Bangor Savings Bank will open its third new Portland branch on Monday, the latest step in an aggressive foray into the state’s largest business market.
The bank opened its first branch in Portland on Fore Street in 2005, complementing a brokerage firm it had acquired in the city earlier. It opened three more branches in the area in 2007, in Portland, South Portland and Scarborough.
Last May, Bangor Savings announced it would open four more area branches, marking a $4 million investment in the Portland market. Branches on Middle Street and Forest Avenue in Portland opened in July. The Allen Avenue branch opens Monday. And a new branch on Route 1 in Falmouth will open in early March.
The bank — like a passel of other community banks — sees a real opportunity in Maine’s largest market. Not only is it the commercial center of the state, but the banking landscape is also dominated by large, national (international, even) banks. Traditionally Portland-based banks have been acquired, and the remaining players are companies like TD Bank, People’s United Bank, Key Bank, and Bank of America.
Community banks like Bangor Savings, Norway Savings, Gorham Savings and others have expanded into the market over the past decade, seeking to provide a “local,” more intimate type of experience as an alternative to customers who may not want to bank with a large corporation.
“Portland has a lot of banks,” said Bangor Savings President and CEO Jim Conlon.
“Frankly, there’s also more opportunities.”
In fact, said Conlon, because there’s no perceived Portland hometown bank, Bangor Savings wants to fill that role. The “Bangor” part of the name conveys the authenticity of a Maine-based bank, said Conlon, and that’s particularly attractive to business customers that seek to bank with a local company.
“The business customer finds it very meaningful to say ‘I want to deal with a local business, if I have a choice,’” said Conlon.
Conlon’s bank has seen total customer funds in the Portland market grow from $25.4 million in 2005 to $196.2 million. The bank has added 7,500 new personal customers, and 1,500 new business customers. Bankwide, Bangor Savings has $2.4 billion in assets, 54 branches and 685 employees. That includes 350 employees in Bangor, and roughly 100 in the Portland market.
According to the Federal Deposit Investment Corp.’s deposit data, Maine banks had $27.6 billion of deposits as of June 30. Ranked by size of deposits, TD Bank came in first in the statewide market, followed by KeyBank, Bank of America, and Bangor Savings — which was just barely below Bank of America.
In the city of Portland, overall deposits totaled $9 billion. Bangor ranked below the three big banks, and below Camden National, as well, in terms of deposits in the market, according to the FDIC data.
Gerard Cassidy, a banking analyst with RBC Capital Markets in Portland, said he thought the market was “terribly overbanked.” Case in point: The new Bangor Savings Bank in Falmouth is across the street from a Gorham Savings Bank. Within a quarter mile there’s a TD Bank North branch, a People’s United branch and a credit union.
But, said Cassidy, the smaller, privately held community banks measure success, in part, by growth of branches. And they can operate under a different business model, he said.
“As a non-publicly traded bank, your focus on profitability is not as demanding as for a publicly traded company,” said Cassidy. “You stay out of the red and have nominal profitability and the regulators leave you alone. You can be a service to the community; you can help the community grow in a low-return kind of business model.”
According to Bangor Savings’ latest annual report, the bank had profits of $16.8 million in fiscal year 2010, up slightly from 2009.
Conlon said Bangor Savings has the size and wherewithal to offer technology and services expected of a larger bank, but is still a community bank with a Maine focus. The bank gives $1 million annually to causes in the state, Conlon said.
“To us, Maine is everything,” he said.
The 158-year-old bank first made a major expansion in 1998, when it acquired 28 former Fleet Bank branches, adding to its own 15 branches. That firmly pushed Bangor Savings into rural Maine.
In 2003, the bank opened branches in Augusta, Waterville and Hampden, followed by a business office in Lewiston in 2004. In 2007, in addition to opening the Portland branches, the bank acquired a small chain, Pepperell Bank & Trust, giving Bangor Savings a presence in York County. In 2009, there were Midcoast expansions of branches in Belfast and Rockland, and 2010 also saw a Lewiston branch opening.
Also in recent years, said Yellow Light Breen, the bank’s chief strategic officer, the bank replaced branches on Broadway in Bangor and in Old Town, and renovated branches in Orono, Brewer and on Hammond Street.
The expansion south followed the population, and was driven by metrics such as total household incomes, employment base, retail sales, and other factors, said Conlon.
That’s the case for all the community banks, which were traditionally focused on their geographic segments, said Cassidy.
“These banks are not Portland-based banks. Now they have penetrated the markets they’ve been long-established in, whether it’s Bangor or Gorham or Norway, and they choose to branch out where the population is, where the growth potential is,” said Cassidy. “Between Madawaska and Portland, Portland wins hands down.”
In the next 12 to 24 months, Bangor Savings will work to support the expansion it has undergone, said Breen. There are some logical next steps, said Conlon. The bank has a branch in Lewiston, and one in Auburn will be likely at some point, he said. Likewise, the Augusta branch is tiny, and an expansion would make sense in that market, he said.
“You’ll continue to see us be acquisitive and opportunistic – for the right kinds of things,” said Conlon.