It was American showman P.T. Barnum who was famously quoted as once quipping “say anything you like about me, but spell my name right.”

It’s another way of saying that there’s no such thing as bad publicity, which is also a line that is credited to Barnum.

So what does that have to do with banks and credit unions?

Maybe a lot.

Because as the two industries continue to trade barbs, at least one credit union CEO thinks all the huffing and puffing by the banking trades is good for business.

“Banks complaining about credit unions has been the best marketing campaign for credit unions in recent history,” the CEO of a $2 billion-asset credit union headquartered in the Southeast told Tyfone. “I’m fine with the banks spending all their time consumed by credit unions. All it does is raise awareness to the credit union cause, so keep on talking.”

The executive, who requested anonymity, said most people are not even aware of what a credit union is, so all the noise that banks make just alerts consumers that there is an alternative to banks.

“And if banks hate credit unions then [credit unions] must be worth checking out,” he said.

The two primary (and related) issues causing the rift between the industries of late are credit unions buying banks and the credit union tax exemption.

As nonprofits, credit unions pay no federal corporate income tax. But banks say that credit unions are acting and operating more and more like banks and should be taxed as such.

Credit unions obviously disagree.

“When a consumer compares a bank to a credit union, they don’t care about taxation,” the credit union CEO said. “They care about the difference credit unions can make in their life.”

Further agitating the banks is the growing number of deals being struck that involve credit unions buying banks.

Most recently, Dearborn, Michigan-based DFCU Financial last month announced its second whole bank acquisition in the Sunshine State with the purchase of Winter Park National Bank in Winter Park, Florida.

That deal was the 20th announced this year in which a credit union is buying a bank.

With four weeks to go in 2024, there remains the real possibility that this year could double up the 11 such deals announced last year. In fact, one source told Tyfone as many as five more deals could be announced in December.

Prior to 2024, the most credit union-buying-bank deals ever announced in a year was 16 in 2022.

Will the increased volume of deals continue in 2025?

Jeff Cardone, a partner with Luse Gorman, said the the incoming Trump administration is likely to accelerate the pace of larger M&A transactions – particularly merger of equals – given the perception of better economic and regulatory conditions on the horizon, although it is unclear whether the new administration will be friendlier to larger banks based on their populist views.

Cardone, who has advised on several credit union-buying-bank deals, said a better economy/lower interest rate environment could result in more options for merger partners for many banks due to better valuations.

Regardless of more favorable dealmaking conditions, credit unions will continue to be viable acquisition partners for smaller community banks due to the supply and demand problem of the community bank industry, Cardone told Tyfone.

“Traditional acquirer banks have grown significantly in asset size and as a result are less interested in acquiring smaller community banks, while smaller community banks, due to regulatory burdens and succession planning issues, are still very interested in exploring a strategic partnership with larger institutions, particularly those that can provide liquidity for their shareholders and absorb their unrealized losses and bad loans,” Cardone said.

As a result, credit unions will continue to be viable buyers that can fill that void.

But Brad Bolton, President and CEO of $205 million-asset Community Spirit Bank in Red Bay, Alabama, told Tyfone credit unions are winning many of the deals by leveraging their $2.2 trillion tax-exempt status “which grows with each acquisition as tax-paying bank assets become exempt and cost taxpayers $4 billion annually.”

On top of that, Bolton, the former chairman of the Independent Community Bankers of America, says the deals allow credit unions to expand beyond their intended fields of membership while sidestepping critical consumer protections like the Community Reinvestment Act, which ensures community banks serve the needs of low and moderate-income neighborhoods.

But the credit union CEO said it is clear that banks have learned nothing from the recent political campaigns when it comes to consumers.

“If one side tries to vilify the other and calls them names while the other side tries to help the consumer, the consumer-helper will win,” he said.

“If credit unions are going to act like banks, they should be regulated like banks. Congress needs to examine whether credit unions are still operating within the purpose of their original charter.”

 – Brad Bolton
President and CEO
Community Spirit Bank