For years, national mortgage factories and big banks dominated Massachusetts’ residential lending landscape, offering products most small lenders were unwilling to match.
But with many of the large lenders reeling – or no longer in business – community banks and credit unions are rapidly rising in the rankings, often because they are able to dominate their own communities.
“We’ve had a bang-up first quarter, and a lot of that has to do with a flight to quality from the national banks,” said Carl Edwards, vice president of real estate lending at National Grand Bank of Marblehead, which holds 13.97 percent of the mortgage volume market share in Marblehead, according to The Warren Group, publisher of Banker & Tradesman.
There are a lot of community lenders in the commonwealth, however, and not all of them lead their communities in residential lending. The top lenders statewide are still the big national and regional players. Through April, Sovereign Bank is the number one mortgage lender in Massachusetts.
But a review of market share numbers across the state shows several community lenders now dominate their primary market areas. For example, Lee Bank leads in Lee with 36.64 percent, Stoneham Cooperative Bank is first in Stoneham with 10.55 percent, Nantucket Savings Bank has a lock on refinance mortgages in Nantucket with 36.34 percent of the market, and Jeanne D’Arc Credit Union was first in its hometown of Lowell, with 7.51 percent share.
Deposits Before Loans
Edwards said National Grand Bank of Marblehead has been soaking up the deposit market share in Marblehead for years, and those relationships lead to mortgage lending.
Brett Dean, president of Watertown Savings Bank, said his bank used the same “backward” strategy after being deposit-minded for the last 15 years. Watertown Savings Bank holds about 70 percent of the deposit market share, according to Dean, and that leads directly mortgage market share.
“We stand a pretty fair chance of capturing [our depositors’] mortgage business,” Dean said.
Watertown Savings Bank holds 11.37 percent of the community’s market share, according to The Warren Group.
But Dean said that strategy may be in peril, as many larger banks are now raising interest rates for deposits to shore up their own balance sheets.
“They’re back into the deposit market for their own liquidity purposes,” he said.
To maintain the bank’s market share in both areas, Watertown Savings Bank has remained very active in the community, kept an eye on competitors’ rates, and managed both sides of its own balance sheet.
“Our number one goal is to keep our costs down,” Dean said. “If we can control our costs as an organization, we know we can offer a good mortgage product.”
Know Thy Community
Another area where community lenders can far surpass bigger institutions is customer service and customer appreciation, and that can lead to market share domination.
Greylock Federal Credit Union holds 36.35 percent of the market share in its hometown of Pittsfield, and is the number one mortgage lender in Berkshire County.
“I think that lending is a lot about reputation, and trusting people,” said Marilyn Sperling, senior vice president at Greylock Federal. “In this environment that we’re in, you have to think outside the box and a lot of these larger financial intuitions, they put borrowers in a box that a lot of today’s borrowers don’t fit in. It may be credit score, or it may be the value of their home. I know that sounds a little bit corny, but when people come in and you listen to their story, you can either be compassionate and listen to them, or you can tell them they don’t fit in the box and close the door on them.”
That compassion has inspired loyalty for Greylock Federal, according to Sperling, and generated the best type of marketing tool: word of mouth.
In Marblehead, Grand National Bank of Marblehead President James Nye is also on the board of selectmen. Thanks to that link, the bank is involved closely in community projects.
Edwards, who heads the bank’s real estate lending, reaches out to a community within the town of Marblehead: the community’s Realtors.
“[We use] word of mouth: we get out, and I personally visit the Realtors,” Edwards said. “The Realtor relationship is very important. Refis come and go, and frankly the Realtor relationship is going to be much more important in the coming five years, more than it has been in the last decade. With rates so low, the refi boom won’t last forever. [Purchase loans are] going to be the market of the future.”
The refi boom isn’t gone yet, however, and Grand National Bank of Marblehead is taking advantage of it while it’s still around. By keeping the rates in the top three most competitive, but not the having the lowest to avoid too much volume, the bank is trying to separate itself from larger institutions based on service.
“One of things that drives people to a community bank is when there is a large refi boom, larger banks can’t seem to handle the large volume of inquiries,” Edwards said. “They can’t get it done smoothly; it’s the pig in the python type of thing.
“We just stay late, work longer, and get it done.”
