When the business day begins on Monday morning, July 1, the $1.8billion HarborOne Credit Union in Brockton, Mass., one of the oldestcredit unions in the country, will open as HarborOne Bank.

James Blake, HarborOne president/CEO, said he has received thenew charter documents from the Massachusetts Secretary of State. OnThursday, he said, he also received final approval to be insured by the FDIC.

“This (charter) change (from a credit union to a mutualco-operative bank) is to make sure we have the flexibility to behere 20 years from today,” Blake said.

“The financial services industry is changing dramatically, andwe can't sit on an island and pretend it doesn't affect creditunions,” Blake said. “We need to have greater flexibility goingforward and this provides us with that flexibility to continue tocompete.”

By flexibility, Blake means the new bank will be able to providemore loans. He noted that over the last two years, HarborOne CU hadto turn down well over $100 million in loan business over the lasttwo years. What's more, the credit union charter did not allowHarborOne to open a branch in the city of Boston, which was anissue for many of its members that work in the city.

“Credit unions are the only financial institutions in thecountry that have no access to capital. If Europe goes into a GreatRecession and if China continues to slow down, and if our economygoes back into a deep recession, what happens to credit unions interms of their ability to raise capital? So many credit unions havedisappeared over the years. Perhaps access to secondary capitalcould have helped them,” Blake said.

“All of our competitors have access to capital, so as they growmore rapidly in the market, it allows them to compete on a basisthat is different from where we are because we don't have thatflexibility. All of these issues combined caused us to feel that wewere in a box in not having the ability to ensure the long-termsustainability of the organization,” he said.

Soon after HarborOne announced its plan to convert to a bank in February2012, it sparked an industry-wide debate and criticism from somecredit union leaders. Nearly a year later in March 2013,

HarborOne members approved converting the 96-year-old credit,the largest state-chartered credit union in the state. HarborOnealso received regulatory approvals from NCUA and the MassachusettsDivision of Banking in April.

Longtime credit union attorney, Steven R. Bisker of Alexandria,Va., said in a Credit Union Times article in March thatmembers who voted for the conversion were not voting for their ownbest interest.

He argued that NCUA data has consistently shown that when acredit union converts to a bank, the rates charged for loans andthe rates paid to savings are not as good as when they wereoperating as a credit union.

“Why would I want to make my credit union a bank?” Biskerquestioned. “The reason why I'm doing business with my credit unionis because it is a credit union. If they (HarborOne Members thoughttheir credit union should be a bank, then they should not have beendoing business with a credit union in the first place.”

Nevertheless, Blake said he doesn't think he received a lot ofcriticism from the credit union industry about the conversion.

“Frankly, I got a lot of calls from people who were supportive,”he said. “They understand it. People don't necessarily want to talkabout it publicly, but it concerns them.”

From Blake's point of view, the co-operative bank charter is themodernization of the credit union charter.

“The membership of the co-operative bank owns the bank in thesame way that members of a credit union does, and the voting rightsin the co-operative bank are identical in a credit union,” he said.“So the only difference both in the ownership and in the voting ofthe credit union and the co-operative bank is that the bank isgoing to pay tax on its income. Well, for all of the capabilitieswe get, that is a price worth paying.”

Blake said the old credit union signs at its 14 branches will bechanged over the weekend.