United FCU to Purchase Small Indiana Bank (Misc News: July 28, 2011)
United FCU in St. Joseph is buying a small, undercapitalized community bank in northern Indiana. It is apparently the first time a federally chartered credit union has purchased a state-chartered bank.
The $1.3 billion United will purchase all loans, investments, real estate, accrued interest receivables, and other banking-related assets of Griffith (with an estimated value of approximately $81 million, after a discount to the loan portfolio agreed to by the parties) and will assume all deposits, Federal Home Loan Bank advances, and accrued interest payable of approximately $81 million.
Griffiths customers will become United members. United will continue to operate a branch at Griffith’s location in Griffith, Ind., which is its only branch. This is United’s first operation in Indiana.
This acquisition is subject to regulatory approvals and is expected to close in the third quarter of 2011. Griffith intends to liquidate following the closing and distribute any remaining net assets at the time of liquidation to its depositors. Although the amount of the distribution cannot be determined at this time, depositors who retain accounts at UFCU will be credited with their pro rata distribution upon Griffith’s liquidation. Other depositors will be sent their distributions.
Griffith President James E. Morris told CU Times that it is his understanding that is the first purchase of a state-chartered bank by a federally chartered credit union.
“As a mutual savings bank, we are pleased that our loan and deposit customers and the greater Griffith community will be served by UFCU, which is also owned by its members,” Morris said. “Our customers will become UFCU’s members and will enjoy access to UFCU’s wide variety of products and services once this transaction is completed.”
In a separate CU Times story, United CEO Gary L. Easterling said he was "a little surprised that a bank would seek out a credit union for a merger.
Easterling added expressed pride his CU figures in a reversal “of all that noise and rhetoric” about CUs switching to banks.
“It’s kind of nice to see the trend go the other way, a bank embracing the credit union charter,” he told the Times.
Easterling said: “We are extremely pleased to have the opportunity to expand our market presence into Northwest Indiana. We welcome the Griffith customers and employees to the UFCU family and look forward to continuing the tradition started by Griffith Savings Bank of delivering community-focused value to the people of Griffith.”
Established in 1949, United FCU had total assets of $1.3 billion at June 30 and operates 22 offices in Michigan, Nevada, Arkansas, North Carolina and Ohio.