Awane Credit Union, Peterborough, N.H., is on the verge of becoming the second credit union ever to convert to a mutual savings bank.

The National Credit Union Administration on Dec. 14 approved the $10 million-asset institution's proposal to switch charters to a federal savings bank.

Awane has already received approval to convert from the Office of Thrift Supervision. It is awaiting the nod from the Federal Deposit Insurance Corp. and the New Hampshire Department of Banking.

The FDIC probably will grant approval this month and the state agency will follow the insurer's lead, said Bob Freedman, senior partner for the Washington firm Silver, Freedman & Taff, which represents Awane.

The conversion is expected to be completed this spring.

Awane applied for a thrift charter in December 1994 after friction with the NCUA. Unlike most credit unions that focus on consumer loans, Awane is heavily involved in real-estate lending.

"It blew their minds," said credit union president Ronald Roucoulet.

When Awane applied, the NCUA was taking a hard line against conversions. The agency feared such transactions might be motivated solely for financial gain by insiders and feared more credit unions wanted to defect.

But once the agency saw that few institutions were interested in leaving the fold, it relaxed, sources said. It approved the first conversion application, by Lusitania Federal Credit Union, earlier last year.

Mr. Freedman, who said his firm has been talking to other credit unions about converting, said the NCUA needs to fine-tune the approval process.

"It was long and cumbersome, but it's a new process for the NCUA," Mr. Freedman said. "While it wasn't a problem for the OTS, the NCUA needs to work out some kind of process over the long term. Next time I hope and expect it will go faster."

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