ABA Chair: Credit union deals at ‘inflection point’

American Bankers Association Chair Jim Edwards discusses the state of the industry with Iowa Superintendent of Banking Jeff Plagge at the 2021 Iowa Bankers Association annual convention.

Credit union purchases of community banks are at an “inflection point,” said American Bankers Association Chair Jim Edwards, and bankers must advocate for the industry if they continue.  

Edwards’ comments came Sept. 20 at the Iowa Bankers Association Annual Convention in Des Moines, during a discussion moderated by Iowa Superintendent of Banking Jeff Plagge. Edwards, CEO of the $2.1 billion United Bank headquartered in Zebulon, Ga., discussed the acquisition of a Georgia community bank by a Florida credit union and the June announcement that a $10 billion Michigan credit union is purchasing a Tampa, Fla., bank focusing on aircraft financing.

To slow the pace of such transactions, Edwards called on credit unions to pay taxes, a rallying cry shared by other banking leaders

Edwards derided President Joe Biden’s plan to require financial institutions to report to the IRS deposits and withdrawals of all business and personal accounts with a balance of more than $600, a proposal he said has been met with unprecedented anger from bankers. The ABA, Independent Community Bankers of America and numerous other organizations signed a letter last week urging Congress to reject the proposal. Edwards said the plan goes against Biden’s stated goal of reaching the unbanked.  

 “This makes absolutely no sense,” he said. 

Edwards said the unprecedented flow of government stimulus during the pandemic has successfully prevented the recession from turning into a much worse economic crisis. However, he noted that the long-term impact of the approach is unclear.  

Despite those challenges, Edwards said community banks are doing well but must not revert their operations to pre-pandemic norms. Plagge, 2013-14 ABA chair and former president/CEO of Northwest Financial Corp., in Arnolds Park, Iowa, said community bankers now face greater regulatory pressure under the Biden administration than they did in the wake of the Dodd-Frank Act.

Another concern is that the sudden flood of excess deposits could dry up just as quickly. At United Bank, deposits have increased 40 to 45 percent over the last two years. “We are awash in cash,” Edwards said.