TOPEKA, Kans.-Bankers in this state successfully limited field of membership guidelines for state-charted credit unions in Kansas in 2008, but not to the extent they had hoped for.
Kansas' state charters that spoke with Credit Union Journal are mixed on whether the bankers' efforts will significantly affect their business.
Senate Bill 535 went into effect June 30, and eliminated statewide fields of membership for state-chartered CUs. But before it passed, efforts by the league and credit union supporters helped amend the bill, which in its initial draft sought to do more than eliminate expansive FOMs, explained Haley DaVee, KCUA political and public affairs specialist.
"Initially, the way the bill was worded, state-chartered credit unions would have had to choose either geographic fields of membership that were very restrictive, or associational and occupational FOMs," DaVee said. "Now they can have both and reach one-million people geographically."
The bill was amended after Kansas credit union supporters lined up in February to testify before a special Senate subcommittee hearing in response to the bill.
The Kansas Banking Association sponsored SB 535, which now restricts a state-charted credit union's geographic area it serves to contiguous political jurisdictions of which the aggregate total population cannot exceed 1-million. The bill defines political jurisdiction as a city, county, township or clearly identifiable neighborhood, reported the Kansas Department of Credit Unions.
Allowing credit unions to serve both types of fields of membership and reach 1-million members geographically took some of the sting out of the bill, DaVee said. "Of course we don't have the statewide FOMs. But we are pleased with what we have and think it presents credit unions with a great opportunity to serve Kansas consumers and continue to grow."
SB 535 applies to Kansas' 60 state-chartered CUs, but only has immediate impact on nine, including the state's three largest: Boeing Wichita CU, Mid American CU and Medical Community CU. With a Jan. 1, 2009, deadline to comply, all have amended their charters, DaVee said.
Larry Schmitz, president and CEO of the $20-million Medical Community CU in Wichita, said the bill will have little impact on his shop.
"We don't have a statewide charter, but we have multiple political jurisdictions that are not contiguous," Schmitz said. "We have retained an attorney who said we are OK if we keep those counties and make them all contiguous. Our solution is to add those counties we need to make the area we serve contiguous."
The $140-million Mid American CU formerly had a statewide charter, and President and CEO Jim Holt said the impact of SB 535 will be felt. "We went from serving an area of 3.5 million down to 1 million," he said. "We don't currently serve a million members, and it's hard to say how much long-term affect it will have on us."
The most noticeable change will be how the credit union conducts business, Holt said, noting it currently reaches out to SEGs. "We have had to change our thinking from serving anyone who is interested in getting service that we can reasonably serve, to anyone that can fit into this narrower definition that we can reasonably serve."
Three-Year Push By Bankers
SB 535 was the culmination of a three-year push by the KBA and the American Bankers Association to limit consumer access to Kansas credit unions, the league reported. Efforts on behalf of the KBA were the result of two intensive studies of the credit union industry-one by the State's Legislative Post Audit and one by a special legislative interim committee. The Post Audit found that state-chartered credit unions are not competing at the expense of the banking industry in Kansas, but suggested that the field of membership interpretation possibly does not comply with state law.
While such strategies have been pursued before by bankers, in a previous Credit Union Journal report, CUNA downplayed the likelihood Kansas' law will be submitted in state legislatures across the country. "Each state's situation is different and, frankly, one cannot easily transfer issues between particular states," said CUNA Spokesperson Pat Keefe.
Originally Reported In CU Journal: Mar. 24, 2008
Search At cujournal.com
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