driven by a 'can do' attitude and the continual review of the rhetorical question 'why not'?"
In this instance, he said, "it made sense" to test previous NCUA and FDIC decisions on the issue since "thrifts as mutuals have quite a few similarities to credit unions and in this case this particular thrift had expressed prior interest in converting to a credit union"
"We searched and searched and never found anything on the NCUA or FDIC side that prevents or prohibits a deal like this," said Bell.
"In our conversations with the NCUA we kept revisiting this simple question: 'Tell us why not and to give us the chance to find a solution,'" he said.
"Transactions like this present a unique opportunity to expand the credit union industries' slice of the financial services pie," Bell said.
"Beyond that a transaction like this also allows jobs to be saved and communities to continue to be served by a financial institution," he added.
Finally, he concluded, "his kind of a transaction presents a unique opportunity for thrifts and community banks by giving them another choice for a partner when one is needed.
The Griffith merger would be the second acquisition for UFCU in two years following its 2009 purchase/assumption takeover of the troubled $175 million Clearstar Financial CU of Reno, Nev.
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