The proposed – and rare – merger of the $1.3 billion United Federal Credit Union of Michigan with an ailing Indiana savings bank is on track and could win final regulatory approval at the end of this month.
Copycat deals with healthy CUs elsewhere taking control of small, troubled banks also could occur, said UFCU President/CEO Gary Easterling, based “on a number of inquiries we’ve received” since the transaction for UFCU to merge the $83 million Griffith Savings Bank of Griffith, Ind., was first announced in July.
“I think a lot of people are just waiting until this is a done deal before deciding whether to go ahead,” Easterling said. The deal awaits regulatory approval from the NCUA and the FDIC. Both agencies have all the current paperwork and based on recent developments the transaction and the conversion could be completed “by the fourth quarter,” Easterling said.
Griffith, located in the Gary/Hammond rust belt of northwest Indiana and undercapitalized, had been urged by regulators over the past year to find a merger partner. It turned to a credit union for a takeover after having once flirted with the idea of what would have been an extraordinary bank-to-CU conversion.
United FCU, based in St. Joseph, Mich. across the Indiana line has 22 branches in five states – Michigan, Nevada, Arkansas, North Carolina and Ohio – and the merger of the 73-year-old Griffith Savings Bank would fit into the CUs expansion into Indiana, Easterling said.
The Michigan CU has acknowledged it was initially surprised by the merger inquiry, shepherded by an Indianapolis investment consultant, though it has had experience merging troubled CUs, having consolidated in 2009 the $175 million Clearstar Financial CU, of Reno. Nev.
As part of the United/Griffith transaction, bank shareholder approval was received last week, including providing new membership in the American Consumer Council of San Diego to meet field of membership rules. A number of West Coast CUs have similar dues deals with ACC, said Easterling.