GFA Federal Credit Union of Gardener, Mass., has agreed to acquire Monadnock Community Bank, a troubled former credit union located in nearby Peterborough, N.H., in the second credit union deal for a bank over the past few months.

The deal follows December's purchase by Michigan's United FCU of Indiana's Griffith Savings Bank, the first time ever a credit union has acquired a bank.

"We look forward to building upon the tradition of customer service and community commitment and bringing greater convenience not only to Monadnock customers but to the members of GFA as well," said Tina Sbrega, president of GFA, in a statement.

The $350 million GFA, located an hour west of Boston, said it will pay $6.4 million in cash for the $82.5 million bank, which was the first credit union to convert to mutual savings bank in 1996. Until then it was known as AWANE FCU because it served the Automotive Wholesalers Association of New England.

The deal is contingent on regulatory approval and the repayment by Monadnock Bank, which lost $1.8 million in 2011, of $1.8 million of bank bailout funds under the Treasury's Troubled Asset Relief Program, or TARP.

Monadnock, named for the nearby peak of New Hampshire's Mount Monadnock, had $10 million in assets when it switched to a bank in 1996 and peaked at $110 million in 2010. It went public in 2004 with an initial public offering of stock.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.