By Jason Stverak
ICBA’s latest attack on “banks selling to credit unions” isn’t about protecting community banks. It’s about protecting ICBA.
Last week the ICBA again urged Congress to “eliminate the federal tax exemption for credit unions over $1 billion in assets,” claiming credit union acquisitions of banks are “harmful” and driven by “favorable” tax treatment. That’s a political demand to punish one set of buyers and shrink the market for community bank sellers.
Let’s talk about what ICBA won’t: the money.
The dues.
ICBA’s membership dues are based on the asset size. Asset-based dues mean the association’s incentives are tied to keeping bank assets inside the banking charter system that funds the association.
Now compare two outcomes, this is the “missing graphic” in every ICBA press release:
A) Bank buys bank
• Assets stay in the banking system (and in ICBA’s dues universe)
B) Credit union buys bank
• The bank charter is terminated or becomes a shell; assets and accounts move into a credit union (outside ICBA’s dues universe)
Which one does ICBA rage about? Exactly.
This is why I’m done letting people pretend ICBA is making a principled argument. Their outrage tracks their dues structure. If your revenue depends on bank assets staying “bank assets,” you will fight anything that converts those assets into something else, no matter what’s best for the bank’s owners.
And what’s best for the owners is not a mystery. When a bank sells, the board and management have a fiduciary duty to act in the best interests of shareholders. In a sale-of-control context, directors must take reasonable steps to obtain the best price reasonably available. That duty doesn’t include protecting a trade association’s membership spreadsheet, or insulating rival bidders from competition.
So, ask the obvious question: how can anyone claim to represent community banks while advocating policies designed to reduce the number of credible bidders for a bank?
Fewer bidders is not “pro-community bank.” It is anti-shareholder.
That is what ICBA is pushing. Their goal isn’t to stop consolidation. It’s to stop a particular kind of buyer, or make that buyer less competitive, so the remaining bidders can pay less. If ICBA gets its way, the bank will still likely be purchased; it will just be purchased at a lower price. That is worse for the people who own the bank.
And let’s be honest about who those owners are. In thousands of small towns, community bank shareholders are local families, retirees, employee owners, and long-time investors. They don’t have lobbyists. They have savings. Their “exit” is their stock. Any lobby demanding fewer bidders is demanding those owners take a haircut, so the lobby doesn’t.
ICBA also repeats the “all-cash offer” line as if cash is some unfair superpower.
Here’s the truth: credit unions often pay cash because they have to. Regulators note credit unions cannot acquire a bank charter and instead purchase assets and assume liabilities; regulators also list “preventing credit unions from issuing common stock and other equity instruments” as a key statutory constraint. Banks can offer cash, stock, or a mix. That flexibility can matter to sellers, tax planning, liquidity, and upside participation. For example, a Bank Director discussion-group deck citing S&P Global Market Intelligence shows that in 2019, among bank deals with disclosed consideration, 52% were cash-only, 19.8% stock-only, and 28.2% stock-and-cash—meaning sellers routinely weigh cash, stock, and hybrids.
So. when ICBA complains that credit unions are “all-cash,” what it’s really admitting is: “They’re competing in auctions we want to win.”
And those auctions are voluntary. Regulators describe these as arms-length, market-driven transactions sought by the management of both institutions, with approvals involving multiple agencies and third-party valuation analysis. DCUC has also emphasized that these are transparent, regulated transactions often initiated by banks that need a succession plan or relief from mounting burdens, not “hostile takeovers.”
Market data also undercuts the claim that banks are being “exploited.” S&P’s bank deal coverage notes that announced credit union acquisitions have often included sizable premiums, reflecting intense competition for scarce quality sellers.
Now to ICBA’s bigger club: “eliminate the tax status.”
Credit union tax status is not a loophole; it’s a longstanding legal recognition of a different ownership model. Federal credit unions have a statutory tax exemption, and state-chartered credit unions are exempt from federal income tax under the Internal Revenue Code. Credit unions are member-owned cooperatives—organized without capital stock and designed to return value to member-owners rather than outside shareholders.
And removing that tax status isn’t a victimless spreadsheet change. A 2025 economic analysis estimates that eliminating the credit union tax exemption would reduce GDP, cost jobs, and increase consumer costs over the next decade, driven by less favorable rates and reduced competition.
So, what ICBA is really proposing is this: punish service members, veterans, working families, and small businesses with higher costs because ICBA doesn’t like the outcome of a voluntary bidding process.
If ICBA wants to argue about competition, let’s have that debate honestly. Competition is exactly what community bank shareholders need when they decide to sell. More bidders are not a threat to community banks; they are a lifeline for community bank investors.
Community banks deserve advocates who fight for their ability to thrive—not ones that pressure them to sacrifice shareholder value to protect dues. Bank investors deserve a full and fair market for their institutions. And America deserves competition that works, not competition sabotaged by a dues-driven lobbying campaign.
Jason Stverak is Chief Advocacy Officer at the Defense Credit Union Council.