Maine bank may try for rescue funds
11/27/08 | 14 comments

Maine bank may try for rescue funds


By Abigail Curtis
BDN Staff

Bar Harbor Bank & Trust apparently has become the first Maine-based bank to apply for funds from the federal Troubled Asset Relief Program.

But it most likely won’t be the last, banking experts said Thursday — and that’s probably good news for Maine borrowers and not bad news for Maine’s banks.

“I’d say that about half the banks in Maine look like they’re seriously evaluating adding this capital to their portfolio,” said Chris Pinkham, president of the Maine Association of Community Banks. “Treasury has been encouraging healthy banks [to apply for the money]. … The reason the money is being offered to healthy banks is that it’s a way to get the economy working.”

The Maine bank joins more than 100 lenders, insurers and financial companies around the country that have applied for TARP funds totaling at least $65.8 billion. The Treasury’s $700 billion rescue plan, which was announced in October, includes $125 billion for the nation’s nine largest banks and $125 billion originally intended for smaller regional lenders, according to a financial report from Bloomberg.com.

Bar Harbor Bank & Trust is a community bank with 12 branches in Hancock, Washington, Penobscot and Knox counties.

According to a preliminary proxy statement filed this month with the U.S. Securities and Exchange Commission, Bar Harbor Bank officials will ask shareholders to vote on Dec. 22 whether or not to issue preferred stock to the U.S. Treasury Department in exchange for an $18.8 million loan.

“Recent economic developments have adversely affected the capital markets and the availability of capital for all financial institutions,” the document reads. “Although the Company is well-capitalized, the Company believes that the Capital Purchase Program may be a source of capital available on favorable terms.”

Pinkham said the terms of the loan would include a fixed 5 percent interest rate for the first five years and 9 percent afterward.

The document also states that capital raised through participation in the TARP Capital Purchase Program “would be available to support future growth as well as a source of capital to address the challenges and opportunities in the current market.”

Calls to Bar Harbor Bank & Trust on Wednesday were referred to bank President and Chief Executive Officer Joseph Murphy, who was out of town for the holiday an unavailable for comment.

Pinkham said that in general, Maine’s financial institutions are “well-capitalized” and have a healthy net-worth, in part because they did not get involved with risky subprime loans.

“We’re not saddled with low-performing loans,” Pinkham said.

He added that far from signifying that banks themselves are troubled, participation in the TARP program can mean just the opposite. Borrowing this money from the government means that bankers are assuming that consumers will begin seeking loans and credit again soon despite the recession, Pinkham said.

“The bankers are basically being optimistic that there is a light at the end of the tunnel — and it’s not a train coming from the other end,” Pinkham said.

Yellow Light Breen, a senior vice president at Bangor Savings Bank, agreed.

“Maine banking and Maine banks are generally very strong,” Breen said Wednesday. “If you see Maine banks applying for this program, it doesn’t mean that depositors should be concerned necessarily. It means that while these banks may be strong today, they view this capital as a good deal for them and will provide them with even more strength to weather the downturn over the next year or two.”

acurtis@bangordailynews.net

990-8133

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Comments
14 comments on this item
On 11/27/08 at 6:22 AM, anewday wrote:         Repeated separate thumbs down will cause comment to be hidden

Thank goodness the newspapers still tell the public what's is happening around them. Even if the bankers are 'optimistic' it's not very people-savvy for BarHarborB&T to not have someone available to speak to the public from BarHarbor B&T. A bank president and CEO on vacation without comment, how sweet, because it rather exemplifies how those in control of money have always handled the public.. in other words we'll get to you last, but bill you first.

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On 11/27/08 at 7:41 AM, Tracey wrote:         Repeated separate thumbs down will cause comment to be hidden

"Yellow Light Breen"?

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On 11/27/08 at 9:29 AM, bassman4447 wrote:         Repeated separate thumbs down will cause comment to be hidden

For those of us living paycheck, to paycheck, Whos gonna bail us out?

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On 11/27/08 at 10:11 AM, learn2listen wrote:         Repeated separate thumbs down will cause comment to be hidden

BHBT is the most unhelpful bank around, i am switching banks as I write this, maybe hiding $ under the mattress is the way to go?

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On 11/27/08 at 10:12 AM, clamchowdah wrote:         Repeated separate thumbs down will cause comment to be hidden

can't get the economy going if none of us has money to put into it. LOL Tracey I was wondering about the funky name too.

