A Nebraska district judge recently gave bankers the green light to sue a credit union that expanded its charter to include anyone who lived or worked in the state's western panhandle.

In October 1993, the Nebraska Bankers Association, Abbott Bank, and Gering State Bank and Trust Co. sued Western Heritage Credit Union and the state banking regulator.

The lawsuit seeks to roll back $33 million-asset Western Heritage's charter expansion.

Dismissal Requested

The defendants filed two motions to dismiss the case in December, arguing that the bankers could not challenge the decision because they weren't a party in the original order granting the expansion.

On May 31, District Judge Paul D. Merritt Jr. for the District Court of Lancaster County, ruled in favor of the bankers.

"The fact that the Abbott Bank and Gering State Bank and Trust Co. did not participate in the department's proceeding does not preclude them from appealing the department's decision," the judge wrote.

"That's great," said George Beattie, president of the Nebraska Bankers Association. "We felt, given the geographic range of the expansion, the limits of common bond had been stretched beyond meaning."

Regulator Confident

James A. Hansen, state director of banking and finance, said he was disappointed but expects to win when the case is tried on the merits.

"We were proper in granting the charter," he said.

Nebraska is one of five states where bankers are suing credit unions and regulators over customer base expansion. The other states are North Carolina, Michigan, Utah, and Montana.

So far the North Carolina and Michigan bankers have gained standing to sue. In Utah the judge dismissed the suit, and no ruling has come out of Montana.

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