Kentucky CU Charts New Legal Ground With State Conversion
A Kentucky credit union appeared to write a new chapter Tuesday on NCUA vs. state policies on community charters.
In the first conversion of its kind in the state in 30 years, the $83 million Autotruck FCU has shed its federal charter and said it can now take advantage of more lenient field of membership regulations governing designated “area development districts” within the state.
The move by the Louisville credit union – which three days before Christmas officially changed its name to Autotruck Financial CU – will give the SEG-based CU expansion muscle to add new members in Bowling Green, said Huston Reinle, president/CEO.
Autotruck Financial has 13,000 members and a branch in Bowling Green – home to the Corvette assembly plant and Holley Performance Products – but NCUA examiners had previously denied a bid for a community charter based on the 120-mile distance from Louisville, Reinle said.
In a formal statement issued Tuesday, Autotruck Financial called its new authority “an important milestone in our 51-year history in providing more products, service and convenience” to Bowling Green members.
The state’s chief regulator, Charles Vice, commissioner of financial institutions, said the Autotruck conversion might lead to more.
“We’ve heard from a few looking at it now,” he said.
Vice said in a press release that Autotruck’s “desire to switch to state regulation is a testament to the strength of the state charter and DFI’s positive role as a regulator.”
The Kentucky Department of Financial Institutions, Vice said, “believes that a state charter provides significant value due to the local decision-making process and our knowledge of local economic conditions.”
AFCU’s board voted in June to begin the process. The conversion was officially completed on Nov. 8 and the charter delivered on Dec. 22.
Reinle, who also is chairman of the Kentucky Credit Union League, said his credit union is linked to the automotive industry, including northern Kentucky Ford plants, but can now start reaching out to new members in an expanded 17-county FOM.
“It’s been a rather tough couple of years for credit unions like ours … but this will help change” credit union fortunes, forecast Reinle.
The conversion is the first of its kind since a 2010 Kentucky Supreme Court ruling turned aside a bank-sponsored challenge to DFI community charter powers.
The NCUA had no immediate comment on Tuesday.