Mutual thrift defections from the Office of the Comptroller of the Currency should decline now that once-nervous bankers have gotten a chance to get familiar with the regulator.
Several mutuals switched to state charters because of the July 2011 dissolution of the Office of Thrift Supervision. Mutuals that chose to stick with the OCC seem to have fewer concerns now, says Susan Ralston, president and chief executive of Bank @LANTEC, a $102 million-asset mutual thrift in Virginia Beach.
"There was some fear that they wouldn't understand us," Ralston says. "When the OCC came into my bank, they said we were welcome to stay a mutual for as long as we wanted. ... I hear from most of my peers that things are going pretty well."
When the Dodd-Frank Act abolished the OTS, the prevalent concern was that the OCC would struggle to understand the idiosyncrasies of mutual thrifts, including dividend waivers and limitations to raising capital.
Defections are likely to come to a halt, says Richard Schaberg, a lawyer at Hogan Lovells. "People by now have gone through a full examination cycle and worked out the kinks," he says.
Bank @LANTEC, a former credit union, had considered a state charter, largely because of potential cost savings. The thrift decided against switching, expressing comfort with its federal charter. The OCC "integrated some of our old examiners into the" exam process, Ralston says.
When the OTS was abolished, more than 670 OTS employees were moved to the surviving agency, ensuring continuity, says Donna Deale, the OCC's deputy comptroller for thrift supervision.
"It's easy to assume we didn't adequately understand mutuals," Deale says. "A lot of staff came over that had experience with mutual institutions."
The appointment of Thomas Curry as comptroller of the currency, also helped ease the nerves of thrift CEOs, says John Bowman, former acting director of the OTS. Curry "understands and appreciates mutuals," says Bowman, who is now a lawyer at Venable.
Most bankers expressed satisfaction with the OCC at a June 17 meeting of an advisory committee formed by the agency to discuss topics related to mutuals, says Mike Nolan, president and chief executive at Fifth District Savings Bank, a $371 million-asset mutual in New Orleans.
"Even institutions that were complaining before are now saying that they don't have any issues about the OCC being uncaring," Nolan says. "We think [the OCC is] taking it seriously the importance of being a mutual."
Still, some mutuals are holding back on making a final judgment. Joe Smith, senior vice president of marketing at Dollar Bank in Pittsburgh, the second-biggest mutual with $6.7 billion in assets, says it is too early to make a full assessment of the OCC.
Some mutuals continue to criticize the OCC. One complaint is that the OCC neglects laws such as the Bank Holding Company Act or the Change in Control Act, allowing activist investors to launch costly attacks, says Doug Faucette, a lawyer at Locke Lord.
"We ought to have banks that are able to control their destiny," Faucette says.
The OCC has gotten a black eye from some of its other work since the financial crisis, such as its oversight of the robo-signing mortgage settlement. But no mutual bankers have raised that settlement as a concern because mutuals did not have as many foreclosures as other institutions, Deale says.
The mixed reviews also provide evidence that the OCC is a large agency that spreads out across many areas, Schaberg says. "Any agency is stronger at delivering some services than others," he says.