Saving a Bank

This is a story with a happy ending.

The Savings Bank of Maine, a 175-year-old financial institution headquartered in Gardiner, Maine, with branches throughout the state, had a very difficult year in 2009. Like so many other banks large and small, the bank had ventured into commercial lending - particularly real estate lending - just as the recession hit, putting it in serious jeopardy of failure.

The bank's regulator, the Office of Thrift Supervision, entered Cease and Desist and Prompt Corrective Action Orders requiring the bank to sell itself or immediately raise new capital. There was no ready buyer for the bank, which was a mutual federal savings association, so finding new capital was the only available avenue. But, in this difficult economic environment, who would be willing to do the hard work of converting the bank from a mutual to a stock corporation and investing sufficient capital to meet the regulatory requirements?