Banks selling to credit unions offers wins for all stakeholders

February 25, 2020

Bank sales to credit unions provide significant benefits to consumers, communities, the bank owners and the credit union, says a new CUNA white paper on bank sales to credit unions. As bankers around the country have been attacking bank purchases of credit unions, the paper builds on research from the St. Louis Federal Reserve that shows “these transactions have the potential to be a win for all the stakeholders involved.”

CUNA’s paper shows that large banks have accounted for more than 75% of total acquired bank assets since 2012, while credit unions account for 0.3% of acquired bank assets during the same time period.

Communities involved benefit through the addition of a not-for-profit financial cooperative that passes its earnings to members through lower loan rates, higher savings yields and fewer/lower fees.

Credit unions collectively delivered $14 billion in direct financial benefits to members through the third quarter of 2019, benefits that total more than $115 billion since 2007.

Desert“...[C]redit unions are more likely to preserve access to financial services for bank customers who become credit union members, compared to bigger banks,” the paper reads. “Recent literature is replete with references to big banks purchasing smaller institutions, cherry-picking the branch networks and then closing those that don’t meet stringent profit criteria,” it goes on, citing a Wall Street Journal report on bank branch closures.

In addition, consumers routinely say credit unions are consumer-friendly, trustworthy and an overall better value than banks. Consumer Reports notes credit unions are “among the highest rated services we’ve ever evaluates, with 96% of our members highly satisfied.”

The credit union benefits by being able to grow and expand service offerings.

According to a survey conducted by CUNA sent to all bank CEOs who have sold to credit unions since 2007, 89% of respondents cited specific reasons other than price for selling to a credit union:

  • 89% said they felt the credit union was more likely to retain employees;
  • 61% said the credit union was a better cultural fit;
  • 50% said they felt the credit union was more likely to preserve the bank’s legacy of community service; and
  • 50% reported they sold to a credit union because the credit union was more likely to keep branches open.