Our industry, unlike the ICBA, sees the acquisition as two financially sound institutions coming together in a strategic move that benefits not only their customers and members but also the broader communities they serve.

Frontwave was founded in 1952 to serve the financial needs of Marines and their families at Camp Pendleton – people who were historically underserved by traditional banks. Fast forward to today, and Frontwave has more than 123,000 members who rely on it for fair rates, low fees and financial education. When Frontwave merged with Barstow Community Credit Union, it didn’t result in layoffs or massive bonuses for executives. Instead, it brought better rates and expanded access to services. That’s the difference between credit unions and profit-hungry banks. 

These acquisitions aren’t a move motivated by exploiting a “tax loophole,” but reflect the continued dedication of credit unions to serve their members and enhance access to financial services for local economies, businesses and community members. Credit unions, by design, are member-centered, not-for-profit institutions that focus on the long-term health of their communities. In contrast to profit-driven motives seen in large banks, credit unions operate with a unique mission to build value and improve financial access for all.

In 2022, credit unions contributed over $200 million to community development efforts, focusing on underserved and rural areas. Over 70% of credit union branches are located in communities abandoned by banks – ensuring continued access to essential financial services to these communities.

Regarding this alleged “unfair tax advantage,” the credit union tax exemption is not only justified, but continues to provide significant economic benefits. Studies from NAFCU (now America’s Credit Unions) show that eliminating this exemption would cost the U.S. $56 billion in tax revenue over the next decade, shrink GDP by $120 billion and kill 80,000 jobs annually. Meanwhile, credit unions save their members $15 billion annually through better rates and lower fees.

Credit unions are heavily regulated by the NCUA and FDIC, and they, along with the NCUA, play an important role in acquisitions. However, state regulators will play an important role in acquisitions as well depending on how the banks and credit unions are chartered.

We continue to reject the rhetoric from the ICBA that credit unions are “leveraging their tax status for industry consolidation.” Rather, we encourage all within the financial industry to embrace the spirit of innovation and community service that credit unions exemplify. The focus should remain on strengthening financial services for consumers and supporting the growth of community-based institutions that prioritize people over profits. This move is a clear reminder of how community-based financial organizations are stepping up, innovating and driving positive change in the industry.

The ICBA and its allies also love to trot out the tired argument about credit unions naming stadiums as if that somehow undermines their mission or their tax-exempt status. Let’s break this down: Marketing and brand awareness are not exclusive privileges of for-profit banks. Credit unions, like any organization, need to stay competitive and visible in order to serve their members effectively. Sponsoring a stadium is a strategic investment, not a deviation from the core mission.

When credit unions sponsor a stadium, the intent is not vanity, but to raise awareness and strengthen community ties. Unlike banks, whose marketing expenditures primarily benefit executives and shareholders, credit union marketing dollars are reinvested back into the membership. This is where the hypocrisy of the banks becomes evident. Banks spend billions on marketing toward flashy ad campaigns that line the pockets of executives, while credit unions focus on growing their impact and communities’ access to their financial services. Sponsoring a stadium or community event is an effective way for credit unions to increase visibility, attract new members and ultimately provide better services. This visibility isn’t a luxury; it’s a necessity in a competitive financial services landscape dominated by banks with billion-dollar marketing budgets. 

It’s concerning how the ICBA never complains about banks plastering their names on every skyscraper and stadium they can find. The hypocrisy is glaring. Banks spend billions on marketing to serve shareholders; credit unions spend to grow membership and bring their services to more people. Maybe the ICBA should worry less about credit unions sponsoring stadiums and more about their own members’ record-high CEO bonuses.

The ICBA’s real gripe isn’t about fairness – it’s about competition. Credit unions consistently offer better rates and services, forcing banks to follow suit. This is why consumers prefer credit unions and why banks continue to raise objections. The fundamental difference between the two begins from the top down.

Banks are owned by anonymous shareholders, while credit unions are member-owned. This structure allows credit unions to reinvest into the organization to benefit members: Lower interest rates, fewer fees and better terms.

• In 2023, credit unions offered an average savings account yield of 1.02%, compared to banks’ 0.69%.
• 82% of credit union checking accounts were free of maintenance fees, far surpassing banks at 38%.
• In 2022 alone, credit unions issued over three million small-dollar loans, providing critical alternatives to high-cost financial products.

Established in 1935, the credit union federal tax exemption has been reaffirmed by Congress multiple times, most notably through the Credit Union Membership Access Act of 1998.

It’s also worth mentioning that the banking industry’s critique conveniently omits the myriad tax benefits banks enjoy, such as Subchapter S designations and deductions for executive compensation. In 2022, banks earned over $263 billion in profits, dwarfing credit unions’ 7% share of U.S. financial assets. Clearly, credit unions pose no existential threat to banks.

The Joint Committee on Taxation estimated the value of the credit union federal tax expenditure at $2.6 billion in 2023. This pales in comparison to the $14 billion in financial benefits credit unions delivered to their members in 2022.

If the ICBA is genuinely concerned about competition, perhaps they should reflect on why their members are losing market share, rather than constantly criticizing credit unions for finding innovative ways to serve their communities and members.

Credit unions are here to serve their members and their communities – not to meet the arbitrary approval of banking industry lobbyists. Whether it’s offering better rates, merging to expand services or engaging in strategic marketing, credit unions remain focused on what matters most –serving their members. Meanwhile, the banking industry remains fixated on profit, rather than on truly providing value to America’s consumers and communities. Credit unions continue to step up and step in when traditional banks fail to meet the needs of millions of Americans. Until that changes, the ICBA should focus on addressing its own concerns rather than attempting to undermine the mission of credit unions.