The governor of Mississippi has signed a bill restricting banking sector mergers and acquisitions to other federally insured banks.
Governor Tate Reeves approved the bill last week, which stipulated that banks registered in Mississippi could only enter into a merger or acquisition agreement with a bank or financial institution insured by the Federal Deposit Insurance Corporation (FDIC).
The bill gives the governor the power to issue ‘cease and desist’ orders if non-bank entities try to merge with or buy Mississippi-based banks.
The wording of the bill states: “A bank licensed by the State of Mississippi may, with the approval of the Commissioner, sell or transfer all or substantially all of its assets, liabilities, and business solely to another bank, savings bank, association of savings and loan or other entity, in a transaction agreed to, adopted and approved pursuant to Section 12, Chapter 4, Title 79, Mississippi Code of 1972, and provided that the purchaser or transferee is an insured financial institution by the Federal Deposit Insurance Corporation.
The American Bankers Association (ABA) has expressed its opposition to recent mergers and acquisitions deals involving the purchase of banks by credit unions. In August, Trade Group CEO Rob Nichols detailed his concerns about the growing number of credit unions buying up smaller community banks.
The association called for federal intervention to prevent credit unions from exiting their traditional target markets. The ABA argued that credit unions were trying to target a wealthier customer base than their traditional remit of low-to-moderate income communities.
Last week, the Arizona Federal Credit Union announced plans to buy Horizon Community Bank in a deal worth $91.4 million.
The FDIC has issued a request for information about mergers and acquisitions in the banking sector.