Small Utah CU Converts to Federal Charter, But NCUA Limits Counties

OGDEN, Utah – After months of delay and a revised application, the $50 million McKay Dee Credit Union here has won NCUA approval to convert to a federal charter, making it the 11th to switch in the last year. The approval from NCUA came April 6 and covers three Utah counties – Weber, Davis and Morgan – and encompasses Ogden and nearby Clearfield. Last November the Ogden CU said its board had approved an application covering six Utah counties mostly around metropolitan Salt Lake City and following the pattern of much larger CUs which left the state system a year ago following the celebrated tax fight in the legislature. “We’ll have to live with what we got,” said John Palmer, president of McKay Dee, expressing disappointment his CU did not win regulatory clearance for Salt Lake, Summit and Tooele counties. Palmer said examiners had suggested to him last fall they were concerned about the CU’s asset size in expanding beyond metropolitan Ogden. An application for the three counties was submitted Feb. 12. Palmer speculated also that the July 2003 American Bankers Association suit challenging NCUA’s field of membership policy in Utah may have been a factor. That suit, pending in a Salt Lake federal district court and with CUNA, NAFCU and the Utah League of Credit Unions as intervenors is due for the first set of filing briefs by the plaintiff on May 3. “I won’t get heartburn” from the NCUA denial of three additional counties, said Palmer but he maintained McKay Dee was strong enough to add branches “where our members live” in suburban Salt Lake. When its Ogden competitor, the $300-million Goldenwest FCU, received its federal charter in May 2003, it won the right to expand into the six counties, based on NCUA’s earlier FOM approval for Tooele FCU, which become the original focus of the ABA suit seeking to overturn the approvals. The ABA has called NCUA actions “capricious and illegal.” Palmer maintained last fall that Goldenwest had “similar problems” with NCUA examiners on winning a six-county approval, but it was eventually approved. McKay Dee, with four branches and a membership of 6,500 with ties to a local hospital, said it plans to open two new branches, one in north Ogden by August and the other in Morgan City later in the year. “We’re satisfied but we could have served more of our members,” Palmer concluded. The move by McKay Dee follows an announcement last month by Granite CU of Salt Lake – the 10th Utah state-chartered CU since late 2002 – to file papers with NCUA to convert to a federal charter. Granite said it would remain domiciled in Salt Lake County but seeks to take advantage of federal credit union law allowing entry into business loans, an area precluded by the state law. -