| 
Meg D. McIsaac
CEO, Bluestone Bank; Chair, Massachusetts Bankers Association
Years experience: 30 years
Bluestone Bank CEO Meg McIssac took office as the 2023-2024 president of the Massachusetts Bankers Association in May in the middle of a challenging environment. The state’s banks have been facing a tougher commercial lending market and federal regulators are looking into tighter bank rules after the failures of Silicon Valley Bank and First Republic Bank in March. On top of that, a Supreme Court ruling took down affirmative action policies at the nation’s colleges and universities, raising questions if corporate America’s own diversity and recruiting initiatives might be next. McIssac’s bank is relatively new, formed in 2020 when Bridgewater Savings Bank and Mansfield Co-operative Bank merged into a new mutual bank.
Q: With CRE lending getting tough – maybe for the foreseeable future – could C&I lending return to prominence in community banks’ lending?
A: Banks like to build and maintain diversified loan portfolios so that they can avoid substantial concentrations in one sector and C&I lending is part of that strategy, but it requires lenders with a specific skill set to originate the loans, C&I loans, prudently. What I’ve seen is that demand and the ability to meet underwriting criteria have been negatively impacted by the rapid increase in risk in interest rates. C&I loan demand was strong in 2022, but reports from the Fed and the FDIC noted weaker demand and tighter credit standards for loans to businesses of all sizes in the first quarter of 2023.
To answer your question, I think C&I lending will continue to be appealing to banks, but it will be challenging because I don’t necessarily see the market as growing right now.
Q: Do you think commercial real estate lending will remain tough for a while?
A: I think CRE lending is challenging simply because of the economic conditions – most banks are reporting very low delinquencies. Credit quality has remained high, but a lot of banks have a little bit higher concentration in CRE lending than they had in the past. I think, similar to C&I lending, the interest rate environment is playing a really substantial role in the demand and the ability to meet underwriting standards. The consensus [for the Federal Reserve’s interest rate policy], with a “soft landing” scenario, is to have another hike of 25 basis points and then a mid- to long- term pause, and then a gradual decrease.
Q: What options do banks have to adapt their diversity, equity, inclusion and recruiting efforts after the Supreme Court’s ruling?
A: The Supreme Court ruling doesn’t directly affect hiring practices of corporations, and we don’t believe that it’s going to harm our recruiting processes. Banks, in general, aim to increase the diversity in their workforces, and numerous studies have supported that a diverse organization tends to perform better. Mass. Bankers is taking a leadership role in that. In 2022, we established support for our members’ diversity, equity and inclusion initiatives as a key priority. The board adopted a new DEI strategic plan in 2022 and it created a DEI council comprised of senior and executive officers from banks of all sizes across the commonwealth. We continue to be a resource for banks and advice on their DEI journeys. Every bank is at a different stage, so it was important for us to be a resource for wherever they are and help them get to what their goal is.
The recruitment committee holds virtual career fairs at Massachusetts colleges and universities for students from all backgrounds, and who are interested in a career in banking. We also want to make a career in banking seem fun and modern and appealing. And in the near future, we’ll be hosting a career planning and placement office to help us in the promotional side of it. In the spring, we had our second DEI summit and we’re preparing to see the third cohort of apprentices that banks are funding to create a pipeline of credit analysts to support commercial lending. What we’ve seen is that the banks are bringing very diverse candidates into this program, which is terrific.
Q: What do you think regulators’ biggest takeaways from the spring banking crisis should be?
A: I think first and foremost is recognizing that there’s not a one-size-fits-all bank. The regulators, I think, have been very committed to applying regulatory standards that meet the specific size and complexity of each institution. We would hope that that would continue and that it wouldn’t become conflated with what happened last spring. Then, I think it’s important for your readers to know that banks being highly regulated, go through a very rigorous risk management and oversight process. It’s continuous. And we go through a robust asset liability management. I think it’s a merit for Massachusetts’ bankers that we have a fairly high level of capital in our banks. We have a very low level of delinquencies and non-accrual loans, so we have high asset quality, and I think we have strong asset balance sheet management processes. I hope that that speaks for itself.
I think the key to all of it is communication, transparency and solutions. We at Bluestone Bank – and I’m sure at most of our member banks – work very closely with our regulatory partners and have an understanding of what their expectations are, how we can meet them and what makes sense for each institution’s size and complexity. These are critical to making sure that the regulatory environment achieves its goals without hampering our ability to serve our customers. The business model of banks is somewhat leveraged, and maybe that needs to be changed – I’m not sure.
Q: What benefits has Bluestone Bank begun to see from its merger?
A: Although we did merge in the middle of a pandemic and then we had the war in Ukraine and all those, sort of, exigent forces at work, but the merger made sense to us because we were fortunate we were two very strong banks that were contiguous, and so there was no overlap. We didn’t have to have any layoffs. Since the merger, we’ve focused on our employee experience and we’ve been able to provide training, and career pathing and career growth in a more proactive way. We’ve also been able to have more funds to invest in technology to make our customer experience more seamless than appealing as fewer people go to the branch and more people do their banking digitally.
And then equally important to us is our commitment, as a community bank and a mutual bank, to giving our time our talents and our resources to support our neighbors and communities. Blending the two banks together and blending those resources has enabled us to be more impactful. I think that’s been really important this year. A lot of charitable giving has decreased with some of the economic pressure, so we want to make sure that what we’re doing has an impact. We’re really “boots on the ground” in terms of volunteer work, as well as financial support, offering seminars and things like that. We feel like we’re part of the community – they benefit and we benefit.
McIsaac’s Top Places to Visit with Family
- Tuscany, Italy
- Paris, France
- Switzerland
- St. Thomas, U.S. Virgin Islands
- Maine
