Verve, based in Oshkosh, Wisconsin, with operations primarily in Wisconsin, entered the Chicago market with the acquisition of South Central Bank of Chicago. South Central, based in South Loop, had built an enviable commercial banking business, especially for a lender of its size, over more than five decades.
The deal, valued at around $ 36 million, caused a stir in local banking circles as the credit union outbid an unnamed local bank that was also vying for the price. Bankers have complained for years that credit unions, because of their nonprofit status, have an unfair advantage over banks because they do not have to pay income tax. This allows credit unions to pay more than banks for deposits and charge less for loans.
Increasingly, as credit unions have grown much more over the years, they are outbidding conventional banks for community banks looking for a buyer.
In the arbitrator’s report on Grayson’s severance claim, the competing bank was identified as West Town Bank, based in North Riverside. With assets of $ 362 million as of March 31, West Town was not much larger than South Central, which had nearly $ 300 million when it was acquired. Verve, on the other hand, had assets of $ 986 million when the deal was announced. By the end of March, that amount had risen to $ 1.5 billion, according to a file.
Keeping Grayson as Chicago president was seen by Verve as key to the deal, according to his testimony to the administrator. But Verve’s opinion deteriorated shortly after the deal was struck in January 2020. She discovered what she saw as accounting discrepancies: Verve’s lawsuit against Grayson, her father Marc Grayson and d others demanding more than $ 1 billion in repayments remain unresolved. Grayson was unable to resolve them to the satisfaction of Verve executives, according to the report.
Grayson was told of his withdrawal during a combative meeting in March 2020 at the Union League Club in which he was evidently blinded by the news, according to the report. Verve considered him fired for cause and refused to pay him, but the merger agreement required those disputes to be heard by an arbitrator. Verve filed his lawsuit against Grayson and other South Central executives and directors in June 2020, less than three months after Grayson left.
Madison, Wisconsin-based arbitrator Danielle Carne concluded in her Nov. 25 report that Grayson was doing his best to answer Verve’s many questions about the accounting issues, which largely related to the company’s purchases. from suppliers and when they were paid and registered. âThe sixty days between the start and end of Grayson’s tenure at Verve were too short a time for Verve to reliably conclude that there was a reason for his termination,â she wrote.
Grayson declined to comment other than to say, “I’m glad it’s over and I was paid according to my contract.”
Karrie Drobnick, director of marketing and strategy at Verve, said she couldn’t comment on legal or employment issues.
âAs for how Operation Chicago unfolds, however, we are delighted to be slowly and safely emerging from the pandemic,â she wrote in an email.
There is no replacement for Grayson yet.
âDue to the pandemic, we are working with a geographically dispersed leadership team and as pandemic restrictions continue to ease, we are evaluating leadership from all of our regions, including Chicago, and will expand leadership teams as necessary. to meet local needs. needs, âshe said.