A deal announced on Tuesday will result in multi-billion dollar Landmark Credit Union acquiring American National Bank Fox Cities. The transaction is the ninth credit union acquisition in Wisconsin’s history and represents a concerning national trend of taxpaying community banks being purchased by large, tax-exempt credit unions. The acquisition will bring Landmark Credit Union to over $8 billion in assets, making it the fourth largest headquartered financial institution in the state.
“Taxpayers should be urgently alarmed about this acquisition,” said Rose Oswald Poels, president and CEO of the Wisconsin Bankers Association. “Unlike banks, credit unions do not pay any state or federal income taxes. Consequently, all of us tax-paying individuals and businesses will bear an increased tax burden to support needed government services. This transaction alone will result in an estimated $850,000 in lost annual federal tax revenue.”
Large, asset-rich and fast-growing credit unions — like Landmark Credit Union — are a reminder that the playing field is not level.
“The transaction illustrates that the merger and acquisition process is clearly broken,” emphasized Oswald Poels. “Taxpayers and lawmakers alike should demand change.”
There is a statutory inequality in the mergers and acquisitions (M&A) process due to the significant tax advantages granted to credit unions that are endorsed by lawmakers.
“The merger table is no longer a free market process. Banks interested in purchasing another bank — such as American National Bank Fox Cities — submit reasonable, competitive bids that are laughed at,” said Oswald Poels. No tax-paying bank has a fair opportunity to keep a tax-paying bank on the tax rolls with large, multi-billion dollar credit unions at the merger table offering ridiculous multiples to secure a deal.”
With more credit union deals like this one expected to be announced this year, the Wisconsin Bankers Association urges all lawmakers — especially those at the federal level — to stop ignoring this improper use of a tax exemption and bring fairness back to the M&A process for the benefit of taxpayers and banks alike.
By Rose Oswald Poels