(Editor’s note: CU Financial has advised numerous credit unions which later accessed hundreds of millions of dollars in regulatory capital. It is the pioneering advisory firm seeking solutions for credit unions should they become directly eligible to access capital from members, the community, or from investors.)
Alternative Capital
Conversion to a Bank: Lower Cost Deposit Insurance and Access to Capital
Conversion to the bank charter is one choice. It sidesteps future NCUSIF assessment. Conversion preserves member capital and independence. Members will gain other benefits, which remain off limits to credit unions, from the larger FDIC insurance fund. The expanded powers attendant to the banking charter will also allow institutions to better serve their members and the community. Most importantly, as we have long advocated, the bank charter carries with it access to outside capital markets. Today, retained earnings alone won't sustain even the most conservative business plans or support the current level of assets and the declared missions of many credit unions.