Bank in dropped CU merger withdraws fed app

AUGUSTA, Maine (11/10/09)--Kennebec Savings Bank, which was unsuccessful in a merger attempt earlier this year with Augusta-Maine based Kennebec Valley FCU (KV FCU), has dropped its bid for a federal charter, according to local news reports.

The state-chartered bank, also based in Augusta, said it withdrew its application with the Office of Thrift Supervision (OTS), according to the office's website (Kennebec Journal Nov. 9).

One reason the bank had applied for a federal charter. KV FCU was trying to get a charter as a federal savings bank and a merger would have been easier if both institutions had the same type of charter.

However, the bank's CEO noted that the reason it withdrew its federal charter application was not because of the merger's failure but because of the uncertainty involving OTS's future in the government overhaul of the U.S. banking system.

The merger "was the reason why we didn't withdraw it [the application] sooner," CEO Mark Johnston told the Kennebec Journal and Morning Sentinel, adding the bank had to wait until the credit union's membership vote occurred.

The credit union members' vote concluded on Sept. 21 after a public debate in the local newspapers about the benefits and drawbacks of merging the credit union into the bank (News Now Oct. 2).

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