VyStar CU President Accuses ICBA of 'Mischaracterizing' Bank Purchase
The war of words between banks and credit unions continues over the tax exemption issue, as VyStar and CUNA weigh in.
Firing back at community banking lobbyists, VyStar Credit Union President/CEO Brian Wolfburg said his credit union’s purchase of Heritage Southeast Bank “will create one of the country’s greatest member-owned, not-for-profit financial cooperatives” and that his institution is not “leveraging” its tax exemption to finance the purchase.
“Everyone involved — members, employees and communities will benefit from the best that both our organizations offer,” Wolfburg said.
Earlier this month, the $10 billion Vystar Credit Union in Jacksonville, Fla., agreed to buy the $1.5 billion Heritage Southeast Bank of Jonesboro, Ga., for $189 million, becoming the credit union industry’s largest-ever bank acquisition.
The Independent Community Bankers of America has cited the deal as evidence that credit unions are using the money they save as part of their tax exemption to purchase community banks. And the trade group renewed its call for Congress to investigate whether the tax exemption is outdated.
The war of words is the latest skirmish in the battle between banks and credit unions over the tax exemption. The stakes in the perennial fight are even higher this year since Congress may consider corporate tax legislation as part of President Biden’s infrastructure initiative. As a result, lawmakers are likely to consider a variety of corporate tax changes and the bankers would like the credit union exemption to be on the table.
“VyStar Credit Union and Heritage Southeast Bank are bringing together two financial institutions that share a common goal of supporting the people and communities they serve,” Wolfburg said. “It is unfortunate that the Independent Community Bankers of America (ICBA) has mischaracterized this partnership and falsely quotes VyStar as having said it is ‘leveraging its tax exemption and crossing state lines to purchase a $1.6 billion community bank.’ VyStar never made this statement.”
He went on to say that the ICBA’s “misinformation campaign has obfuscated this partnership’s benefits for employees, customers, members and communities. While doing so, the ICBA has continued its attempt to deceive the public about the purpose of VyStar and the credit union industry.”
Wolfburg said his credit union serves anyone who works or lives in an area from Southern Georgia to Central Florida, as well as past and president military members around the world.
Wolfburg said VyStar and other credit unions pay a variety of taxes, including payroll, property and sales taxes while also focusing on giving members favorable interest rates, lower fees and good service while also focusing on charitable, civic and nonprofit organizations.
“This is distinct from banks’ mandate to offer community support under the Community Reinvestment Act,” he added.
READ MORE: Full statement from VyStar Credit Union President/CEO Brian Wolfburg.
Meanwhile, CUNA Chief Advocacy Officer Ryan Donovan also fired back at the bankers Wednesday, saying they are complaining that banks are choosing to sell to credit unions.
“What’s really concerning, however, is that banks are closing and there’s an increasing prevalence of financial deserts in urban and rural communities across America,” he said in a letter sent to all congressional offices.
Donovan noted that credit unions are tax exempt because they are structured as not-for-profit cooperatives designed to “promote thrift and provide access to credit for provident purposes.”
Donovan said 80% of the bank-credit union transactions have involved low-income designated credit unions. Such deals ensure that consumers retain access to a local financial institution, adding that thousands of bank branches have closed since 2004, while credit unions have opened branches.
And he said that credit unions paid almost $25 billion in local, federal and states taxes last year.