LAKE PLACID, N.Y. -- A bill before the New York State Assembly would make expansion easier for state-chartered credit unions.

The bill would eliminate a requirement that a credit union must hold a meeting of its members to approve any widening of its customer base.

The requirement makes expanding a lengthy and costly process, said Chris Langley, a lobbyist for the New York Credit Union League.

He was speaking at a legislative affairs meeting during the league's annual conference here. About 1,200 credit union officials attended the conference.

Under the bill, a credit union's board would vote whether to expand and then it would go before the superintendent of banks for approval.

Mr. Langley said he doubted the bill would get through this year. But not to worry: Next year the league plans to back a recodification of the state credit union rules that would change regulations governing expansion.

New York credit unions, battered by corporate and military cutbacks, are starting to see their loan portfolios grow.

"Our members have had a tough time, but lending is starting to pick up slowly," said Wiley Vincent, president of Sidney (N.Y.) Federal Credit Union.

Loan portfolios of Empire State credit unions with more than $50 million in assets grew 1.1% to $1.05 billion in the first quarter, according to Callahan & Associates, a Washington-based consulting firm.

Meager as that seems, that's nearly three times the growth in last year's first quarter.

Deposits grew 3.4% in the first quarter, dragging the loan-to-deposit ratio to 60.2% from 61.6%, according to Callahan.

Robert G. Allen, president of Farmingville-based Teachers Federal Credit Union, gave credit to Norman E. D'Amours, chairman of the National Credit Union Administration.

Mr. D'Amours has encouraged credit unions to make more loans as long as they meet safety and soundness criteria. He also has told examiners to let credit unions take reasonable risks.

Mr. Allen said when he was reviewed earlier this year, the examiners were more tolerant of loans held by the $415 million-asset credit union. "I think his message has begun to filter down," he said.

Although the federal regulator is fostering the growth of community-development credit unions, it won't ignore safety and soundness concerns.

That's the message Christopher Kerecman gave at the league's annual meeting. Mr. Kerecman is the NCUA director of the office of community development and low-income credit unions.

The agency has streamlined rules for chartering credit unions serving poor groups and it has encouraged other institutions to help them out. But the agency won't carry community development credit unions.

"We expect the credit unions to have a business plan and operate like a business," Mr. Kerecman said in an interview. "We won't turn our back on safety and soundness."

New York credit unions are fighting for a piece of a state-sponsored deposit program worth $100 million.

The Excelsior Linked Deposit Program, created last year, allows the state comptroller to purchase from participating banks two-year certificates of deposit with below-market rates. The banks then use the deposits to make capital loans to qualified businesses.

Targeted businesses include manufacturers with less than 500 employees, minority- and women-owned businesses, and companies in distressed areas.

Credit unions are barred from the program. But league assistant vice president Lisa Shaver said they deserve to be let in.

"I think we're a natural to fulfill the intent of the program," she said.

She noted that so far only 41 banks have participated in the program.

Banks are staunchly opposed to letting credit unions get involved, Mr. Langley said at the legislative affairs meeting.

"They're going to go to the mat on this one," he said.

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