Colorado credit unions are taking in stride a law that for the first time requires their regulator to hold public hearings before an institution can expand its membership into a community.

Bankers lobbied for the hearings because they are angry with a decision by a regulator to allow a credit union at Lowry Air Force Base to expand its membership base into the adjacent community of Aurora.

The law, which went into effect this month, creates a five-member financial services board within the Colorado Division of Financial Services that will grant credit union charters, oversee mergers, and set regulations - powers formerly belonging to the division commissioner.

"I don't think there'll be any problems," said Carroll D. Beach, president of the Colorado Credit Union League. "We feel comfortable with a board and we think it will be responsive to the needs of credit unions and the community as well."

But the statute allows bankers to comment at public hearings when the board considers granting charters for credit unions seeking to expand their so-called field of membership. It also limits to one the number of branches a credit union can open if its common bond is within a community of more than 100,000. The restriction is in effect until Jan. 1, 1997.

Bankers Angered at Lowry Decision

The change comes in the wake of a December 1992 state court ruling that held legally binding Commissioner David Paul's controversial decision to allow Gateway Credit Union, formerly Lowry Federal, to expand into Aurora. The credit union asked for approval to expand after the Air Force base was targeted for closure. Gateway is the state's only community chartered credit union in the 100,000-population category.

Colorado bankers still don't know if the steps are enough to prevent credit unions from expanding into their communities.

"We'll wait and see," said Don Childears, executive vice president of the Colorado Bankers Association. "We greatly support it since we helped author it, but it doesn't go quite as far as we would've liked."

Bankers wanted hearings for all charters, Mr. Childears said.

|Industry Boards Tend to Be More Lenient'

"The banking industry will be disappointed in the new board," said Barbara M.A. Walker, state bank commissioner. "Industry boards tend to be more lenient, more concerned with competitive issues and even-playing-field issues."

A public hearing must be held before the board can grant a "community charter" or approve a merger that involves a community charter. Representatives of each credit union, savings and loan, bank, and industrial bank within the targeted community can attend the hearing and inspect the credit union's application.

Mr. Paul doesn't expect many community charter applications. "Lowry was more of a unique circumstance than the beginning of a trend," he said.

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