Whitman-based Mutual Bank is seeking approval to convert its federal charter to a Massachusetts cooperative bank, according to a statement from the bank Friday.

Under a state cooperative bank charter, depositors’ funds would be insured in full, instead of being capped at $250,000 per depositor by the FDIC. A state charter would also allow the bank to lend larger amounts to qualified borrowers.

The bank’s board of directors unanimously voted to recommend the change to its members, notified the regulating agencies of its intent and called a special meeting of members to be held July 17 to vote on the plan of conversion. If approved by a majority of the membership, the bank will make formal applications to the regulatory authorities.