The Minnesota Department of Commerce has blocked the acquisition of Lake Area Bank—a state chartered bank—by Royal Credit Union. The department concluded that under Minnesota law, a Minnesota state-chartered bank may be acquired only by another bank, savings bank or trust company, and that state-chartered banks are not authorized to transfer assets and liabilities to a credit union for the purpose of consolidating or merging out of existence.
With this decision, Minnesota becomes the sixth state to officially clarify that their state laws do not allow for the acquisition of state-chartered banks by credit unions. Similar decisions were taken by regulators in Colorado, Iowa, Tennessee and Nebraska, and last month the Mississippi legislature enacted legislation that effectively bans these transactions.
