The Bank Slate


A look at how states are blocking CU-bank deals

Mississippi just passed a law that should severely restrict credit unions’ abilities to buy banks in the state.

The state is the latest to intervene in an issue of great importance to bankers. In fact, the Independent Community Bankers of America has pushed Washington to step in, either by blocking such seals or imposing a tax on credit unions that do buy banks. 

For now, it looks like most roadblocks will come from the state level. 

Here are four examples. 

Colorado: The state’s banking board in 2020 rejected a bid by Elevations Credit Union to buy Cache Bank & Trust, supporting an argument that state law bars purchases between different types of financial institutions. Cache eventually sold to Mountain Valley Bank. 

Iowa: Though the state’s banking commission approved the sale of First American Bank to GreenState Credit Union, the agency said it would “quickly deny” any subsequent deals.

Nebraska: GreenState Credit Union in Iowa wasn’t allowed to buy Premier Bank after the Nebraska Department of Banking and Finance determined in January 2022 that the credit union failed to provide supporting evidence that federal law allowed it to buy a national bank’s assets.

Mississippi: A law that goes into effect in July would require that any assets or liabilities sold by state-chartered banks must be bought by institutions insured by the FDIC.

Tennessee: Orion Federal Credit Union’s planned purchase of Financial Federal Bank is on hold after a judge granted an injunction sought by the Tennessee Department of Financial Institutions Commissioner. The agency argued that the Tennessee Banking Act allows only bank holding companies to acquire, form or control a bank. 

It will be interesting to see if the ICBA, and the overall banking industry, will successfully make more arguments like these in other states where credit unions are trying to buy banks.

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