NCUA memo: Credit unions are not purchasing banks at fast pace

Despite the outcry by the banking community, credit unions are not purchasing banks at a quickening pace, according to a National Credit Union Administration memo obtained by Washington Credit Union Daily under the Freedom of Information Act.

“Bank transactions with credit unions are a small proportion of the overall consolidation occurring in the financial services marketplace,” Kelly Lay, the NCUA’s director of the Office of Examination and Insurance, wrote in a December 14 memo to agency Chairman Todd Harper.

Lay prepared the memo to Harper as part of the agency’s response to a request by House Financial Services Committee Vice Chairman Rep. French Hill, R-Ark. During a November hearing with banking regulators, Hill asked Harper for a report on credit unions purchasing banks. He said he had read a report that credit unions had purchased 16 banks during a recent year. He raised concern that such deals meant that tax-paying banks became tax-exempt credit unions.

In her memo, Lay reported that from 2011 to Sept. 30, 2023, the NCUA had approved 64 purchases of banks by credit unions. Of the 64 bank purchases by credit unions, 54 were made by federally insured, state-chartered credit unions, which have broader authority and flexibility in their field of membership rules. Since 2011, the NCUA and/or a state regulatory agency have denied four credit union purchases of banks and in nine other cases, the credit union involved withdrew its application.

 

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