Rumors that Community Charter Applications Slowing Untrue, Agency Says

ALEXANDRIA, Va.-Despite the fact the NCUA Board has not approved a community charter since September 2004, the board is not reluctant to consider community charter applications. However, the regions have been busy plowing through stacks of conversion applications. Sixty-one had been approved as of the end of June, well over half of the 83 approved in 2004. “In regard to conversion applications, which require NCUA Board action, we do expect applications to be before the board within the next few months,” NCUA Director of External Affairs Nick Owens said. “Applications sent to NCUA occasionally require additional data or information. There are applications that would require board approval which also need additional detailed information. Our regional staff works closely with credit unions to ensure that all the data needed for analysis is received.” He added that he could not speculate on the status of individual applications in process. Sources close to the process have said there are three expected to come up possibly as soon as the September board meeting. Marc Selvitelli, executive director of the National Association of Community Credit Unions, took an educated guess as to why applications have not been coming before the board. “I think that the whole Utah decision scared a lot of people. It may make credit unions a little less enthusiastic about converting,” he said. Late last year, a court in Utah sided with the American Bankers Association in a lawsuit the agency brought against NCUA to rein in the six-county communities approved for service for Tooele Federal Credit Union and three others. The decision “has not been as big a worry as it had been initially,” Selvitelli added. Dollar Associates Partner Dennis Dollar, the most recent former NCUA chairman, said he has “heard a lot of concern about” the lack of applications that have come before the board. One of the services Dollar Associates provides its clients is help with community charter applications. He said he has heard from many credit unions that they attribute it to the current two board member situation. But, he points out to those credit unions that both NCUA Chairman JoAnn Johnson and Board Member Debbie Matz had voted in favor of large community charter conversions during his time on the board, such as the one for Bethpage Federal Credit Union with more than two million potential members. Matz, herself, said that some have suggested there will not be any large community charters approved while she sits on the board. She said she does not understand the accusation since she has voted for 36 of the 40 community charters that have come before the board during her time at NCUA. Matz abstained from one and voted against three, including the Tooele Federal Credit Union Conversion, which she did not feel was a community and the courts ultimately agreed. The other two, Matz felt, did not provide adequate marketing and business plans. She freely admitted that she requests a lot of documentation and reviews it thoroughly. Matz said it might be best that those credit unions unwilling to submit “sound business and marketing plans” do not apply and are not approved for large community charters. Matz added that she, too, believed the Utah court decision could have had a chilling effect on credit union applications, as well as slowing the agency’s approval process as staff review them with a fine-tooth comb. “Clearly we’re taking the decision into account. It was a serious decision and we’re not going to ignore that decision,” she stated. Additionally, Dollar emphasized that while he was still at NCUA, the board decided to delegate certain applications to the regions, including those that were single political jurisdictions, multiple counties with populations below 500,000 and communities previously approved by the board for other credit unions. Still, Dollar admitted that some credit unions have come to him asking how they can avoid the NCUA Board to get a certain community approved. “The regions have been very cooperative with our credit union clients seeking community charters.” Dollar also has three credit union clients with applications awaiting board action. “I don’t think their timetables have been outside the bounds of reasonableness,” he said, emphasizing that when he was on the board complete applications were being processed in 60 to 90 days. The Utah decision could have had a chilling effect on the application process because the agency wants to ensure that every `i’ is dotted and `t’ is crossed with larger communities, Dollar agreed. “But you don’t want that to turn into paralysis analysis,” he said. The community charter remains an appealing choice for credit unions for a couple of reasons, Selvitelli stated. With the continuing consolidation in many industries that credit unions serve, credit unions are looking “to maintain services and to reach out to new members.” Additionally, he said, “The available pool of SEGs isn’t what it used to be.” [email protected]