Bankers are trying to stop a group of credit unions in Utah from creating a statewide system of shared branches.
Oral arguments were heard last week in the case pitting the Utah Bankers Association against the Utah Credit Union League and the state regulator. The shared-branch network, being organized by the league, will open Oct. 3, despite the legal challenge.
If the bankers win, it may have to be shut down.
The Utah system will be tied into Credit Union Service Corp., which connects networks in 16 states, involving about 150 credit unions. Members of those institutions could use any of the facilities across the country. The shared branches violate the state's field-of-membership regulations, bankers argued in the Utah Court of Appeals.
"Some of these credit unions that would be part of the shared branch network would be operating in more than one county" and that's illegal, said association president Lawrence Alder.
Under state law, a field of membership can comprise people who "reside within an identifiable neighborhood, commumty, rural district or county."
The bankers are asking the appeals court to overturn the state regulator's approval of the network, called the Credit Union Services Centers of Utah.
This is one of two legal offensives the association has launched against Utah credit unions. Last year it sued the regulator for granting multicounty charters. It lost the case earlier this year in district court but has appealed.
G. Edward Leafy, state commissioner of financial institutions, said he gave the nod to shared branches earlier this year because they serve-the public interest.