Guest view: Iowa’s credit unions earn their tax breaks

 

By Dale Owen


Over the past 30 years, I’ve dedicated my career to improving the financial lives of people living and working in the Quad City area. After working for three different local community banks that evaporated into larger national banks during the first 12 years of my career, I started working for Ascentra Credit Union (formerly Alcoa Employees & Community Credit Union) and have had the pleasure of serving our members for the past 18 years, serving as CEO since 2013. My career has given me a unique perspective into the differences between banks and credit unions and the unique role each play in our community. I consider myself a “reformed banker” who is passionate about the best interest of those I am entrusted to serve and take great pride in working in an industry focused on bettering the financial lives of our members, instead of maximizing profits for a handful of stockholders.

Iowa Bankers Association are working a group of Iowa legislators to raise credit union’s taxes which means higher taxes for our member-owners and lower taxes on banks in an effort to try to eliminate credit unions as a valued choice in the financial services marketplace. Founded on the philosophy of “people helping people,” credit unions are not-for-profit financial cooperatives that return earnings to members in the form of better rates on loans and lower fees. Unlike the structure of a bank, which is designed to generate profits for a select group of stockholders, the credit union cooperative structure has helped more than one million Iowa credit union members save approximately $100 million annually compared to what they would have paid for similar services at a bank.

Over the past 10 years, our country has endured some of the most traumatic financial events in our history. As banks of all sizes pulled back on lending and helping their communities when they needed them the most, credit unions all over the country stepped up to fill the void. Ascentra Credit Union has experienced more than 180 percent growth in both membership and assets during this dynamic period, effectively managing a loan to share ratio near 100 percent. This means every dollar on deposit was out in a loan helping another member with their borrowing needs. Never before has a choice in financial institutions been more necessary than it is today. Without a banking alternative, there would be no guard against profit-driven, unscrupulous bank practices like greed-centered redlining and the creation of fake accounts to meet fat sales quotas.

It’s no mistake that Ascentra Credit Union and IHMVCU are in the process of building two iconic structures at both ends of the new I-74 Bridge in Bettendorf and Moline. As the only two Community Development Financial Institutions in the area, our commitments run deep and we understand the responsibility of making a meaningful impact in the communities we serve. A great mentor will do that. To house the main office of any financial institution in a downtown is a major deal. One only needs to look at the holes left throughout the Quad-Cities as bank mergers have drained our communities of these vital institutions over the years. Numerous other examples exist in our area where credit unions have stepped in to serve and help our community grow.

At a time when credit unions and local community banks have so much in common, it’s ironic that the leadership of the Iowa Banking Association continues to assault the tax status of credit unions. In 1992, community banks held a national market share of 53.3 percent, the largest 100 banks 41.1 percent and credit unions 5.6 percent. By the end of 2016, these numbers have evolved to only 17.8 percent for community banks, 75.1 percent the largest 100 banks and 7.1 percent for credit unions. Meanwhile, Iowa banks realized more than $900 million in profits last year, their sixth straight year of record profits. Credit union competition isn’t hurting banks. But it is helping consumers. Simply put, there is room for both types of financial institutions.

On behalf of Iowa’s 1.1 million credit union members, I respectfully ask legislators to protect the financial choice of Iowans when considering tax reform. The timing couldn’t be better for community banks and credit unions to work together for the betterment of the local communities we serve. The largest banks received billions of dollars in bailout money during the financial crisis and instead of lending those funds back out into the economy as intended, they worked hard to build world class apps and technology to garner market share as the economy has rebounded. The actions of the “Too Big to Fail” banks have created a never ending stream of regulations that have increased the cost of doing business for everyone. My sincere hope is that we will see such collaboration sooner than later. Applying a business model of doing the right thing, focused on those they serve is something the bankers should take note. People may hear what you say, but they believe what you do.

Dale Owen is president and CEO of Ascentra Credit Union in Bettendorf.

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