Thomas Farley
Thomas Farley
Title: Executive Vice President, Chief Commercial Banking Officer, Middlesex Savings Bank
Age: 61
Experience: 36 years
Tom Farley has spent his entire career in the Greater Boston area’s commercial banking scene, and he’s loved every minute of it. As many do in this field, he came to Middlesex Savings Bank through a friendship forged with Michael McAuliffe, now the bank’s president, when the two worked together at Citizens Bank. He joined Middlesex Savings Bank’s commercial lending division just a few months after McAuliffe, and he recently succeeded McAuliffe as the bank’s chief commercial banking officer. When he’s not banking Middlesex County’s small and middle-market businesses, his passion is cooking for his family.
Q: Let’s talk about Middlesex Savings Bank’s commercial loan growth last year – where did you see the most activity and what drove that?
A: About half of our loans came from existing customers, which is great. We helped them grow their businesses. Half came from new customers, which is also great. It was just a good year for expanding our customer portfolio as well as our loan portfolio.
[Loan growth] was really across the board, but commercial real estate, for example, there were lots of opportunities there. We saw hundreds and we were very selective in what we did. We probably looked closely at about 10 percent of what we saw and actually pursued it and went in and closed it. There was an awful lot. It’s an overheated market and we didn’t want to get too aggressive in that space.
Commercial loan growth, small businesses and medium-sized businesses, it’s kind of across the board, whether they were expanding their facility or adding machinery and equipment for new growth. We had a couple where we financed solar panels. We even did some M&A financings with probably smaller and medium-sized private equity firms who look to buy and invest in companies in our market, and we had three or four good merger and acquisitions financings as well.
Q: When it comes to commercial real estate, what kind of projects do you like to finance?
A: We have a little of everything, but I think our target is probably commercial properties. Within that you can have one that’s fully stabilized, fully tenanted, and you have some that are to-be-built or to-be-tenanted and some that may be under-tenanted. Some of them are more speculative. We look at those very cautiously. But we did do a couple where we liked the sponsor, and they had a good track record and they were putting in a good amount of equity alongside our bank financing. But really we try to look for the more stabilized properties where there’s less risk. We have done some multifamily, we’ve done some institutional, but probably the commercial is the bread and butter.
Q: What does the loan growth last year tell you about the local economy?
A: All in all, it’s doing OK. I think small and medium-sized companies are doing reasonably well. Part of it is costs and commodity prices are low, whether it’s fuel or whatever raw materials companies need. Interest rates are low so borrowing costs are cheap.
On the cost side, companies are doing OK. We’re essentially at full employment, so there will be some pressures there as companies continue to expand their work force. I think if they’re seeing any pressure at all it’s on their top line. Their end customers are also pushing back on price, so they’re maybe not able to get all of the margin they’ve gotten in the past, but net-net, things are moving well really across almost every company we looked at.
Q: What sort of challenges do you face in this new role, particularly where the external environment is concerned?
A: As I look externally, it’s competition and maybe to a lesser extent, the economy. I think it’s good, not great, but as long as it keeps going, that should be fine. But from a competition perspective, there’s just no shortage of banks out there and money, our product, is kind of a commodity, so we have to differentiate ourselves by providing service, by providing ideas, by developing relationships, which by definition are two-way in nature.
But competitors are out there and increased competition can sometimes lead to irrational behavior, and that’s something we need to be aware of. We need to remain disciplined and selective in the new opportunities we pursue. We can’t compromise asset quality for loan growth, but we have to be competitive on loan terms. The phrase I use is, “we’ll bend but not break.” We’ll do what makes sense.
Farley’s Top Five Food And Drink Pairings:
- Lobster macaroni and cheese with an unoaked chardonnay
- A rib eye steak with mushroom cream sauce and a petit syrah
- Chicken enchiladas with a Corona with lime
- Bolognese sauce on pasta paired with a Chianti classico
- Pan seared sea scallops paired with pinot grigio
