The recent acquisition of 1st Bank Yuma by OneAZ Credit Union is the 17th acquisition of a community bank by a credit union this year – a single year record, and the Independent Community Bankers of America (ICBA), which represents community banks, is advocating for a policy response.
“With credit unions accounting for roughly a quarter of this year’s banking industry acquisitions, the FDIC recently approved a new statement of policy on bank mergers that for the first time explicitly states that additional scrutiny may be needed for deals involving tax-exempt credit unions — as advocated by ICBA. In a June comment letter, ICBA called on the FDIC to expand the scope of its bank merger reviews to include credit unions because their diluted field-of-membership restrictions no longer limit the ability of credit unions to attract customers, especially given their tax-exempt status,” ICBA President and CEO Rebeca Romero Rainey said on Oct. 3.
Romero cited ICBA’s latest polling conducted by Morning Consult that said 61 percent of U.S. adults believe that Congress should investigate whether credit unions should be able to acquire banks given credit unions’ tax and regulatory exemptions.
“The news media and the American public are clearly taking notice, with recent Bloomberg, CNBC, Axios, and CNN coverage raising questions about credit union practices. To remedy this increasingly concerning trend, ICBA and community bankers continue our calls for Congress to hold hearings and to consider an ‘exit fee’ on credit union acquisitions of tax-paying banks to capture lost tax revenue resulting from these deals,” Rainey said.
A policy change would be in line with previous banking industry reforms, she added.
“In 1951, Congress revoked the tax exemption for building and loan associations, cooperative banks, and mutual savings banks, finding that these institutions operated much like commercial banks and should be taxed accordingly. With community banks serving as the nation’s leading small-business and agricultural lenders, Congress should investigate the outdated credit union policies and whether the government should continue subsidizing community banking consolidation,” Rainey said.
The transaction will increase OneAZ’s assets to over $4 billion, serving over 220,000 members throughout Arizona.