It’s a win for consumers, their communities and their financial institution in the few scenarios when a credit union purchases a bank, League of Southeastern Credit Unions President/CEO Patrick La Pine wrote this week for AL.com. Responding to community banker complaints about credit unions purchasing banks, La Pine says these bankers are working against the best interest of their own customers and communities.
“No one is forcing a bank to sell to a credit union. These transactions occur because they benefit both sides, and the fact that they happen again shows the difference between credit unions and banks,” he writes. “As a result, the bank and the credit union each fulfill their purpose and it shows that credit unions are committed to expanding their reach to bring more Americans and more small businesses into credit union membership.”
La Pine notes that community banks are disappearing due to mega banks, not credit union growth. Since 1992, credit union market share has grown from 5.6% of the market to 7%, while the 100 largest banking institutions went from 41.1% to 75.4% over the same time period.
“Local, main street financial institutions are vital to America’s communities and as they diminish, credit unions are filling this gap. In most cases, banks or their representatives are coming directly to credit unions or their representatives to initiate these acquisitions,” he writes. “The reason why? Larger regional and national banks do not want them and/or would close branches and layoff their employees.”
Credit unions, on the other hand, are able to invest more into the service area, pay taxes on the premium paid by the credit union and typically retain bank employees rather than laying off staff.