Title: Treasurer and Chief Financial Officer, Middlesex Savings Bank
Age: 54
Experience: 33 years
Reading native Brian Stewart has always been a Bostonian at heart. Not long after graduating from the University of Massachusetts in Amherst, he went to work for the former Shawmut Bank as a cost accountant. But Stewart notes, “Careers never seem to go the way you think they’re going to go.” Shawmut’s only open seat was on the trading desk, where the trading and investment activity piqued Stewart’s interest. He pursued a master’s degree in finance from Bentley University, and from there his career took a turn toward bank portfolio management. Today, he works a full day as the treasurer and chief financial officer at Middlesex Savings Bank.
Q: What do you see as your main challenge in the year ahead?
A: The big challenge is going to be growing. And managing the margins. The other thing that gets tricky is lending long and funding short. The problem here is when you have a low-rate environment like now, most customers want longer term, fixed-rate loans.
Q: How many mortgages do you really want to put on your books that are yielding 3.5 percent?
A: In a low-rate environment, you can’t say to customers, “We’re not going to offer you 30-year fixed-rate mortgages. We want you to do one-year adjustable rate mortgages,” because they aren’t going to want to do it. And it’s very hard to get a customer to take on a 10-year CD if you’re only going to pay him 50 basis points.
Q: So how have you been handling that?
A: As we’ve been taking on a lot more long-term fixed rate assets or loans, we’re trying to keep our investment portfolio much shorter in duration as kind of a counterbalance to what’s happening on the loan side. That way when rates start to rise, even though we may have some longer-term loans at fixed rates, at least the investments will start re-pricing faster as rates go up.
It’s a balancing act. I’ve never seen rates this low in my career, and it’s quite the challenge. It really is.
Q: What kind of changes have you been seeing in your immediate market?
A: We used to do a lot of construction home building, but that market’s been a little soft the last few years. We also do a lot of commercial lending, but again, that’s been very competitive.
Housing has been a boon in the refinance area for the last few years for those who have been able to refinance. And we are starting to see a lot more purchase activity, where people are actually buying homes. We’re hoping that continues. Rental rates have been really high, so you’re starting to see the demand for multi family housing coming back a little quicker than the regular single-family homes.
It won’t be gangbusters like it might have been 10 years ago, when the economy was really booming and housing was really a growth engine, but it’s off the bottom. The consumer seems to be crawling out from under the rock, consumers were so hunkered down the last few years. They were petrified to be in the stock market, everybody was trying to delever, take all their debt. Now we’re starting to see people looking to borrow again. And car sales are up, which is also a good sign.
Q: And on the investment side?
A: We’re actually starting to see in the markets that consumers are now starting to head for the stock market a little bit more. They’re getting confidence back as their 401(k)s are starting to recover. I think we’re almost near the all-time highs as measured by the Dow, measured by that 14,000 mark. People are looking at their 401(k)s, they’re starting to feel a little better. Some of them are thinking, “Hey, maybe it’s time to buy that car, maybe it’s time to take that money out of the low-yielding CD and throw it back into the stock market.”
I think, overall people are starting to feel a little better.
Brian Stewart’s Top Five Recommended Books:
- “Outliers” – Malcolm Gladwell
- “Killing Lincoln” – Bill O’Reilly and Martin Dugard
- “The End of Wall Street” – Roger Lowenstein
- “The Big Short: Inside the Doomsday Machine” – Michael Lewis
- “Killing Kennedy” – Bill O’Reilly and Martin Dugard
