New Analysis Shows Credit Union Acquisitions of Community Banks Harm the Communities That Can Least Afford It

ICBA and community bankers have long warned about the dangers of tax-exempt credit unions acquiring tax-paying community banks, a concerning trend that peaked last year and has continued in 2025.

Now, the results of an exhaustive ICBA data analysis of publicly available data validate what we have long warned: this recent explosion of taxpayer-subsidized acquisitions is harming small businesses and local communities while community banks outperform credit unions in high-poverty areas.

Accelerating problem fueled by credit union behemoths

Given how strenuously ICBA and community bankers have been raising the flag on this trend, its scope should come as no surprise. Since 2010, credit unions have acquired 77 community bank charters with less than $50 billion in assets-with more than 60% of these charter acquisitions (49) occurring in the past five years, according to FDIC and Federal Financial Institutions Examination Council data.

Even more revealing, our data show these deals involve the largest credit unions, which often cross state lines to acquire community banks well outside their field of membership. Since 2010, more than 80% of charter acquisitions involved a credit union with more than $1 billion in assets, while more than 40% involved a credit union headquartered in a different state than the acquired bank.

And counter to credit union industry claims, credit union acquirers aren't saving struggling community banks. Nearly two-thirds of acquired banks saw an increase in net operating income in the five years leading up to their acquisition, while more than three in four grew their total assets in that five-year period.

The data is clear: These tax-subsidized entities are using their members' shares to purchase well-performing institutions (and eliminating local, tax-paying community banks in the process).

Harmful impact on local small-business lending

The scope of these acquisitions won't come as a surprise to community bankers, but Small Business Administration data on how these acquisitions are harming access to credit in local communities-particularly underserved areas-should give pause to anyone interested in preserving locally based economic growth.

Going back to 2010, nearly half of credit union acquisitions of community banks occurred in service areas in which either the acquired bank or the acquiring credit union participated in an SBA program, with community banks in these areas providing an average of $500,000 more in SBA loans to small businesses than credit unions. In areas where community banks participated in SBA programs, SBA lending fell after the acquisition nearly 80% of the time.

This concerning development is particularly acute in lower-income areas. Community banks have provided roughly 69.3% of SBA loans provided by banks and credit unions since 2010, compared to 2.8% from credit unions. In the highest-poverty counties, community banks accounted for 76.5% of SBA lending, compared with just 1.8% from credit unions-showing community banks dramatically and disproportionately outperformed credit unions in meeting commercial lending needs in high-poverty areas.

So not only are community banks stronger small-business lenders than the credit unions using taxpayer funds to reduce the number of community banks, but community banks are also doing a better job of meeting the needs of underserved communities than credit unions. Let's say that again: Community banks are outperforming credit unions in the lower-income communities that credit unions receive a federal tax exemption to serve.

Mortgage lending takes a hit

If credit union acquisitions appear to be wreaking havoc on small-business lending in local areas, mortgage lending isn't faring much better in these communities.

According to our analysis of available Home Mortgage Disclosure Act lending data, total mortgage applications decreased in 57% of affected service areas following an acquisition. The amount loaned per approved mortgage application decreased in 61% of acquisitions, while the median mortgage loan amount across all areas decreased $20,000 per loan.

Further, mortgage denial rates increased in 61% of acquisitions, with a median increase of 2.1 percentage points. In areas where denial rates rose, the median increase was nearly 10 percentage points.

This relatively high share of areas with increased denial rates and lower application volumes suggests that credit unions are not replicating the mortgage lending practices or community relationships of the banks they acquire-despite the taxpayer-subsidized industry's claims.

Damaging economic impact in local communities

The decline in small-business and mortgage lending shown in our analysis has real economic consequences on the local communities affected by credit union acquisitions of community banks, particularly in lower-income areas.

Since 2010, community banks made $23.5 billion in SBA loans in the top 25% highest-poverty U.S. counties, compared to $561 million by credit unions. This community bank lending translated to supporting 433,227 jobs in these high-poverty areas, compared to just 16,415 jobs supported by credit unions.

Overall, community banks issued a total of $305 billion in SBA 7(a) and 504 loans-nearly 25 times more than credit unions. Community bank SBA loans supported nearly 6 million jobs between 2010 and 2024, while SBA loans issued by credit unions supported 295,000.

A few more illuminating data points:

• Community banks accounted for nearly two-thirds of SBA loan dollars issued (64%), compared to just 3% for credit unions.
• Community banks issued larger loans on average, with their median SBA loan amount of $289,500 significantly exceeding the $150,000 tally for credit unions.
• In rural regions, particularly in the Great Plains, the South, and Appalachia, community banks were often the only SBA lenders present.

The upshot: Community bank small-business lending in low-income areas is in a league of its own, and credit union acquisitions pose a significant threat to the communities that depend on this economic lifeline.

The road ahead

With community banks making 60% of the nation's small-business loans and 80% of the banking industry's agricultural loans, the surge in credit union acquisitions of community banks has very real consequences. The damage to communities highlights the inequities and perverse incentives built into federal policies that prop up this taxpayer-subsidized industry.

Lawmakers granted credit unions a full federal tax exemption on the condition they serve defined fields of membership, but years of relaxed policies and mission creep have created conditions that are at odds with the public's best interest.

ICBA will continue to share this data as we press lawmakers to reexamine credit union policies and end the federal tax exemption for credit unions with $1 billion or more in assets-and we encourage the nation's community bankers to spread the word as well with their members of Congress.

As our data clearly show, the economic outlook for our nation's local communities depends on a much-needed change to federal credit union policy.