DUBLIN, Ohio – When looking at where former CUs that converted to thrifts are today, it's tough to find a more unique story than the former Ohio Central FCU. The CU converted to a mutual savings bank in 1998, becoming Ohio Central Savings. On Friday Sept. 21 it received the go-ahead from its members (yes, as a mutual they're still called members), to become a subsidiary of a mutual holding company of Third Federal Savings, which at $6 billion is the largest mutual savings bank in the country. Some 96% of voting members approved the deal. The former CU now enjoys some serious operational advantages says Robert Hughes, president/CEO of Ohio Central Savings. "We're still our own mutual. The only thing that changes is we get to ride their coattails for a number of things," said Hughes. Things such as Third Federal's auditing program. "They'll now take care of the auditing. Adding a $50 million institution to their $6 billion isn't tough for them," said Hughes. Ohio Central can also get in on Third Federal's ambitious advertising programs for print and other outlets, as well as using the holding company's creative talent for marketing campaigns. Financially, Ohio Central Savings will receive a capital infusion, which is really what this deal was all about. "We were running out of capital. The road most often traveled is you convert to stock and raise capital by becoming publicly held. We didn't want to do that," said Hughes. Third Federal has plenty of capital at about 12%. Another financial benefit, said Hughes, is the ability to sell off consumer loans, particularly auto loans, to the holding company. "Right now we have about $4 million in car loans that we've sold and taken off our books." "This is the best of both worlds. We still get to run our own little place. They have nothing to say about pricing. You look at Third Federal and despite their size, they're still a mutual," said Hughes. Third Federal utilizing banking subsidiaries under a holding company is a revolutionary concept that gives it the ability to diversify its vast mortgage portfolio with auto and other consumer loans from the subsidiary institutions. "Their plan is to be a big clearinghouse for mutual subsidiaries around the country." For years Third Federal has specialized in mortgages and Hughes said it can pass on that expertise to Ohio Central and buy up some of Ohio Central's mortgages. "We can pool mortgages and sell them to the holding company, without having to use Fannie or Freddie. They've never made an auto loan. They like us because we help them diversify with auto loans. Mortgage lending rules will have to change for CUs if they are to get deeper into mortgage lending, said Hughes. "There's no way to effectively keep making mortgage loans and balance the risk unless you're able to use wholesale funding to match long-term investments with long-term assets." He said Ohio Central can do this with FHLB advances. "I heard NCUA was coming around on that one." The very candid Hughes said he couldn't be happier about converting from a credit union. "After years and years of beating your head against the wall as a credit union, you realize you were doing things right, it's just easier to grow as a bank." "The day our conversion was approved the Supreme Court had just ruled against credit unions. At that point we had 200 groups and the largest one only had 10% of assets. Since we've converted we haven't lost a single one of our 200 groups." The institution has doubled in size, going from about $25 million to $50 million. "We're more profitable even with taxation," said Hughes. Hughes said perception may have helped the institution grow so quickly. "I think just the name. People don't feel like it's an exclusionary thing. They feel comfortable coming in and applying for car loans. I also think it helps that our door says FDIC-insured instead of NCUA. People don't have the same recognition with NCUA." Hughes said Ohio Central has steadfastly kept the credit union philosophy, which he believes is alive and well among mutuals. "If credit union people went to meetings of mutual thrifts, they'd swear they were in there with boards and managers of credit unions. They talk about their members and their community. It's a whole different world when you start talking about the stock owned banks," said Hughes. Hughes said the board is the same today as it was when it was a CU and that directors now receive modest compensation for attending meetings. He also noted that those directors will now have the same benefits as Third Federal employees. Ohio Central has 10,000 members. [email protected]