Update, Jan. 3, 2012: UFCU Purchase of Indiana Bank Now Complete

In an extraordinary consolidation, the $1.4 billion United Federal Credit Union of St. Joseph, Mich., said Wednesday that it plans to buy an undercapitalized $80 million bank in Indiana after its management solicited bids from both banks and credit unions.

Under the purchase/assumption deal subject to approval of both federal and state regulators, United FCU said it expects to take over control of Griffith Savings Bank, located not far from Chicago in northern Indiana, in the third quarter of this year.

UFCU, whose multi-state operations include a 2009 purchase deal for a failed Reno, Nev. CU since merged, said in a statement that it would “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.”

The southwest Michigan credit union, making its first market entry into Indiana, said it would continue to operate its new credit union branch at Griffith’s current location.

“Griffith will be retaining certain assets that will be used to fund accrued liabilities relating to its employee benefit plans which will not be acquired by UFCU in the transaction. This acquisition is subject to regulatory approvals and is expected to close in the third quarter of 2011,” the credit union’s statement said. 

“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,” the statement said.

James E. Morris, president of Griffith, told Credit Union Times that “it is my understanding this is the first federal credit union acquisition of a state chartered bank” though there have been state-to- state pacts in the past.

Morris said he used the services of an Indianapolis investment banking firm, Renninger & Associates, LLC to scout out prospective suitors eventually choosing UFCU.

Morris said in the formal statement: “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. 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.”