The sign on a Rockland Trust branch in downtown Boston. Photo by James Sanna | Banker & Tradesman Staff / file
Rockland Trust executives say the bank is seeing less demand for multifamily construction loans as investors nervously eye the potential for rent control to arrive in Massachusetts.
The bank’s loan balances totaled $18.4 billion, a 0.4 percent decline quarter-over-quarter. Additionally, its commercial real estate and construction loan total decreased $89.6 million (0.9 percent), due to elevated payoffs and amortization of balances, including a reduction of $55.9 million in its office portfolio.
Still, Rockland Trust CEO Jeffrey Tengel told analysts in a quarterly earnings call last week that the bank is not willing to compromise on its rates to try and draw more business.
“It’s interesting because the commercial real estate market has gotten very competitive,” Tengel said. “We see it at the low end with a lot of the smaller banks and the mutual [banks] and and we see it at the larger end too. We’re not going to stretch for structure or for rate. We think the environment is really very competitive so we’re continuing to support our existing clients where we can.”
Rockland also saw its criticized loans increase, with the bank reporting 4.04 percent of loans being nonperforming. This is an increase from 3.31 percent in the prior quarter and a decline from 4.25 percent in the second quarter of 2025.
“With respect to the criticized assets, we really had three larger loans that moved to criticized status that make up the bulk of that increase. All three are in different asset classes. Only one of those is in the office asset class, one of them C&I, and the other one is in the multifamily space, which is really the first multifamily loan that I think has been criticized in quite some time,” Tengel said
Rockland also reported a $4 million charge-offs in the quarter. Executives said that the charge off was associated with a non-performing office loan that actually repaid the full remaining balance after the end of the year. Rockland also has $33.2 million in loans coming to term in the second quarter of 2026.
With a strict rent control proposal seemingly headed for the ballot this fall in Massachusetts, executives noted that demand for new construction loans has slipped significantly.
“The most obvious headwind would just be the muted new business coming from construction loans in the multifamily space,” Rockland Trust CFO Mark Ruggiero said in response to a stock analyst’s question about the bank’s outlook.
Many investors are looking elsewhere due to the rent control proposal, Tengel said.
“I think a number of investors, and I’ve spoken to several of them, they’ll tell me, ‘Look, we have choices. We don’t have to invest in Massachusetts. We can invest in Connecticut, or New York.’ Until that issue gets some clarity around it, I think there’s going to continue to be muted demand on the construction side,” he told analysts.
Tengel said that in his opinion, he believes that the ballot measure will not pass.
“I think there’s a good chance it doesn’t pass, because there’s so much research out there that would suggest that it’s not a good thing for the economy,” he said. “It can have a muted impact on new affordable housing, new development.”
He added that the bank does not underwrite its multifamily loans with an eye towards “trended rents or any of those sorts of things,” so its existing portfolio of multifamily loans will likely be protected from stress.
