THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Thursday, October 31, 1996 TAG: 9610310305
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: 64 lines
A court-imposed restriction on eligibility for credit-union membership could hamper the growth of several larger credit unions in Hampton Roads, officers of the organizations said Wednesday.
``It's definitely going to have an impact,'' said Jean Yokum, president of Langley Federal Credit Union in Hampton. ``We're going to fight this.''
At Chartway Federal Credit Union, ``We're sending letters to our members letting them know about the decision,'' said Phil Richards, vice president of strategic planning and marketing at the Virginia Beach-based organization.
Richards and other credit-union officers said they expected the organizations' members to lobby Congress next year for legislation voiding the court restriction.
On Friday, the U.S. District Court in Washington barred federally chartered credit unions from taking in new members who were not part of a credit union's core field of membership.
Plaintiffs in the case, a commercial bank and the American Bankers Association, had challenged the ability of federally chartered credit unions to take in individuals who lacked a common bond, such as the same employer.
Over the years, federal regulators have broadened their interpretation of the ``common bond'' requirement for credit-union membership. Some credit unions responded by growing rapidly and offering a greater array of financial services, including home loans and credit cards.
The issue of membership eligibility has been especially sensitive in Hampton Roads. A handful of local credit unions have expanded beyond the military installations where they started and take in employees at factories, hospitals and other civilian facilities.
In some parts of Virginia, ``Credit unions are a fairly significant force,'' said Walter C. Ayers, executive vice president of the Virginia Bankers Association, a Richmond-based trade group for banks and thrifts in the state. ``A number of large credit unions dwarf community banks in size.''
In southeastern Virginia, 76 credit unions have combined assets exceeding $2.5 billion and membership totaling 599,600.
The court order issued Friday doesn't affect existing credit-union members. However, relatives of some members may no longer be eligible to join the same credit union, Richards said.
At Chartway, the core field of membership has been the civilian and military personnel at the Norfolk Naval Air Station and other members of the military. But Chartway has expanded to 132,000 members by absorbing some smaller credit unions and taking in employees of several local companies.
Today, its field of membership includes 350 to 400 employee groups, such as catalog-retailer Lillian Vernon Corp. in Virginia Beach and power-tool manufacturer Stihl Inc.
At Atlantic Fleet Federal Credit Union, marketing director Agnes M. Parker said the membership restriction would have a minimal impact on the Norfolk credit union. About 95 percent of its 22,000 members fall within its core field of membership.
However, Atlantic Fleet has been taking in employees from 10 to 15 local companies, and these groups would no longer be eligible, Parker said. The companies include Colonna's Shipyard Inc. in Norfolk and the Checkered Flag auto dealerships.
For years, bankers have argued that credit unions enjoyed an unfair advantage because they didn't pay taxes and didn't have to adhere to certain regulations that applied to banks.
Credit-union officers countered that the organizations deserved their tax-exempt status because they provided lower-cost financial services that many banks no longer offered. by CNB