Whether the $200 million, 20,000 member Monterey Credit Union converts to a California mutual bankcharter may depend on the procedures California's Department of Business Oversight has establishedstate chartered credit union conversions.

If the credit union opts not to convert to state bankingcharter, it would still have the option to convert to a federalbanking charter.

The California Department of Financial Institutions publishedthe most recent word on the topic in May 2011, when it promulgatedan opinion letter that said California chartered credit unions canconvert to a mutual bank charter through a purchase and assumptiontransaction.

“We agree with that reasoning. It is our opinion that aCalifornia state chartered credit union may convert to a federalmutual savings bank in the manner described in your letter,” wroteKenneth Sayre-Peterson, then acting general counsel for theagency.

However, Sayre-Peterson pointed out that the purchase andassumption approach was not the only possible avenue a statechartered credit union could take to a state bank charter.

“Please be advised that our agreement with your argumentregarding the conversion of California state-chartered creditunions to federal mutual savings banks as set forth in your lettershould not be seen as a statement that there is only one way toconvert a California state-chartered credit union to anotherfinancial institution charter,” Sayre-Peterson wrote. “There may beother avenues used to convert a credit union into another form offinancial institution. However, such other methods are not beforeus for determination at this time,” he concluded.

The California DBO did not answer questions about the process astate chartered credit union would have to follow to convert to astate chartered bank or how the 2011 opinion letter might influencethe process.

The DBO also refused to disclose discussions it has had withMonterey CU officials.

“I have determined that your request seeks copies of recordswhich are not subject to the disclosure requirements of theCalifornia Public Records Act,” Assistant General Counsel MichaelPatrick McQuinn wrote in a letter to CU Times. “[The codes]expressly provide that any record that is related to thisdepartment's application processes or to information received inconfidence is exempted from disclosure. Should any communicationsbetween DBO and MCU concerning a contemplated conversionapplication exist, such records would undoubtedly fall within oneor both of the identified exemptions.”