Washington, D.C. (June 18, 2021) — The Independent Community Bankers of America (ICBA) today reinforced its call for Congress to investigate tax-exempt credit unions acquiring taxpaying community banks following a resurgence in interstate acquisitions.
The latest acquisitions include:
- Lake Michigan Credit Union—a low-income credit union in Grand Rapids with $10.4 billion in assets—buying Tampa, Fla.-based Pilot Bancorp, a $656 million-asset institution that specializes in financing private airplanes.
- GreenState Credit Union in North Liberty, Iowa—a low-income credit union with $7.5 billion in assets—acquiring community banks in Illinois and Nebraska worth $730 million in assets and $345 million in assets, respectively.
“Congress granted credit unions a tax exemption to serve people of modest means—not to buy taxpaying community banks and finance private airplanes,” ICBA President and CEO Rebeca Romero Rainey said. “These transactions—facilitated by a tax exemption that allows credit unions to make inflated purchase offers well above the book value of the acquired banks—are the latest to eliminate locally based lenders, further consolidate the banking industry, and cut regulatory safeguards for low- and moderate-income consumers.”
Credit union acquisitions of community banks have a demonstrably negative impact on local communities and taxpayers.
- According to S&P Global data, the nearly 100 acquisitions of the past 19 years amount to a loss of nearly $300 million annually in federal income taxes alone—not counting lost revenue to states and municipalities.
- The Joint Committee on Taxation has tallied the federal cost of the credit union tax exemption at roughly $10 billion through 2022—an annual taxpayer cost of $2 billion and rising.
- Because credit unions are also exempt from the Community Reinvestment Act—which assesses whether institutions are meeting the needs of low- and moderate-income communities—each transaction also cuts access to financial services in affected areas.
- Meanwhile, the National Credit Union Administration continuously expands the powers of growth-oriented credit unions by: allowing outside investors to profit from the credit union tax subsidy, repeatedly delaying stricter capital requirements more than a decade after the financial crisis, and permitting credit unions to include in their memberships wealthy suburbs of metropolitan areas while leaving out their urban cores.
To fully understand the impact of this deeply concerning acquisition trend, ICBA is calling on Congress to:
- Hold hearings to review the role and the appropriateness of using the credit union tax exemption to fuel these transactions.
- Request a Government Accountability Office study on the evolution of the credit union industry and NCUA supervision.
For more information, visit www.icba.org/wakeup.
The Independent Community Bankers of America creates and promotes an environment where community banks flourish. ICBA is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education, and high-quality products and services.
With nearly 50,000 locations nationwide, community banks constitute 99 percent of all banks, employ more than 700,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding more than $5 trillion in assets, over $4.4 trillion in deposits, and more than $3.4 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org.