Dive Brief:
- The Office of the Comptroller of the Currency (OCC) found "certain regulatory concerns with Blue Ridge Bank" that may cause the Charlottesville, Virginia-based lender’s proposed merger with FVCB to be delayed by at least three months, the banks said Thursday.
- The banks agreed in July to merge to form a $5 billion-asset entity that would become the fourth-largest Virginia-headquartered community bank. The deal was expected to close in the fourth quarter of this year or the first quarter of 2022, the banks said at the time.
- The banks on Thursday updated their merger completion timeline to the second or third quarter of 2022 in a release minutes before the banks announced their third-quarter results.
Dive Insight:
Neither the banks nor the OCC gave further details surrounding the issue delaying the merger. Blue Ridge, however, said it has already begun an "initiative" to address the OCC’s misgivings.
"While we have additional work to do, we believe the OCC's concerns are ones that we can solve in a timely fashion, and do not materially impact the strategic rationale of the Merger," Brian Plum, Blue Ridge’s CEO, said Thursday, adding the banks are "considering various alternatives to proceed with regulatory applications and shareholder meetings, and to close the merger as expediently as possible."
The Blue Ridge deal would hardly be the first over the past several weeks to run up against a roadblock from regulators.
VyStar Credit Union and Heritage Southeast Bank agreed last week to postpone — from Dec. 31 to Feb. 28 — the date by which they can terminate VyStar’s proposed acquisition of the bank. The transaction still needs regulatory approvals from the Federal Deposit Insurance Corp. (FDIC), the National Credit Union Administration (NCUA), the Georgia Department of Banking and Finance and the Florida Office of Financial Regulation, Heritage said.
New York Community Bank, also last week, said it doesn't expect its $2.6 billion acquisition of Michigan-based Flagstar Bank will get state and federal regulators’ approval before the end of the year as it initially hoped, according to American Banker. That deal, announced in April, must receive sign-off from the New York Department of Financial Services, the FDIC and the Federal Reserve. CEO Thomas Cangemi said he now expects the transaction to be finalized sometime next year.
First Citizens BancShares and CIT Group in late September extended the timeline to complete their $2.2 billion merger until March 1 after they said the Fed had not signed off on their deal.
Green Dot called off its proposed acquisition of Republic Bank's tax processing unit last month after it said it was unable to get the Fed's approval or non-objection to the deal. Republic has sued.
An Indianapolis-based fair-housing advocacy group sued Old National Bank last month, accusing the institution of redlining in a move that could affect the bank’s proposed merger with First Midwest Bank. The OCC signed off on the deal in August, after the Fair Housing Center of Central Indiana and two dozen other housing advocacy groups had written the regulator and Federal Reserve asking to receive a public hearing.
As for the Blue Ridge merger, the source of the OCC’s concerns are unclear. But the bank appears to have the support of its merger partner.
"We … know how committed Blue Ridge Bank's management team is to resolving any concerns raised by its regulators," FVCB CEO David Pijor said Thursday. "We strongly believe that this transformational partnership remains strategically and financially attractive … and we are committed to seeing it through to completion."
Blue Ridge made headlines in February for claiming to be the first commercial bank in the U.S. to offer access to Bitcoin at its ATMs. It also was the subject of an April letter the Student Borrower Protection Center and other advocacy groups wrote to the OCC over an "income-share" lending option the bank offers in which students pledge some of their income earned after graduation.
