After a long contest that heated up in its final days, the members of the $54 million KV Federal Credit Union have voted not to change their charter and merge with a local community bank.
The Augusta, Maine-based credit union's board of directors voted on Oct. 14, 2008 to pursue a merger with Kennebec Savings Bank, a then state-chartered mutual bank that converted to a federal mutual bank charter to permit the merger with KV. Both institutions are financially sound and well-regarded in the community. Some members of the credit union early on expressed bewilderment about why the credit union would merge with the bank.
KV CEO Beverly Beaucage further fueled the controversy when she said that KV had sought merger partners among other credit unions but had no been able to find a match with the same roots or focus on the community that KV had. Three of the four other credit unions in the area who would have seemed to have been KV's natural merger partners denied ever having been contacted about the possibility of a merger.
The credit union and bank faced a longer then customary charter period to debate the decision in part because the bank had to move its charter to that of a federal mutual savings bank before the credit union converted its charter. As a result, months went by between when the credit union and bank announced they were pursuing a merger and when members actually started voting on the issue. For much of that time, the issue seemed to have moved to the back burner, but members reported significantly more interest once ballots began to arrive and voting began.
In the four weeks of balloting, members both for and against the merger got active with signs, letters to the editor of their local papers and postings to area Web sites that focused on events and news in the Augusta area.
Voting closed on Sept. 21, and the credit union announced in a Sept. 30 letter to members that they had rejected the merger plan and voted to remain a credit union.
"The board believed that a merger with Kennebec Savings Bank would be in the best interests of the members and would be the best course for the credit union over the long term," wrote Richard Tardiff, chairman of the board. "At the same time, the board believed that the proposal would not be in the best interests of the members unless there was broad consensus in support of the board's view-even if a majority of members voted for the merger."
The credit union declined to indicate how many members voted or how many voted for either side.
Beaucage told the local media that the credit union only wanted "direction from the members" about whether to convert its charter to that of a mutual bank. NCUA regulations require a credit union to report the outcomes of a charter change vote but do not appear to require that a CU report an actual tally.
Tardiff revealed in the letter to members that Beaucage would step down as CEO in March 2010. Beaucage denied to local media that the decision had anything to do with the outcome of the conversion contest, but a number of credit union CEO's have resigned after their members rejected charter change bids. Had KV members voted in the affirmative, Beaucage would have assumed an executive position at the bank after the merger.
If KV's goal in not revealing the vote count was to tamp down controversy about the balloting and help the credit union move on, it may have fallen short as some members have reacted with strong emotions on local media Web sites.
"The reason Bev Beaucage refuses to give the vote count is that she and her board of directors got themselves ROYALY TOASTED!" crowed one member who signed onto a site maintained by The Kennebec Journal as BoogieWhomp.
Lucille Cloutier, the retired secretary and long time KV member who had organized other members into KV Members Matter to oppose the conversion, said the experience had been "extremely educational" and that she was glad it was over.
"We have pretty much disbanded now," she said of the organization she had founded and helped lead, "as of when the voting was over, of course. But now we also know each other, and we really didn't before, so I guess the group will still be around in some sense."
Cloutier said part of her really wanted to know the final voting results, but she could also see the virtue of focusing on just the results and having remained a credit union.
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