BISMARCK, N.D. – Any test of the state's new 75-mile field of membership law appeared all but dead last week as two small North Dakota CUs withdrew their applications for FOM extensions after hearing from attorneys that "under-the-wire" bids would be futile because of a retroactive clause. The controversial FOM law, which becomes effective Aug. 1 over strong objections of a CU contingent complaining of a banking sellout, limits CUs to opening branches 75 miles from their main office. Though the banking lobby often vigorously objected, the state previously maintained a "leapfrog" FOM statute permitting some CUs to branch hundreds of miles from their headquarters. Opponents of the law, including the two CUs withdrawing FOM extensions-the $45 million Dakota West CU of Watford City and the $12 million Elm River CU of Page-argued they should be allowed to reach the many unbanked areas of the state with new facilities. "Sure, I'm disappointed," said Erin Olstad, manager of the $12 million Elm River, which withdrew an application to extend its FOM limit 50 miles past Horace, a community of 1,000 which saw its lone bank depart more than a year ago. At a special July 26 meeting of the North Dakota Credit Union Board, Olstad's application to set up a branch in Horace – which is within the 75-mile limit -was approved without objection. "It would be hard for anyone to object since there is no bank at all in town," said Olstad. The branch is slated to open next year. Meanwhile, in its withdrawn FOM application, Dakota West had sought to extend FOM authority 50 miles from Washburn, a community of 1,200 located 140 east of Watford City. "Until we heard from attorneys, we did not realize the grandfather portion would not allow us to extend our field of membership," explained Denton Zubke, CEO of Dakota West. Tim Karsky, chairman of the Credit Union Board and the state's CU commissioner, said a state attorney general's opinion held that Jan. 1, not Aug. 1, was the retroactive date barring FOM extensions. "We could have had our field of membership authority in Washburn for four days before we would have had to rescind," said Zubke who has long been the most vocal in leading the unsuccessful opposition to the law. The Watford City CEO has called the FOM law "a disaster to North Dakota" and said this week he still would look at converting to a mutual savings bank. Zubke has been a leader among North Dakota CUs in merging small CUs and said he is moving forward with his sixth, the $4.8 million Mohall CU whose management has signed a letter of intent and whose members were to vote Aug. 2. Zubke as well as four other CUs in the opposition group which quit the North Dakota Credit Union League in March, contends the FOM law is injurious to the state's economy by denying needed financial services in very small rural communities already suffering declining population and unemployment. Taking note of the law's opposition, Karsky, the CU regulator, said "this law can always be changed in the future" but it will be up to CUs, if they choose, to pursue legislation in 2007. The legislature meets every two years -

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