GreenState Credit Union calls off deal for Premier Bank in Nebraska

Facing insurmountable regulatory pushback, GreenState Credit Union in North Liberty, Iowa, has terminated its deal to buy a bank in Nebraska.

The $10.6 billion-asset credit union's CEO, Jeff Disterhoft, said Friday that a Nebraska judge supported the state's regulatory opposition to its acquisition of Premier Bank in Omaha, effectively nixing the deal.

"We're disappointed, obviously," Disterhoft said in an interview.

It's the second time this year that a credit union's deal to acquire a bank was called off. The $13 billion-asset VyStar Credit Union in Jacksonville, Florida, ditched its $196 million deal to acquire Heritage Southeast Bank in Jonesboro, Georgia, in June. The $1.7 billion-asset Heritage would have been the largest bank sold to a credit union.

The closing of the VyStar deal had been delayed three times as the companies struggled to obtain approval from state and federal regulatory agencies. The boards for VyStar and Heritage said "all required regulatory approvals would not be obtained in a timely manner" after they threw in the towel.

GreenState agreed to buy the $365 million-asset Premier Bank last year. However, the Nebraska Department of Banking and Finance in December shot down the proposed deal, ruling that Premier failed to provide evidence supporting the legality of the acquisition. Lancaster County District Court Judge Ryan Post backed the decision.

Robyn Aaron

At issue: Bank industry advocates have long argued that many credit unions strayed from their core mission of serving people of modest means in limited geographic areas. Credit unions get tax exemptions because of that mission, and critics say that when they buy banks, they effectively become tax-exempt banks, creating an unfair playing field for lenders that do pay taxes.

What's more, the Independent Community Bankers of America has railed against these transactions, arguing that because credit unions are not taxed, they are able to pay a premium in acquisitions that bank buyers can't match.  

The ICBA has called on Congress to hold hearings and asked the Government Accountability Office to study the long-term impact of credit union purchases of banks.

Still, the trend of credit unions buying banks appears to be holding near record levels nationally. So far this year, 10 such deals have been announced. Last year, 13 banks agreed to be sold to credit unions, approaching 2019's record of 16 such announcements, according to American Banker tallies.

Credit unions

VyStar Credit Union calls off purchase of Heritage Southeast Bank

June 15, 2022 4:52 PM

Among the deals this year was GreenState's purchase of the $327 million-asset Midwest Community Bank in Freeport, Illinois. That deal closed in July.

Disterhoft said GreenState would continue to consider bank acquisitions outside of Nebraska and, at the same time, it may expand into Omaha organically.

"Omaha is a growing market and an enticing place to be," he said. "Organic expansion there is possible. … And we'll react to acquisition opportunities as they present themselves."

Disterhoft said that while Nebraska pushed back, it appears that most states remain friendly territory for credit union-bank deals.

"Each state has its own approach," he said. Regulatory pushback "is not a nationwide movement."