Credit unions may be forced to severely restrict membership.

The Supreme Court will decide as early as this week on whether to hear a case that could drastically dampen future growth at credit unions, including some of the nation's largest credit unions that are based in L.A.

A court decision for the plaintiffs in the case of First National Bank and Trust Co. et al vs. National Credit Union Administration et al could trim anywhere from 5 to 70 percent from the future growth at some of L.A.'s major credit unions.

The case hinges on the court's interpretation of a clause in the Credit Union Act of 1934, which states that all members of any federal credit union must share a "common bond." Traditionally, that common bond has been the members' employer.

But a recent wave of corporate downsizings has forced many credit unions to look beyond their traditional "common bond" to maintain their membership and asset base.

About 20 percent of the current membership at Lockheed Federal Credit Union of Burbank, for example, has no connection to Lockheed-Martin Corp., said Tammy Tagami-Reeves, the credit union's vice president of marketing and technology.

Lockheed Federal's original sponsor-Lockheed Corp. - merged with Martin Marietta Corp. in 1994 and consolidated the company's headquarters in Bethesda, Md. Even after the move, Lockheed Federal remains one of L.A. County's largest credit unions, with 106,000 members and $975 million in assets.

"The majority of our growth in recent years - between 60 and 70 percent - is coming from non-Lockheed people," said Tagami-Reeves. "That's a function of the (sponsor) company itself, which isn't growing."

Some credit unions already have suffered as a result of the legal battle over what constitutes a "common bond."

Last October, a U.S. District Court judge ordered all federally chartered credit unions to stop accepting new members from outside their common bond. That ruling was stayed three months later by an appellate panel of judges, but only after wreaking havoc at some credit unions.

"We usually sign up over 1,000 new members a month, but we were down to 100 to 200 a month between October and December," said Tagami-Reeves. She added that Lockheed Federal also had to close down all its business development activity during the three-month period.

Similar to the Lockheed credit union, Westcom Credit Union has about a third of its total membership outside its common bond, said Joe Schaeffer, vice president of planning and business development. The Pasadena-based credit union has 135,000 members and $1.1 billion in assets, making it another of L.A.'s largest credit unions.

The credit union's common bond is the Southern California telecommunications industry, where Westcom's traditional membership includes employees from Pacific Telesis Group, AT&T and GTE California.

Westcom currently enrolls between 500 and 700 new members each month, including 30 percent who are not employed in the telecommunications industry, according to Schaeffer. He added that industry downsizing - particularly at PacTel - has prompted the credit union to look outside its traditional customer base for new members.

"We and other credit unions are forced to expand our core groups, or risk financial soundness," he said.

The common bond issue is also raising red flags at Hughes Aircraft Employees Federal Credit Union of Manhattan Beach, even though all but about 4 percent of its 165,000 members are employed by the aerospace giant. The big concern at Hughes' credit union is more philosophical than bottom line-oriented, according to Laura Kalb, vice president of marketing.

"We feel it's important for American consumers to have a choice of which financial institution they want to do business with. ... A lot of Americans work for small companies, and we think it's important for their employees to have access to credit union benefits," she said.

Regardless of whether the Supreme Court decides to hear the case, credit unions nationwide are lobbying Congress to make sure the common bond issue is eventually laid to rest through legislative action.

"If there's any ambiguity, it's up to Congress to clear the confusion," said John Annaloro, senior vice president of public and government relations at the California Credit Union League in Pomona, the industry group for California credit unions.

Annaloro said credit unions in California would be hammered harder by the exclusion of non-common bond members than other states, because many California credit unions were originally sponsored by aerospace and defense companies, which have undergone dramatic downsizings.

Annaloro said the California Credit Union League has already met with 25 of the 52 California members of Congress to express the importance of a legislative solution to the common bond issue.

"We expect a bipartisan bill will be forthcoming in the House over the next month. This is an issue where I think Congress would like the courts to solve the problem and vice versa. But without exception, everyone wants the problem solved," he said.