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On 11/27/08 at 1:21 PM, lbckool wrote:         Repeated separate thumbs down will cause comment to be hidden

Learn2Listen, a banks a bank. BHBT is actually a reasonable based bank if you think about it, especially if you're looking into checking :P

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On 11/27/08 at 5:50 PM, sickntired wrote:         Repeated separate thumbs down will cause comment to be hidden

A healthy economy depends on consumer spending not consumer borrowing. That is what got us into this mess in the first place. This is just another giveaway to the rich from the poor taxpayer. So what if the government gets prefered stock in the banks? How is that to help the average person? Do you think you are going to get a dividend check in the mail since "we the people" own it? Any profits from these stocks the Fed is buying will go right back into the banking/financial business in the form of more loans and give aways. The people of this country are fools to think they will ever benefit from any of it.

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On 11/27/08 at 8:41 PM, JWBooth wrote:         Repeated separate thumbs down will cause comment to be hidden

Gotta wonder why Murphy would want to pay the government 5% for a five year loan (and dilute the shareholder's equity) when he's only paying the depositors 3.75% for a 5-year CD (according to his website).

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On 11/27/08 at 9:37 PM, RevGerald wrote:         Repeated separate thumbs down will cause comment to be hidden

John Jay the first Chief Justice in 1789 said,"The people who own the country should be the ones to govern the country."...Well, that let's you and mout out...No one will bail you out.

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On 11/27/08 at 11:15 PM, meadowlands wrote:         Repeated separate thumbs down will cause comment to be hidden

I don't buy this at all....NO way. Selling shares to Federal Government.....why because the bank is well capitalized? So this means what??? That now the share are "out there", the bank becomes a target for take over for those who want to "use" hard working Mainer's Money??? I am very concerned about this idea

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On 11/28/08 at 8:36 AM, HermonStout wrote:         Repeated separate thumbs down will cause comment to be hidden

anewday......................................I just called a friend to tell her about this article. SHe DID get a letter from BHBT, telling her that they were going to do this. I probably did too but, just didn't open it, being busy this month.

I have not had any problem with BHBT in the 17 years I have had an account with them. When I moved here.........my Moving men wanted to cash my check to them to get them back to NJ. They had arrived first, unloaded my stuff and had another job to report to. Union Bank would NOT cash their check, even tho I was depositing a large cashiers check, BHBT WOULD, so I put my money in their bank, and have been there ever since!

They were really helpful to me 2 years ago when, on Dec. 22, Dish TV couldn't wait for my $42.00 payment until my SS check on Jan 3rd and went in to my account and withdrew $200.00 using my debit card number I had used, 15 months prior to start my agreement with them. ( questionable legally)

( Dish was on pause because I was short of funds, & they did charge $10.00 per month for that service, where Direct TV does it for free.)

I didn't even have 200. in the account but BHBT paid it out and waived the bounced check fees..........................didn't get their $200, reimbursed for a month, until Dish received the electronic equipment they were so worried I was going to steal!

I wish I had a LOT of money to put in my savings account there to help them do well! They do nice customer appreciation lunches every once in a while too.

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On 11/28/08 at 11:36 AM, maineopine wrote:         Repeated separate thumbs down will cause comment to be hidden

Bar Harbor Bank is a wonderful bank with wonderful people who know what they are doing. A bank is a business, albeit with extra rules. They have a right to make deals that benefit them. If they don't make good deals on their own behalf, then they wouldn't be around to make good deals to the people in general. I say get as much money as you can, BHBT, and then use it to make the Maine economy better!

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On 12/2/08 at 11:03 AM, overworkedunderpaid wrote:         Repeated separate thumbs down will cause comment to be hidden

maineopine - You're right! Many wonderful people do work for BHBT, but unless they are at the very top they don't get paid like they do a wonderful job. Not even close. Let's hope they will use some of this money to make the Maine economy better - starting with being fair to the people who work for them!

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On 2/13/09 at 12:55 PM, overworkedunderpaid wrote:         Repeated separate thumbs down will cause comment to be hidden

heard bhbt got their government funds AND they had a remarkably successful 2008. congratulations!

does this mean you're going to start paying the people who work for you?

board of directors: asking more + paying less = bad business

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