The Ohio Bankers League (OBL) in Columbus said it will use all available tools, including legal action, to block the proposed $31 million acquisition of The Hicksville Bank in Hicksville, Ohio by Interra Credit Union in Goshen, Ind., announced last week.
The Ohio Credit Union League (OCUL), also based in Columbus, called the bankers group's threat frivolous and politically motivated.
Ohio law allows bank-to-bank acquisitions but does not permit credit unions to purchase banks, according to the Ohio Bankers League.
"This issue is not only about competition – it is about adherence to Ohio's statutory framework governing bank ownership and acquisitions" OBL said. "Ohio law clearly defines eligible acquirers of state-chartered banks as other banks and FDIC-insured institutions. Credit unions are not included in that framework. Legal analysis confirms Ohio's structure is consistent with other states that have blocked similar transactions."
Based on this statutory intent, the bankers' league said regulators should not approve the pending acquisition. If the transaction is not blocked by regulators, the trade group said it is fully prepared to challenge the decision in court.
However, Paul Mercer, OCUL's president/CEO, noted that Ohio regulators approved the 2019 sale of a Cincinnati branch of United Fidelity Bank, based in Evansville, Ind., to the $1.9 billion Superior Credit Union in Lima, Ohio. He argued that The Hicksville Bank's decision to sell to Interra will benefit not only the bank's current customers who maintain access to critical financial services, but also the Hicksville community and the local economy.
"By initiating this sale, [The] Hicksville Bank recognized what 3.4 million Ohio credit union members already know: As member-owned, not-for-profit financial institutions, credit unions are uniquely invested in the local communities they serve," Mercer said. "This sale represents the best business decision for everyone involved, and we're disappointed that the bank lobby is threatening to harm [The] Hicksville Bank, Interra Credit Union and the Hicksville community with frivolous and politically motivated litigation."
However, what is likely to make a difference from a regulatory standpoint is that Interra's proposed acquisition of The Hicksville Bank is the first whole bank purchase agreement in the Buckeye State. What's more, because Interra is insured by American Share Insurance, a private insurer, federal law requires that the deal, or part of it, also must be approved by the FDIC, which insures The Hicksville Bank's deposits.
The Indiana Bankers Association in Indianapolis had not released a public statement about this issue as of Monday.
The OBL also has launched a petition drive "to urge Ohio lawmakers to promote tax fairness, protect taxpayer funds and preserve a balanced and competitive financial system."
When banks are acquired by credit unions, communities lose tax revenues that support public services. According to the bankers' trade group, Ohio forgoes an estimated $20 million annually due to the credit union tax exemptions.
Ohio credit unions are exempt from paying the federal income tax and the Ohio Financial Institutions Tax because they are organized as member-owned, not-for-profit cooperatives. In exchange for these exemptions on their retained earnings, credit unions – compared to banks – typically offer their members lower and fewer fees, higher interest rates on deposit products and charge lower rates on loans, according to a 2024 Wall Street Journal report. The retained earnings of banks, by contrast, are returned to their shareholders.
OCUL also pointed out that credit unions do pay taxes such as local, state and federal payroll taxes, property and sales taxes, unrelated business income taxes and special excise taxes.
According to the federal reserve, commercial banks hold about 91% of the market and credit unions hold approximately 9% of the market.
Peter Strozniak can be reached at peter.strozniak@arc.network.com.
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