Members will cast their vote Monday on whether to approve orreject converting the $1.8 billion HarborOne Credit Union in Brockton, Mass., to a mutualco-operative bank charter.

Operating as a credit union since 1917, HarborOne has grown tobecome the largest state-charted credit union in New England.Nevertheless, the longstanding credit union has said its reasons toconvert were the flexibility to expand HarborOne's markets andcustomer base, increase its lending authority, including smallbusiness lending, and gain access to additional capital.

“The member meeting is at 5 p.m. at the Shaw's Center inBrockton,” said James Rice, HarborOne's vice president ofmarketing. “We do not know how long the meeting will last asmembers will have the opportunity to express their opinion on thecharter change, and we cannot predict how many will choose to doso.”

HarborOne's 139,078 members were mailed ballots on Feb.19. Eligible members may cast their ballot by postage-paidreturn mail, place the confidential ballot envelope in a lockbox atone of the CU's 14 branches, or vote in person at the meeting.

“Colbent Corporation of Braintree, Mass., is the independentinspector of (the vote), and they are required to have the (vote)tally completed within 10 (calendar) days of the meeting,” Ricesaid, meaning the final vote count will be completed by March 21 orearlier.

HarborOne's President/CEO James Blake has told Boston media thatbecause HarborOne's field of membership is limited to fourcounties, the credit union has been forced to turn down $70 millionin mortgages and other consumer loans from potential members wholive outside its market.

After the conversion plan was announced Feb. 16, 2012 andapproved by HarborOne's board a month later, it sparked anindustry-wide debate and criticism from some credit unionleaders.

Steve Bisker, a former NCUA assistant general counsel andattorney in Washington, D.C., disputed HarborOne's reasons formulling the move, saying HarborOne was at only 20% of its memberbusiness lending cap, based on his examination of HarborOne'spreliminary online notice filed with regulators.

“The stated 'consequences of conversion' are inaccurate ormisleading at best,” Bisker told Credit Union Times inMarch 2012, pointing to what he said were inconsistencies onHarborOne's stated need for more capital to lend and its prospectsfor increased membership under a mutual charter.

But industry analysts argued credit union frustration over NCUAassessments coupled with the inability to raise capital and expandbusiness lending to compete with banks apparently helped spurHarborOne CU's proposal to convert to a bank.

“Margins have been pretty thin for awhile now and credit unionssee no way to build capital and they don't like paying thoseassessments while seeing so much uncertainty ahead,” Alan Theriaultof Portland, Maine, a conversion specialist, told Credit UnionTimes in February. He also said that at least onebillion-dollar CU was ready to make the switch and so were a handful of $200-$400 millionCUs.

Richard S. Garabedian, a partner at the Luse Gorman Pomerenk& Schick law firm in Washington, D.C., said, “I'd say thecorporate crisis and the sense of many credit unions feeling boxedin” by the onslaught of new regulations and tighter NCUA examrestrictions triggers moves like HarborOne.

Except for the $1.4 billion Technology CU of San Jose, Calif.and a few smaller CUs with conversion plans, there has been a lullin activity, but the trend may be about to change, Garabedian saidin a Credit Union Times article last February. N

Technology CU members overwhelminglyrejected a bid to convert their institution to a mutual bank inSeptember. Of the total 18,000 votes cast, 14,000 voted no tothe conversion and 4,000 voted in favor of it.

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