June 28, 2013 - When the business day begins on Monday morning, July 1, the $1.8 billion HarborOne Credit Union in Brockton, Mass., one of the oldest credit unions in the country, will open as HarborOne Bank.
James Blake, HarborOne president/CEO, said he has received the new charter documents from the Massachusetts Secretary of State. On Thursday, he said, he also received final approval to be insured by the FDIC.
“This (charter) change (from a credit union to a mutual co-operative bank) is to make sure we have the flexibility to be here 20 years from today,” Blake said.
“The financial services industry is changing dramatically, and we can’t sit on an island and pretend it doesn’t affect credit unions,” Blake said. “We need to have greater flexibility going forward and this provides us with that flexibility to continue to compete.”
By flexibility, Blake means the new bank will be able to provide more loans. He noted that over the last two years, HarborOne CU had to turn down well over $100 million in loan business over the last two years. What’s more, the credit union charter did not allow HarborOne to open a branch in the city of Boston, which was an issue for many of its members that work in the city.
“Credit unions are the only financial institutions in the country that have no access to capital. If Europe goes into a Great Recession and if China continues to slow down, and if our economy goes back into a deep recession, what happens to credit unions in terms of their ability to raise capital? So many credit unions have disappeared over the years. Perhaps access to secondary capital could have helped them,” Blake said.
“All of our competitors have access to capital, so as they grow more rapidly in the market, it allows them to compete on a basis that is different from where we are because we don’t have that flexibility. All of these issues combined caused us to feel that we were in a box in not having the ability to ensure the long-term sustainability of the organization,” he said. (Credit Union Times)