The NCUA's Denial of Vantage CU Conversion May Be Headed to Court
Denied its NCUA application to convert to a federal charter in a contentious case, the $654 million Vantage CU of Bridgeton, Mo., may take its complaint to federal court.
The possibility of litigation on Vantage's two-year-old community-charter bid to broaden its two-state field of membership was raised by Hubert Hoosman, its president/CEO, who said the NCUA board made serious and "very troubling errors with broad injury to multiple community charters everywhere."
The federal multiple community charter, he concluded, "is basically dead," based on the NCUA's 2-1 board decision Sept. 16 that held the Region IV director's denial of the Vantage application.
According to the NCUA, Vantage as part of its conversion application had requested to include the city of St. Louis and seven additional counties-four in Missouri and three in Illinois.
"But we never had requested the third county in Illinois, we had agreed to walk away from an existing Missouri branch and those facts were not supplied so that makes this whole decision all wrong and on top of that we were never given a chance for rebuttal," complained Hoosman.
In his e-mailed statement, Hoosman, expressing deep disappointment at the ruling, said that due to the conservative interpretation of new community charter rules, "the future of community charters involving multiple communities are almost totally in the hands of state regulators."
Hence, he wrote, "the future of federal chartered FOM memberships consisting of multiple communities is dead and credit unions just haven't realized it yet. Unless you are applying for a single county, single municipality or an extremely well-defined rural district, you're dead from multiple community federal charter perspective."
All of this, he concluded "is a great way to keep our banker friends happy."
Hoosman maintained that Vantage, through its operations straddling Missouri and Illinois with traffic across Mississippi River bridges, already serves many of the counties that the CU sought to expand in its FOM application.
But the board denied the appeal based on the regional director's determination that under the agency's former FOM rule, the application did not show sufficient interaction, even though it was shown the area is similar to at least one other FOM that was approved under a prior rule, according to CUNA.
Claiming there are major inconsistencies in how the NCUA acted, Vantage said it "disagrees that we did not prove the interaction requirements as a community as defined by NCUA."
"Our application was not an attempt for a land grab," Hoosman emphasized.
Moreover, Hoosman, citing two Illinois mergers undertaken by Vantage, said he found it "a bit strange that the NCUA wants us to turn our backs on our Illinois membership but has solicited us to see if we had interest in merging struggling credit unions from across the country."
Hoosman has said a court suit remains an option as it considers challenging the NCUA denial. He did not elaborate what other steps might be in the offing.
Asked for reaction, John McKechnie, NCUA director of public and congressional affairs, told Credit Union Times the agency would have no comment and "prefers to let the statements made in the board meeting" stand as the response.