Colorado banking group asks state regulator to rethink credit union-bank deal

The Colorado Bankers Association has asked state regulators to rexamine certain state laws as they consider a credit union's deal to buy a bank.

Elevations Credit Union in Boulder, Colo., agreed last fall to buy the assets of Cache Bank & Trust in Greeley. While bank groups have spoken out often in the last year regarding credit union-bank deals, this is believed to be the first time a state banking trade group has publicly asked regulators to reconsider a sale's legality.

“We regard this proposed purchase as an effort to expand the credit union’s activities beyond what was contemplated in law and by a process to avoid the clear limitations and intent of Colorado statutes," Don Childears, CEO of the Colorado Bankers Association, wrote in a letter Monday.

The trade group has heard from banks of a variety of sizes that oppose the transaction, Childears added.

“We have no quarrel with Cache Bank & Trust, but we object on principle to any unauthorized purchaser, in essence any nonbank, in such a transaction,” he said. “This includes a tax-advantaged credit union, buying a tax-paying bank. We believe in a free market, but one in which all competing businesses play by the same rules. That isn’t the case here.”

Childears’ letter outlined a number of objections, including a claim that the purchase violates a state statute tied to the sale of assets between state-chartered banks. “The statute doesn’t reference any other purchaser of such assets, which we believe clarifies that a bank may only sell the bulk of its assets to another bank,” he wrote.

The letter claims that, due to the wording in several Colorado statutes, credit unions are not authorized to purchase banks. Rather than letting regulators determine how these deals move forward, the association asserted that the onus is on Colorado lawmakers to clarify existing statutes or change them.

“You are being asked to approve a sale to an ineligible buyer,” Childears wrote. “We oppose allowing an ineligible purchaser — a nonbank, a credit union or otherwise — under state law to acquire a bank.”

Elevations representatives said the credit union was unable to comment on pending regulatory action.

This story was updated at 9:41 P.M. on Jan. 14, 2020.