To stem the growth of credit unions in the Sunshine State, the Florida Bankers Association has asked the state Banking Department to issue a regulation limiting credit union membership.

Bankers said they fear a recent federal appellate court ruling that rejected a liberal interpretation of the "common bond" required for membership in federal credit unions will push Florida credit unions to switch to more liberal state charters.

Florida law does not contain "common bond" language for credit union membership. Instead, it specifies a "limited field of membership." Florida bankers claim credit unions have used that membership standard to increase assets by the billions.

"They can just convert charters," said John Milstead, executive vice president of the bankers association. "That gives credit unions a back door."

The Florida Credit Union League said only a handful of organizations have moved to convert charters since the court ruling last summer.

There are 270 credit unions in the state of Florida, and "most of them" are members of the league, according to league spokesman Mark Ivester.

Mr. Ivester said that only three or four credit unions have tried to switch. "I wouldn't call that a stampede," he added.

Comptroller Robert F. Milligan has yet to officially respond to the bankers' request for a regulation. However, in a Jan. 8 letter to the speaker of the Florida House of Representatives and the president of the Florida Senate, he said the Legislature should not entertain any credit- union-related legislation in the 1997 session.

He cited pending actions in Congress and in the courts as reasons to forgo any state action, and he pointed out that state-chartered credit unions make up 2% of the aggregate market share of insured depository institutions in Florida.

"Their importance as viable outlets for retail savings and lending activities-in direct competition with banks, thrifts, and federal credit unions-cannot be overstated," his letter said.

The rancorous relationship between banks and credit unions has a long history. Bankers begrudge credit unions their tax-exempt status, claiming the concessions give credit unions an unfair advantage. For their part, credit unions say they are no different from any not-for-profit and shouldn't have to pay taxes.

The rivalry heated up last year when a federal appeals court ruled in favor of four North Carolina banks, saying occupation-based credit unions may not accept members from unrelated companies. The case is now pending before the U.S. Supreme Court, and Congress may address the matter.

Many state bankers groups are content to watch from the sidelines and allow the battle to be won or lost in Washington. But Florida bankers are preparing to throw all their ammunition at this cause.

"This is the first step. Eventually this will end up in the courts," said Mr. Milstead.

The bankers have also armed themselves with a recent study conducted by Florida TaxWatch Inc., a government watchdog group. The report found that Florida credit unions have doubled their market share in the last decade and now have about $13 billion in deposits statewide.

Tax exemptions received by credit unions in Florida are worth about $89 million a year.

"We don't have any problem with them expanding, but when they do that they should pay their taxes," said Mr. Milstead.

The credit union league's Mr. Ivester said the bankers are working themselves up over nothing. The industry's market share is still a fraction of that held by banks in Florida, he said.

In addressing complaints that tax concessions unfairly add to credit union profitability, Mr. Ivester said: "We don't have anybody making $6.7 million as CEO and our boards of directors don't get paid, so before we start talking about taxation, we might also want to talk about CEO compensation," he said.

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