NORTH CHESTERFIELD, Va.–After being denied a desired field of membership expansion by Virginia’s State Corporation Commission in 2022, Virginia Credit Union is now looking to move to a federal charter.
As CUToday.info reported earlier, the $5.1-billion Virginia Credit Union, which is currently overseen by the Bureau of Financial Institutions, was turned back by the regulator in its three-year battle to add the Medical Society of Virginia to its field of membership. The Virginia Bankers Association and several community banks in the state had strongly opposed the move to add the 10,000 members of the Medical Society.
While the bank groups had argued that adding those 10,000 members would give VACU too much of an advantage over local community banks and could potentially cost the state tax revenue, the State Corporation Commission found VACU “did not meet the required burden of proof that the medical society was unlikely to be able to form its own credit union — which is preferable under state law, as opposed to allowing a large organization’s members to join an existing credit union.”
Members Now Voting
Virginia Credit Union now says it will switch to a federal charter, pending approval from its 324,000 members, who are now able to vote on the change. According to Richmond BizSense, VCU does not plan to add “federal” to its name in the event members OK the move.
“Having NCUA as our primary regulator makes it more efficient and easier for us to add new groups and areas to our field of membership,” a spokesperson told BizSense.
Financial Hit for Regulator
The publication said the move will “deal a financial blow to the BFI,” noting the SCC bureau funds its entire $16 million annual budget with fees paid by the institutions it regulates.
“VACU is the largest state-chartered credit union among the 23 such credit unions in Virginia. VACU was required to pay $816,000 in assessment fees to the BFI this year, accounting for nearly 40% of the $2.1 million in total assessments the regulator received from credit unions statewide,” the report stated.
The BFI received an additional $9 million from Virginia’s 48 state-chartered banks.
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