The Nebraska Department of Banking and Finance recently rejected Omaha-based Premier Bank’s application to merge into Iowa-based GreenState Credit Union.
Hearing Officer Jim Titus wrote in a 15-page ruling released late last month that the $395 million Premier Bank lacked the legal standing to sell its assets to the North Liberty, Ia.-based credit union. Also, Titus wrote that GreenState, as a credit union organized under Iowa laws, is not qualified to purchase Premier Bank under Nebraska statutes.
“There is difficulty in finding in the statutes the authority of a bank to sell substantially all of its assets as being an incidental power to the carrying on of the business of banking, since Premier is not going to be carrying on the business of banking, but rather terminating it,” Titus wrote. “Therefore, Premier has not carried its burden of proof in proceeding to show that there is express power under federal law for a national bank to sell substantially all of its assets under the factual circumstances presented in this proceeding.”
The Department of Banking and Finance disagreed with Premier’s argument that state statute allows it to transfer assets to a non-insured bank or institution “in consideration of the assumption of liabilities for any portion of the deposits made in such insured depository institution.”
“That is not precisely how the statute reads; instead, it is a provision where the statute says no insured depository institution shall take such action except with the prior written approval of the FDIC,” Titus wrote.
On May 25, the Nebraska-chartered bank submitted an application through the Office of the Comptroller of the Currency to sell all of its assets and transfer liabilities to GreenState. Following the transaction, Premier would have surrendered its bank charter and discontinued operations. Pending merger applications have also been filed through the FDIC, National Credit Union Administration and the Iowa Division of Credit Unions. Approval from the Department of Banking and Finance must also be secured.
This is the second time GreenState has run afoul of state banking regulators over its bank acquisitions. The Iowa Division of Banking previously objected to its acquisition of First American Bank in Fort Dodge last year before ultimately allowing the deal to proceed in 2020.
GreenState has closed on its acquisition of Oxford Bank & Trust in Oak Brook, Ill., announced at the same time as the Premier deal, with another acquisition — of Midwest Community Bank, Freeport, Ill. — pending for the second quarter of 2022.