KV Federal Conversion Moving Forward; Members Are Seeking More Information

AUGUSTA, Maine — KV Federal Credit Union is actively moving forward with changing its charter to a mutual bank, according to an executive with the credit union’s proposed merger partner.The $51 million KV Federal Credit Union and the Kennebec Savings Bank, a state chartered thrift, announced in September 2008 that they would merge after they both converted to federal thrift charters. Since then, however, a mixture of economic downturns and regulatory tightening have made charter changes steadily less attractive.Last month, the $190 million Beehive Credit Union, Salt Lake City, announced that it was withdrawing its charter change application.Kennebec Savings Bank CEO Mark Johnston said both the bank and credit union had been working through their “regulatory quagmire” and that the credit union had decided to get NCUA approval of its disclosure documents before the CU sent them to members. That, he implied, had slowed the process down so that no member vote at KV was expected before June of this year.Credit unions seeking to convert usually run their conversion disclosure statements by the NCUA ahead of time to try to minimize the possibility of later problems.But Johnston did not mention that Kennebec had only filed its application to change to a federal bank charter on Jan. 21, according to the Office of Thrift Supervision and that the agency has set April 21 as a target date for making a decision. The dates are important because the two institutions will not be able to merge until they are both federally chartered.The OTS has no record yet of an application from KV.Meanwhile, at least some KV members have been signaling that they are opposed to the conversion and want more information about it.The members reported that the credit union has accepted their petition seeking to see the minutes from the KV board meeting where the board members discussed the merger proposition.Lucille Cloutier, a longtime member of the credit union whose husband had been one of the institution’s founders, said the group was particularly interested in why the credit union chose to merge and why it chose to convert and merge with a mutual bank.“I want to say again that is not against KSB [Kennebec Savings Bank],” said Cloutier. “I am a depositor in KSB and its a fine institution. But people want to have a credit union, not a bank.”–[email protected]