May 28, 2018
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Bangor Savings Bank reports record earnings in a ‘fragile financial ecosystem’

Whit Richardson | BDN
Whit Richardson | BDN
Jim Conlon, CEO of Bangor Savings Bank, with the 2013 award from J.D. Power and Associates for being the highest-scoring bank in New England when it comes to customer satisfaction.
By Whit Richardson, BDN Staff

BANGOR, Maine — Despite tough economic conditions over the past few years, Bangor Savings Bank on Monday reported record earnings and solid growth in its customer deposits and loan portfolio during its last fiscal year.

The bank, founded in 1852, earned a record net income of $18.9 million in its 2013 fiscal year, which ended March 31. That represents a 2.5 percent increase from its prior fiscal year and is the 12th consecutive year of earnings growth, according to its annual report.

The bank’s assets grew to $2.9 billion, a 12.1 percent increase over the prior year.

And its customers are sharing the wealth.

The bank reported that customer deposits grew by $136.6 million to $2.28 billion, a 6.4 percent increase from the year before.

Based on customer deposits, Bangor Savings Bank is the third-largest bank in the state, trailing only TD Bank and KeyBank, according to data from the Federal Deposit Insurance Corp. It is the largest Maine-based bank.

In March the company opened its 57th branch in the former Kennebec Journal building in Augusta and now employs 720 people in the state. Bangor Savings Bank President James Conlon said it would be a few years before the bank considers opening another branch “de novo,” meaning from scratch.

The bank’s commercial and small business loans grew by $88.9 million, or 10.6 percent, to $300 million, according to Conlon and its annual report.

Despite the upward growth, economic challenges remain. While some metrics are improving, such as home sales and car sales, Conlon called it a “fragile financial ecosystem.”

A major challenge continues to be that a third of the state’s population is on some sort of public assistance, he said.

“Until that gets corrected and stabilized, it’s going to be a long haul because there are only so many business opportunities with the sector of people that are left,” he said.

Another hurdle is the low-interest-rate environment, which means the bank’s net interest margin — the spread between the interest banks earn on customer loans and the interest they pay to depositors — continues to be squeezed.

“The net interest margin is killing banks today,” he said Monday in an interview at the Bangor Daily News. “That margin continues to shrink and shrink.”

As a result, the bank has worked to diversify its sources of noninterest income, Conlon said. Its noninterest income grew by 15.2 percent to $36.45 million, driven by double-digit growth in mortgage, merchant card and payroll services.

When asked if the bank is actively looking for acquisitions to drive growth in noninterest income, Conlon said “there’s nothing on the table,” but if the right opportunity came along the board would consider it.

However, the bank isn’t entertaining offers to be acquired. “We like it just the way we are,” he said.

According to its annual report, the bank and its foundation gave $1.3 million to nonprofits in sponsorships and grants in its past fiscal year. It also loaned more than $325 million in residential mortgages.

A recent highlight came in May when a national market research company ranked Bangor Savings Bank as the top-performing bank for customer satisfaction in New England, and one of the top banks in the country. The company, J.D. Power and Associates, collected the results from a national survey of retail banking customers.

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