Going through insurmountable regulatory pushback, GreenState Credit score Union in North Liberty, Iowa, has terminated its plan to purchase a financial institution in Nebraska.

The $10.6 billion-asset credit score union’s CEO, Jeff Disterhoft, mentioned Friday {that a} Nebraska decide supported the state’s regulatory opposition to its acquisition of Premier Financial institution in Omaha, successfully nixing the deal.

“We’re disenchanted, clearly,” Disterhoft mentioned in an interview.

It marked the second time this yr {that a} deal involving a credit score union buying a financial institution was referred to as off. The $13 billion-asset VyStar Credit score Union in Jacksonville, Florida, ditched its $196 million deal to amass Heritage Southeast Financial institution in Jonesboro, Georgia, in June. The $1.7 billion-asset Heritage would have been the most important financial institution offered to a credit score union.

The closing of the VyStar deal had been delayed thrice as the businesses struggled to acquire approval from state and federal regulatory businesses. The boards for VyStar and Heritage mentioned “all required regulatory approvals wouldn’t be obtained in a well timed method” after they threw within the towel.

GreenState agreed to purchase the $365-million asset Premier Financial institution final yr. Nevertheless, the Nebraska Division of Banking and Finance in December shot down the proposed deal, ruling that Premier failed to supply proof supporting the legality of the acquisition. Lancaster County District Court docket Decide Ryan Put up backed the choice.

At challenge: Financial institution business advocates have lengthy argued that many credit score unions strayed from their core mission of serving individuals of modest means in restricted geographic areas. Credit score unions get tax exemptions due to that mission, and critics say that after they purchase banks, they successfully change into tax-exempt banks, creating an unfair enjoying discipline for lenders that do pay taxes.

What’s extra, the Unbiased Group Bankers of America has railed in opposition to these transactions, arguing that as a result of credit score unions aren’t taxed, they can pay a premium in acquisitions that financial institution patrons cannot match.  

The ICBA has referred to as on Congress to carry hearings and requested the Authorities Accountability Workplace to review the long-term affect of credit score union purchases of banks.

Nonetheless, the pattern of credit score unions shopping for banks seems to be holding close to report ranges nationally. Thus far this yr, 10 such offers have been introduced. Final yr, 13 banks agreed to be offered to credit score unions, approaching 2019’s report of 16 such bulletins, in response to American Banker tallies.

Among the many offers this yr was GreenState’s buy of the $327 million-asset Midwest Group Financial institution in Freeport, Illinois. That deal closed in July.

Disterhoft mentioned GreenState would proceed to contemplate financial institution acquisitions exterior of Nebraska and, on the similar time, it could broaden into Omaha organically.

“Omaha is a rising market and an attractive place to be,” he mentioned. “Natural enlargement there’s potential…And we’ll react to acquisition alternatives as they current themselves.”

Disterhoft mentioned that whereas Nebraska pushed again, it seems that most states stay pleasant territory for credit score union-bank offers.

“Every state has its personal strategy,” he mentioned. Regulatory pushback “just isn’t a nationwide motion.”