Efforts to Halt Credit Union-Bank Deals Squashed in Tennessee

The bank lobby lost a battle in Tennessee, but it has not lost the war, as decisions regarding credit union purchases of banks in two other states remain outstanding.

Three of the 13 credit union purchases of banks announced in 2021 came under fire from state regulators, making 2022 a pivotal year for states' progress on halting these transactions. One of those situations was recently resolved when a Tennessee court lifted the temporary injunction on Orion FCU's announced acquisition of Financial Federal Bank, allowing the transaction to proceed. With the Tennessee litigation in the rearview mirror, all eyes now are on Nebraska and Minnesota.

The Nebraska Department of Banking and Finance in December 2021 denied Premier Bank permission to sell its assets to GreenState CU, but the bank has appealed the decision in district court. The Minnesota Department of Commerce recently blocked Royal CU's pending acquisition of Lake Area Bank, but the companies have restructured the transaction, Royal CU President and CEO Brandon Riechers told S&P Global Market Intelligence in a statement shortly after the state regulator's decision in April.

Michael Bell, a partner and co-leader of the financial institutions practice group at law firm Honigman LLP, which advised Orion FCU, GreenState CU and Royal CU, expects positive outcomes in both states following the decision in Tennessee, he said in an interview.

"This is good momentum," Bell said. "I believe they will do the same in Nebraska and in Minnesota and any other state where politics enters to hinder the free market."

Three states — Colorado, Iowa and Mississippi — have completely barred credit unions from purchasing state-chartered banks.

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