MONTEREY, Calif. (8/6/14)--With the approval of its membership, a California credit union has taken the first step in converting to a commercial savings bank.
The members of Monterey (Calif.) CU, with $209 million in assets, voted in favor of amending the credit union's charter to become a mutual savings bank (Monterey County Weekly Aug. 4).
The credit union will next move toward becoming a commercial bank, where only shareholders have voting rights and board directors are paid for their service. This is different from the credit union structure of "one member, one vote" and board members who volunteer their time.
According to CEO J. Stewart Fuller, the change would give the financial institution the ability to expand business services and increase access to capital (Monterey Herald July 24).
Member deposits will continue to be privately insured by American Share Insurance. Once the charter change is complete, the Federal Deposit Insurance Corp. will insure deposits.
The Credit Union National Association has adopted policy that it supports the right of member/owners to exercise democratic control of their credit unions, and that the credit union charter currently provides the best vehicle for serving the financial needs of consumers. The policy also notes, among other things, that CUNA encourages those credit unions considering conversions to make their decisions based solely on the best interests of their members.