Nebraska's small banks unite in protest of credit union's attempt to branch out.

In what is fast becoming a common scene in an unfolding drama between bankers and credit unions, Nebraska bankers are protesting applications submitted by a credit union to expand its field of membership and open a branch.

More than 60 community bankers have written to the Nebraska Department of Banking, opposing plans by Western Heritage Credit Union, based in the city of Alliance, to open a branch in Gering and expand its membership by 12 counties.

"Western Heritage cannot possibly define a common bond that satisfies both statutory and regulatory criteria ... in an area composed of diverse regions with separate identities and characteristics," said Ron Sedlacek, associate general counsel for the Nebraska Bankers Association, at a preliminary hearing on the issue in late July.

Must Prove a Common Bond

Typically, a credit union must prove that its expansion plans will encompass communities and customers linked by some underlying common characteristics such as similar employment. Ted Bohlen, president of the credit union, would not comment on the issue.

Because the credit union is regulated by the state, its officers must submit a brief within the next two weeks summarizing their case for expansion, according to James A. Hansen, Nebraska director of banking and finance. A final decision is likely within six weeks.

Similar battles are being waged by bankers throughout the country. Recent cases involved expansion moves by federally chartered credit unions in North Carolina and Michigan.

|Could Have Some Bearing'

While bankers in those states have yet to declare victory in thwarting credit unions' plans, they have won the right to challenge the credit unions and the National Credit Union Administration in court.

Mr. Hansen, a former community banker, said "issues affecting nationally chartered credit unions could have some bearing." Nebraska's state-chartered credit unions are given the same powers as nationally chartered institutions.

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