Members 1st FCU Contemplates Return to Its SEG Roots After Court Ruling

MECHANICSBURG, Penn. – Members 1st FCU is considering a return to its 1,000 select employee groups in light of Monday’s federal court ruling striking down its six-county community charter, awarded five years ago.
 
That way, the $1.5 billion credit union still could use the dozen or so branches it opened since then to serve its select groups, at a cost of almost $20 million.
 
“We have all intentions of continuing our expansion, whether it’s under a community charter or a select employee group charter,” said Robert Marquette, president of the $1.5 billion credit union. He said returning to its SEG charter is one of possibilities the credit union is exploring in response to the court decision.
 
“There are benefits to being a community charter; there are benefits to being a SEG charter. One of the benefits of being a SEG charter is you can open up branches anywhere, with no geographic boundaries,” said Marquette.
 
The decision by the U.S. District Court for the Middle District of Pennsylvania struck down a six-county community charter granted to Members 1st by NCUA that covers more than 1.2 million people living in 3,000 square miles between the state capital of Harrisburg and the city of York.
 
The court decision also nullifies a similar charter NCUA eventually approved for AmeriChoice FCU and New Cumberland FCU.
 
The court has given the credit unions 30 days to propose a remedy. The American Bankers Association, which brought the suit, could ask for a divestiture of the areas in question. According to Marquette, Members 1st still could use the new branches it built in the expanded field of membership to serve its many SEGs. Under NCUA rules, Members 1st had to give up those SEGs when it converted to a community charter, but was allowed to retain the members.
 
“We will continue to open up branches; they are under construction as we speak. We’ve not stopped and we have no intention of stopping,” a defiant Marquette told The Credit Union Journal.
 
Members 1st was chartered in 1950 to serve employees of Mechanicsburg Naval Depot and grew to serve 993 select groups by the time it converted to a community charter in 2003.  Since then, it has grown from 90,000 members to 142,000 members.