UNITED STATES OF AMERICA
BEFORE THE NATIONAL CREDIT UNION ADMINISTRATION BOARD
In the Matter of [redacted] Federal Credit Union
Docket No. 00-FOM-3
Decision and Order on Appeal
This matter comes before the National Credit Union Administration Board (Board) on appeal from the [redacted] Federal Credit Union (Credit Union or Appellant). The Region III Director denied the Appellant’s application to add the underserved area of [redacted], to its field of membership.
Background
Appellant is a low income community credit union located in [redacted]. It was chartered in 1970 (under a different name) as an occupational credit union. It converted from a multiple common bond credit union (occupational) to a community charter in April, 1997. Its community includes persons who live, work and worship in [redacted]. The Credit Union has $19 million in assets and is currently rated a composite [redacted]. It has experienced problems with loan delinquency, loan losses and management.
In March of 1999, Appellant applied to add the underserved area of [redacted], to its field of membership. [redacted] is an underserved community which lies adjacent to [redacted], and has a population of approximately 650. The Region III Director denied the field of membership request due to low penetration of the existing community and operating concerns as outlined in the examination report. The Credit Union appealed the denial to the NCUA Board.
Issue for Appeal
The issue in the matter of this appeal is whether Appellant has met the requirements of Interpretive Law and Policy Statement 99-1 (IRPS 99-1, also referred to as the Chartering Manual) for adding an underserved area to its field of membership.
Analysis of Applicable Policy
The Board issued IRPS 99-1 in December, 1998. IRPS 99-1 sets forth NCUA’s chartering and field of membership policies. As provided in Chapter 3, III of the Chartering Manual:
A federal credit union that desires to include an underserved community in its field of membership must first develop a business plan specifying how its will serve the community. The business plan, at a minimum, must identify the credit and depository needs of the community and detail how the credit union plans to serve those needs.
Chartering Manual at p. 3-4.
Although the Credit Union is aware of this requirement, Appellant has not developed a business plan for service to the underserved area of [redacted].
Order
Based on Appellant’s failure to develop a business plan specifying how it plans to provide service to the underserved area of [redacted], it is ordered as follows:
The Region III Director’s decision denying [redacted] Federal Credit Union’s application to add the underserved area of [redacted], to its field of membership is upheld and the appeal is denied.
So Ordered the 6th day of June, 2000, by the National Credit Union Administration Board.
Becky Baker
Secretary of the Board