WASHINGTON—Bank trade groups continue to zero in on CU purchases of banks, and last week’s record-setting purchase has not slowed their attacks—with one group again asserting CUs must pay an “exit fee” on all bank buys.
As CUToday.info reported, the deal between OneAZ Credit Union and 1st Bank Yuma set the one-year record for these agreements at 17. Sixteen was the previous record, established in 2022. And, as CUToday.info also reported, HAPO Community Credit Union Tuesday agreed to buy Community First Bank, taking the number to 18.
Following OneAZ’s announcement, the Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey addressed the record-setting purchase.
“Acquisitions of tax-paying community banks by tax-exempt credit unions have set a record high this year at precisely the moment that policymakers and the American public are increasingly scrutinizing these deals and the role of antiquated credit union policies,” Rainey stated in a release. “With credit unions accounting for roughly a quarter of this year’s banking industry acquisitions, the FDIC recently approved a new statement of policy on bank mergers that for the first time explicitly states that additional scrutiny may be needed for deals involving tax-exempt credit unions — as advocated by ICBA. ‘
Expand Scope Of Reviews
In a June comment letter, ICBA called on the FDIC to expand the scope of its bank merger reviews to include credit unions because their “diluted field-of-membership restrictions no longer limit the ability of credit unions to attract customers, especially given their tax-exempt status,” ICBA stated.
“And according to ICBA’s latest polling conducted by Morning Consult, 61% of U.S. adults — including 70% of Democrats and 64% of Republicans — say Congress should investigate whether credit unions should be able to acquire banks given credit unions’ tax and regulatory exemptions. ICBA previously released results showing Americans are growing increasingly uneasy with credit unions’ regulatory exemptions and support reforms to policies that arbitrarily favor these tax-exempt financial firms,” Rainey said.
“The news media and the American public are clearly taking notice, with recent Bloomberg, CNBC, Axios, and CNN coverage raising questions about credit union practices,” added Rainey. “To remedy this increasingly concerning trend, ICBA and community bankers continue our calls for Congress to hold hearings and to consider an ‘exit fee’ on credit union acquisitions of tax-paying banks to capture lost tax revenue resulting from these deals.
“This needed policy change is in line with previous banking industry reforms. In 1951, Congress revoked the tax exemption for building and loan associations, cooperative banks, and mutual savings banks, finding that these institutions operated much like commercial banks and should be taxed accordingly,” continued Rainey. “With community banks serving as the nation’s leading small-business and agricultural lenders, Congress should investigate the outdated credit union policies and whether the government should continue subsidizing community banking consolidation.”
18th Deal Draws More Attention
Following the HAPO deal, Romero Rainey weighed in again, saying, “With the fifth acquisition this year of a tax-paying community bank by a tax-exempt credit union in Washington State, it should come as no surprise that policymakers and the American public are increasingly scrutinizing the shocking record amount of these deals and the role of antiquated credit union policies."