In a landmark ruling, the FDIC Tuesday gave approval to a credit union-bank deal by which the $1.3 billion United Federal Credit Union of St. Joseph, Mich. can buy the ailing Griffith Savings Bank of Indiana, according to attorneys representing UFCU.
The transaction had already won NCUA approval.
Management of the Michigan CU previously hailed the merger as an industry breakthrough in opening the doors for troubled thrifts or perhaps even community banks to legally become absorbed by healthy CUs.
The key to the transaction is that CUs can purchase the assets of the ailing thrift rather than take on the charter, which would be prohibited, explained CU lawyers. Griffith has agreed to shed a portion of its assets to conform with NCUA field of membership regulations as they apply to UFCU, officials said.
The $80 million northern Indiana bank, located not far from UFCU’s Michigan headquarters, once considered converting to a credit union but the idea was later dropped.