Progress Cited in Proposed GFA/Monadnock Purchase
Lawyers handling the planned $6.4 million purchase of an ailing New Hampshire savings bank by a Massachusetts credit union – the $345 million GFA FCU – expressed optimism Thursday the deal can clear regulatory hurdles.
“I can’t say anything about the talks we’ve had or identify which agencies but our application is on track,” said Washington attorney Richard Garabedian, a partner at Luse Gorman Pomerenk & Schick.
Garabedian represents the troubled $82 million Monadnock Community Bank of Peterborough, N.H., in the negotiations which began informally last December. He also said the proposed takeover of the thrift by the Gardner, Mass., credit union can serve as a blueprint for similar credit union/bank deals but that any acquiring credit union has to be able to show real benefit from the transaction.
“Credit unions have to be well prepared for these kind of transactions but can’t go in there fishing around without being ready to offer something tangible in terms of enhanced service, job security for the employees, perhaps an advisory board,” Garabedian said, stressing the need for an advance merger package.
The stock nature of a bank with directors already being compensated provides a special challenge for acquiring credit unions, he added.
Nonetheless, given the right circumstances, deals can be worked out, said Michael Bell, a Niles, Mich., attorney who represents GFA CU, noting that “just like any M & A transaction, for efficiency purposes the purchaser needs to have its house in order and should have performed some level of due diligence prior to engaging in detailed talks.”
Like Garabedian, Bell, an attorney with Kotz Sangster who handled the purchase of Griffith Savings Bank in Indiana by United Federal Credit Union in Michigan last year, said he has been ironing out details with the NCUA on the proposed CFA/Monadnock deal.
“We are working close with the NCUA exchanging information, addressing concerns and the like,” said Bell.
In the past Bell has mentioned both the FDIC and the Comptroller of the Currency as two other agencies that must approve the merger. A vote by Monadnock Community shareholders is set for May 31.
“I cannot reveal any specifics but I can say I have heard and am hearing from other credit unions looking to do a similar transaction,” Bell concluded.