Banks selling to credit unions is worthwhile collaboration.
Those who scoff at the sale of a bank to a credit union either don't understand the fundamental differences between the two financial institutions, or they have no issue with putting profits over the people they serve.
At the very core, a bank is focused on profits and bottom lines, whereas not-for-profit credit unions, that are owned by those who bank there, are focused on serving all consumers who need them.
Credit unions were created nearly 100 years ago to serve those left behind by the big banks and have consistently and continually looked for new ways to continue to meet consumers' needs. These member-owned financial institutions take pride in using every tool at their disposal to serve their communities. Offering safe and affordable products while reinforcing good financial habits has led to generations of Americans achieving their financial dreams.
When banks realize they are unable to continue their operations, a credit union is often a natural partner to consider. Instead of leaving consumers high and dry because they can't turn a profit, banks often make the decision to sell to a credit union to ensure a healthy financial institution remains in the community.
As members of the community themselves, these bankers are looking for options that will keep financial services accessible, keep people employed and maintain a local option. Often, they find a credit union that fits the bill, and they decide to move forward on the transaction.
Eighty percent of these transactions involve sales to low-income designated credit unions, meaning they're critical to maintaining vital financial services to those communities. Credit unions bring the experience of hyperlocal financial services and combine it with a member-first mentality that leads to billions in financial benefits each year and a huge impact on these communities that need it most.
A report from the St. Louis Federal Reserve found that credit unions and community banks share a deep connection with consumers. In fact, a survey of community bankers showed 50% cited the focus on community and customer-first mindset as a big consideration in deciding to sell to a credit union.
Credit unions enter these transactions with a goal of maintaining customers and employees and ensuring safe and affordable financial services for all. According to America's Credit Unions' research, the approximately 404,000 new credit union members who chose to join following a bank sale in the last decade have realized benefits of more than $41 billion since becoming members.
Looking at the larger picture, a majority of bank CEOs who chose to sell to credit unions since 2007 have said credit unions are more likely to keep branches open, preserve services and retain employees. The big banks can claim all sorts of things, but this data comes directly from the people who chose to sell to a credit union.
We also can't properly discuss this "trend" without discussing market share. The top 100 largest banks have nearly three-quarters (74.4%) of all market assets, with all other banks taking 16.7% of the market. Credit unions have 8.8% of the market share.
Since 2012, only 78 banks have sold to credit unions, compared to 2,572 banks that sold to other banks. Those 78 banks understand that selling to a credit union keeps the benefits local to a community that needs it. A bank selling to another bank keeps the benefits local to their executives' and shareholders' wallets.
These sales are not forced. In fact, they are approved by the bank's board, taxed and ultimately are a win-win for all involved.
These sales are not forced. In fact, they are approved by the bank's board, taxed and ultimately are a win-win for all involved. A trusted banking option is preserved in the community, and bank employees retain their jobs.
These positives come straight from government data, surveys and the people who participate in these transactions, and missing from all of it is a call for reform, or further attention from Congress. Narratives suggesting otherwise are simply untrue and uninformed.
There will unfortunately always be stories of uneven playing fields, consumer harm and predatory behavior worthy of federal attention. But these types of transactions — representing only 2.6% of bank sales over more than a decade — are not an example of this.
Community financial institutions working together for the benefit of the people they serve is something Congress should be encouraging and looking for ways to emulate, not reform.
Credit unions are very proud of their decades of service to members and will continue to earn the faith placed in them by consumers and policymakers, with a continued focus on those the banks are leaving behind. They will continue to do what they've always done: be the best financial partner for members, putting people over profit every time.
So, now that you have the full story, is it truly any wonder why a bank may choose to sell to a credit union?
