State regulator in Colorado blocks credit union's bank purchase

The Colorado Banking Board has blocked a bid by Elevations Credit Union to buy the assets of Cache Bank & Trust in Greeley.

While the proposed deal was one of more than a dozen similar transactions announced last year, this is believed to be the first time that a regulator has intervened to halt a credit union’s purchase of a bank.

Just days before the hearing, the Colorado Bankers Association sent a letter to the Colorado Banking Board outlining what the trade group said were several laws that made the purchase illegal.

In Thursday’s vote, only one of the board’s seven members voted in favor of Elevations. Local news reports indicate that several members of the panel agreed with the association’s argument that state law prohibits purchases between different types of financial institutions. Any changes to existing statutes would have to come from state legislators.

Officials at the Colorado Bankers Association praised the board’s decision.

“We are pleased that the board viewed the proposal the same way we did: against Colorado statutory requirements,” CEO Don Childears said in a press release. “We welcome the [sale] transaction between Elevations and Cache; Elevations simply needs to convert from a tax-subsidized credit union to a tax-paying bank.”

That may not be as far-fetched as it sounds. One prominent credit union observer recently suggested it may be a matter of time before a big credit union elects to convert away from the credit union charter, though most industry watchers don’t share that opinion.

The Credit Union National Association and the Mountain West Credit Union Association stated in a press release late Thursday that they "maintain the position that credit union purchases of banks offer substantial benefits to all parties involved.” The groups referenced a recent report from the Federal Reserve Bank of St. Louis suggesting that credit union-bank deals can benefit both institutions and their stakeholders — if enough customers and employees are retained.

Elevations' representatives did not provide a comment on Thursday’s decision. It is unclear whether Elevations or Cache will appeal the ruling.