Court lifts injunction on Orion FCU's deal for Financial Federal Bank

The Tennessee court that blocked Orion FCU's proposed acquisition of Memphis, Tenn.-based Financial Federal Bank last year lifted the injunction on May 27, allowing the transaction to proceed.

Judge Patricia Moskal ordered the temporary injunction issued in November 2021 to be vacated, ruling that "there are no genuine issues of disputed material facts" in the case and that "the proposed asset purchase transaction is not a prohibited transaction" under Tennessee law.

The Tennessee Department of Financial Institutions had argued that Orion is not authorized to acquire, form or control a bank. However, the court ruled that the term "acquire" under the law means acquiring a bank by "acquiring its charter or stock" and "does not include the purchase of all or substantially all of the bank's assets." According to Orion and Financial Federal, their transaction falls under the latter category.

Some states have sought to bar credit unions from acquiring banks, presenting a potential roadblock for credit unions that have increasingly turned to bank acquisitions to diversify or increase in scale.