Blue Hills Bank of Boston led the pack in growing its loan portfolio by more than 50 percent in 2013.
Matthew L. Brown
Reporter- Boston Business Journal
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Greater Boston’s real estate market has been on a hot streak, and the heat was definitely on for local banks’ lending operations in 2013.
Still, local bankers are careful to temper their excitement. They need the extra income, they say, to pay for increasing costs. And while somewhat higher interest rates mean banks are more comfortable holding the loans they make, they’re not high enough to inspire great confidence among small bank executives.
Loan portfolios at nearly a third of the Bay State’s community banks grew by 10 percent or more last year, and a dozen banks registered loan growth of 20 percent or more compared to the previous year, according to a BBJ analysis of FDIC data. Tops among them was Blue Hills Bank, which finished 2013 with a loan portfolio nearly 57 percent fatter than it was the year before.
Bankers who were ready to roll with a changing market were able to take advantage of a few key factors. For example, interest rates increased about halfway through the year, but not enough to seriously hurt demand. With rates at 4.25 or 4.35 percent, bankers were more willing to keep those loans on their books rather than sell them, which they did as quickly as possible with loans that carried rates in the 3 percent range. Also, bankers say the loans packaged in mortgage-backed securities banks keep in their investment portfolios were paid down very quickly last year. With demand high for both 30-year mortgages and commercial loans, banks shifted the cash they made on MBS away from investments and into lending.
Old fashioned hustle played a part, too. “We did it through increased advertising, as well as new branches and putting more lenders in the branches,” CEO Michael Jones said of The Institution for Savings’ 24 percent loan increase.
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