CU/bank plan merger, league to discuss other options

AUGUSTA, Maine (9/10/08)--KV FCU and Kennebec Savings Bank, both based in Augusta, Maine, Monday announced they are discussing a proposal to merge the credit union into the bank. The Maine Credit Union League is taking action to discuss other viable options first.

"The Maine Credit Union League and our member credit unions are committed to the credit union charter and remain resolute in our belief that the credit union charter provides by far the best option for credit union members," John Murphy, president of the league, told News Now Tuesday.

The league board Tuesday "unanimously voted to establish communications with KV FCU officials to consider other viable options available to the credit union and its membership," he said. "A meeting for this purpose has been scheduled for later this week, and it will determine the future direction we will take in this process," Murphy explained.

The merger proposal was announced by Beverly W. Beaucage, president/CEO of KV FCU, and Mark L. Johnston, president/CEO of the bank.

KV FCU's board is scheduled to vote Oct. 14 on a proposal to convert to a federal mutual savings bank. Immediately following the conversion, the credit union would merge into the bank, said the credit union's website.

Kennebec Savings Bank is currently a state-chartered mutual savings bank; however, at the time of a merger it will have converted to a federal savings bank charter.

The announcement begins a process of scrutiny, legal postings and comment periods, with votes by the directors and members of the credit union, the trustees and corporators of the bank, and regulators.

The credit union noted that the conversion and merger would significantly expand its capacity to meet the current and future needs of members.

"We've continued to grow steadily since 1962 while maintaining a strong capital base and steadfast focus on member service," said Beaucage in the press release.

"Our board determined that the long-term goal for KV was to build and maintain a strong presence in the Kennebec Valley offering our members a wide variety of financial services," she said. To accomplish this, "it makes sense to consider combining our efforts with a local institution that has similar values."

KV Board Chair Richard Tardiff said, "A union like this could allow us to capitalize on each others' strengths to make the best financial institution going forward."

Kennebec Savings Bank was chartered in 1870, making it one of the oldest mutual savings banks in the state. KV FCU was chartered in 1962 as St. Augustine's FCU. Its county charter allows for membership in two counties--Kennebec and Somerset. It has more than $51 million in assets.

Both institutions are familiar with the merger process, they said. KV acquired Messalonskee Regional FCU in 1992 and Kennebec Health Systems FCU in 1993. The bank combined with Waterville Savings and Loan in 1995.

"With all the changes happening in the financial services industry, this union of two longstanding and respected local financial institutions could provide the greatest opportunity for improved services and choice for residents in the Greater Kennebec Valley," said Johnston.

If the credit union board approves the conversion/merger proposal, the proposal will be submitted to KV FCU's membership for a vote following a notice period of at least 90 days, the credit union said.

courtesy of cuna.org