By Jason Stverak
Another week, another headline announces a small credit union closing or merging into a larger institution. These announcements aren’t just occasional anymore—they’re becoming a drumbeat, and it’s accelerating.
This trend may have logical drivers (economic pressures, regulatory costs, succession challenges), but its speed and scale should give us pause. Each closure isn’t merely a statistic; it represents a community of members losing a financial cooperative dedicated to their needs. As someone who has devoted his career to credit union advocacy, I find this rapid attrition deeply concerning. We must confront what it means for the future of our movement.
When a small credit union disappears, we lose more than just an institution—we lose a piece of the soul of the credit union movement. For over a century, credit unions have been defined by our “people helping people” ethos, rooted in local communities and common bonds. The smallest credit unions often embody this spirit most purely: they serve hard-to-reach groups, niche communities, church parishes, military bases, or schools with a level of personal connection and trust that big institutions struggle to match. These local cooperatives give credibility to our industry’s claim that we are different from banks.
They are run by neighbors, not remote shareholders. They prove that financial services can put mission over profit, day in and day out. And importantly, they demonstrate to lawmakers and the public that credit unions exist to serve people of modest means, not to build empires. Every time one of these small credit unions vanishes, our industry’s narrative loses a bit of its authenticity and moral high ground. If the current wave of consolidation continues unchecked, we risk a future where only a few massive credit unions remain and the core values and community-driven principles that built this industry become little more than a memory.
This is not to romanticize inefficiency or resist all change. Some mergers make sense for financial stability or member service. But the sheer volume and speed of closures now demand reflection. The credit union system was once proudly called a “movement” because it was grounded in community and cooperation. We have to ask: what do we lose if that movement becomes indistinguishable from the commercial banking sector it was created to challenge?
Outsized Role In The Public Perception
Beyond their community impact, small credit unions play an outsized role in the public perception and political defense of all credit unions. They are, in many ways, our best argument for keeping the credit union tax exemption intact. Why has Congress historically granted credit unions a federal tax exemption? It’s not a favor to large financial institutions; it’s a recognition of our not-for-profit, member-owned structure and community-focused mission. When a lawmaker thinks of that mission, it’s much easier to picture the neighborhood credit union serving teachers or soldiers than a $20-billion institution marketing like a big bank. If we wake up tomorrow and find that only massive credit unions remain, the rationale for those tax benefits will erode under the weight of billion-dollar balance sheets. The optics would shift dangerously. Instead of pointing to hundreds of small, member-driven cooperatives serving local needs, we’d be trying to justify why a handful of multi-billion-dollar credit unions deserve special tax treatment. That narrative would be a much tougher sell on Capitol Hill.
Make no mistake: the credit union tax exemption is under constant scrutiny, and the disappearance of small credit unions threatens to make our case weaker. We already see our banking opponents seizing on the growth of the largest credit unions to argue that our industry no longer warrants its tax status. They love to point out that collectively, credit unions now exceed $2 trillion in assets. In fact, after a recent credit union acquisition of a community bank, the Independent Community Bankers of America (ICBA) issued a statement deriding “growth-obsessed credit unions [that] now rival banks in size, holding trillions in assets while maintaining a nonprofit status that no longer reflects their operations”. That skewed portrayal conveniently ignores the 140+ million Americans we serve with better rates and lower fees, or the many underserved areas we reach that banks won’t. But perceptions matter. As smaller institutions vanish, it becomes easier for critics to paint all credit unions as big-bank equivalents enjoying an unfair tax break.
Let’s be clear: Growth itself is not inherently harmful. In many cases, larger credit unions have achieved scale precisely by doing something right – by fulfilling our mission so well that more consumers want to join. Their expansion has sometimes come from stepping up where others failed. For example, when credit unions acquire community banks, they often keep local branches open and jobs in the community, preventing financial deserts that might have occurred if a big out-of-town bank took over or the bank simply closed. Many of the largest credit unions continue to deliver excellent value to members, reinvesting earnings into better rates and community services rather than siphoning profits to stockholders. In short, a thriving credit union – large or small – can greatly benefit consumers.
Rapid Expansion Of Big CUs
However, the rapid expansion of some big credit unions has undoubtedly changed our advocacy calculus. It has given fodder to bank lobbyists who claim credit unions have outgrown their purpose. We see headlines focusing on the rare credit union mega-merger or bank acquisition, even though such deals are a tiny fraction of the financial industry’s consolidation (credit unions accounted for under 0.5% of bank assets acquired in the last decade). Still, in politics perception is reality. The presence of very large credit unions means our advocacy messages must work harder to highlight that our mission is unchanged. We now operate in an environment where a significant portion of lawmakers and voters don’t immediately distinguish a credit union from a bank. In a recent poll commissioned by our banking detractors, a majority of consumers (many likely unaware of credit unions’ unique structure) expressed support for Congress examining our tax exemption. The bigger our largest institutions become, the more we have to double down on educating officials that credit unions – of all sizes – are still member-owned, community-rooted, and not-for-profit. And that task becomes monumentally easier when we can point to vibrant small credit unions in every state and district, living out the mission in local communities.
As chief advocacy officer of the Defense Credit Union Council (DCUC), I spend a lot of time on Capitol Hill fending off attacks on our tax status. I can tell you from experience: optics and anecdotes carry weight in policy debates. It’s far more compelling to share stories of a 3,000-member credit union helping soldiers save for deployment, or a tiny teachers’ credit union keeping a rural school district financially served, than it is to defend the abstract idea of a $10 billion institution not paying federal income tax. If current trends continue and small credit unions keep fading away, our ammunition in the fight to preserve the tax exemption will dwindle. The discussion will no longer be about the local cooperative difference; it will be about balance sheets. The narrative could shift to “Why should this handful of large institutions be tax-exempt?” rather than “How do we keep financial services available for millions of people of modest means?”
