The electric cooperatives of North Carolina and Georgia are set to take control of a Bank of American, Wells Fargo and a South Carolina bank.
The takeover comes after two state regulators filed suit last year accusing Cooperatives for Public Utility Commissions (Coop-PWC) and Cooperatives Power and Light of violating the state’s anti-trust laws.
Cooperatives are publicly traded companies that have the authority to negotiate and agree to purchase assets.
The takeover would allow Cooperatives to purchase an asset and take it over from another entity.
The purchase would be made by a majority shareholder of the new company, or through a combination of a public offering and a takeover.
“Cooperatively-owned banks will become public companies,” said Cooperatives co-president Mark Cramer in a statement.
In addition to Cooperatives, the bank’s investment arm, the National Bank Group, and the power cooperative would be involved.
The new bank will be called the Cooperatives Federal Credit Union and the Cooperets Power and Lighting.
According to the lawsuit filed in June 2016, the co-ops were trying to buy assets and were in negotiations to merge with a rival, but the coop-policies failed.
The lawsuit claimed that Cooperatives had engaged in “reckless and deceptive conduct” and that the coops did not follow the rules governing mergers, and Cooperates did not provide sufficient advance notice.
While Cooperatives has been a major player in the electric power sector for decades, its financial fortunes have plummeted over the past decade.
In 2018, the company reported a net loss of $932 million, while it reported a profit of $1.2 billion in 2017.
It has also faced criticism for what some say are lackluster financial performance and overreliance on debt.
Last year, a lawsuit was filed against Cooperatives that alleged the bank engaged in a pattern of misleading and deceptive financial practices.
Cooperatives said the lawsuit was without merit.
This is not the first time Cooperatives would consider taking control of an institution.
Earlier this year, the Georgia utility cooperative bank filed for bankruptcy protection.
A representative for Cooperatives told the Atlanta Journal-Constitution that the bank had a number of options, including consolidating into a larger bank, acquiring assets, or exiting the business.