Washington, D.C. (Aug. 25, 2021) — With the number of tax-exempt credit union purchases of taxpaying community banks passing 100, the Independent Community Bankers of America (ICBA) is renewing its call for policymakers to examine the loophole contributing to these tax-subsidized acquisitions.
The acquisitions of $489 million-asset Citizens Bank of Florida by $4 billion-asset Fairwinds Credit Union and $93-million Tempo Bank by $1.6-billion Scott Credit Union mark the 100th and 101st credit union acquisitions of community banks since 2003, more than one-fifth of which have come since 2019.
Because every credit union purchase of a community bank diminishes tax revenues, each acquisition increases the cost of the credit union tax exemption, which costs taxpayers $2 billion per year and rising at the federal level alone.
“Congress granted credit unions a tax exemption to serve people of modest means—not to subsidize their rapid growth at the expense of taxpaying community banks and local communities,” 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 — eliminate locally based lenders, further consolidate the banking industry, and cut regulatory safeguards for low- and moderate-income consumers due to credit unions’ exemption from Community Reinvestment Act oversight.”
To fully understand and address this concerning acquisition trend, ICBA is calling on policymakers to:
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.