Nebraska Regulator Denies Bank’s Acquisition Deal With GreenState CU
State order says bank did not prove that federal law permits selling its assets to Iowa’s largest financial cooperative.
The Nebraska Department of Banking and Finance on Monday denied an application of the $395 million Premier Bank to be acquired by the $7.9 billion GreenState Credit Union in North Liberty, Iowa.
“Premier has not carried its burden of proof in this proceeding to show that there is express power under federal law for a national bank to sell substantially all of its assets under the factual circumstances presented in this proceeding,” the NDBF’s decision read in part.
During a September hearing held before NDBF Hearing Officer Jim Titus, lawyers for Premier Bank argued that its proposal to sell substantially all of its assets and liabilities to Iowa’s largest credit union should be approved because it is allowed by Nebraska’s so-called wildcard and cross-industry laws. However, attorneys for the Nebraska Bankers Association argued that under those state laws, the deal should not be approved, according to a transcript of the hearing obtained by CU Times.
Based on case laws and testimony presented at the hearing, Titus recommended that the credit union-bank purchase deal not be approved. His recommendation was affirmed and ordered by NDBF Director Kelly Lammers on Dec. 30. The NDBF released its decision publicly on Monday.
“In this case … there is difficulty in finding in the statutes the authority of a bank to sell substantially all of its assets as being an incidental power to the carrying on the business of banking, since Premier is not going to be carrying on the business of banking, but rather terminating it,” the NDBF decision read in part.
A GreenState spokesperson said the credit union is disappointed with the outcome of this decision, but it is working with Premier Bank to keep the acquisition deal viable. Premier Bank declined to comment at this time when reached by CU Times on Tuesday.
GreenState originally announced a proposed agreement to buy the Omaha-based bank in May and the $743 million Oxford Bank & Trust of Oak Brook, Ill. The latter acquisition deal was closed on Dec. 31, GreenState Chief Human Resource and Information Officer Marsha Wolff said last month.
Additionally, GreenState’s planned purchase of the $352 million Midwest Community Bank in Freeport, Ill., announced in October, is pending. The credit union said it expects to close the acquisition during the second quarter.
The credit union-bank purchase agreement in Nebraska was the first deal challenged by bankers in 2021. The second challenge came in November when a Tennessee judge granted a temporary injunction requested by the state’s regulator that blocks the $1 billion Orion Federal Credit Union’s proposed acquisition of the $792 million Financial Federal Bank in Memphis.
A judge is expected to decide whether to grant a permanent injunction that would prohibit the credit union-bank purchase. As of Tuesday, the case is still pending, according to court records.