Report Sees MHC Structure In Trouble
An article in the Hartford Business Journal speculates that the mutual holding company structure, long a popular option for credit unions converting from credit union to bank charters, may be on its way out.
The article said there is regulatory uncertainty as the Office of Thrift Supervision, the structure's former regulator, gets folded into the Office of the Comptroller of the Currency and the Federal Reserve's oversight of thrift holding companies expands.
The paper reported that one bank in Connecticut had moved from a MHC structure to a fully stock-issuing structure and that seven others had also done so, up from two in 2009 and one in 2008.
Under a MHC structure, the thrift forms a holding company that owns the thrift as a mutual and then sells off minority ownership in the company as stock to raise capital. The structure allows thrifts, including former CUs, to both raise capital in the capital markets and retain their mutual organization.
CU Financial Services, a consultancy that specializes in helping credit unions covert to bank charters, says that 10 of the 34 credit unions that have converted to mutual banks or have merged with them have adopted the mutual holding company structure.