If you have anything to do with banking in Massachusetts, maybe you thought of the bank formerly known as HarborOne Credit Union when you caught this little tidbit this morning, courtesy of Credit Union Times:

Citing the need to deliver new business lending products and services to survive, the $209 million Monterey Credit Union in California plans to change its charter to a mutual savings bank.

The idea to convert to a mutual savings bank originated from the board’s planning committee about two years ago.

However, the process to apply for a charter change began more than a year ago when the credit union began discussions with the California Department of Business Oversight. The credit union has filed its application with the FDIC.

Writing about HarborOne’s conversion just over a year ago, I addressed one particular question that comes to mind now: “Will this set off a wave of credit union-to-bank conversions?”

Short answer? No.

One conversion does not a wave make, and while it can be good to be a bank (Monterey CU specifically cites their desire to ramp up commercial lending) there are there are still plenty of reasons a credit union would be perfectly happy to remain a credit union. Regulation is a big one.

Now, I’m not suggesting credit unions are under-regulated, but rather that you probably have to have some pretty serious reasons to want to submit yourself and your institution to the regulatory burdens community bankers struggle with daily. Then there’s the view, undoubtedly held by some, that the execs are waiting for a big payday years down the road when they can convert to a stock institution and maybe, eventually, sell, but that’s a little cynical for me so early in the week.

I’ll wind this down by suggesting you also check out Keith Leggett’s Credit Union Watch (if you don’t already) and by sharing a little tidbit I learned last year when I was covering the HarborOne conversion:

“Credit union-to-bank conversions are rather uncommon. Since 1995, only 35 credit unions nationwide have converted to bank charters, according to the NCUA. There are presently 6,888 credit unions in the United States. The last credit union-to-bank conversion to take place was in 2009 – when Rhode Island’s Coastway Credit Union became Coastway Community Bank.”

Echoes of HarborOne? Not so fast…

by Banker & Tradesman time to read: 2 min