Conversion to a Bank: Lower Cost Deposit Insurance and Access to Capital
Conversion to the bank charter is one choice. It sidesteps future NCUSIF assessments, which could be as large as 5% of deposits. NCUA tells credit unions to budget a hefty amount for future deposit insurance premiums, while the FDIC fee is only 5 to 9 basis points (pre-tax). 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 as the economy recovers. 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.