Washington, D.C. (Sept. 1, 2023)—Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey issued the following statement on recent acquisitions of taxpaying community banks by tax-exempt credit unions.

“Following this week’s series of announcements that tax-exempt credit unions will acquire five community banks, ICBA and the nation’s community bankers urge Congress to investigate the credit union tax exemption and its harmful impact on local communities. Of the 51 bank deals announced so far this year, nearly 20% are now credit union bank purchases.

“The surge in credit unions leveraging their taxpayer subsidies to acquire local community banks has devastating implications for local communities that go well beyond their expansion of the federal tax exemption for more than $2 trillion in credit union assets. With the nation’s community banks accounting for roughly 60% of U.S. small-business loans to local entrepreneurs and 80% of agriculture loans to local family farms and agricultural enterprises, each credit union acquisition displaces a critical and trusted provider of credit, further consolidates the banking industry, and increases the portion of the industry exempt from Community Reinvestment Act oversight.

“With a tax exemption worth nearly $4 billion per year, in stark contrast to the $12 billion in tax revenue community banks contributed in 2020, there is little wonder why credit union bank acquisitions peaked last year and are now on pace to match that record in 2023 — credit union executives can combine their members’ capital with the savings from their tax exemption to make inflated all-cash offers to buy out healthy community banks in largely private, nontransparent deals.

“While states such as Colorado, Minnesota, Mississippi, and Nebraska have pushed back against these deals in their states, this trend is a matter of federal policy and national economic importance. Taxpayers are entitled to know more about how the subsidy they fund is being used to underwrite financial services consolidation. Congress should respond by holding hearings, requesting a Government Accountability Office study on the credit union industry, and considering an “exit fee” on these acquisitions to capture the value of the tax revenue lost once the acquired bank’s business activity becomes tax-exempt.

“ICBA will continue raising a red flag on this disturbing trend of larger credit unions increasing their taxpayer-subsidized footprint by buying up smaller, tax-paying community banks. As credit union banking acquisitions accelerate, policymakers are responsible for investigating whether federal policy should continue to support this alarming trend.”


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 employ nearly 700,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding $5.8 trillion in assets, $4.8 trillion in deposits, and $3.8 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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