WASHINGTON (2/17/12)--In Brockton, Mass., the directors of HarborOne CU posted an announcement to its website yesterday informing members that the credit union is considering a charter conversion from state credit union to a Massachusetts-chartered mutual co-operative bank.
Credit Union National Association (CUNA) President/CEO Bill Cheney said of the announcement, "Ultimately, the interests of the members of the credit union need to be protected.
"That can only happen when the members--who will make the decision on whether to convert from a credit union to some other institution--have all of the facts about the impact on them as a result of the change, provided with complete transparency."
Cheney added that it is CUNA's view that the credit union charter is the best option for the members of a credit union.
Massachusetts Credit Union League President Dan Egan had this to say: "The league strongly believes the member-owned, not-for-profit, credit union charter is the charter of choice for providing the public with consumer-friendly financial products and services, and allows credit unions to offer a far better economic return."
He added, "Credit unions now have 2.5 million members in Massachusetts and 92 million members nationwide because they put the interests of consumers first. In the last quarter of 2011, credit unions grew dramatically as consumers searched for a financial institution that would best serve their needs."
The HarborOne directors, in their website notice, cited membership restrictions, lending rules, and access to capital as some of the reasons the charter change is being considered.
Egan noted, "While a credit union's management may appreciate the operational advantages of a bank charter, those benefits must extend to the credit union's members. Any charter conversion should be approached from the perspective of what is best for the credit union's member-owners."
Among the conversion consequences to members noted by HarborOne were the facts that volunteer directors of the credit union would become compensated directors under the mutual bank structure; also, HarborOne would lose its current tax status.
"Based upon its extensive analysis," HarborOne noted, "the board of directors believes…this tax impact would be more than offset by the enhanced earnings capacity through increased commercial and small business lending and…by adding more customers with an expanded marketing area."
HarborOne will accept comments from members through March 15. On March 21, the credit union's directors intend to consider the adoption of a plan of mutual charter conversion.
"In the event a conversion plan is adopted by the board of directors, we would file with our regulators for review of all the conversion-related materials to be sent to members, including an information statement covering in greater detail all of the matters referred to in this notice.
"Members should not expect to receive any conversion-related materials from HarborOne until this review is completed, which can take several months. Upon completion of this review, the conversion proposal would be submitted to the membership for a vote following a notice period no shorter than 90 days," the notice said.