The Boston lending market is a tough nut to crack, but John Korona isn’t trying to make Mansfield Bank the biggest name in town. He would be happy with just a little sliver of the business.

Around this time last year, the $398 million Mansfield Bank opened up a loan production office on Arlington Street in Boston, an unusual move for a small, suburban bank with no other presence inside Route 128.

But Korona, the bank’s president and CEO, didn’t scheme up a new loan office without rhyme or reason.  

“We were beginning to generate more and more business from the Boston area,” he explained. “It was an opportunity and we took advantage of it.”  

“It started with one developer in the South End” about seven or eight years ago, said Harold Horvat, executive vice president and COO. “It really started small and we saw some success and were able to prove ourselves with this one developer and it expanded to where we are today.”

The new loan production office required minimal overhead, and so Korona said the bank expected to see positive results relatively soon, though perhaps not as soon as it did.

“We actually did an analysis after nine months and we were surprised – pleasantly surprised, really – to see we were generating a positive cash flow based upon what was generated there. It exceeded our expectations,” he said.

New Loans

“Mansfield Bank’s loan production office initiative is off to an undeniably strong start and appears to affirm the logic of the strategy to extend their market reach out of Bristol County and into downtown Boston,” remarked John Carusone, president of the Hartford, Conn.-based Bank Analysis Center. “In addition to generating impressive financial performance in the first six months, the bank has also credentialized itself as being able to compete head on in a much larger and more competitive marketplace.  I give them a lot of credit for creativity and working their strong capital position harder through generating loans in an adjacent market.”

According to Korona, Mansfield Bank generated around $28 million worth of new loans out of its Boston office through the end of June. He said the majority of those loans, about $22 million, were made on the commercial side of the house, predominantly commercial real estate, and the remaining $6 million or so fell to the residential side.

 “We had contacts, and we had a decent-sized loan portfolio in town. It’s only helped having that presence,” said Norman Hayes, vice president of commercial lending.

Hayes said the majority of Mansfield Bank’s commercial lending in Boston has focused on real estate: “From single-family to multi-family homes, ground-up construction and rehabilitations and renovations. A lot of that is driven by people wanting to live in and near the city.”

Many of the bank’s newer customers are looking for investment properties, too, said Shanika Rogowski, senior vice president of residential lending.

“We’re getting a mix of first-time homebuyers and also people who are buying investment-type properties, like a two-family or three-family house that they’re going to live in and rent out the other units,” she said.

Rogowski said year-to-date, Mansfield Bank has generated close to $10 million worth of residential loans out of its Arlington Street office, partially because the new location has allowed the bank to generate more loans in places like Newton and Cambridge, too. In Boston specifically, she said, the bank has focused predominantly on lending in the Back Bay and the South End.

“We’ve made such great inroads with a lot of really good professionals in the area – real estate brokers, planners, developers, contractors,” she said. “We are a community bank, and community banking is all about building relationships with people, so we took that same philosophy and put it to work here … The bigger banks just can’t quite give that personal attention, and we have a product line that competes very well with the bigger banks.”

Hayes said that until now, Mansfield Bank has focused primarily on real estate lending, saying, “That’s where the demand has been.”

But over the next year or so, Hayes said he would probably look to increase the bank’s commercial and industrial lending in the Boston area to balance out the bank’s loan portfolio.

“There’s no magic to it. When we opened the office, we continued doing the same good things we have been doing all along,” he said. “It just opened us up to a bigger market. We have the infrastructure, we have the experience, and the biggest advantage is we’re a small bank that can do what a big bank can do, but we react like a small bank, which is to say, a lot quicker.”

For Rogowski, the real payoff happens when one of Mansfield’s brokers comes to the bank for their own loan or for one of their top clients.

“You have to prove yourself,” she said. “Over the past 3 or 4 months, we’ve had a couple of those situations. That to me is what it’s all about, when they’re willing to trust you with their personal loans or their top clients.”

Email: lalix@thewarrengroup.com