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W W W. M A I N E B I Z . B I Z 17 A P R I L 1 , 2 0 2 4 B A N K I N G / F I N A N C E / I N S U R A N C E F O C U S A separate study, by researchers at the Cambridge, Mass.-based National Bureau of Economic Research, found that if distress in the commercial real estate sector prompted half of all uninsured depositors to withdraw their funds, as many as 67 smaller banks with aggregate assets as high as $29 bil- lion could become insolvent. And in a scenario where all uninsured depositors withdraw their funds, as many as 385 additional banks with aggregate assets as high as $500 billion could fail, according to the think tank report. In early March, Fed Chair Jerome Powell told lawmakers that "there will be bank failures" due to commercial real estate exposure, "but this is not the bigger banks. It's more smaller and medium-sized banks that have these issues." However, "we're working with them, we're getting through it. I think it's manageable." Maine is not Manhattan While the pandemic-fueled shift to remote and hybrid work is creating big downtown office-tower vacan- cies in Manhattan and other demo- graphic hotspots, occupancy rates remain strong in Maine and the Portland area, which bodes well for real estate lending. "e scary headlines about the pending collapse of big city office markets like San Francisco, New York and Chicago simply don't translate to Portland," says Justin Lamontagne, partner and designated broker with the Dunham Group. "I don't anticipate any direct pain in our downtown due to pending office vacancies." Echoing that point, Nate Stevens of the Boulos Co. expects a decline in office vacancy rates this year, "and pos- sibly even leveling out or a decrease in the sublease rate as well." "In relation to lending, there's has been a strong demand for owner- occupier office buildings," he adds, "and I feel this demand will only increase if or when interest rates come down in 2024." Given Maine's steady and growing property values over the last several years, Maine Bankers Association President Jim Roche says he's not bothered by the Massachusetts think tank worst-case warning of up to 385 bank failures. "e risk of this scenario in Maine, with extreme CRE distress, is quite low," he says. "is was an aca- demic study theorizing about a situ- ation whose applicability to Maine is very limited." He adds that "we're following headlines closely, but banks in Maine are strong." Gerard Cassidy, RBC Capital Markets' Portland-based head of U.S. equity strategy and large-cap bank- ing analyst, has similar confidence in Maine's community banks. "Nothing is ever crisis-proof," he says, but "as long as you've got good people running commu- nity banks without taking excessive risks and they have a strong base of deposits under $250,000, the banks are going to be very resilient." Discover a credit union near you at mainecreditunions.org Discover a banking experience that revolves around you. Maine Credit Unions offer personalized service, and competitive rates, and they support your community. All while putting your financial well-being first. Say hello to a trusted banking partner that can make a difference for you and your business. Your best financial choice. C O N T I N U E D O N F O L L OW I N G PA G E » P ROV I D E D P H O T O Don Baker, TD Bank's commercial market president for northern New England, expects companies will take on new credit to fuel expansions, M&A deals or other investments.

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