A tiny New Hampshire credit union is applying today for a mutual savings bank charter to escape regulatory disapproval of its emphasis on home loans.
Awane Credit Union has about $10 million of assets and is based in Peterborough. It wants to convert because the National Credit Union Administration frowns upon the high concentration of mortgages in its loan portfolio, said James Fleischer, a partner in the Washington law firm Silver, Freedman & Taff. The firm is handling the credit union's conversion application.
About 85% of the credit union's assets are secured by residential and some
commercial real estate, Mr. Fleischer said. Awane has an 18% capital-to-assets ratio.
The credit union has been operating under a regulatory letter ordering it to whittle down its mortgage concentration, Mr. Fleischer said.
Awane approached the law firm about converting nine months ago, Mr. Fleischer said. The firm has discussed the transaction with officials at the Federal Deposit Insurance Corp. and the Office of Thrift Supervision.
Both agencies are "supportive and receptive to the application," according to Mr. Fleischer.
A draft application for insurance was filed with the FDIC several months ago, Mr. Fleischer said.
The law firm requested a meeting with NCUA to discuss the application, but the agency declined, Mr. Fleischer said.
Awane is the second credit union applying for a mutual savings bank charter to say that it wanted to escape regulatory pressure on its real estate portfolio. The first, Lusitania Federal Credit Union, Newark, N.J., filed in August.
Bill Fulwider, spokesman for the OTS, said the thrift regulator probably will make a decision about Lusitania's application in January.
The issue of credit unions leaving the fold is a sore point with the NCUA.
It has blasted lawyers who have discussed conversion with credit unions, excoriated the OTS for approving regulations that would ease the conversion process, and placed under regulatory scrutiny two institutions that were eyeing conversion.
