Following the latest acquisition of a Wisconsin community bank by a credit union, WBA has written to Wisconsin’s Federal Congressional delegation and to members of the Wisconsin State Assembly Committee on Financial Institutions to further illustrate that it’s time for growth-oriented credit unions to be paying their fair share of taxes. Read the letter below:
Yesterday, Dupaco Community Credit Union, a $2.6 billion credit union headquartered in Iowa, announced their acquisition of Home Savings Bank in Madison. According to the joint release, the strategic acquisition will increase Dupaco’s total number of branches to 20 and total assets to approximately $2.8 billion based on 2021 financial data.
A bank’s decision to sell is completely up to bank ownership, directors, or shareholders. While we at WBA are disappointed to see this type of acquisition occurring, we do not question the Home Savings Bank’s motivations for doing so. However, we are hopeful this deal sparks conversation among all members of Congress as to why these deals are possible in the first place.
Growth-oriented credit unions have managed to become nearly indistinguishable from tax-paying banks. This is because they enjoy federal and state income tax exemptions, less stringent oversight, and do not need to adhere to community reinvestment obligations.
Wisconsin banks have opportunities to make acquisitions in these scenarios, and there were institutions that sought to purchase Home Savings Bank. But given the future tax savings credit unions can realize, they can offer purchase terms with which banks simply cannot compete. This is wrong!
This is the fifth credit union acquisition of an income tax-paying community bank in Wisconsin in the last eight years. There have also been numerous credit union purchases of bank branches and bank assets. Each one of these transactions has revenue implications for the State of Wisconsin and the country; bank assets accumulated by credit union acquisition cease to be taxed at the state and federal level. As of this year, credit union acquisitions of community banks nationwide have surpassed 100.
Dupaco’s deal here is another example of a troubling trend in the financial services industry. Rather than return more money or reduce prices and cost to members, credit unions continue to use their tax advantages to expand their footprints and operate outside the scope of their original mission. It is our hope this acquisition will raise a red flag with Rep. Steil whose constituents subsidize credit unions’ competitive advantage that will ultimately leave them with fewer choices for financial products and services. It is time for these growth-oriented credit unions to be paying their fair share of taxes!