Nebraska’s Bankers Challenge GreenState CU’s Bank Acquisition Proposal

While the $7.9 billion GreenState Credit Union in North Liberty, Iowa, says it will close on the acquisition of the $743 million Oxford Bank & Trust of Oak Brook, Ill. on Dec. 31, its proposed purchase of the $395 million Premier Bank of Omaha, Neb., is uncertain after bankers in that state urged regulators to reject the deal.

The Nebraska Bankers Association (NBA) opposed the position of Premier Bank that its sale to Iowa’s largest credit union should be approved because it is allowed by Nebraska’s so-called wildcard and cross-industry laws. But attorneys for the NBA argued that under those state laws, the deal should be nixed, according to a transcript, obtained by the CU Times, of a hearing held earlier this year by the Nebraska Department of Banking and Finance (NDBF) in Lincoln.

Lawyers for Premier Bank and the NBA made their arguments before NDBF hearing officer Jim Titus in September. His responsibility is to prepare a report based on findings of fact, conclusions of law and to make a recommendation to NDBF director Kelly Lammers who has not yet rendered a decision as of this week.

“We have heard no news at this point,” GreenState’s Chief Human Resource and Information Officer Marsha Wolff said. “After we go through the holiday season, we will work early next year to push for a resolution.” If the deal is not approved, Wolff, who oversees the credit union’s bank acquisition deals, said GreenState will consider its legal options.

This is the second challenge by bankers to stop a credit union-bank buy deal. Last month, a Tennessee judge granted a temporary injunction that blocks the $1 billion Orion Federal Credit Union’s proposed acquisition of the $792 million Financial Federal Bank in Memphis.

Lawyers representing Premier Bank said under the wildcard law, the applicable federal statutes and OCC regulations, show that if Premier was a national bank, the proposed deal would be permitted as long as the transaction is approved by the FDIC and meets other requirements of the OCC.

Premier lawyers said the banks’ FDIC application has been accepted and indicated the federal agency is expected to approve it if the Nebraska regulator gives the proposed transaction a thumbs up.

But NBA lawyers indicated the deal should not be approved, in part, because the wildcard statute was not included in the bank’s application, and it was not posted in the hearing’s public notice.

“If it’s not in the public notice, how does Premier come before the Department today and say that we’re here under the Wildcard Statue,” Gerald M. Stilmock, an NBA attorney said during the Sept. 20 hearing. “I have to believe the Supreme Court would say public notice is public notice and the reference to the statutes means something.”

Under the cross-industry law, however, Premier Bank said it presented more than sufficient evidence that it met the law’s specific factors, which include its stockholders and officers are parties of integrity and responsibility, that the bank’s deposits will continue to be insured. and that the public necessity, convenience and advantage will be promoted by permitting GreenState’s acquisition.

“We submit to you this evidence is overwhelming,” Premier Bank’s attorney David J. Routh said. “From many different perspectives it is clear that the proposed transaction will promote the public necessity, convenience and advantage in Omaha and Nebraska City. The NBA has not produced any meaningful evidence to the contrary.”

But a second attorney, Robert J. Hallstrom, for the NBA contended there is a fourth factor that needs to be met for the Nebraska regulator to approve the proposed acquisition agreement.

He noted that GreenState is not a state-chartered credit union, nor a federally chartered credit union or other financial institution authorized (and) organized to do business in Nebraska.

“As such, GreenState Credit Union, clearly, is not a financial institution eligible or authorized to participate in a cross-industry acquisition or merger transaction under Nebraska Revised Statute,” he said. “The definition of financial institution under Nebraska Revised Section only extends to banks, savings and loans, building and loans, trust companies, or credit unions organized under the laws of Nebraska or organized under federal law to do business in Nebraska. GreenState Credit Union does not meet either of these requirements.”