Despite intense competition in the Boston commercial real estate (CRE) financing market, several smaller banks have carved a profitable, middle-market niche over the past two years.
The community and regional banks making their mark in the Eastern Massachusetts CRE middle market have done it by emphasizing local market knowledge and personalized service.
Among Massachusetts-headquartered banks, Rockland Trust held the largest amount of CRE loans – $1.67 billion – as of June, according to an analysis of Federal Deposit Insurance Corporation (FDIC) data by John Carusone, president of the Hartford, Conn.-based Bank Analysis Center.
Eastern Bank was second, with $1.5 billion in CRE loans, followed by Boston Private Bank & Trust Co., third, $1.4 billion; Berkshire Bank, fourth, $1.1 billion; East Boston Savings Bank, fifth, $993 million; Cambridge Savings Bank, sixth, $808 million; Brookline Bank, seventh, $803 million; Middlesex Savings Bank, eighth, $693 million; Enterprise Bank & Trust Co., ninth, $691 million and United Bank, 10th, also with $691 million in CRE loans, but $70,000 short of Enterprise Bank & Trust’s total.
In all, Massachusetts’ domestic banks held a total of $21.8 billion in CRE loans as of June, according to the Bank Analysis Center.
There’s no Massachusetts CRE loan data available for banks headquartered outside of the Bay State. But People’s United, based in Bridgeport, Conn., has muscled its way not only into the Boston CRE scene, but is ranked 19th largest CRE lender in the country, according to a recent report by SNL Financial.
Other regional banks staking a claim in the Eastern Massachusetts commercial real estate market include Waterbury, Conn.-based Webster Bank and Buffalo, New York-based First Niagara.
Several of the community and regional banks have buffeted their CRE lending groups over the past several years with experienced local lenders, some from much bigger banks.
Bring In The Vets
Douglas MacLean, who formerly headed TD Bank New England’s commercial real estate division, joined First Niagara two years ago and has quarterbacked the bank’s Massachusetts CRE lending growth from zero in 2011 to $300 million.
“When any bank outside a market is trying to penetrate that market, the normal strategy is to try to add talent within that market that might have a following,” he explained. “That’s what motivated them in hiring me. Subsequently, I brought on additional folks from TD with similar experience in the local market.”
Webster Bank also tapped a local real estate banking veteran, Claudia Piper, to lead its Boston office.
Piper joined Webster in 2011 as senior vice president for commercial real estate, bringing with her more than 20 years of experience in the Boston commercial real estate market.
That experience is critical, since Boston’s commercial real estate market financing market has become “much more competitive,” she said.
“Really, in the $10 million to $25 million range, you can have anyone from Webster Bank to East Boston Savings to Bank of America to U.S. Bank to a life insurance company and a CMBS (commercial mortgage-backed securities) player,” she said.
To stand out from the financing pack, Webster touts its team’s expertise and its banking capabilities.
“We are relationship managers that have been in our markets a number of years and know the markets and know our players well, and we have a platform within Webster that gives our clients the financing opportunities they want: from short- to long-term, construction, bridge or permanent financing,” Piper said.
In 2011, Webster’s Boston office closed more than $90 million in CRE loans. Last year, the office’s CRE loan volume jumped to more than $200 million.
‘Trying To Make Things Simple’
Darryl Fess, a banking veteran with more than 15 years of commercial real estate experience, took the helm of Brookline Bank’s commercial real estate banking group two years ago. With many of the larger banks offering low-rate loans, Brookline Bank realized it would be tough to compete on price alone.
So, Fess said, “You sharpen your pencil as best you can to have pricing that is reasonable, but you sell yourself as providing extra service, trying to make things simple for your client.”
Brookline Bank doesn’t use high-priced Boston law firms for closings, for example, when it can hire capable local attorneys, he said.
Last year, Brookline closed on about $350 million in CRE loans; this year, similar results are expected.
“Everybody on the team has had lots of experience, so we are adding a great deal of value in terms of our experience, and that translates into quicker transactions and generally lower costs,” Fess commented.
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