Price said the planned conversion has been under study for months as the Bloomington CU saw FOM weaknesses under a federal charter in being able to add new members and branches in markets where the CU has a foothold including Indianapolis, where many alumni reside.

Last February, the 70,000-member CU merged with the smaller Central Federal Credit Union of Indianapolis and now operates a branch there with plans to add a second in the city. In December IU Credit Union, as it is commonly branded here, expects to add another branch in nearby Ellettsville.

Ties with its university sponsor remain intact, said Price adding, however, there is a limit to member growth in the college community in faculty and alumni and in attracting student members, "We've long found out it's harder to sign students who nowadays have bank accounts and debit cards back home."

Mark Powell, Indiana CU supervisor in the Indiana Department of Financial Institutions, told Credit Union Times he welcomes the CU to the state system which has been at 48 state CUs accounting for 49% of total Indiana CU assets.

Powell said he understands the IUCU motivation to switch is based on "problems and trouble NCUA has and the favorable field of membership existing in Indiana."

State law allows a CU to have community members as well as retain qualified groups, said Powell.

In its September statement to members explaining the conversion, which also appears on its Web site, Price noted the CU enjoyed good growth last year adding business loan services, shared branching, and surcharge-free ATMs while surpassing the $500 million milestone in assets.

Capitalizing on growth opportunities, the CU management believes its goals can "best be accomplished by converting," he wrote.

"Federal charters have become overly restrictive in defining fields of membership, thereby preventing us from realizing our full growth potential," wrote Price. "This is evidenced by the fact that four of the top five largest credit unions in Indiana hold state charters."

In the statement, Price noted that a conversion would cost the CU in paying state taxes, but "we will gain the ability to enter new geographic areas by adding communities to our field of membership rather than building a market presence one select employer group at a time."

At the same time, the CU will be better positioned to serve "our diverse and geographically-dispersed membership, including IU alumni and regional campus locations," he wrote.

"Market-leading rates and high quality personal service will not be compromised," he concluded adding, "we will still be known as your IU Credit Union." The vote to accept the conversion taken Oct. 22 was passed with 75% in favor.

Powell, the state regulator, said the conversion is subject to approval by a seven-member Indiana Financial Institutions Commission with the IU application on its Nov. 16 agenda.

Officials of the Indiana Credit Union League said they were cognizant of the trend toward state charters among the very largest in Indiana. Part of the move also reflects reform in FOM law which the league has helped push through in recent years.

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