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Updated: May 28, 2020

Maine Bankers chief says current crisis is 'very different' from 2008

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Chris Pinkham, president of the Maine Bankers Association, has a fairly upbeat outlook for Maine's banking sector, saying that lenders are well-positioned to weather this unexpected pandemic storm. Mainebiz caught up with him for his take on the current situation and beyond.

Mainebiz: Given the COVID-19 crisis, what is your estimate on the amount of bad loans on the books of Maine banks?

Chris Pinkham: Maine banks have been working with customers since March to help manage all types of loans. Many borrowers have been offered deferral programs, some have opted to restructure existing loans, and many have been able to maintain their current payment plans. Currently, delinquencies are manageable.

MB:Will Maine banks be able to cope with all the loans that people and businesses will be defaulting on?

CP: Lenders are well-positioned to weather this unexpected pandemic storm. They have strong reserve positions, are well capitalized and have demonstrated their flexibility in adjusting quickly to changing circumstances. Issuing over 25,000 new [Paycheck Protection Program] loans in less than eight weeks is an example of the talented employees ready to meet the challenges of the weeks and months ahead. We are hopeful that Maine’s economy will safely reopen very soon to ensure that consumers and businesses can move past any financial hardships they are now facing.  

MB:  How does today's situation compare to the 2008 crisis?

Portrait of Chris Pinkham
Courtesy / Maine Bankers Association
Chris Pinkham, president of the Maine Bankers Association, said the current crisis is a health crisis and not a financial one.

CP: Our current situation is a health care crisis and not a financial crisis. Our members entered this current health care crisis from a position reflected by strong balance sheets and a diversified business model. This is very different from the factors that led up to the 2008 issues.

MB: In processing a heavy volume of Paycheck Protection Program loans, what has been the biggest hurdle for banks?

CP: Bank employees everywhere stepped up to meet the volume of applications but the rush by Congress to pass the bill and the inability of federal agencies to clarify early program requirements led to an ever-changing set of rules for borrowers. This frightened many deserving PPP borrowers away from the program and is restricting the effectiveness of the forgiveness aspect to help bridge business through the challenging period of April, May and June.

'Banks remain profitable'

MB: It also seems that interest rates will stay extremely low for a long time. What will the impact be on bank profits?

CP: Interest rate management is a key component of banking today and even with the attractive, low rates for borrowers, banks remain profitable. While delinquencies may be challenging in the months ahead, balance sheet growth will continue as parts of the economy expand and some industries move to meet the demand of the "new normal" in the months ahead. It is also significant that low borrowing costs will also, be critical for many businesses and individuals to get beyond this crisis.

MB: More broadly on Maine’s economy, what sectors do you see as best poised to weather a protracted downturn?

CP: We believe all sectors of the economy will be challenged for a period. As employees return to workplaces and restrictions on travel are relaxed, new corporate cultures will develop along with new opportunities. While, these will grow sector by sector, we expect to see innovation rise to meet new challenges and those moving ahead smartly will be the emerging success stories in the months ahead.

MB: What sectors are you most concerned about and why?

CP: Initially, the service industry with attention to hospitality but all industries need to refine how employees will work in the future. For some, a laptop and internet access will suffice, other occupations will require greater attention to their employees. Those finding the new normal for employee engagement and productivity will be the strongest. 

'We will be hiring'

MB: To all the new college or business school graduates hoping to start a career in Maine's banking sector, what is your message?

CP: We will be hiring. Two factors are clear: A significant number of senior positions, staffed by Boomers are being vacated due to retirements and those openings create many vacancies. Second, the complexity of the back office of banks, has exploded and our needs for IT, cyber, data security, accounting, fiscal management and marketing are greater than ever. Our public-facing employees are still vital to our business models. However, with the pandemic, many customers have expanded their use of online services, and supporting that growth means we need additional talented, technology-oriented employees.  

MB: Finally, what tops your state or federal legislative "wish list" for Maine's banking sector?

CP: Congress needs to recognize that small businesses need greater attention in the months ahead. The PPP program was designed as primarily, a one-size fits all, short-term fix and it is helping 4 million companies nationally and over 25,000 in Maine. Many more businesses will need programs in the months ahead and those lending programs may need to be industry specific and/or offered with some form of government guarantee so that the risks are shared. Finding ways to keep small businesses open and return to profitability will help restore much of our economy in Maine and in the nation.

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May 29, 2020

The Maine Bankers Association and the Maine banking industry are fortunate to have had many years of great leadership from Chris Pinkham and his very talented team. No one is better informed and more insightful.

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