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Maine State Profile - Winter 2003
Employment declined modestly in Maine since the recession began in
2001.
- Unlike Massachusetts and Connecticut, Maine showed only a modest
decline in employment from the 2001 recession. The October 2003 estimate
of total payroll employment of 605,200, after seasonal adjustment,
is only 4,500 jobs, or 0.7 percent, below the peak reached at the beginning
of 2001 (see Chart 1).
[D]
- Despite this comparatively good performance, Maine continued to suffer
heavy losses of manufacturing jobs. While the loss of manufacturing
jobs has occurred elsewhere in New England, the primary factors behind
the job losses in Maine were related mostly to downsizings and closings,
owing to cost pressures rather than to new technological developments.
- Employment losses were particularly intense in Maine's traditional
industries, which include leather goods, pulp and paper, logging, textiles,
and apparel. For example, employment in leather goods, at 2,500, was
just one-quarter of the level in 1990.
- The mixture of old and new industries is reflected in Maine's exports
to the rest of the world, which is led by computers and electronic
products, joined with paper and forestry products.
Leisure and hospitality industries continue to grow in Maine.
- Maine's other “traditional” economic base is travel and tourism,
which gained approximately 6,300 jobs from early 1990 to October 2003,
representing almost one in ten jobs in the Maine economy (see Chart
2).
[D]
- Since 1990, travel to and within Maine rose in every year but one,
according to the Maine Turnpike Authority. The 50-million-mile level
was passed in 1999; travel may reach 60 million miles on the turnpike
in 2003. The increased traffic prompted a major widening of the turnpike
that is now under way.
Housing appreciation continues at a healthy pace, although somewhat
slower than prior years.
- Housing appreciated in Maine as elsewhere in New England. House prices
increased 7.9 percent as of second quarter 2003 on a year-over-year
basis, which represented a modest deceleration from the 10.7 percent
rate posted over each of the two previous full years. Housing construction
accelerated more in Maine than in other New England states (see Chart
3).
[D]
Maine's banks and thrifts continued to be profitable, despite some
pressure on net interest margins.
- Maine's commercial banks reported a median return on assets (ROA)
of 1.02 percent as of the second quarter 2003, down from 1.12 percent
one year earlier. Profitability was undermined by declining levels
of net interest income and increased expenses. The state's savings
institutions posted a median ROA of 0.99 percent as of second quarter
2003, a 26-basis point increase from one year earlier. Savings institutions
also saw net interest income decline, partially offset by an increase
in noninterest income and a decline in expenses.
- The median net interest margin (NIM) in the state's commercial institutions
declined 36 basis points to 3.99 percent as of June 30, 2003. Thrifts
experienced a 6 basis point increase to 3.94 percent as funding costs
declined (see Chart 4).
[D]
- Insured institutions continued to utilize gains on the sale of securities
to boost earnings. As of June 30, 2003, securities gains represented
9 percent of net income in the state's commercial banks and 18 percent
in savings institutions. There are still gains to be taken, at least
in the short term, as total unrealized gains amounted to $153 million
as of June 30, 2003, representing about 1.53 percent of total securities
available for sale in commercial institutions and 2.43 percent in the
savings institutions.
- Loan-loss provisions remained extremely low and have helped support
profitability. Should the economy suffer another downturn, causing
a deterioration in credit quality, profitability may be affected as
insured institutions increase provisions.
Interest-Rate Risk remains a concern for Maine's institutions with
increased concentrations of fixed-rate, long-term assets, resulting from
the recent refinancing waves.
- The conventional 30-year mortgage rate has declined significantly
over the past several years, falling to historic lows. Refinancing
activity remained strong during the first half of 2003, but started
to slow in the second half of the year as mortgage interest rates began
to rise. According to the Mortgage Bankers Association, on a national
basis, the level of adjustable rate mortgages has increased from only
about 13 percent of originations in July 2003 to almost 24 percent
in November 2003. While the shift to adjustable rate mortgages ultimately
may allow greater asset repricing, insured institutions still hold
large volumes of long-term assets at low fixed rates.
- Since the late 1990s, asset maturities lengthened at many institutions,
but began to moderate in the last year. The median ratio of long-term
assets to total assets remained among historical highs at 36 percent
(see Chart 5). If the recent rise in mortgage
rates is sustained, the average life of mortgage portfolios will extend
further and may result in a mismatch of asset and liability repricing
for some institutions. Net interest margin compression may occur, when
short-term interest rates increase as liabilities reprice at a faster
rate than assets.
[D]
- The extension of asset maturities has been pronounced in the state,
as well as New England, reflecting the large percentage of thrifts
and residential lenders. Savings institutions represented 58 percent
of insured institutions in Maine, and residential real estate loans
comprised almost 54 percent of their average loan portfolio as of June
30, 2003.
