Ramping up lending efforts may top the list of New Year’s resolutions for Massachusetts bankers.
According to Banker & Tradesman’s annual reader survey, conducted in partnership with the Sudbury-based research firm Bannon & Co., bankers overwhelmingly expect credit would be readily available at reasonable terms for one-to-four family residential construction loans, multi-family apartment projects, commercial office space developments, single-family traditional mortgages and small business loans. Nearly 80 percent of bankers who responded to the survey also said they expect standard single-family home sales to grow in 2014.
In Western Massachusetts, would-be homeowners disappointed with current inventory have been taking out construction loans to build their dream house, said Katya Magee, vice president and retail lending development officer at Ware-headquartered Country Bank.
“I think buyer demand is still pretty strong. It’s just the inventory here in Western Massachusetts is not as strong as they would prefer to be. We have a lot of REO properties or homes that need rehab,” she said. “We see people gravitating toward construction, or those who don’t have quite that much, have been taking out purchase and rehabilitation loans. That’s another subset of the market we’ve seen growing.”
While recovery has moved slowly in Western Massachusetts, the Greater Boston area was all but immune from the worst of the recession. Now, more than five years out of the recession, Boston-area industries feel more comfortable hiring, making capital improvements, and building and expanding facilities, and bankers are more than happy to step up and lend them the money.
“If you stop in the right spot on the Mass Pike looking east, you will see four large cranes in the sky all doing very large projects. That’s a very good sign,” said Robert M. Mahoney, president and CEO of Belmont Savings Bank.
First Trade Union Bank will push its Small Business Administration loans and commercial and industrial loans in the year ahead, Marketing Director Chris Tremont said.
HarborOne Bank, previously Harbor One Credit Union, is also expanding its reach into the Boston area with an eye toward ramping up its commercial lending, Chief Marketing Officer Dave Tryder said.
And Needham Bank is expected to finish a 7,500-square-foot addition to its main office around the end of February, a response to increased lending demand in recent years, said Eric Morse, the bank’s marketing director.
“We’re feeling very bullish about 2014. Our business is very strong, our construction business continues to grow, and we go where our builders go,” Morse said. “We see an awful lot of projects underway in South Boston.”
Embracing New Technology
Nearly 40 percent of bankers taking the survey replied that it has been “somewhat easy” to adopt new technologies, suggesting bankers, community bankers in particular, are becoming a little less gun-shy about technology than in years past.
But aside from online banking and mobile banking – both of which can now be pretty much considered table stakes in the industry – new technologies also mean new avenues for getting a bank’s message out to the people.
Shelley Regin, director of marketing and public relations at Country Bank, said the bank is shifting its marketing strategy away from television advertising and towards digital media.
Country Bank will expand its online marketing to several regional news sites and is also planning to implement target marketing, courtesy of a system provided by its new core processor, Regin said. The bank also plans to target younger customers with products like mobile banking and a totally paperless “green mortgage.”
And while Tremont had to keep mum on the details, he hinted that more new strategic partnerships in the flavor of First Trade’s partnership with LevelUp were in the works for the New Year.
Bulking Up In Compliance
The cost of compliance is a perennial concern, though. While just 28 percent of bankers said they planned to increase staffing this year, a third of those who indicated they were planning to hire said they would add staff in compliance. Bankers responding to a question about the application of Basel III capital requirements, however, were equally split between concern and lack thereof.
Consolidation, along with regulation, is another of those perennial concerns. Fully 50 percent of bankers answering the survey expect three to five bank mergers in Massachusetts this year. About 35 percent of banking respondents anticipate even more than that. Those results are roughly in line with what respondents predicted last year.
But for all the concern that new regulations may force a wave of mergers, Massachusetts consumers are blessed with an unusual abundance of community banks, and the Bay State’s high concentration of mutual banks makes the merger process more onerous than it might be elsewhere.
In line with more modest expectations, the Massachusetts Bankers Association said that last year the Commonwealth experienced just three bank mergers.
Email: lalix@thewarrengroup.com
