Another State Bars Credit Union Acquisitions of Banks

SOURCE: S&P Capital IQ

A new Mississippi law effectively prohibits credit unions from buying state-chartered banks.

The law, approved by Governor Tate Reeves on March 10, amends Mississippi code to allow only financial institutions insured by the Federal Deposit Insurance Corporation to buy banks chartered in the state. That excludes credit unions, which are not insured by the FDIC.

The act takes effect July 1. Mississippi joins Iowa and Colorado, which barred banks chartered there from selling to credit unions in 2020. Litigation is pending in Tennessee and Nebraska over credit unions' proposed bank acquisitions announced in 2021.

Credit unions have been active acquirers of banks in recent months, with five such deals being announced in the early months of 2022. Banking industry groups have criticized the trend, arguing that credit unions have unfair advantages because of their tax status.

Credit unions have now announced or completed whole-bank or franchise deals in 17 U.S. states since 2015.