A western New York community bank has found some unlikely allies in its battle to stop a local credit union's expansion plans: other credit unions.

Olean (N.Y.) Dresser Clark Community Federal Credit Union, which has $76 million of assets, filed in June with the National Credit Union Administration for permission to let anyone working or living in Cattaraugus County join. Membership is now limited to residents of Olean.

In response, Salvatore Marranca, president and chief executive of $93 million-asset Cattaraugus County Bank, Little Valley, filed a protest with the NCUA and wrote letters to other credit unions and banks based in the county. To his surprise, it was the credit unions that responded.

"You know something is going on when credit unions are banding with us," Mr. Marranca said. "If I was them, I would be scared as hell that these guys are blowing the common bond for me."

Detractors argue that by giving one credit union access to everyone in a county, the regulators would create an institution capable of snuffing out smaller banks and other credit unions.

"The thousands of smaller credit unions realize they are going to be the victims of the ego-driven expansion of a few," Mr. Marranca said.

At least two other credit unions in his county, Allegany Community Federal Credit Union and Olean Teachers Federal Credit Union, have followed Mr. Marranca's letter with protests of their own. They are worried a bigger institution would be able to offer better rates and would use them to steal their customers.

Mary A. Stelley, managing officer of $7 million-asset Gowanda (N.Y.) Area Federal Credit Union, said she plans to discuss the situation with her board. Gowanda filed a formal protest a few years ago when a rumor of a similar plan by Olean Dresser Clark surfaced.

Sources familiar with Olean Dresser Clarksaid that it plans to merge with a $3 million credit union in Little Valley if it receives its field extension, and that more mergers could follow.

"What happens when they want to become Western New York Credit Union? And then New York State Credit Union?" Mr. Marranca said. "If it doesn't stop here, when does it stop?"

Thomas Crosson, manager of Olean Dresser Clark, did not return phone calls seeking comment. The NCUA's decision is expected in October.

The fear of fast-growing credit unions extends beyond Cattaraugus County. "I am afraid our industry is buying into the Trojan horse," said John U. Barker, president and chief executive officer of Hudson River Teachers Federal Credit Union, Peekskill, N.Y. He wrote a letter last month to credit unions in New York warning them of the perils of competition and consolidation.

"If our regulator allows the credit union across the street to start a rate war to blow me out of the water, there is going to be trouble," Mr. Barker said.

Michael Farkas, general manager of $20 million-asset Adirondack Regional Federal Credit Union, Tupper Lake, N.Y., said a nearby $100 million-asset credit union is considering expanding its field to five counties. If so, that institution could price him out of the market, he said.

"If they want to sharpen the knife, I think they could make it difficult for me to do business," Mr. Farkas said.

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