We cannot allow that to happen. Defending the tax exemption is already an uphill battle, and it will only get steeper if we lose the visibility and goodwill that small credit unions generate. It’s an unfortunate truth that public policy sometimes hinges on appearances: a credit union with a few hundred million in assets serving a military base simply looks more deserving of tax exemption than one hundred times its size serving a broad metropolitan area – even if both are operating under the same principles. As small credit unions vanish, the face of our industry to outsiders becomes the big players, and our opponents know this. They’ll continue to push the narrative that our tax exemption is an outdated subsidy for large, bank-like entities. We must counter that by lifting up our smallest institutions every chance we get. They are living proof of our mission, and their presence keeps our story credible. Indeed, regulators themselves have noted that taxing credit unions would hit smaller institutions hardest, likely forcing many to close or consolidate – leaving military bases and underserved neighborhoods vulnerable to predatory lenders if credit unions disappeared. In other words, preserving our tax status is inextricably linked to preserving our small credit unions. Each is a safeguard for the other.
A Voice In Advocacy And Policy
At DCUC, we are dedicated to ensuring every credit union – large or small – has a voice in advocacy and policy. Our Council was founded over 60 years ago to advocate for defense credit unions, many of which are modest-sized institutions on military installations. That mission has expanded, but our ethos remains: no credit union should be left behind or go unheard, particularly the smaller ones that may not have the lobbying resources of a multi-billion-dollar institution. We work hand-in-hand with ACU, and state leagues as part of the broader “Don’t Tax My Credit Union” coalition, amplifying the stories of all credit unions. From the nation’s largest credit union serving millions of members to a tiny cooperative serving soldiers on a remote base, each brings critical value to the communities we serve. We make it a point on every visit to Congress, every comment letter, every meeting with regulators to highlight that diversity and inclusivity of our industry. Policymakers need to hear that when we speak about credit unions, we speak for 100% of our industry – the 50-member church credit union matters just as much as the nationwide federal credit union. DCUC is committed to reinforcing this truth. We know that our strength lies in unity and in the rich mosaic of charters, fields of membership, and sizes that make up the credit union family. We will continue to fight so that the smallest institutions aren’t drowned out by the largest, and so that legislation and regulations allow credit unions of every size to thrive, not just survive.
Reversing the tide of small credit union closures will take a collective effort. It’s not enough to admire the problem; we need to act as an industry to support our smaller peers. Larger credit unions, especially, have a stewardship role to play. After all, every large credit union operating today began as a small one. Preserving a future for small institutions is about honoring our roots and keeping the ladder of opportunity intact for the next generation of cooperatives. How can the broader credit union ecosystem help? Here are a few ideas:
- Shared Infrastructure: Big credit unions can help establish shared technology platforms and core processing systems that smaller credit unions can use at lower cost. Likewise, partnering on digital banking apps or IT services can help small institutions offer modern conveniences without breaking their budget.
- Back-Office Collaboration: We should expand cooperative back-office services – from compliance to accounting to cybersecurity – so that small credit unions can leverage scale efficiencies. By pooling resources on complex tasks, we free up small credit unions to focus on what they do best: serving members.
- Mentorship and Training: The industry can invest in leadership development programs to cultivate the next generation of small credit union CEOs and volunteers. This might include internships, management training, or mentorship initiatives sponsored by larger credit unions. Strong leadership and governance will help more small institutions navigate challenges and remain independent.
Not Charity
These aren’t acts of charity; they are investments in the sustainability of the credit union model itself. When big and small collaborate, the whole system benefits. We maintain a pipeline of innovation and personal service that often starts at the smallest institutions and inspires the rest of us. Moreover, by visibly standing together – big credit unions helping small credit unions – we strengthen our case in the eyes of policymakers that this is indeed a cooperative movement, not just an industry. It shows that we practice what we preach about “people helping people,” with credit unions helping each other.
In the final analysis, preserving small credit unions is vital not only for their communities but for the future of the entire credit union movement – including our cherished tax-exempt status. The survival of small credit unions isn’t just a “nice to have” sentimental goal; it’s a must-have for the continued credibility and moral standing of our industry. These institutions are the standard-bearers of our founding principles. If we allow them to vanish, we don’t just lose some branch offices and logos on a map – we lose trust, purpose, and the foundational story we tell the public about who we are and why we matter. The ripple effects would be felt by every credit union, big and small. Without the grassroots examples to point to, our defense against taxation and over-regulation weakens. With them, we can always remind America (and its lawmakers) that credit unions are unique guardians of financial opportunity for the little guy – something worth protecting.
So, let’s not wait passively for the next merger announcement to appear in the trade press. Let this op-ed be a call to action. We must recommit to collaboration and solidarity across our credit union ecosystem to ensure credit unions of all sizes can thrive – together. DCUC stands ready to do its part, and I invite all our industry partners to join us. By bolstering our smallest credit unions, we bolster our entire movement. In doing so, we safeguard not just those individual communities, but the very idea of what a credit union is meant to be. And in turn, we safeguard the argument – indeed the truth – that our tax exemption is an investment in America’s communities and not just a break for big institutions. The road ahead will require unity and effort, but I am confident that if we hold fast to our cooperative values, we will not only survive these challenges, we will prevail – with our smallest credit unions leading the charge as living proof of why this industry warrants both its tax status and the public’s trust. The future of the credit union movement, and the financial well-being of millions, depends on it.
Jason Stverak is Chief Advocacy Officer at the Defense Credit Union Council.