The Credit Union Times is reporting that the $209 million Monterey Credit Union, which has a Hollister branch at 1760 Airline Hwy., plans to change its charter to a mutual savings bank. The conversion must gain approval from the credit  union’s 19,543 members as well as state and federal regulators.

“We believe that regulations with respect to the amount of commercial (lending) we could make as a credit union are capped (at 10% of total loans), and we don’t feel we could cost effectively operate within that regulatory scheme,” Chairman David C. Laredo said in an interview with CU Times on Monday. “We believe that to embark upon a business lending plan, we could at best break even.”

The idea to convert to a mutual savings bank originated from the board’s planning committee about two years ago.

“We are a community of small businesses. There are a lot of professionals. There are a lot of family run businesses,” Laredo explained to the Times. “We serve many of these businessmen through their personal accounts, but we cannot provide them with a full range of business services they want or need. So what we are finding as the financial industry becomes more competitive, is that these individuals who are already banking with us are getting pressure from their business lenders to move their personal banking. It’s a question of survival.”

The Central California cooperative reported $116,864,462 in total loans as of March 31, but none of them were classified as business loans, according to financial reports posted on the American Share Insurance website. Monterey CU is not federally insured.

Chartered in 1968 as Monterey Peninsula Navy FCU, the credit union changed its name to Monterey FCU in 1974 after a merger. It merged again in 1976 and 1981 with other credit unions. In 1999, the credit union switched to a state charter because the NCUA would not allow any overlap of its field of membership with another federally chartered credit union, according to Laredo. Employing more than 70 people and operating seven branches, Monterey CU serves Monterey, Santa Cruz, San Benito, San Luis Obispo and Santa Clara counties.

If the charter conversion is approved by members and regulators, the board is expected to tentatively change the institution’s name to Community Savings Bank of Monterey, Laredo said.