WASHINGTON–In a twist, two bank trade groups are calling on the FDIC to reject the acquisition of a bank by a credit union, arguing the deal would “cut regulatory safeguards for low- and moderate-income consumers.”
In a joint letter, the Independent Community Bankers of America (ICBA) and the Community Bankers Association of Georgia (CBA) said the acquisition of Georgia’s Heritage Southeast Bank by Florida’s VyStar Credit Union will result in a “less accountable financial institution exempt from the Community Reinvestment Act.”
The bank groups also said the acquisition would extend branch consolidation in Georgia, further limiting access to financial services for low- and middle-income communities.
“With VyStar Credit Union seeking to leverage its tax exemption for the largest-ever credit union purchase of a taxpaying community bank, the FDIC should reject its application to roll back Community Reinvestment Act safeguards in affected communities,” ICBA President and CEO Rebeca Romero Rainey said. “The dated credit union tax exemption and faulty National Credit Union Administration oversight again threaten to claim another local institution while reducing loans and investments benefiting low- and moderate-income consumers.”
In their joint letter, ICBA and CBA said they are offering the following “facts” for the FDIC to consider as the agency evaluates the merger:
- VyStar closed half the branches it gained from a previous community bank acquisition despite promises to the contrary, indicating it prioritizes growth over customers of modest means.
- “Whereas Heritage Southeast made more than $19 million in loans to businesses in its CRA assessment areas in 2018, VyStar’s CRA exemption leaves it with less incentive to serve LMI areas.”
- The premium paid by VyStar will hamper its capital ratio and future stability.
‘Rejection’ Urged
“The VyStar acquisition of Heritage Southeast Bank will substantially decrease Community Reinvestment Act loans and further branch consolidation in Georgia, harming low- and moderate-income consumers in our communities,” CBA President and CEO John McNair said. “We strongly urge the FDIC to reject this merger application.”