Advocacy in Action: Banks Selling to Credit Unions: A Win for Local Communities

​In recent years, credit unions have stepped up as buyers for community banks – and that’s a good thing. Rather than signaling a hostile takeover spree, this trend reflects a commitment to keeping local banking services alive and well. In 2024 alone, credit unions announced 22 bank purchases – more than in any previous year on record. Community bankers may be sounding alarm bells over this uptick, but the reality is that credit union acquisitions of banks are benefiting consumers and communities. Here’s why keeping ownership local through credit unions buying banks is a positive development.

Preserving Local Banking Access
Across the country, financial institutions are consolidating, often leaving small towns with fewer banking options. When a community bank goes up for sale, a credit union buyer can be the best option to retain local financial services. These mergers are voluntary, market-based transactions – not hostile takeovers. In fact, the bank’s own board must vote to merge with a credit union, and the bank ultimately decides to sell to the credit union. Frequently a community bank’s choice comes down to either selling to a credit union that will keep a trusted local institution running, or closing down entirely. Credit unions have become lifeline buyers in such cases, ensuring that a community isn’t left with a shuttered bank and lost access.

Keeping Branches Open and Jobs in the Community
When a credit union acquires a bank, the local branch stays open and jobs stay in town. Unlike many large bank mergers that result in branch closures, a credit union merger typically means the branch remains open – preserving the local tax base through property and payroll taxes, and keeping residents employed. In many cases, if no credit union stepped up to buy, that community could have lost its only bank. By merging with a credit union, the community keeps a financial institution on Main Street instead of a dark, empty building.

Credit unions are community-based institutions, often with a mission to serve specific regions or groups, so they strive to maintain and even enhance the services of the acquired bank. Industry data shows that credit unions tend to keep branches open, retain the employees, and remain committed to serving the bank’s existing customer base. In other words, when a credit union buys a bank, customers don’t lose their local branch or familiar staff – they gain the benefits of a member-owned financial cooperative on top of the continuity of service.

There are tangible benefits for those employees and customers. Former bank employees frequently see improved salaries and benefits after joining a credit union, along with better career development opportunities that small banks often couldn’t offer. Meanwhile, customers gain access to a broader range of affordable financial products. The credit unions bring in financial literacy programs, community sponsorships, and higher community giving than ever before, strengthening the local social fabric. All of this adds up to real, positive impacts that go well beyond what a distant megabank would likely deliver.

Local Ownership and “People Over Profit” Mission
Why do community bank owners increasingly choose credit unions as buyers? A big reason is the shared ethos. Credit unions, like community banks, care deeply about the towns and people they serve. But credit unions take it a step further: as member-owned, not-for-profit institutions, they prioritize people over profits. There are no wealthy shareholders demanding maximum profits – the “owners” of a credit union are the local members themselves. This structure means credit unions reinvest earnings back into better rates, lower fees, and community services, rather than funneling profits to a small group of stockholders. It’s a fundamentally different model of ownership that keeps the focus local and consumer-centric.

In other words, credit unions extend the community bank’s legacy rather than erasing it. They bring the cooperative “people helping people” philosophy, which translates into friendlier services and community involvement that for-profit banks can struggle to match.

This commitment to community isn’t just rhetoric – it shows in credit union behavior. Even as they grow, credit unions on the whole serve over 140 million Americans with lower costs and better service. That includes millions of military members and veterans served by defense credit unions, which play a critical role that traditional banks often don’t. The credit union mission is alive and well, and when they expand by buying banks, they are bringing that mission to more people. Every customer of an acquired bank essentially becomes a member-owner of a credit union, with a voice in how their financial institution is run.

A Tiny Fraction of Mergers – with Outsized Community Benefits
Critics claim credit unions are on a buying binge, but let’s put the numbers in perspective. Studies show since 2012, over $1.77 trillion in bank assets have been merged through acquisitions. Credit unions accounted for less than $6.5 billion of that – a mere 0.3% of merged bank assets. In the same period, banks have acquired other banks more than 2,000 times, whereas fewer than 40 deals involved a credit union as the buyer. In short, credit union purchases of banks are a drop in the bucket compared to the wave of bank-on-bank mergers. Community bankers lobbying against these mergers are focusing on the exception rather than the rule.

The irony is that while some bank lobbyists decry credit unions for expanding, the biggest threat to local banking has been big banks swallowing up community banks. Policymakers concerned about fair, community-based finance should be looking at those mega-mergers, excessive fees, and predatory lending practices, not at the credit unions that are stepping in to serve communities. Bank industry consolidation – often accompanied by branch closures and layoffs – is what truly risks creating financial deserts. Credit unions, by contrast, are often preventing financial deserts by maintaining and even enhancing banking services in areas that might otherwise be abandoned.

It’s also worth addressing the tax argument that bankers often raise. Yes, credit unions are exempt from federal income tax because of their not-for-profit, member-owned structure. Bank advocates argue that when a credit union buys a bank, those assets stop being taxed as a bank would pay. But this critique rings hollow when you realize many banks themselves exploit tax loopholes – for example, over 2,000 banks have elected Subchapter S corporate status to avoid corporate income tax, saving an estimated $1.8 billion in taxes in 2022 alone. In other words, a significant portion of community banks already pay no corporate taxes, yet bank lobbyists seldom mention this.

Moreover, unlike banks that distribute profits to a handful of investors, credit unions use their tax-exempt earnings to build capital and offer better value to their members – effectively returning it to everyday people in the community. The public benefit of the credit union model justifies its tax status, a fact Congress has recognized repeatedly (most recently rejecting an attempt to tax large credit unions). Rather than lament that credit unions don’t pay income taxes, we should applaud that they use their financial strength to serve members and communities, not to enrich shareholders.

Strengthening Communities Through Cooperative Banking
The bottom line is this: when credit unions buy banks, communities win. These mergers keep local banking relationships intact and often deepen the community commitment. They are done by mutual agreement – typically because the bank’s leaders decide a credit union will be the most beneficial steward for their customers and employees. The results speak for themselves: branches stay open, employees keep their jobs (often with better pay and prospects), and consumers gain access to the credit union difference – member ownership, better rates, and a focus on service over profit.

Far from representing a loss for the community, credit union acquisitions preserve the legacy of community banks in a changing financial landscape. They ensure that local families and businesses continue to have a neighborhood financial partner that prioritizes their needs. At the same time, these mergers make credit unions stronger and more resilient, which helps them continue offering low-cost loans, financial education, and support for local causes.

Rather than resisting this trend, we should recognize it as a creative solution that keeps ownership local and rooted in community values. Every community saved from becoming a banking desert, every customer who gains a say in their financial institution, and every employee who can grow in their career at a credit union is proof that this is a trend worth cheering. Credit unions buying banks is not about empire-building – it’s about community-building.

Policymakers and the public should welcome these partnerships. In a time when big-bank mergers dominate, credit unions offer a refreshing path to sustain local banking traditions. By embracing the cooperative model and keeping financial services locally owned, credit union-bank mergers are ensuring that community banking has a bright future – and that’s something we can all support.