Meeting with constituents during CUNA’s virtual GAC? Here are some things to consider.

Issue: The Credit Union Mission to Serve “People of Modest Means”

Credit unions were created and granted a substantial tax exemption to serve “people of modest means” by providing credit for “provident purposes.” However, fewer than 20 percent of credit unions are physically located in an economically distressed area and only 27 percent are in low- and moderate-income (LMI) areas.

Question for Credit Union Attendees:

  • Is your credit union located in a low- and moderate-income area? Can you tell me what percentage of your customer base is LMI?

Issue: Credit Union Acquisitions of Community Banks

In recent years, there has been a spike in credit unions abusing their tax-exempt status to acquire taxpaying community banks, removing a trusted, local lender from the community, and limiting consumer choice in the financial services marketplace.

While these acquisitions were uncommon just a few years ago, there were 13 deals in 2018, surging to 21 in 2019. Due to the pandemic, transactions slowed to 9 in 2020 but could increase dramatically in 2021 and beyond.

Question for Credit Union Attendees:

  • Do you plan on using your tax exemption to target and acquire a taxpaying community bank?
  • Do you think that these transactions are true to your mission or the purpose of your tax exemption?
  • A credit union is tax-exempt; a bank is taxed. Doesn’t that give you an advantage?