In the second such move nationally in a couple months, the $345 million GFA FCU of Gardner, Mass. plans to purchase and merge the ailing Monadnock Community Bank of Peterborough, N.H., it was disclosed Thursday.
The transaction is unusual and represents a new test of regulatory oversight and authority since the $83 million Monadnock, itself a former CU-turned-bank, is stock owned. CUs are prohibited from owning stock-owned banks so the deal is structured to meet that problem, industry sources said.
Details on the purchase deal remained sketchy but it was learned the proposed transaction has been under discussion since last fall as NCUA and bank regulators weighed the purchase by the $1.3 billion United FCU of St. Joseph, Mich., of the assets of the $80 million Griffith Savings Bank of Griffith, Ind.
Griffith, an FDIC-insured mutual, had also been troubled and had once considered switching to a CU charter.
In that precedent-setting transaction, United FCU at yearend won approval from the NCUA, the FDIC and the Comptroller of the Currency to take over the assets of the northwest Indiana bank.
With an eye on recent trends, industry sources pointed out the irony in the New Hampshire transaction considering just two weeks ago the $1.8 billion HarborOne CU of Brockton, Mass. revealed plans for a proposed conversion to a mutual charter.
HarborOne follows the $1.5 billion Technology CU of San Jose, Calif. by also initiating the lengthy conversion process with solicitations for member comment.
The $187 million HAR-CO Maryland Federal Credit Union also plans to complete its conversion to a mutual bank by April 1.
Regarding the GFA deal, it was learned that Monadnock Community had been under a cease-and-desist order after experiencing losses. There also reportedly have been other bank bidders for the institution.
Officials of GFA were not immediately available for comment. GFA, which serves central Massachusetts, has seven branches, including one in New Hampshire.
Monadnock Community Bank, FSB was initially chartered in 1971 as AWANE CU, with sponsorship by the Automotive Wholesalers Association of New England Inc., a trade group serving wholesalers, manufacturers and dealers in the automotive parts industry.
With a goal of expanding services in Cheshire and Hillsborough counties, AWANE converted to a federal savings bank in May 1996 and opened a retail banking office in November 1997.
In October 2000 the bank changed its name to Monadnock Community.
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