For a guy who started his career in a mailroom, Richard Gavegnano has done okay.
Gavegnano, 66, has used his street smarts and financial savvy to help increase the assets of East Boston Savings Bank to $2.6 billion and propel it into a leading role in the Greater Boston residential and commercial real estate lending scene.
As chairman and chief executive officer of Meridian Interstate Bancorp Inc., the East Boston native heads a state-chartered stock savings bank with 26 branches in Greater Boston, including nine in its Mt. Washington Bank division. Another East Boston Savings branch is scheduled to open in Somerville’s Union Square in November.
Meridian is part mutually held and part publicly traded. Since the end of 2009, assets have increased by about $1.4 billion. And the company’s stock price has climbed from $8.70 share on Dec. 31, 2009 to November 2008 to $23.46 a share as of Nov. 14.
The bank’s mutual holding company, Meridian Financial Services, currently owns a majority interest – 59.5 percent – of its shares. That ownership structure, though, is expected to change in the first half of next year with a “second-step” conversion, in which the bank would sell its remaining shares to the public.
The offering would boost the capital ratios of the holding company and the bank once the sale of additional stock takes place.
‘A Thousand Calls A Day’
Gavegnano grew up in a triple-decker on East Boston’s Neptune Road with his mother, brother and grandparents, who, like many in the neighborhood, were Italian immigrants. When he was 17 years old, he applied for a job in the mailroom of a Boston stock brokerage. During the job interview, he spotted a stockbroker from Marblehead he knew.
“He used to park his car near my house, and I made sure nobody stole his hubcaps,” Gavegnano recalled. “He knew I had no father and my mother was raising my brother and me.”
The stockbroker helped him get the mailroom job. Gavegnano became a broker when he was 21, and built his client base using the yellow pages to make cold calls.
“I started at the beginning of the alphabet, and I’d make a thousand calls a day – through good markets, bad markets,” he said.
He became involved with East Boston Savings Bank in 1974, as a community adviser. Eventually, he became a board member and Meridian’s chairman.
His first big move was Meridian’s 2008 initial public offering (IPO), followed by its January 2010 acquisition of South Boston-based Mt. Washington Bank. Since then, Mt. Washington’s deposits have increased to $700 million from $389 million. And three new Mt. Washington branches have opened– in West Roxbury, Allston and Boston’s South End.
The acquisition and branch expansion have helped boost East Boston Savings’ total deposits to $2.2 billion and total loans to $2.1 billion as of Sept. 30.
About 68 percent of Meridian’s loans are in commercial real estate, multi-family and construction loans. Through the first nine months of the year, the bank posted increases of $177.4 million in commercial real estate loans, $103.1 million in multi-family loans, $19.7 million in construction loans and $32.9 million in commercial business loans.
Gavegnano’s management of East Boston Savings has not been without criticism. In 2008, former bank CEO Robert Verdonck retired in a dispute with Gavegnano, whom he blasted for his non-conservative approach and the initial public offering of Meridian’s minority stake.
And Meridian is still posting increases in non-performing loans, which rose 10 percent during the first nine months of the year to $43.6 million.
Still A Community Bank
Last year, Meridian sold its stake in a New Hampshire bank, boosting net income by $2.9 million and refocusing its growth within the Greater Boston area. East Boston Savings currently employs 450 people working in 20 communities throughout metro Boston.
Despite its growth, Gavegnano said, East Boston Savings will remain a community bank.
“When it comes down to banking, people still like to have the facility to talk to people, get good service, good attention and be able to reach anybody in management from the bottom all the way up to myself, and talk to somebody and get phone calls answered,” he said.
“I personally am proud of where this bank is today, especially considering what’s taken place in the industry in the last five years,” he continued. “We’ve done nothing but flourish, with lending, hiring and investing in the community.”
Not bad for a kid from Eastie who started out in the mailroom.
Email: noratooher92@gmail.com
