Settlement in Iowa resolves dispute over bank-credit union branch deal
A settlement between an Iowa bank and its state regulator will allow a branch sale to a credit union to stand.
GreenState Credit Union in North Liberty, Iowa, had agreed in June to buy seven branches and related assets from First American Bank in Fort Dodge.
But the Iowa Division of Banking raised an objection to the deal last week, asserting that the $5.8 billion-asset GreenState and the $959 million-asset First American finalized the transaction before the regulator had given its approval.
The agency, after a few days, reached an accord with First American that will allow the deal to proceed.
"In light of the extremely unique circumstances ... First American and the superintendent agree it is in the best interest of all involved — especially the First American customers impacted by the transaction who are confused regarding the status of their deposits and loans and who deserve a timely resolution to this matter — to settle this dispute," according to the settlement.
While the agency agreed to approve First American's application, the agreement made it clear that the decision should not be construed as setting precedent for future cases.
"The supervisors stands firmly by the position that state-chartered Iowa banks seeking voluntarily to cease doing business as a bank and become a regular [nonbank] business must seek and obtain prior approval from the superintendent before closing any sale of substantially all of the bank's assets and liabilities," the agreement said.
First American, which had claimed that it did not need the regulator's approve to close the deal, agreed to pay $110,700 to cover costs incurred by agency.