According to an advisor who specializes in credit union acquisitions of banks (yes, they’ve become so common that someone can now build an impressive career in overseeing them), a “magic moment” of credit unions increasingly buying banks is underway. We’d hardly call it a “magic moment” when large credit unions are using taxpayers’ hard-earned money to buy community banks to increase their own profits, instead of bolstering the original mission. In fact, we’d actually have a few other choice words. A recent report by the CU Journal cited that the credit union industry is on track to break its own record for the most credit union-bank transactions in a year, with six acquisition deals in the lineup already for 2019:
- Vystar Credit Union/Citizens State Bank
- Central Florida Educators Credit Union/Fidelity Bank of Florida
- Fairwinds Credit Union/Friends Bank
- Power Federal Credit Union/TransCapital Bank
- MIDFLORIDA CU/Community Bank & Trust of Florida
- Arizona Federal Credit Union/Pinnacle Bank
With these purchases, credit unions are hoping to bring banks into their own wheelhouse and expand geographically to add new streams of revenue. Many also want to buy commercial lending operations. The problem is, if they’re going to think like banks and work like banks, they need to be taxed like banks – not given special tax exemptions. These deals in no way, shape or form help the modest means communities these credit unions were originally chartered to support – in fact, they probably harm them as they offer the opportunity for credit unions to focus on shinier, newer costumers.
If NCUA once again isn’t going to act as an effective regulator and stop these deals from happening, it should at least provide transparency around the process of approval so that Congress can eventually analyze the legitimacy of these deals. If NCUA won’t act, only congressional oversight and reform can bring about the change that is needed.