Mutual thrifts are on the decline across most of the county, but that isn't the case in Maine, where such institutions seem to be thriving.

Thrifts managed to increase aggregate deposits in Maine by nearly 5% over the 12-month period that ended June 30, according to figures released earlier this week by the Federal Deposit Insurance Corp. Thrifts now hold nearly a third of the state's deposits.

In nearby Massachusetts, deposits held by thrifts fell 20% over the same period. Thrifts in states such as Connecticut, New Hampshire and New York also lost ground.

A slight case of xenophobia could contribute to the trend in Maine. Locals tend to be wary of outsiders, or "people from away" as native Mainers call them, says Bob Strong, a finance professor at the University of Maine.

"The notion that the guy who's deciding on your loan is two blocks away, as opposed to two states away, is appealing," says Strong, who is also a director of the $2.7 billion-asset Bangor Savings Bank. Bangor Savings is the nation's eighth-largest mutual thrift.

At the same time, big banks have tended to avoid the state, says Doug Faucette, a lawyer at Locke Lord. Of the 33 financial institutions that operate in Maine, excluding credit unions, only four are based outside the state.

Toronto-Dominion Bank's TD Bank had about 40% of Maine's $34 billion in deposits at June 30, though most of those funds are associated with brokerage accounts at TD Ameritrade. KeyCorp in Cleveland had an 8% share, and Bank of America in Charlotte, N.C., held 5% of deposits. People's United Financial in Bridgeport, Conn., held about 2.5% of Maine's deposits. Bank of America is shrinking in Maine by selling 15 branches to another bank.

"Maine has not been the kind of place where your larger financial institutions have thought it was worth their while to expand," Faucette says.

Many of Maine's institutions are savings banks, including a large number that are mutually owned. Bangor Savings is the state's largest mutual thrift with 6% deposit market share, followed by the $957 million-asset Machias Savings Bank, and the $965 million-asset Norway Savings Bank.

The number of mutual thrifts in Maine has held firm in part because they have largely resisted an urge to convert to stock companies. Bangor Savings' mutual holding company, Bangor Bancorp, has routinely considered converting because a stock company can more easily raise capital, Strong says. "We've been able to acquire other branches, or another bank in the past, and we've not been short on capital," he says.

The lure of a second-step conversion may be weighing heavily on the minds of directors at Maine's mutuals, says Frank Schiraldi, an analyst at Sandler O'Neill & Partners. Schiraldi says he expects a new wave of conversions, partly because many executives want to dump the mutual holding company structure.

Mutual thrifts in Maine have not felt as much pressure to convert, because many avoided high concentrations of construction loans or other risky assets, says Jim Fleischer, a lawyer at Silver, Freedman & Taff. "Fewer thrifts got into trouble and needed capital," he says.

Bangor Savings doesn't need to convert, says Yellow Light Breen, the thrift's executive vice president and chief strategic officer. Bangor Savings doesn't think of itself as an old-line savings and loan that focuses largely on residential mortgages.

Rather, the thrift has diversified into commercial real estate and commercial-and-industrial loans, along with trust and payroll-processing services. "We're not a typical savings bank," Breen says.

At June 30, Bangor Savings had the both the largest loan book, at $1.8 billion, and the largest C&I loan portfolio, at $208 million, of any bank doing business in Maine, according to

Diversification has helped Bangor Savings combat a trend of the biggest banks getting bigger in other parts of the country, at least in terms of retail deposit market share. Bangor Savings' share of the statewide market stood at 6%, at June 30, according to the FDIC. It was a slight increase from a year earlier.

Bangor Savings has taken advantage of bigger banks' lack of interest in customers with more-limited assets. "I used to joke that the best place to put one of our new branches was the parking lot of a big bank," Breen says.

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