Credit union purchases of banks offer substantial benefits to all parties involved, CUNA and the Mountain West Credit Union Association (MWCUA) wrote this week to the Colorado Banking Board in support of Elevations CU plan to purchase and assume Cache Bank & Trust. The board must approve this transaction, and the Colorado Bankers Association (CBA) has asked the board to consider the legality of the transaction.

Specifically, Cache Bank & Trust has requested authorization to operate  as if the bank was a national bank, a request that includes the approval of the purchase and assumption by Elevations CU.

CUNA President/CEO Jim Nussle and MWCUA President/CEO Scott Earl, in the letter sent this week, demonstrate how such credit union-bank transactions are good business decisions for all parties involved.

“Consumers benefit by gaining access to strong, responsible community-focused financial services. Communities benefit because credit unions provide, based on our analysis, more than $16 billion in direct and indirect consumer benefits, especially in underserved areas that often have no other affordable option for financial services,” the letter reads. “And, clearly, bank investors benefit. Indeed, this sentiment has been confirmed by the Federal Reserve Bank of St. Louis in a recent report: ‘If they [the credit union] can retain enough of the employees and customers, these transactions have the potential to be a win for all the stakeholders involved.’”

CUNA’s research on the topic has included interviews with the former bank CEOs that made the decision to sell to a credit union.

“Nearly 90% of bankers indicated they chose a credit union because they felt there was a greater likelihood that employees would be retained; more than 60% said a better cultural fit helped drive the decision. For about half, they saw the transaction as an opportunity to preserve their legacy of service to the community,” the letter reads. “A similar number indicated they felt that there was a greater likelihood that branches would remain open.”

The letter also notes that, should the Banking Board accept the CBA argument, it would be reversing precedent set by the board itself in previous years regarding bank purchase and assumptions by thrift institutions, citing several examples.

“These examples demonstrate that the Banking Board has the power to approve the sale between a bank and a financial institution and that it has appropriately applied this power consistent with Colorado law and regulation,” the letter reads. “Therefore, the transaction falls well within statutory bounds and the precedent set by the Banking Board.”