Katahdin Bankshares Corp. is attributing its 2011 drop in profits in part to regulatory changes on overdraft fees.
The Houlton-based parent company of Katahdin Trust Co. reported an 11.4% drop in net income in the first six months of the year over the same period last year, according to its quarterly report. President and CEO Jon Prescott attributed the decline in part to an expected drop in non-interest income "due to regulatory changes in how we are able to calculate overdraft fees." As part of last year's financial reform act, banks are now required to get customers' permission before charging them fees for debit card and ATM overdrafts. Prescott went on to say that non-interest income could continue to slide later this year related to a cap of debit card swipe fees, which the Federal Reserve recently set at 21 cents per transaction, half the current average of 44 cents. Earnings for the six-month period were $2.18 million, compared to $2.46 million for the same period last year. Total assets reached a record high of $524 million.
The company also reported a 5.2% increase in deposits to $417 million, the majority of which was attributed to the bank's new office on Broadway in Bangor, which opened last August. The bank last month opened an office in Hampden.