Credit unions are acquiring community banks to expand their footprint—but banking trade groups worry about the abuse of tax exemption

Credit unions are acquiring community banks to expand their footprint—but banking trade groups worry about the abuse of tax exemption

Credit unions are acquiring community banks to expand their footprint—but banking trade groups worry about the abuse of tax exemption Michigan-based DFCU Financial recently announced its intention to acquire First Citrus Bank of Tampa, Florida, in a deal estimated to be worth about $105 million. DFCU is the seventh credit union this year to announce its acquisition of a community bank—suggesting this may become a larger trend moving forward. While these deals help credit unions expand their commercial lending footprint and penetrate markets in other geographic areas, some community bankers worry credit unions may be abusing their tax-exempt status to outbid banks and gain an unfair advantage. In doing so, this could "decrease consumer access to local financial services while diminishing tax revenues that could be used to help bolster services in local communities," per The Business Observer. That said, "these acquisitions—relatively small in number—aren't likely to become an existential threat to community banks. Bank-to-bank deals will continue to dominate M&A activity in financial services," said Sherry Fairchok, analyst at Insider Intelligence. Looking ahead, as President Joe Biden signed an executive order last year to reduce the trend of corporate consolidation, "the executive branch may eventually take a look at credit union acquisitions of banks," Fairchok said. Read This Full Story on Insider Intelligence Related articles U.S. Bank hopes $100B community plan will advance the MUFG Union Bank merger View Article UK bill seeks to protect access to cash and victims of APP fraud View Article Thanks for Reading! Find out why more than 100,000 corporate subscribers worldwide trust our unbiased approach to make grounded decisions about the future of their business. Become a Client Email sent to: nguyenvu1187.love5@blogger.com Manage your email preferences  |  Unsubscribe  |  Terms of Service  |  Privacy Policy © 2022 Insider Intelligence, 11 Times Square, New York, NY 10036