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Decision and Order on Appeal Field of Membership Decision

July 1994
Decision and Order on Appeal Field of Membership Decision
Chartering/Field of Membership



In the Matter of [redacted]

Docket No. 95-004

Decision and Order on Appeal

This matter comes before the National Credit Union Administration Board (Board) as an appeal of the Region IV Director's denial of a streamlined expansion procedure (SEP) amendment to [redacted] Federal Credit Union's charter.


[redacted] the FCU) is a multiple group credit union located in [redacted], with a field of membership consisting of over thirty occupational groups and two associational groups. [redacted] has approximately 12,000 current members with a potential membership of 15,000. It has assets of approximately $42.8 million and was rated a [redacted] when it made the SEP request and is currently rated a [redacted].

An examination took place in the spring of 1994 with a follow up examination report prepared by the credit union's examiner on June 30, 1994. In August the Region IV Director wrote to the president of [redacted] noting his concerns with [redacted] investment portfolio, weak earnings position and asset/liability position after reviewing the examination report. The Regional Director also stated that field of membership expansion was not appropriate for [redacted] at that time. In September, [redacted] submitted an SEP request to the Region IV Director but did not submit the required SEP forms. On November 15, 1994, the Region IV Director denied [redacted] SEP request for failure to take necessary corrective action. The Region IV Director stated that [redacted] field of membership expansions would be granted. The denial letter also set forth [redacted] appeal rights and stated that "substantial evidence disclosing clearly that the reason cited for denial [of the SEP request] is not valid" was necessary for an appeal.

[redacted] appealed the SEP denial in a brief letter on November 18, 1994. No further evidence supporting the appeal was submitted. [redacted] next examination took place in late 1994 and the FCU was [redacted].

[redacted] The Regional Director stated: [redacted] The last supervisory contacts with [redacted] took place on April 30 and June 25 of 1995. The credit union continues to be rated a [redacted].

Streamlined Expansion Procedure Policy and its Application to this Case

SEP policy is a new charter amendment policy which became effective with the issuance of Interpretive Ruling and Policy Statement (IRPS) 94 1. An SEP charter amendment permits an approved federal credit union to immediately begin serving employee groups meeting criteria set forth in the IRPS. Under this procedure, there is no formal NCUA action necessary on each group being added.

The only criteria for approval of an SEP amendment is that the FCU be "well operated" and not designated as distressed.' [redacted] is not designated as distressed. It is clear that [redacted] is not eligible for an SEP amendment at this time.

1NCUA Chartering and Field of Membership Manual (Manual) at p. 2 9 2 10 (59 Fed. Reg. 29088, 6/3/94). A credit union designated as "distressed" is one that has suffered a severe economic reversal (e.g. a plant or base closing). Policy as set forth in IRPS 94 1 provides that such a credit union may add groups to its field of membership without regard to location. Manual at p. 2 3 (59 Fed. Reg. 29086).


For the reasons set forth above, it is ORDERED as follows:

The Region IV Director's denial of the request for a Streamlined Expansion Procedure amendment for [redacted] FCU is upheld based on the fact that the FCU is currently rated a [redacted] and is not a "well operated" FCU. It therefore does not meet the criterion set forth in IRPS 94 1 for SEP approval.

So Ordered this 27th day of July, by the National Credit Union Administration Board.

Becky Baker
Secretary of the Board

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