MADISON, WI (March 8, 2022) – Last week, Commerce State Bank’s board of directors announced its plan to sell substantially all its assets and liabilities to Summit Credit Union. Commerce State Bank’s CEO reiterated the reasons for doing so: “When we opened Commerce State Bank nearly 17 years ago, we focused all efforts on serving our four core constituencies: clients, employees, communities, and shareholders. Combining with Summit Credit Union significantly benefits each of them.”
In other words, the transaction was good for all involved. That’s consistent with findings of St. Louis Federal Reserve Senior Economist Andrew Meyer, who explored bank sales to not-for-profit credit unions in 2019, concluding “if they can retain enough of the employees and customers, these transactions have the potential to be a win for all the stakeholders involved.”
Wisconsinites agree, too. 71% of Wisconsin registered voters polled in an August 2021 survey agree that if a community bank were to leave their community, they would want a credit union to take its place.
To no one’s surprise, the Wisconsin Bankers Association still cried foul—contrary to the views of the parties involved in the sale and contrary to the views of Wisconsinites.
Here are just a few facts to consider regarding the WBA position:
>> Credit unions are not gobbling up the market. In Wisconsin, banks purchased 97.1% of bank assets sold.
>> The WBA allegation of lost tax revenue is inaccurate. The sales and tax payments for the two years leading up to recent sales resulted in (on net) no lost tax revenue when WI banks sold to credit unions. Following the WBA’s criticism of lost tax revenue, one would expect they would also oppose the tax status of 58 Wisconsin banks chartered as Subchapter S that also pay no corporate income tax. In Wisconsin, the amount of Subchapter S foregone federal tax revenue for 2021 was $42. 8 million.
Credit unions already pay substantial taxes – and, as cooperatives, a new tax on credit unions is a tax on their members (a fact that 75% of Wisconsinites recognize). Further, 80% of Wisconsinites support the current credit union tax status. Banks simply refuse to recognize the proven fact that the financial benefit to consumers far outpaces the revenue from another tax on member-owners.
>> Transactions like this makes sense for consumers – they already see The Credit Union Difference. Even with less than 20% of the market in Wisconsin, credit unions still helped members save $420 million in 2021 alone through better rates and fewer or lower fees – not even including through direct patronage or bonus dividends credit unions pay. If Wisconsin banks were structured like credit unions, the $7.8 billion the banks paid to wealthy stockholders over the past decade would have instead been paid to average Wisconsin families.
Consumers recognize this Credit Union Difference, as well – 75% of credit union members agree their financial institution improves their financial wellness (versus 60% for non-members). 73% of credit union members believe their financial institution cares about their financial wellness (versus 55% for non-members). 72% chose credit unions as the financial institution that offers the best deals for consumers (13% chose banks).
At the end of the day, Wisconsin consumers aren’t fooled by WBA’s antics. 82% disagreed with the banks’ continual assertion “there is no real difference between a bank and a credit union.” 91% disagree with the WBA’s claim “A credit union moving into my community would hurt schools, hospitals and other infrastructure.”
Credit unions are structured and mission-driven to put the interest of Wisconsin’s 3.5 million member-owners first, including the member-owners welcomed through this purchase. Consumers get it. Their rhetoric suggests the WBA does not.