A new Mississippi law signed by Gov. Tate Reeves effectively bans bank-credit union mergers within the state.
The law states that only FDIC-insured banks can merge with or acquire Mississippi-chartered state banks. The state’s commissioner of banking and consumer finance is required to issue a cease-and-desist order against any transaction not compliant with the requirement.
“A bank chartered by the state of Mississippi, may, with the approval of the commissioner, enter into a business combination with another bank, savings bank, savings and loan association or other entity, on such terms and conditions, as may be lawfully agreed upon, adopted and approved in a plan of merger or share exchange in accordance with Article 11, Chapter 4 of Title 79, Mississippi code of 1972, and provided that the survivor is a financial institution insured by the FDIC,” the law states.
The Mississippi law comes as a broader debate over CU-bank transactions continues across the country. In 2020, the Colorado State Banking Board rejected a proposed deal allowing for Boulder, Colo.-based Elevations Credit Union to purchase the assets of Cache Bank and Trust in Greeley, the American Bankers Association reported. In rejecting the plan, the board found that the deal did not follow state laws limiting the sale of assets between state-chartered banks.
In Nebraska, a proposed merger between the $395 million, Omaha-based Premier Bank and the North Liberty, Iowa-based GreenState Credit Union was rejected in December after Nebraska Department of Banking and Finance Hearing Officer Jim Titus found that the bank lacked legal standing to sell its assets. Also, Titus wrote that GreenState, as a credit union organized under Iowa laws, is not qualified to purchase Premier Bank under Nebraska statutes.
In Wisconsin, where the $4 billion Summit Credit Union recently announced its purchase of the $837 million, West Bend, Ill.-based Commerce State Bank, tension between the Wisconsin Bankers Association and credit unions has been brewing. A state bill introduced in 2021 would enable state-chartered credit unions to issue subordinated debt; allow non-members to be a party to a credit transaction; and give credit unions the chance to transfer and lease property, subject to guidance by Wisconsin’s Office of Credit Unions.
The Iowa Superintendent of Banking stepped in to prevent a bank-CU deal in the state in 2020, citing a similar justification to that outlined in the Mississippi law. The regulator and the involved bank eventually settled, allowing the acquisition of First American Bank by Green State Credit Union to proceed.