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UNITED STATES
OF AMERICA In the Matter of xxxxxxxxxxxx FEDERAL CREDIT UNION 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 xxxxxxxxxxxxx Federal Credit Union's charter. Background xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx the FCU) is a multiple group credit union located in xxxxxxxxxxxxxxxxxx, with a field of membership consisting of over thirty occupational groups and two associational groups. xxxxxxxx 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 xxxxxxx when it made the SEP request and is currently rated a xxxxxxx. 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 xxxxxxxx
noting his concerns with xxxxxxxxxx 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 xxxxxxxx at that time. In September, xxxxxxxx
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 xxxxxxxxxx SEP request for failure to take necessary corrective
action. The Region IV Director stated that xxxxxxxxx xxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxx xxxxxxxxxxxx xxxxxxxxxxx xxxxxxx
xxxxxxxxxxx xxxxxx xxxxxxxx xxxxxxxxxxxxxx xxxxxxxxx xxxxxxxxx xxxxxxxxx
xxxxxxxxxxxxxxx xxxxxxxxxxx xxxxxxxxxx xxxxxxxxxxxxxxx xxxxxxxxx xxxxxxxx
xxxxxxxx xxxxxxxxxxxxx xxxxxxx xxxxxx xxxxxxxx xxxx field of membership
expansions would be granted. The denial letter also set forth xxxxxxxxxx
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. xxxxxxxx appealed the SEP denial in a brief letter on November 18, 1994. No further evidence supporting the appeal was submitted. xxxxxxxxxx next examination took place in late 1994 and the FCU was xxxxxxxxxxxxxxxxxxxxxxx. xxxxxxxxxx xxxxxxxxxxxxxx xxxxxxxxxxxxxxx xxxxxxxxxxxxxx xxxxxxxxx xxxxxxxxxxxxxxxx xxxxxxxxxx xxxxxxxx xxxxxxxxxx xxxxxxxxxxx xxxxxxxxx xxxxxxxxxx xxxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx xxxxxxx xxxxxxxxxx xxxxxxxxxxx xxxxxxxxx xxxxxxxxxx xxxxxxx xxxxxxxx xxxxxxxxx xxxxxxxxxxxxx xxxxxxxxxxx xxx xxxxxxxxx xxxxx xxxxxxx xxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx xxxxxxx xxxxx xxxxxxxxxxxxxx xxxxxx xxxxxxxxx xxxxxxxxxxxxxx xxxxxxxxxxxx xxxxxxxxx xxxxxxxxxx xxxxxxxx xxxxxxxxxxxx xxxxxx xxxxxx xxxxxxxx xxxxxxxxxxxxxxxx xxxxxxxxx xxxxxxxxxxxxx xxxxxx xxxxxxThe Regional Director stated: xxxxxxxxx xxxxxxxxxxxxx xxxxxxxxxxx xxxxxxxxxxxxxxxx xxxxxxxxxx xxxxxxxxxx xxxxxxxxxxxxxxxxx xxxxxxxx xxxxxxxxxxxxxxxxxx xxxxxxxxxxxx xxxxxxxxxx xxxxxxxxxxxxxxx xxxxxxxxxxx xxxxxxxxx xxxxxxxxx xxxxxxxxxxxxx xxxxxxxxxxxxxxx xxxxxxxxxxxxxxx xxxxxxxxxxxxxxx xxxxxxxxxxxxxxx xxxx xxxxxxxxx The last supervisory contacts with xxxxxxxx took place on April 30 and June 25 of 1995. The credit union continues to be rated a xxxxxxx. 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.' xxxxxxxx is not designated as distressed. It is clear that xxxxxxxxxx xxxxxxxxxxx xxxxxxxxx xxxxxxxxxxx xxxxxxxxxxx xxxxxxxxxxx xxxxx xxxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxxx xxxxxxxxx xxxxxxxxx xxxxxxx xxxxx xxxxxx xxxxxxxx xxxxxxx xxxxxxxxxx xxxxxxxxxx xxxxxxx xxxxxxxxxx xxxxxx xxxxxxxxx xxxxxxxx xxxxxxxx xxxxxxx xxxxxxxx xxxxxxx xxxxxxxx xxxxxxxxxxx xxxxxxxx xxxxxxxx xxxxx xxxxx xxxxxxxxx xxxxxxxx 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). Order 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 xxxxxxxx FCU is upheld based on the fact that the FCU is currently rated a xxxxxxx 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.
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