A small bank in southern Maine has found a way to give something back to the community - with a percentage of its annual earnings.

Kennebunk Savings Bank, a $200 million-asset mutual thrift, is donating 10% of 1994 net income to local charities and preservation organizations in York County.

With net income of $1.2 million in 1994, that means total contributions of more than $120,000, significant for the York County market, according to president and chief executive Joel W. Stevens.

Contributions have already been made of $6,000 for scholarships for area schools, $5,500 for the christening ceremonies in July for the U.S.S. Maine, and $2,500 to restore the town cannon in Kennebunk.

Mr. Stevens is also recommending for board approval two gifts of $25,000 each to two local fund-raising campaigns in Ogunquit and Kennebunk.

The donations are part of a strategic plan developed in 1993, when the bank was recovering from three years of losses totaling $1.6 million and nonperforming assets that were at 5.2% in early 1993. As part of the plan, officials decided each year to contribute 10% of the thrift's previous year's profits to local organizations as long as Kennebunk's Tier 1 leverage capital ratio did not dip below 7%.

Currently, the bank's ratio is 7.7%.

The donations allow thrift officials to "carry out what we perceive our vision of what a community-based institution should be," Mr. Stevens said.

Since Kennebunk has no stockholders, officials felt they should "dividend our earnings back to our figurative owners, which is the community we serve," he said.

He noted that most stock institutions give 30% to 40% of their income to stockholders in dividends, so "it doesn't seem a terrible leap to dividend 10% to your community."

"It's an appropriate thing for them to do," said Lawrence Connell, president and chief executive of South Portland-based Atlantic Bancorp, one of Kennebunk's competitors. "I would applaud their actions as a mutual."

This is the first year that major contributions are possible, however. The bank earned only minimal profits of $145,000 in 1993, so the 1994 budget for donations was only about $15,000.

"It is unusual," said Gerard Cassidy, bank analyst at Tucker Anthony's Hancock Institutional Equity Services. "The beauty of being a nonpublic entity is that you can be more responsive to your community needs than the publics. The publics have a more delicate balance between their shareholders and the communities."

The program helps Kennebunk compete in what Mr. Stevens calls a "pretty hot market," with such large competitors as Keycorp of Cleveland and Providence, R.I.-based Fleet Financial Group, as well as the state's largest independent bank, People's Heritage Financial Group, and several local institutions.

"We're not hiding our light under a bushel by any means," Mr. Stevens said. "We want to get the message to the community that if you do business with Kennebunk Savings Bank, you're supporting your community. And that really seems to be hitting a responsive chord."

In fact, the thrift is trying to draw the community into the program. Kennebunk has asked its customers to vote on which local charities they want the thrift to donate 20% of the donation budget, or $24,000 this year.

"We're overwhelmed by the response we're getting from the community," he said. "A lot of customers and people in the community are very impressed with what we're doing."

And that is boosting the thrift's customer base. Several new depositors have already told bank officials that they chose Kennebunk because of the donation program. One customer even brought in deposits of $300,000 after hearing of the bank's efforts.

Mr. Stevens expects more funds to flow to the community since the thrift is on track for a strong year. Kennebunk Savings reported net income of $443,000 for the first quarter alone, a typically slow period because of the dearth of tourists.

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