RICHMOND, Va.–A dispute over plans by one credit union here to expand its field of membership continues even after three years, but a resolution may be in the works, according to one report.
The dispute is being waged by the Virginia Bankers Association and a group of banks in the state against Virginia Credit Union, which has been seeking to add all members of the Medical Society of Virginia to its FOM.
According to Richmond BizSense, an examiner from the State Corporation Commission overseeing the matter recommended last month that VACU be found victorious in the case, which would allow it to offer credit union membership to all members of the Medical Society of Virginia.
“While that expansion would simply give VACU the ability to try to win the business of MSV’s members, it’s the prospect of doing so that has drawn the ire of the bankers,” Richmond BizSense reported. “MSV’s ranks are 10,000 strong and made up mainly of physicians, a profession that’s often a coveted customer segment for banks.”
Dispute Began in 2019
As CUToday.info reported in 2019, Virginia Credit Union said it filed its application to include the Medical Society of Virginia in its FOM at the request of the organization.
The bankers have been arguing the request goes beyond the statutory limit of membership expansion of 3,000 potential new members at a time.
The MSV request is the largest such request ever by a credit union in Virginia, due to the size of the group and its statewide reach, Richmond BizSense reported.
VACU’s application was initially approved by Bureau of Financial Institutions Commissioner Joe Face. However, the bankers’ petition has left the matter on hold ever since, the report added.
The case has been in litigation and was restarted at the request of SCC commissioners in 2021, according to Richmond BizSense.
The Main Arguments
“Among the main arguments has been whether MSV has the ability to create a credit union of its own, which industry-specific groups have often done in the past,” Richmond BizSense stated. “The bankers group argued that Virginia law calls for groups of 3,000 or more to create their own credit union. VACU and its camp has said that should only be done when a credit union can be formed reasonably within the standards of safety and soundness expected of regulated credit unions.”
The record identifies eight groups in excess of 3,000 members that were permitted to join the FOM of an existing state-chartered credit union in Virginia since 2003, Richmond BizSense added.
“I find the statutory provisions underlying this case require the exercise of judgment that goes beyond whether MSV could form a new credit union, to whether MSV should form a new credit union,” the examiner stated, according to the publication, which added that the analysis has stated the amount of startup capital needed to form a new credit union to serve the Society in the modern age is $3.5 million. It further noted no new state-chartered credit unions have been formed in Virginia since 1983.
‘Unlikely to Succeed’
“Thus, I find that a new MSV credit union is unlikely to succeed on an ongoing basis,” the hearing commissioner concluded in his recommendation for approval of the expansion, Richmond BizSense reported. “Furthermore, based on the level of donated capital required to form a new MSV credit union, coupled with the unlikelihood of success, I find that MSV could not feasibly or reasonably establish a new credit union.”
The next step in the process is submission of comments, followed by a likely decision by SCC commissioners.
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