WASHINGTON—The Independent Community Bankers of America (ICBA) has intensified its long-running campaign against credit union acquisitions of community banks, this time leaning on new data to bolster its case.
ICBA argues that when tax-exempt credit unions purchase tax-paying community banks, local governments lose critical revenue, weakening support for small businesses and communities.
In a newly published blog post, ICBA President and CEO Rebeca Romero Rainey cites the group’s analysis of publicly available data, contending that community banks consistently outperform credit unions in serving high-poverty areas—further evidence, ICBA says, that the trend of credit union bank buys undermines, rather than strengthens, local economies.
ICBA contends the data show:
- Since 2010, credit unions have acquired 77 community banks with less than $50 billion in assets—with more than 60% of these charter acquisitions occurring in the past five years.
- More than 80% of these acquisitions involved a credit union with more than $1 billion in assets, while more than 40% involved a credit union headquartered in a different state than the acquired bank.
- Community banks have provided roughly 69.3% of Small Business Administration loans provided by banks and credit unions since 2010, compared to 2.8% from credit unions.
- Community bank lending has also been disproportionately higher in the highest-poverty counties, with community banks accounting for 76.5% of SBA lending since 2010, compared with just 1.8% from credit unions—showing community banks are dramatically outperforming credit unions in the lower-income communities that credit unions receive a federal tax exemption to serve.
- In areas where community banks participated in SBA lending programs, SBA lending fell after nearly 80% of credit union acquisitions.
- Total mortgage applications decreased in 57% of affected service areas following an acquisition, while the amount loaned per approved mortgage application decreased in 61% of acquisitions and mortgage denial rates increased in 61% of acquisitions.
- Since 2010, community banks issued nearly 25 times more SBA 7(a) and 504 loans than credit unions, with community banks supporting nearly 6 million jobs compared to the 295,000 jobs supported by credit unions.
- In the top 25% highest-poverty U.S. counties, community bank loans supported 433,227 jobs compared to just 16,415 jobs supported by credit unions, despite credit unions’ federal tax exemption.
“While ICBA and community bankers have been strenuously raising the red flag on the concerning trend of taxpayer-subsidized acquisitions of local financial institutions, the data in our new analysis should serve as a wake-up call to policymakers given the harmful impact of these deals on small businesses, consumers, and local communities—particularly in low-income areas,” ICBA President and CEO Rebeca Romero Rainey said. “With community banks disproportionately outperforming credit unions in meeting the needs of the high-poverty areas that the credit union industry receives a federal tax exemption to serve, the economic outlook for our nation’s local communities depends on a much-needed change to federal credit union policy.”