Ultra-large GreenState Credit Union – based in Iowa with nearly $11 billion in assets – has scrapped its plan to buy Omaha-based Premier Bank. The decision follows a Nebraska state judge’s affirmation of a state agency ruling that denied GreenState’s application to cross state borders and scoop up Premier, a $369 million community bank.
This marks the second time this year that a credit union has fallen short in its pursuit of a bank acquisition. Readers will recall that another $11 billion credit union, Florida’s VyStar, recently attempted to purchase Heritage Southeast Bank, a Georgia-based community bank. That deal was abandoned when they were unable to clear the necessary regulatory hurdles.
Perhaps regulators in some states are beginning to wake up to the fact that these ultra-large credit unions are leveraging their outdated, outsized and outrageous tax status to expand their footprints beyond state lines and across the country.
This rightfully-scuttled deal notwithstanding, the troubling trend of credit unions buying banks continues, as does their relentless growth fueled by their relaxed membership restrictions and unjustified tax exemption. And based on comments from GreenState’s CEO, no judge will dissuade them from chasing new members and new commercial lines in new markets.
CEO Jeff Disterhoft told the Credit Union Times that “We are still coming to Nebraska. This simply pushes our timetable back a year.”
So, unsurprisingly, they’ll be back.
And why not? They’ve already purchased two banks in Illinois and another in their home state. And ultra-large credit unions are living the easy life. No federal income taxes. No Community Reinvestment Act requirements. No CEO compensation disclosure requirements despite ostensibly being not-for-profits (hello, Form 990). Private jets for executives in the name of efficiency.
While we at Reform Credit Unions applaud Nebraska for tapping the brakes on this transaction, we must ask yet again: where are other state and federal regulators on this critical issue? When will Congress finally tax credit unions that act (and even buy them!)? When will regulators ask credit unions to prove that they are in fact serving underserved communities?
In our view, the sooner the better.