After last week blocking the sale of First American Bank’s remaining Iowa-based assets and branches to a credit union, the Iowa Division of Banking has settled with the bank and approved its application to sell substantially all of its assets and liabilities to the credit union and go out of business as a bank. Under the settlement, the bank will pay a six-figure sum to cover IDOB costs associated with reviewing the transaction.
The IDOB had argued that the deal did not meet criteria required under state law, which calls for banks voluntarily dissolving to adopt plans for their assets and liabilities to pass to another state or national bank or other FDIC-insured institution. However, since the bank did not believe IDOB approval was necessary, the transaction had already been finalized prior to the IDOB order.
“In light of the extremely unique circumstances regarding this transaction and the Application, First American and the Superintendent agree it is in the best interest of all involved—especially the First American customers impacted by the transaction who are confused regarding the status of their deposits and loans and who deserve a timely resolution of this matter—to settle this dispute,” the settlement said.
However, IDOB said that Superintendent Jeff Plagge “stands firmly by the position that Iowa state-chartered banks seeking to voluntarily cease doing business as a bank and become a regular (nonbank) corporation must seek and obtain prior approval of the Superintendent before closing any sale of substantially all the bank’s assets and liabilities,” adding that “the IDOB will quickly deny any future application based on a similarly structured transaction.”