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Updated: January 9, 2023

2023 Forecast: Machias Savings braces for ‘softening’ loan demand

Larry Barker in suit and tie Photo / Courtesy of Machias Savings Bank Larry Barker, president and CEO of Machias Savings Bank

Machias Savings Bank is bracing for weakening loan demand in 2023, according to the company’s president and CEO, Larry Barker.

“We’re expecting loan demand to soften following the rapid rise in interest rates,” he says, noting that residential mortgage volume has already dropped off significantly. “Although our business lending pipelines continue to be very strong, we do expect some softening” this year.

There is a plus side of rising interest rates, the Downeast banker says.

“Our margins tend to get stronger,” says Barker, who comes from an agricultural background raking blueberries as a teen and has led Machias Savings Bank since 2012.

Specifically, 60% of the bank’s loan portfolio consists of variable rate loans, which are adjusted upwards over time as the Federal Reserve Bank raises rates, he says.

With $2.3 billion in assets, Machias Savings Bank ranked No. 5 among Maine-based banks in the 2023 Mainebiz Book of Lists published in December. The bank has 315 employees and 15 locations from Caribou to Portland.

Asked about expansion plans, Barker underscores that growth will continue to be organic, “one customer and one talented employee at a time.” Machias Savings will also continue to invest heavily in cash management solutions, he says.

Barker’s outlook for Maine’s banking sector as a whole: “Loan volumes will continue to soften, adding to the constant challenge of growing revenues faster than expenses.”

He adds that while it’s hard to predict what direction the economy will take, “Maine banks are strong and well-positioned to weather a storm.”

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