Bank’s business groups aim for VyStar-Heritage deal
The Independent Community Bankers of America (ICBA) and the Community Bankers Association of Georgia (CBA) have urged the Federal Deposit Insurance Corp. (FDIC) to reject the proposed acquisition of Heritage Southeast Bank by VyStar Credit Union, saying the deal would reduce regulatory guarantees. for low- and middle-income consumers, both groups written in a letter Saturday.
Vystar, based in Jacksonville, Florida announced last month that she had agreed to buy the Heritage Company of Jonesboro, Ga., for $ 195.7 million.
If approved, the acquisition would make VyStar the 13th largest credit union in the United States, with total assets of $ 12.5 billion, 88 branches and a membership of more than 850,000 customers, according to the cooperative. credit.
ICBA President Rebeca Romero Rainey has accused VyStar Credit Union of leveraging its tax exemption for what is said to be the largest acquisition ever by a credit union.
“The dated credit union tax exemption and flawed oversight by the National Credit Union Administration once again threatens to claim another local institution while cutting lending and investment to benefit low and middle income consumers,” said Rainey in a statement.
In a joint letter to FDIC Regional Director John Henrie, ICBA and ABC recalled VyStar’s history of branch closures, as well as the exemption of credit unions from the Community Reinvestment Act. (CRA).
“VyStar has either closed, moved, sold or consolidated half of the branches acquired in the Citizens State Bank transaction,” the trading groups wrote, referring the 2019 purchase of the credit union from the bank based in Perry, Florida.
“VyStar’s acquisition of Heritage Southeast Bank will significantly reduce Community Reinvestment Act lending and branch consolidation in Georgia, which will hurt low and moderate income consumers in our communities,” said the president and chief executive officer. CBA Executive John McNair. “We strongly urge the FDIC to reject this merger request.”
American Bankers Association (ABA) President Rob Nichols has also weighed on the trend for credit unions to buy from banks.
In a letter To leaders of House financial services and Senate banking committees on Thursday, Nichols said the VyStar transaction “highlights in harsh terms the changing face of the nearly $ 2 trillion credit union industry. “
“Over the years, several growth-oriented credit unions have become indistinguishable from traditional tax-paying banks – while still enjoying exemption from federal income tax and most taxes. States, with lighter regulation and no reinvestment requirement from the federal community to meet the needs of – and moderate-income communities, “he writes.
Nichols called on Congress to review the tax-exempt status of credit unions, as well as to commit to and determine whether bank acquisitions by credit unions meet the public policy objectives sought by Congress.
“We believe any thoughtful review will lead lawmakers to firmly conclude that it is time for Congress to make the changes necessary to bring credit unions back to their original mission or at least end their outdated tax exemption,” he said. he wrote.
The National Association of Federally Insured Credit Unions (NAFCU) hit back at the ABA’s statements, calling the trade group’s letter to Congress misleading.
“The ABA continues to misrepresent the facts about these types of transactions,” ANCAF President and CEO Dan Berger said in a statement. statement friday. âFirst and foremost, it is important to recognize that mergers between banks and credit unions are voluntary, market-based transactions that require the board of directors of a community bank to vote on the sale to a credit union. These are not âhostileâ takeovers.â¦ Perhaps, ABA’s concerns would be best addressed by sending a letter to their members asking them why they choose credit unions over banks. “
Credit unions bought 16 banks in 2019, an acceleration from nine the year before. That number dropped to seven in 2020.
ICBA launched a campaign in the middle of the trend acceleration at the end of 2019 and last year research a study by the Government Accountability Office on the evolution of the credit union sector and the supervision of the NCUA.