NORTH CHESTERFIELD, Va.–This state’s bankers are pushing back on a plan by Virginia Credit Union to expand its field of membership.
The $3.7-billion Virginia Credit Union is seeking to add the 10,000-member Medical Society of Virginia to its FOM, but the Virginia Bankers Association as well as more than a half-dozen banks are objecting, saying the move goes beyond the scope of credit union regulations.
The FOM request is now on hold as the request is being challenged.
“This is an effort on the part of a credit union to keep moving in the direction of looking more and more like a bank,” Bruce Whitehurst, CEO of the Virginia Bankers Association, told RichmondBizSense.com.
VACU initially applied to add the Medical Society of Virginia with Virginia’s Corporation Commission’s Bureau of Financial Institutions in late 2018, then withdrew the application, then refiled in March. The application was initially approved by BFI Commissioner Joe Face, leading to the VBA’s petition to stay the matter for further argument, the publication reported.
‘Far Beyond’ Limits
According to Whitehurst and the VBA, Virginia CU’s request to add MSV members goes too far beyond the statutory limit of field of membership expansion of 3,000 potential members at a time. It is the largest such request ever by a credit union in Virginia, due to the size of the group and its statewide reach, RichmondBizSense.com reported.
Whitehurst did acknowledge to RichmondBizSense.com that NCUA has approved larger FOM requests for federal charters.
“This is the first time in Virginia a credit union has applied for something like this since it became law 20 years ago,” Whitehurst was quoted as saying. “We obviously are going to object anytime a credit union wants to go even further than the very permissive statutes.”
‘Taking Away Business from Banks’
The seven small community banks and the Virginia Bankers Association (VBA) told local media the credit union has taken a step too far by asking the state for permission to be able to offer membership to the large, statewide group of “highly educated and highly compensated” physicians and other medical professionals, taking away business from taxpaying banks with fewer assets than the credit union.
Virginia Credit Union Director of Public and Media Relations Glenn Birch said in a statement the Medical Society of Virginia approached the credit union about joining and “saw membership … as an attractive benefit they could offer members located throughout Virginia and who may benefit from our products, services, access, technology and financial education resources.”
Response from League
Rick Pillow, president of the Virginia Credit Union League, told local media it makes sense for the Medical Society of Virginia to seek membership in the Virginia Credit Union rather than establish its own credit union because "groups and businesses seeking to charter a new credit union face tremendous obstacles, including regulatory hurdles, the need to raise significant capital, technology costs and the fact a newly chartered credit union would be decades building a member base sufficient to offer the wide range of products and services demanded by today’s consumer."
“Credit unions are expanding on the uneven playing field they enjoy,” Steve Yeakel, president and CEO of the Virginia Association of Community Banks, was quoted as saying,