Omaha, Neb.-based Premier Bank is appealing a Nebraska state regulator's decision that denied the bank permission to sell to North Liberty, Iowa-based GreenState CU.
Nebraska Department of Banking and Finance Hearing Officer Jim Titus recommended that the credit union-bank deal not be approved based on case laws and testimony presented during a September 2021 hearing, and his recommendation was affirmed and ordered by NDBF Director Kelly Lammers on Dec. 30, 2021, the Credit Union Times reported Jan. 4.
Premier Bank filed a petition for review with the District Court of Lancaster County, Neb. on Jan. 14. Lammers is being sued in his official capacity. His final decision on the bank's interagency Bank Merger Act application, issued on behalf of the NDBF, is sought to be reviewed and reversed by the petition.
According to the petition, Premier Bank claims that Titus and the NDBF disregarded well-settled federal law and the plain language and intent of the Wildcard Statute, which provides that a Nebraska-chartered bank "shall have all the rights, powers, privileges, benefits and immunities" of a federally chartered bank doing business in the state, notwithstanding any of the other provisions of the Nebraska Banking Act or any other Nebraska statute.
Titus and the NDBF ignored 90 years of Office of the Comptroller of the Currency precedent and practice under 12 U.S.C. § 24(Seventh) that allows whole-bank purchase and assumption, or P&A, transactions, according to the petition. In their final order, they acknowledged that applicable precedent of the U.S. Supreme Court required that "the [c]omptroller's interpretation of the National Bank Act must be given 'great weight,'" but they did not give weight to OCC Conditional Approval No. 1244, which involves the OCC's approval of a transaction that is identical to the proposed Premier Bank-GreenState transaction, according to the petition.
Premier Bank also claims that Titus and the department failed to properly consider and give effect to the duly adopted regulations of the OCC, and 12 C.F.R. §§ 5.33 and 5.53, which implement the OCC's precedent that allows P&A transactions under the authority of 12 U.S.C. § 24(Seventh). Titus and the NDBF also allegedly failed to properly consider 12 U.S.C. § 1828(c)(1)(C), which authorizes a national bank to engage in whole bank P&A transactions with other financial institutions, including credit unions, according to the petition.
The hearing officer and the department examined two other decisions cited in OCC #1244 and came to the "unprecedented conclusion" that 12 U.S.C. § 24(Seventh) only gives national banks permission to sell assets and engage in P&A transactions when they are insolvent or on the verge of insolvency, Premier Bank claims.
The bank is requesting the court to conduct a de novo review of the agency record; reverse the decision of the NDBF with instructions to the department to issue an approval of the application, contingent solely on the bank obtaining Federal Deposit Insurance Corp. approval; order the NDBF to reimburse the bank for reasonable expenses incurred in pursuit of the appeal; and award the bank any other relief the court deems just and equitable.
In a statement obtained by S&P Global Market Intelligence, Premier Bank Chairman and CEO Christopher Maher said the bank and GreenState CU's legal counsel reached out to the state regulator before signing their agreement, and the regulator "did not raise any objections to the authority of a Nebraska bank to engage in the transaction at that time."
The executive also said he believes that the NDBF decision is a result of the state regulator "bowing to the political pressure of the Nebraska Bankers Association." Meanwhile, David Routh, a lawyer for Premier Bank, said the decision creates a disparity between state-charted and nationally-chartered banks in the state by denying state-chartered banks "the same right, powers and privileges."
The NDBF did not respond to a request for comment.
