Peter Brown, who grew up in Chatham, was brought on as president of Dedham Institution for Savings three years ago to increase the bank’s commercial lending portfolio. Until then, the bank concentrated on the residential market. Then when the recession hit, the board of directors realized the institution needed a change, and fast.
Peter Brown
Title: President and CEO, Dedham Institution for Savings, Dedham
Age: 54
Experience: 31 years
How did you come to join the ranks at Dedham Institution for Savings?
Part of the reason I was hired was to grow commercial lending. The bank was kind of a big, clunky savings bank. Even though we’re a billion-dollar bank, we were still predominantly a portfolio lender in residential lending. We had a nice active investment portfolio. When 2008 happened, [the board] realized that not only was the bank heavily involved in residential lending, but a lot of the investments were collateralized mortgage obligations and mortgage-backed securities, so they had almost doubled-down on the exposure in residential real estate, the risk. Then board said, we need to really beef up the commercial lending here … to take the pressure off the residential lending. In round numbers, if our loan portfolio previously was around $700 million, the commercial portfolio was only a little over $100 million.
So what kinds of commercial lending are your bread and butter?
We’re into a little bit of everything now, which is good because it diversifies the portfolio that much more. As crazy as it sounds, we’ve done a couple of private golf courses. Once the regulators looked at how we structured them [and] underwrote them, they realized they were good loans, despite the trends in the golf course business. Our construction portfolio was just about zero when I started here. Right now, we have a little over $50 million in construction loans, and another $20 million available. We’ve been very active in a lot of the multifamily properties that have been converted in Jamaica Plain in Boston, Davis Square in Somerville, and we’re doing a lot in South Boston right now. One of the things I don’t like are large phased residential sub-divisions or large condo projects because they have to go through so many cycles [in order] to sell out. We also have a couple of small strip mall centers on the books right now. We’re trying to do more [construction and industrial] lending as well.
What are the terms of your loans like?
We’re at about $110 million in capital, so we can do a loan of about $22 million as the legal limit. But our house limit is $15 million. Do we like to go out and do a single $15 million loan? No. But we have three or four relationships pushing up to $15 million, and it might be spread among five or six loans. The largest single commercial loan we have on our books is $10 million, a mixed-use retail apartment building in Dedham. To get the quality borrower and projects, we’ve been very aggressive with our rates. Rather than go chase a marginal deal that we can get a 6.5 percent rate for, I’d rather be able to sleep at night. So we go after the guy with a lot of experience, strong guarantor strength, a high-net-worth guy and charge him 4.25 percent for five years. So many banks right now are so liquid, and there are too few quality deals and too many banks chasing them, that it’s driven rates down to the next level. We’re at the point now where there might be great deals that we’d love to have, but some of our competitors offer such low rates that we say, it’s yours, take it. We’re not willing to go that low.
Peter Brown’s Five Best Places To Go in Chatham
- North Beach Island – It’s accessible only by boat. Peter and his brothers own a camp there.
- Veteran’s Field – The field is home of the Chatham Anglers, the town’s Cape Cod Baseball League team.
- Eastward Ho! Country Club – Brown says it’s “one of the most beautiful waterfront golf courses anywhere.”
- Anywhere on the water that can be safely reached in a small Boston Whaler.
- Pate’s Restaurant – It has great food and a great owner, Brown says. He tended bar and was a waiter there during college.
