Letter from the President

For over a decade, I’ve introduced our annual report with a statement announcing that it’s been another year of extraordinary impact for Machias Savings Bank. As we reflect on 2023, I have reason to pause. Can I trumpet the same success in a year that we lived through three of the largest bank failures in US history; in a year where economic conditions and an inverted yield curve led to a decline in profitability for most banks across the nation?

My answer is a resounding YES. We remain independent, community focused, purpose driven, and dedicated to moving Maine forward for the benefit of our employees, customers, and communities. I could not be prouder of the way our Board, Leadership Team and all 300 employees have navigated the challenging waters of 2023. I can confidently say that we are stronger for it.

Entering a challenging environment from a position of strength enabled us to reinforce our position as the Bank of YES with renewed commitment to serving our employees, customers, and communities.

While some banks were pulling back, we continued to invest in our communities with prudent lending, originating $399 million in new loans to help businesses grow and 350 new loans to help customers purchase homes. We received our 4th outstanding Community Reinvestment Act (CRA) rating, an honor afforded to only 8% of the nation’s banks. Our employees gave another 11,600 hours of community service and we donated over $830,000 to organizations around the state.

In 2023, we improved our ability to serve small business on two fronts: creating a Business Services Team for dedicated customer support and implementing new technology and teams to get money into the hands of small businesses faster. We bolstered our effort to protect customer deposits through new fraud prevention tools. One of our largest investments was in data talent and infrastructure, ensuring our ability to better understand our customer needs in the future.

Given margin compression and the resulting pressure on profitability, we embarked on a journey to manage expenses and improve our business processes. In a very competitive landscape where some banks will be acquired or give way to fintech competition, our efficiency gains ensure our viability, allow us to grow, and help us maintain independence for the long term.

We set Machias Savings Bank apart by being the first Maine bank to launch a flexible time off program. This effort, combined with our remote and hybrid work policies, allows us to attract top talent that will be vital to our future. Our employee engagement and satisfaction scores continue to be industry leading and allow us to be in the top five across ALL large companies in Maine.

In 2024, our focus is on technological innovation, increased efficiency, and growth in deposits. Our financials project ongoing improved performance with margin expansion, efficiency gains, tech investments and allocation of resources behind our best opportunities.

Our financial position remains very strong in regard to capital, liquidity, and the performance of our loan portfolio. We are grateful to have very limited exposure to office buildings, a mere 2.9% of loans. That small portfolio is diversified across Maine, and performing very well, with no delinquencies.

We thank you for your continued trust and look forward to meeting your banking needs in 2024.

Larry Barker

President & CEO