WASHINGTON — Credit union community charter conversion approvals could be in flux as a result of last week's federal court ruling against the NCUA.

U.S. District Judge Yvette Kane wrote that the agency acted in an "arbitrary and capricious manner" when evaluating evidence and deciding to grant a community charter to Members 1st Federal Credit Union in Mechanicsburg, Pa., a suburb of Harrisburg. She added, "The NCUA's lopsided decision reflects a certain deafness to the unfavorable evidence in the record. Moreover the record is clear that the agency in this case changed its formal position with respect to the relative weight of the factors, and the agency provided no explanation for the shift."

The American Bankers Association and a group of Pennsylvania bankers sued NCUA after the agency's 2003 decision, granting Members 1st a community charter for a six-county, 3,400 square mile area.