In an op-ed today, Colorado Bankers Association CEO Don Childears called a recent decision by the Colorado State Banking Board to deny the sale of a community bank to a credit union “good public policy,” noting that such a sale would have removed a taxpaying institution from the state tax rolls. The board earlier this month denied the sale of Greeley, Colorado-based Cache Bank and Trust to Elevations Credit Union, headquartered in Boulder.
In its decision, the board cited a state statute regarding the sale of assets between state-chartered banks, which essentially stipulates that a bank may only sell most of its assets to another bank. The decision was a win for the banking industry, which has seen a concerning uptick in the past year of tax-exempt credit unions purchasing community banks: 16 such deals were announced in 2019 alone, Childears noted.
“The mini-trend of credit unions purchasing taxpaying banks and removing those dollars from state and federal coffers is concerning,” he wrote. “Not only do credit unions not pay taxes and take money from taxpayers’ hands when they buy a bank, but they also do not have the same level of restriction, regulation and transparency, which makes them susceptible to risky debt.”
Childears added that Colorado could collect an additional $65 million in tax revenue annually if credit unions were required to pay income taxes. Nationally, removing the exemption would add an estimated $2 billion per year in additional tax revenue.
