December 09, 2019

NAFCU provides Mnuchin with insights into CU-bank mergers

Dan Berger
NAFCU President and CEO Dan Berger

NAFCU President and CEO Dan Berger, in a letter to Treasury Secretary Steven Mnuchin, provided additional insights into recent credit union-bank mergers. Lawmakers raised the issue to Mnuchin while he testified before Congress last week; however, Mnuchin noted that these mergers are small scale and not currently a concern for the Treasury.

"The mergers in question are voluntary, market-based transactions and the community banks' board of directors are voting to sell to credit unions as the best option available for consumers," Berger said, echoing comments from NCUA Chairman Rodney Hood in congressional testimony.

Berger highlighted that nine credit union-bank mergers have received final approval this year. While it is an increase of the decade average of three per year, "these mergers are certainly not occurring at an 'alarming rate' and credit unions are not on a 'buying spree,' as some have suggested," Berger wrote.

"In the current phase of financial institution consolidation, there are instances where banks, who answer to shareholders, are unable to remain economically viable," he wrote. "In order to avoid a bank failure, a merger with a credit union can ensure financial services continue for an established consumer base. If a merger with a credit union can avoid a banking desert, or continue to serve an underserved market, then consumers are better off."

Berger also flagged that credit union-bank mergers are significantly smaller than the recent mergers between banks. For example, the BB&T Corp. and SunTrust Bank merger – finalized last week – created the sixth largest retail bank in the country, with $435 billion in assets. Credit unions are also leading banks when it comes to diversity and inclusion efforts, as well as satisfaction among consumers, Berger added.

Read Berger's full letter. NAFCU will continue to set the record straight on credit union-bank mergers and share the credit union difference, which is demonstrated by their support of communities and the economy as a whole.