Banks vie for town’s business

MOUNT DESERT — The “apples and oranges” analogy was used repeatedly by members of the board of selectmen as they struggled to compare proposals from 10 different financial institutions for providing banking and investment services for the town.

Bar Harbor Bank & Trust (BHB&T) has handled the town’s daily banking needs since 1984. Acadia Trust, which was acquired by Camden National Bank in 2001, has managed the town’s investment portfolio since 1991.

Earlier this year, selectmen solicited proposals for providing those services over the next five years.

Last week, the board winnowed the field of contenders to four: Acadia Trust/Camden National, Bangor Savings Bank, BHB&T and The First.

They eliminated the other six institutions for one or more of the following reasons: Their proposal was deemed inadequate, the fees they quoted were too high, or they were not locally based.

The town currently has about $6.5 million in investments. The estimated annual fees quoted by the four financial institutions contending to handle those investments were: Bangor Savings Bank, $13,000; The First Advisors, $26,000; Acadia Trust, $28,575; and BHB&T, $37,500.

Selectman Dennis Shubert said the town doesn’t need to pay high costs for “active” investment management when a “passive” strategy will do just as well in the long run.

“My opinion is that active management of our investments is a waste of money,” he said. “Virtually no one can beat the average [return on investment] over time. The few people who can are very wealthy investing for other wealthy people.

“We’re investing for the long term. We basically just want to track inflation or slightly beat inflation.”

The board voted 4-0 for Shubert’s motion “to have new proposals from potential [investment] managers with a fee reduction based on the use of more passive techniques of investment.”

Board Chairman John Macauley said there are criteria other than price that selectmen should consider in selecting institutions for banking and investment services.

“I think one of those criteria is locality,” he said. “One of the banks [BHB&T] is clearly local, and the others are not.”

Shubert said that some of the other banks “are suggesting the same level of service as Bar Harbor Bank &Trust and are charging us significantly less.”

“The question is ‘Why?’ What are we getting for our money?” Shubert asked. “How much more are we willing to pay for a local bank? We have to explain to our taxpayers … .”

Selectman Martha Dudman has recused herself from the board’s deliberations on banking and investment services because she serves on BHB&T’s board of directors.

Macauley said selectmen could decide to award both the town’s banking and investment accounts to a single financial institution or to use two separate institutions, as it does now. The town’s bank balance averages about $5 million.

“We have resources that people want, and I think they should be competing for them,” Shubert said. “I think we should be getting a better deal than we’ve been getting.”

Dick Broom

Dick Broom

Reporter at Mount Desert Islander
Dick Broom covers the towns of Mount Desert and Southwest Harbor, Mount Desert Island High School and the school system board and superintendent's office. He enjoys hiking with his golden retriever and finding new places for her to swim. [email protected]

Leave a Reply

Your email address will not be published.