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SALT LAKE CITY -The intervenors in the Utah field of membership case decided to let last week’s deadline for an appeal slide. “We’ve decided that our resources are best directed toward working with NCUA on the remand getting the best of what we can out of that,” CUNA General Counsel Eric Richard stated. The deadline for an appeal was Feb. 7. NAFCU General Counsel Bill Donovan echoed, “We and the other intervenor-defendants did conclude that we would forego appeal.We reached that decision in consultation with the credit unions directly impacted and it was our conclusion-and it was the conclusion that was shared by the other intervenors-that the interests of those credit unions are best served by us working with NCUA in accordance with the remand on the broader issue by the judge.” Intervenors in the case included CUNA, NAFCU, the Utah League of Credit Unions, Tooele FCU, Goldenwest FCU, America First FCU, and University of Utah FCU. Despite the decision not to appeal, Utah league President and CEO Scott Simpson said NCUA was reasonable in accepting the six counties as a community for the purposes of a community charter. He said he regularly travels between at least three of the counties himself. On the positive side, Simpson did point out, “The reality is it’s still in the hands of NCUA. The judge did not put himself in front of the NCUA.” The next moves for the four credit unions involved are up in the air. “I think each of the credit unions is making its own plans and I think they’re still evaluating exactly what they’re going to do. They may not all go in the same direction,” Richard said. He explained that there is no deadline for the credit unions to seek a permanent field of membership. America First was approved for an interim field of membership serving Salt Lake County, but the credit union hopes to go beyond that with its permanent field of membership, Executive Vice President John Lund said. One of the possibilities America First is considering is applying for all six counties again, but that is not likely, Lund said, adding that he thought NCUA was correct in its original assessment. “Going forward, what we’re doing is meeting with our board of directors and legal counsel on what we want to do into the future,” Lund stated. It will probably be months before the credit union is ready to submit another application to NCUA, he said. Lund said he does expect greater scrutiny from the regulator this time around. “I think they’re going to be more careful, sure,” he said. “I think after something like this, yes.” America First also wants to ensure it provides NCUA an application that the regulator is able to approve. At this point, according to Lund, the affected credit unions are not coordinating on their next steps. In response to the news that neither NCUA nor the intervenors were going to appeal, ABA Public Relations Director Charlotte Birch said, “[W]e are pleased with the judge’s decision in the case and will be watching closely to see what happens on remand.” Utah Bankers Association President and CEO Howard Headlee stated, “I think it’s clear that they learned that they didn’t have much of a case. I think anyone who read the judge’s decision could figure that out.” However, he said, the jury is still out on what NCUA will do with the remand. Headlee said he hopes more people at the agency will listen to NCUA Board Member Debbie Matz’ concerns this time around. “Honestly, Debbie Matz completely understood the issue. I certainly hope people will listen to her point of view a little bit more this time,” he said. Matz was the lone dissenter when the six-county field of membership was initially approved with then-NCUA Chairman Dennis Dollar and current NCUA Chairman JoAnn Johnson voting in favor of it. The decision was made at a crucial time when the state of Utah was setting up a task force to determine a tax rate for state chartered credit unions, which these credit unions were before converting and applying for the community charters. The ABA, in conjunction with the Utah Bankers Association, Bank of Utah, Liberty Bank, First Utah Bank, and Frontier Bank, FSB, filed a lawsuit in July 2003 against the NCUA for determining a six-county community field of membership for Tooele in an “arbitrary and capricious” manner. The other three credit unions were subsequently approved for the same area. U.S. District Judge Dale Kimball, for the U.S. District Court for the District of Utah Central Division, remanded the case back to NCUA Dec. 9 for further consideration of evidence of a community. The judge’s decision suggested that the area included at least two well-defined communities. “This case is troubling because there is no indication in the record that the NCUA questioned any of the data TFCU provided or that the NCUA queried into areas that would diminish the likelihood of finding a “local” community. If the NCUA had conducted a critical analysis of the information provided, it should have recognized areas of concern that required further discussion,” Kimball wrote. NCUA had previously determined not to appeal the case. Tooele has gone back to serving its original field of membership while the other three have been granted interim FOMs until they request a permanent one. Attorneys within the credit union community have pointed out that this ruling applies to this unique situation and it should not have reverberations concerning other community charters or new applications. -

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