Two Wisconsin institutions are shedding their current charters for better-fitting ones.

Citizens Community Federal Credit Union, Eau Claire, announced Oct. 29 that it is seeking a state mutual savings bank charter. Meanwhile, Milwaukee-based Employes Mutual Savings Building and Loan Association plans to apply for a state credit union charter by yearend.

The two institutions' attempts to find charters more suited to their strategies are the latest in a trickle of conversion transactions that began two years ago.

Citizens Community, which can accept deposits from anyone in two counties, acts much like a bank but now operates under the tighter lending limits of a credit union charter. Employes Mutual already acts like a credit union in that it serves only current and former workers at Wisconsin Electric Power Co. and Wisconsin Energy.

"We feel the mutual savings bank charter gives us a better position for the future," said Tom Maday, executive vice president of $76 million-asset Citizens Community. Until May 1, he was Wisconsin's top credit union regulator. "It gives us the opportunity to have a greater mix of products for a greater number of people," he added.

Employes Mutual, with $90 million of assets, is seeking a credit union charter because insurance costs are cheaper than for a thrift or bank, said chief executive Raymond Lepper.

The thrift also has some expansion plans.

Assuming its conversion goes through next year, Employes Mutual would acquire $8.5 million-asset Energy Family Credit Union, which already caters to the utility companies' workers.

Chartered in 1914, it is the only Wisconsin thrift without deposit insurance. It now wants insurance because it is diversifying from its traditional savings and mortgage products, Mr. Lepper said.

Eric Luse, a Washington lawyer who is handling the conversion for Citizens Community, said expansion also is its goal.

"A couple possibilities for expansion came to their attention, and they weren't able to take advantage of them" because credit unions can't merge with banks or thrifts, said Mr. Luse, a partner in the Luse, Lehman, Gorman, Pomerank & Schick firm.

The conversions are the latest in a series that started in 1994 when, in a then-controversial move, Lusitania Federal Credit Union, Newark, N.J., applied for a thrift charter.

Since then, only Awane Credit Union, Peterborough, N.H., has switched to a thrift charter.

Both Lusitania and Awane cited grief from regulators over their asset mix as motivating the charter switch. Citizens Community hasn't heard complaints yet, Mr. Maday said, but if its mortgage portfolio keeps growing, it might.

Mortgages comprise $28.8 million of Citizens Community's $64 million loan portfolio. The National Credit Union Administration, which regulates federally chartered credit unions and administers the industry's insurance fund, has disapproved in the past of credit unions' holding large mortgage concentrations.

Callahan & Associates, a Washington consulting firm, said only 32% of the average credit union's assets are mortgages.

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