Maine at a Glance
| General Information |
Jun-03 |
Jun-02 |
Jun-01 |
Jun-00 |
Jun-99 |
| Institutions (#) |
40 |
39 |
40 |
43 |
44 |
| Total Assets (in thousands) |
38,931,665 |
33,542,467 |
15,484,290 |
16,467,408 |
15,984,628 |
| New Institutions (# < 3
years) |
1 |
0 |
0 |
0 |
0 |
| New Institutions (# < 9
years) |
2 |
1 |
2 |
3 |
3 |
| |
| Capital |
Jun-03 |
Jun-02 |
Jun-01 |
Jun-00 |
Jun-99 |
| Tier 1 Leverage (median) |
8.88 |
8.66 |
9.14 |
9.20 |
9.43 |
| |
| Asset Quality |
Jun-03 |
Jun-02 |
Jun-01 |
Jun-00 |
Jun-99 |
| Past-Due and Nonaccrual (median %) |
1.49% |
1.47% |
2.00% |
2.04% |
1.85% |
| Past-Due and Nonaccrual ≥ 5% |
1 |
1 |
2 |
2 |
4 |
| ALLL/Total Loans (median %) |
1.18% |
1.17% |
1.16% |
1.12% |
1.23% |
| ALLL/Noncurrent Loans (median multiple) |
2.13 |
2.31 |
1.25 |
1.54 |
1.48 |
| Net Loan Losses/Loans (aggregate) |
0.20% |
0.25% |
0.22% |
0.20% |
0.17% |
| |
| Earnings |
Jun-03 |
Jun-02 |
Jun-01 |
Jun-00 |
Jun-99 |
| Unprofitable Institutions (#) |
1 |
0 |
1 |
0 |
0 |
| Percent Unprofitable |
2.50% |
0.00% |
2.50% |
0.00% |
0.00% |
| Return on Assets (median %) |
1.00 |
0.94 |
0.75 |
0.83 |
0.97 |
| 25th Percentile |
0.71 |
0.59 |
0.48 |
0.59 |
0.66 |
| Net Interest Margin (median %) |
3.96% |
4.10% |
3.94% |
4.09% |
4.00% |
| Yield on Earning Assets (median) |
5.99% |
6.82% |
7.92% |
7.98% |
7.76% |
| Cost of Funding Earning Assets (median) |
2.10% |
2.71% |
4.15% |
4.04% |
3.72% |
| Provisions to Avg. Assets (median) |
0.13% |
0.13% |
0.16% |
0.11% |
0.12% |
| Noninterest Income to Avg. Assets (median) |
0.67% |
0.64% |
0.58% |
0.56% |
0.58% |
| Overhead to Avg. Assets (median) |
3.05% |
3.04% |
3.04% |
2.96% |
3.10% |
| |
| Liquidity/Sensitivity |
Jun-03 |
Jun-02 |
Jun-01 |
Jun-00 |
Jun-99 |
| Loans to Deposits (median %) |
94.74% |
94.88% |
95.63% |
97.34% |
88.34% |
| Loans to Assets (median %) |
70.33% |
71.13% |
71.74% |
73.11% |
69.59% |
| Brokered Deposits (# of institutions) |
14 |
13 |
9 |
9 |
9 |
| Bro. Deps./Assets (median for above inst.) |
2.93% |
2.58% |
2.75% |
2.05% |
2.70% |
| Noncore Funding to Assets (median) |
22.24% |
22.47% |
22.73% |
22.44% |
16.00% |
| Core Funding to Assets (median) |
65.44% |
67.25% |
67.09% |
67.06% |
71.89% |
| |
| Bank Class |
Jun-03 |
Jun-02 |
Jun-01 |
Jun-00 |
Jun-99 |
| State Nonmember |
8 |
7 |
7 |
7 |
8 |
| National |
6 |
6 |
6 |
6 |
5 |
| State Member |
3 |
2 |
2 |
3 |
3 |
| S&L |
7 |
7 |
7 |
7 |
7 |
| Savings Bank |
2 |
2 |
2 |
4 |
4 |
| Mutually Insured |
14 |
15 |
16 |
16 |
17 |
| |
| MSA Distribution |
# of Inst. |
Assets |
% Inst. |
% Assets |
|
| No MSA |
29 |
8,997,219 |
72.50% |
23.11% |
|
| Portland ME |
4 |
26,542,505 |
10.00% |
68.18% |
|
| Lewiston-Auburn ME |
4 |
1,200,775 |
10.00% |
3.08% |
|
| Bangor ME |
3 |
2,191,166 |
7.50% |
5.63% |
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