The NCUA last week asked a federal judge to dismiss an amended complaint seeking documents and communications the federal agency used in its decision to conserve the $3.2 million People Trust Community Federal Credit Union of North Little Rock, Ark., in January.
The amended complaint was filed on March 10 in U.S. District Court in Little Rock by Arlo Washington, the founder and former CEO of People Trust Community Credit Union. He also asked the court to set aside the conservatorship decision for judicial review.
Washington alleged the timing of events and communications submitted – including those submitted outside of the credit union's management process – raises questions about whether the regulatory review was undermined when the agency decided to conserve the credit union, making it subject to judicial review.
However, the NCUA argued that even if Washington's allegations are true, the federal agency had lawful authority to order the conservatorship. The federal regulator cited People Trust Community's rapidly declining net worth, worsened by unrecognized costs and alleged material Truth in Lending Act violations.
"Because a statutory ground existed for the NCUAB's (NCUA Board's) order of conservatorship, the NCUAB did not act arbitrarily or capriciously, so Washington cannot state a claim for relief to enjoin the conservatorship," the federal regulator stated in its March 20 motion to dismiss.
Last June, NCUA examiners said they identified unsafe and unsound conditions related to management and governance. During a Dec. 3, 2025 meeting with management, the examiners allegedly said the credit union would have time to address their findings and submit a revised business plan.
Washington said he submitted a revised business plan on Dec. 22, within the agency's timeframe.
However, on Dec. 21, a meeting of the board of directors occurred. Washington said he didn't attend that meeting because he was not notified about it. As a result, no management record of the meeting was created through the credit union's governance procedures.
Washington alleged that then-Board Chair Michael Pridgeon submitted a request to the NCUA seeking an additional extension for the revised business plan. Washington argued the regulatory communication with the NCUA was historically handled through executive management and that this request was submitted outside the established management communications process.
Nevertheless, the NCUA granted the extension request, according to the amended complaint. Less than one month after submitting the revised business plan, the federal regulator placed People Trust Community into conservatorship on Jan. 16.
Washington alleged that the timing of these events raises questions regarding whether the revised business plan was fully evaluated before the conservatorship was imposed. He also argued that if the NCUA's decision relied on communications submitted outside the established management communication process, it allegedly undermined the regulatory review process and is subject to judicial review.
But in its motion to dismiss, the NCUA contended that Washington lacks legal standing because he was no longer the CEO when he filed the amended complaint and that the case should be dismissed for lack of subject matter jurisdiction.
Peter Strozniak can be reached at peter.strozniak@arc.network.com.
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