Washington, D.C. (April 1, 2021) — Following the announcement of the largest-ever credit union purchase of a community bank, the Independent Community Bankers of America (ICBA) today renewed its call for policymakers to investigate the growing trend of tax-exempt credit unions acquiring taxpaying community banks.
VyStar Credit Union in Jacksonville, Fla., this week said it is leveraging its tax exemption and crossing state lines to purchase a $1.6 billion community bank in Jonesboro, Ga.—eliminating a locally based lender and further consolidating the banking industry. ICBA is calling on Congress to hold hearings on this trend and request a Government Accountability Office study on the evolution of the credit union industry and National Credit Union Administration supervision.
"While community banks have accounted for more than 60 percent of Paycheck Protection Program loans to lead the economic response to the pandemic, the dated credit union tax exemption and faulty National Credit Union Administration oversight are claiming another of these essential local institutions,” ICBA President and CEO Rebeca Romero Rainey said. “The current rash of taxpayer-funded credit union acquisitions exacerbates industry consolidation, shrinks state and local tax revenues, limits the reach of the Community Reinvestment Act, and again shows that tax-exempt credit unions have become virtually indistinguishable from taxpaying commercial banks.”
Credit union acquisitions of community banks have a demonstrably negative impact on local communities and taxpayers.
- According to S&P Global data on the 93 acquisitions of the past 19 years, the total assets of acquiring credit unions was more than $157.5 billion, while acquired community banks totaled $149.8 billion, amounting to a loss of more than $264 million annually in income taxes.
- 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 $2.5 billion and rising.
- Each transaction also increases the portion of the financial services industry exempt from Community Reinvestment Act oversight at the expense of taxpayers.
ICBA will continue calling on policymakers and the public to “Wake Up” to the costly tax subsidies and irresponsibly lax oversight of the nation’s credit unions.
About ICBA
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.
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