A Brief History of FSB
Franklin Savings Bank was organized in Farmington November 16, 1868 as Franklin County Savings Bank.
The charter for the new bank was created February 24, 1868, when Governor Joshua Chamberlain signed into law a bill incorporating Franklin County Savings Bank. Robert Goodenow, Joseph W. Fairbanks, Stillman Tarbox, Daniel V. B. Ormsby, Samuel Belcher, Hannibal Belcher Simeon H. Lowell and Reuben Cutler of Farmington, Charles J. Talbot of Wilton, Jeremy W. Porter of Strong, Daniel Howes of New Sharon and Seward Dill of Phillips were the original incorporators. That charter was put into effect in November, when Daniel Ormsby was chosen as the bank’s first president.
“The bank opened for deposits the day of its organization and at once commended itself to the people of the county,” wrote Francis Gould Butler, “A History of Farmington, Maine.” (1885). “While suffering somewhat during the period of great financial depression, it has had a successful history and been of marked value to the business interests of the place.” The origins of the bank were well known to Butler, who himself was the bank’s second treasurer, having served from 1874 to 1875. He later became the president of Sandy River National Bank.
The bank’s early mission as stated in advertisements, was simple: to “help the people of Franklin County lay by something each year and deposit it in some good bank where it will be safe and earn a little something.”
According to President Joseph Fairbanks, who was one of the original corporators, “We prefer the one-dollar account of a child which will be added to in small amounts from time to time to the $2000 account of a rich man.”
Times have changed since President Fairbanks penned that sentiment before the turn of the last century. While still a savings bank, Franklin Savings Bank has grown to serve four Western Maine counties at eight locations. That expansion beyond Franklin County prompted the bank to drop “county” from its name in the late 1970s.
The bank began in the former law office of Robert Goodenow, which stood just north of his house on Main Street. By 1886, the bank had moved to a lot on Broadway, next to the current Reny’s Department Store. Construction of the current Main Office, a colonial style building on Main Street, almost directly opposite the bank’s original location, was completed in 1964. In 1980, the bank acquired the neighboring First National grocery store and converted it into the present Loan and Operations building.
In the midst of construction, other renovations were made to the 16-year-old main office, including the addition of the Farmington village mural behind the teller painted by customer Melanie Farmer of Temple. The open house was festive, with the Mt. Blue High School Marching Cougar Band leading the celebration.
Franklin Savings Bank opened its first branch in Rumford, April 1, 1968. A Jay Branch was opened March 30, 1970, followed by Rangeley, February 3, 1975; Mexico, September 2, 1975; Wilton, January 31, 1977, Skowhegan, November 8, 1976, and Mt. Blue High School, September 7, 1993.
In its early years, the bank accepted deposits from individuals and invested the funds primarily in government security in order to pay interest on the funds. By the early 1900s, the bank was investing depositor funds in mortgage loans to a limited extent.
It was not until after World War II that Franklin County Savings Bank shifted its investment strategy toward home mortgage lending, which became its principal asset for the rest of the century. The bank accepted relatively short-term deposits and reinvested the deposits into long-term fixed rate mortgages. Because interest rates on bank deposits were regulated at the time, profitability in lending activities was predictable and interest rate risk was not an issue.
Of the bank’s 94th annual meeting in April 1962 in the vestry of the Old South Congregational Church, the Franklin Journal wrote: “Sixth-nine were present at the meeting, now considered one of the highlights of the social season in Farmington.” The entertainment following the business meeting included a puppet show, performed by Girl Scout Troop 36 of Farmington. The troop leader was Mrs. Avon Pulcifur.
The federal government deregulated deposit rates in the late 1970s and early 1980s, in response to consumer demand, and interest rates became market driven. While this was not a problem for commercial banks that tie their loan rates to the Prime Rate, it did make it difficult for savings banks and thrifts. Mortgages issued in the 1960s and 1970s were earning fixed interest rates as little as 4.5 percent while the bank was paying out interest as high as 15 percent on CDs. Savings banks lost substantial sums of money while the high rate period lasted.
In 1980 and 1982, growth dropped off. “While no composite figures are available as yet for the thrift industry in Maine for the year 1980, individual bank reports that have been received or published indicate that Franklin fared better than most and I strongly believe we have both the financial and management resources to meet any continuing adversities that might present a challenge in the coming year,” according to President Robert A. Brown.
Despite the tough times for savings banks, FSB held fast to its commitment to conservative, prudent management for the good of the community. In 1981, Brown commented on the “Merger Mania” he saw as prevalent in Maine and the nation. “Bigness for bigness sake alone has never been a strong forte of my own or that of management philosophy in the bank’s 114 years of existence.”
By the last quarter of 1982, relief from the extreme volatility of interest rates arrived , but not before having its impact. The bank experienced the poorest growth performance, in almost all areas, in over a decade, according to Brown. “Some thrift institutions have failed, and many others have survived only through mergers and capital infusions by regulatory bodies. Few, however, have escaped damage, some of a serious nature.”
In 1983, the bank rebounded. “A return to profitability occurred that not only recouped the losses sustained in those years, but also provided a reasonable additional amount for the current year’s operations,” wrote Brown.
While there was much relief as the savings industry stabilized, the merger mania continued. President John A. Durham noted in 1989 that the banking industry in Maine has changed. “Maine banking laws enacted in recent years have allowed Maine financial institutions to be taken over by out-of-state institutions. What at first glance appeared to hold favorable possibilities for Mainers has in many ways turned out to be something different than as originally envisioned. Maine jobs have been lost as banking functions were transferred out of state. Branch offices originally opened to serve the convenience and advantage of the public are being closed or sold off as unprofitable.”
Franklin Savings Bank was not one of those banks. “Happily, there are a few banks left in Maine that care about giving service to Maine people and are controlled locally.”
Today, the bank’s mission is to serve the basic financial needs of western Maine by providing high quality deposit, lending and financial services consistent with the principles of safety and soundness. Franklin Savings Bank is proud to consistently rank as one of the safest banks in the country. The bank is strong and well-managed, earning it the ranking of Strongest Bank in Maine by Weiss Ratings Inc. every year since 1999, (based on assets, capital, income, liquidity and stability projections). It also consistently earns top marks from BankRate.com and Bauer Financial.
Franklin Savings Bank continues to buck the consolidation and buyout trend in financial services. In January 1998, Franklin Savings Bank formed a mutual holding company and became Maine's first bank mutual holding company. Under the new structure, depositors retained their mutual status, but of the mutual holding company, FSB Bancorp, MHC, instead of the bank. The reorganization helps to insulate the bank from any acquisition threat.
Founded in 1868, Franklin Savings Bank is one of the oldest and most successful businesses in Franklin County. It is, in fact, the ONLY locally-owned bank in Franklin County.