ST. JOSEPH, Mich. – NCUA has cleared the acquisition by United FCU of Griffith Savings Bank, the first purchase of a bank by a federally chartered credit union, and the deal now awaits approval by the FDIC.
“It’s been approved, with stipulations, by NCUA,” Gary Easterling, president of the $1.3 billion credit union told the Credit Union Journal this afternoon. He said he expects the FDIC to rule on the acquisition in the next two weeks so they can give depositors of the $81 million Griffith, Ind., savings bank the required 15 days notice before the completion of the deal, projected for Dec. 31.
Among the stipulations in the NCUA approval are the divestiture of certain loans held by Griffith that are non-permissible for federally chartered credit unions and FDIC approval. “The reality is this is a precedent-setting deal. A federal credit union has never done it before,” said Easterling. In a similar deal, Wisconsin’s Royal CU acquired 11 branches and 20,000 member accounts last year from troubled Anchor Bank, but not the whole bank, he noted.
The acquisition of Griffith is being constructed as a so-called purchase and assumption because of the declining financial condition of the bank. Terms of the deal call for the sole branch of the 73-year-old savings bank to become a branch of the Michigan credit union, which is located about 90 miles away.
United has a recent history of acquiring troubled institutions, including 2009’s deal for Clearstar Financial CU, a one-time $175 million Reno, Nev., failure.
United, a conglomeration of former Whirlpool Employees FCU and First Resources FCU, has strong capital, almost 11%, and reported net income of $7.2 million for the first nine months of the year, even after a $1.8 million charged for NCUA’s corporate credit union assessment.