BANGOR, Maine — An improving economy and continuing southern expansion helped Bangor Savings Bank rack up record profits for the fiscal year it ended in March.
The bank took in about $25 million in net income for the year, an 8.4 increase over the previous year. CEO Bob Montgomery-Rice said in an interview Monday that the bank’s mortgage portfolio and payroll servicing business have fueled much of that growth.
But a challenge looms above the mortgage sector’s continued growth as Maine faces a dearth of houses at just the right price and quality to bring more first-time home buyers into the fold. Maine real estate agents noted that trend in May, attributing the second monthly drop in home sales to a lack of inventory.
“We approve a fair amount of people who can’t find something in their price segment,” Montgomery-Rice said.
At one point this spring, Montgomery-Rice said the bank had six borrowers pre-approved for every borrower that closed on a home. He attributed that to a lack of homes in the mid-$200,000 range in the Bangor area and the mid-$300,000 range in the Portland area, but also to buyers who are willing to keep renting until they find the right place.
That shortage could stand in the way of short-term growth, but Montgomery-Rice said the bank expects mortgage lending and servicing will continue to fuel its expansion on Bangor’s riverfront, in a new complex it will spend tens of millions to build during the next 10-15 years.
The bank issued about $371 million in home loans last year.
Bangor Savings also saw continued growth from its expansion into southern Maine, with Portland branches posting double-digit percentage growth in customer accounts, Montgomery-Rice said. Overall, Bangor Savings added about 31,000 deposit accounts in Maine, growing to 192,000 customers.
Those customer accounts showed broader signs of economic health, as the average account balance continued to rise through the addition of new customers.
He said the bank has focused many of its customer acquisition efforts on younger adults, with about 70 percent of its new account-holders in the millennial generation (born between the early 1980s to mid-1990s).
That generation became America’s largest in 2016, making it an obvious focus for banks. But there’s another reason millennials might be appealing. The generation that came into adulthood during the Great Recession has generally held off longer in buying homes.
Reuters reported in December that real estate industry watchers predicted that will turn around in 2017.
As part of its strategy, Montgomery-Rice said the bank has continued to update its smartphone app, was the first in Maine to introduce near-field radio chips (tap and pay) into its debit cards, maintained reimbursements on all ATM fees and is working on the release of a new local gift card product under the Buoy Local brand it purchased last fall.
Montgomery-Rice said the bank is working on a mobile app for that gift card product that it plans to release later this year, focused on major downtowns across the state.