TOPEKA, Kan. -- The Kansas legislature appeared headed last weektoward passing compromise--and perhaps milestone--legislationputting new limits on field of membership and merger expansion bystate-chartered Kansas CUs. The measure stops short of using thelanguage in federal FOM statutes.

A proposed bill drafted by the Kansas Bankers Association andagreed to by the Kansas Credit Union Association would restrictfuture statewide branching by CUs in certain metro areas of thestate based on population size.

An earlier version of the bill would have restricted new CUbranches to those with 3,000 members.

Agreement to the FOM bill, pushed hard for the last two years bythe KBA as a means to throttle expansion by so-called "largenontraditional credit unions," apparently puts to rest for the timebeing any protracted court battle like one that stymied CUs inneighboring Missouri.

A 2007 Missouri FOM law, which also restricted FOM growth basedon geography, was enacted last January with initial CU applicationsand was also viewed as a compromise measure agreed to by the bankand CU trades in that state.

"There are definite parallels between Missouri and Kansas on theissues agreed to, but you also have to remember that in theproposed Kansas bill, as in Missouri, there are plenty ofopportunities for credit unions to grow," said Chris Johnson,CUNA's vice president of state government affairs.

Nonetheless, the Kansas bill, which was passed out March 18 bythe Senate Financial Institutions and Insurance Committee and wasdue for a Senate floor vote, does limit future statewide branchingfor certain CUs based in counties with million or more "potentialmembers" in MSA designations.

The president/CEO of KCUA, Marla S. Marsh, said if the billbecomes law, nine credit unions will be affected immediately. ThoseCUs are those in the state's largest cities like Wichita and Topekabut also medium-sized CUs with statewide operations in Hutchinsonand Garden City.

"We'll have credit unions that won't be able to expand in a waythey could have before," Marsh said.

"Yes, it's a political compromise, and it all depends on thedefinition of compromise since we were able to retaingrandfathering and other features, which clarify field ofmembership," said Erich Schaefer, KCUA chairman and president/CEOof Golden Plains CU, Garden City.

For his CU, with 10 branches in western Kansas, there would beno immediate disruption "but we could not branch statewide in thefuture, and that would have an impact on our indirect lendingprogram that we have with dealers."

In a prepared statement, the KCUA noted that the bill wasintroduced by the KBA to "limit the geographic area served bycredit unions as well as create new regulatory standards forbranching, mergers and field of membership changes. The bill hasbeen extensively amended and approved by the Senate FinancialInstitutions and Insurance Committee to reflect language agreedupon by the Kansas Credit Union Association."

Officials of the Kansas Bankers Association said there was "giveand take on both sides" since that trade group for years had soughtfar more restrictive language patterned after NCUA FOM rulesgoverning CU structure.

Marsh told the Kansas City Star in an article covering thelegislation that Community America CU, which has Kansas facilities,would not be affected by the bill because it was chartered inMissouri.

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