The fuling overturned a decision of a lower appeals court that sided with Ashland-based Home Federal Savings & Loan and the Kentucky Bankers Association, which contended that the state commissioner lacked authority to approve development district charter bids by a group of six CUs.

The Supreme Court, citing the Kentucky legislature's "intent to broaden allowable categories of membership" based on a 1984 statute, turned the six-year-old case back to the lower appellate court and directed the Kentucky Department of Financial Institutions to immediately promulgate new FOM rules.

Charles A. Vice, state commissioner, said he would be consulting with department lawyers on the exact procedure to process community charter applications from the six defendant CUs as well as other interested state-chartered CUs.

He said he has one application in hand from the $41 million Beacon Community CU of Louisville, which has said it seeks to start taking new member applications from its suburban Shepherdsville branch once it gets the final state approval.

"We actually built the branch to handle our new community charter, but since 2006, we've been limited in taking on any new applications from individuals living in the district" who do not meet the old court-ordered criteria, said Jeff Roberts, president/CEO.

Roberts said he understands one final hurdle may be a 30-day waiting period the state's high court imposes on last minute appeals. Overall, Roberts said, "We're pretty excited about moving forward once again."

Beacon Community was among the six defendant CUs in the case, which also saw amicus briefs filed by CUNA, the American Bankers Association and its Kentucky affiliate challenging the 1984 statute as well as previous laws granting authority to the commissioner to approve community charters in development districts.

The other five CU parties in the case were Members Choice CU, Ashland; C&O United CU, Edgewood; Service One CU, Bowling Green; GTKY CU, Lexington; and Kentucky Employees CU, Frankfort.

"This is a terrific ruling," said Michael Fromma, president/CEO of the $61 million GTKY CU, adding he was "awaiting direction from the state" on how to proceed based on interpretations of the court order.

There's no doubt, however, "we can diversify our membership," which has been a long-standing goal, said Fromma.

Lyons, the league head, said the high court ruling "clearly validates" what CUs had originally sought in their charters. "The court has given credit unions a green light on geographic expansion, and they are no longer living under a court prohibition, " he said.

Still, "I don't see anything dramatic" for the time being as to a rush of charter bids.

In its ruling, the high court sided with CUs that even without specific language allowing geographic FOMs, the "common bond" requirement still holds sway based on Kentucky law.

CU attorneys involved in FOM litigation have for years been tracking the Kentucky case as one in a line of bank challenges. The Kentucky ruling follows another test case in Pennsylvania last September by the Commonwealth Court also favoring CUs in which the Pennsylvania Department of Banking was cleared to grant five-county community charters to Freedom CU and Trumark Financial CU.

The Pennsylvania court held that the evidence supported the department's conclusion that the Freedom and Trumark charter notices were for a "well-defined local community."

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