Iowa Credit Union Plans Bank Acquisition

The $1.2 billion Collins Community Credit Union in Cedar Rapids, Iowa said it plans to acquire the $12.3 million First Savanna Savings Bank in Savanna, Ill.

Collins Community CU will acquire the assets and liabilities of First Savanna Bank, according to a press release.

Financial terms of the cash deal were not disclosed.

The bank, which specializes in mortgage lending, will give the credit union a foothold in the western Illinois market. Collins Community CU operates a home loan center in Dubuque, Iowa, which is about 50 miles northwest of First Savanna’s sole branch.

Established in 1886, First Savanna manages $10.4 million in deposits, $8.5 million in loans, and $1.3 million in capital. According to the bank’s financial reports filed with the FDIC, First Savanna posted a net income loss of $79,000 and an ROA of -1.30%, and an ROE of -11.80% at the end of the second quarter.

On March 8, 2019, the FDIC placed First Savanna under a consent order because of unsafe and unsound banking practices and alleged violations of laws and regulations of the Bank Secrecy Act. Though the bank did not admit or deny the charges of unsafe or unsound banking practices and alleged Bank Secrecy Act violations, First Savanna nevertheless consented to the order, according the FDIC document.

The 14-page consent order requires the bank to develop and adopt BSA compliance and training programs, designate a qualified senior bank official to oversee the BSA compliance program and establish account transaction monitoring.

The consent order, which has not been lifted by the FDIC, also requires the bank to develop and adopt a profit plan and budget, a strategic plan and prohibits First Savanna from entering into any new lines of business to high-risk customers without conducting appropriate due diligence.

The proposed acquisition, expected to close in the first half of 2020, has received unanimous approval from the board of directors of each organization and is subject to regulatory approvals as well as other customary closing conditions.

Following the completion of the transaction, the bank’s customers will become members of Collins Community CU. The press release did not report how many customers the bank serves.

“We are excited about this opportunity to partner with First Savanna Savings Bank and expand our footprint into Illinois,” Collins Community CU President/CEO Stefanie Rupert said in a prepared statement. “Additionally, we are pleased to welcome First Savanna Savings Bank team members and customers to the Collins Community family.”