More details emerged Friday on the thinking behind a possible conversion to a bank by the $1.8 billion HarborOne Credit Union of Brockton, Mass.

The proposed change to a cooperative bank charter, believed to be exclusive to Massachusetts law, would empower the metro Boston CU to expand business loans and mortgages, increase capital and branch into downtown Boston, sources said.

Meanwhile, industry reaction in Massachusetts to the planned switch, the first such transaction advanced by a major CU this year, remained restrained.

Some executives did express surprise that the move comes now considering the recent deposit inflow from Bank Transfer Day and consumer unhappiness with large banks.

“We cannot speak for HarborOne but this is a great time to be a credit union,” said a spokesman for the $4.2 billion Digital FCU of Marlborough, the state's largest.

Apart from the formal Web notice inviting member comments preceding a March 21 board vote, the president/CEO of HarborOne, James Blake, told Boston media outlets his field of membership is limited to four counties but the switch would permit opening a Boston branch and perhaps more later on.

“We have to compete with everyone in the market,” Blake told the Brockton Enterprise News, noting the CU under a bank charter could reach a wider group of members “where they work” while also being able to make more commercial loans. He called the proposed conversion “the right approach for us at this time.”

Blake also said because of FOM restrictions, HarborOne was forced to turn down $70 million in mortgages and other consumer loans from potential customers who live outside its market. HarborOne, founded in 1917, has 15 Massachusetts branches.

Details on the possible new structure HarborOne might seek remained sketchy. Industry lawyers studying the bid did point to a Massachusetts charter used in the 1860s by merchants to obtain banking services that traditional banks would not offer.

Meanwhile, CUNA on Friday joined the Massachusetts Credit Union League in citing the benefits of being a credit union.

“Ultimately, the interests of the members of the credit union need to be protected,” said CUNA President/CEO Bill Cheney. “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.

John Bissell, executive vice president of the $1.1 billion Greylock FCU of Berkshire, the state's third largest, said it had no interest in following HarborOne.

“We are confident our model is the right one” noting Greylock continues to serve successfully and profitably Berkshire County.

“But we cannot speak for them,” he added.

Blake did not return calls from Credit Union Times seeking comment. He is a former chairman of the state league.

Instant Insights /

Possible HarborOne Conversion Would Chart Unusual Course

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