Former NCUA official calls for transparency in credit union bank acquisitions

A new blog post spotlights the lack of information that credit union member-owners are privy to when their credit union decides to acquire a bank.

New Blog Post: The Just a Member post from Callahan & Associates co-founder and former National Credit Union Administration Central Liquidity Fund President Chip Filson notes that bank shareholders, the National Credit Union Administration, and the FDIC receive financial details on these deals, but credit union member-owners are left in the dark. Noting these deals often feature premiums of 1.5 to 2.0 times the bank’s net worth, he calls for increased transparency on these transactions.

Lack of Transparency: “It’s past time for credit union owners to have this full information,” Filson writes. “It is essential to understand whether the transaction makes financial sense and to hold their leaders accountable for the proforma outcomes. Right now everyone else has the details except the owners footing the bill.”

Data Shows Harm of Acquisitions: ICBA recently conducted a data analysis demonstrating that credit union acquisitions of community banks are harming small businesses and local communities. As detailed in a Main Street Matters blog post, the ICBA analysis found that in areas where community banks participated in Small Business Administration lending programs, SBA lending fell after nearly 80% of credit union acquisitions.

Growing Media Scrutiny:

• In recent op-eds in the Natchitoches Parish Journal and the Shreveport Bossier Journal, ICBA leadership community banker Ken Hale details how credit union acquisitions of community banks harm local communities.

• Recent op-eds in American Banker and RealClear Markets target the credit union tax exemption following ongoing ICBA advocacy.

• A previous article in The Banker—an imprint of the Financial Times—says some credit unions may be abandoning their mission with “Wall Street-style” behavior and no longer serving their core members.

• In The CU Daily, retired credit union CEO Ed Speed cites the loosening of field-of-membership rules, regulatory maneuvering that exploits tax advantages, and expansion-focused growth strategies.

• A recent American Banker article says credit unions are indeed announcing more and more bank acquisitions, sometimes thousands of miles away.