Banker & Tradesman: March 4, 2019

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THE FINANCIAL SERVICES AND REAL ESTATE WEEKLY FOR MASSACHUSETTS

BY THE NUMBERS

PAGE 6

County close-up: Middlesex Spotlight: Lowell

IN PERSON

PAGE 8

When companies can’t make their loan payments, that’s when bankruptcy attorneys like Andrew Lizotte step in. Lizotte is a shareholder at the law firm Murphy & King and has extensive experience representing different factions in bankruptcy proceedings including operating Chapter 11 businesses.

WEEK OF MONDAY, MARCH 4, 2019

RESIDENTIAL REAL ESTATE

BY THE NUMBERS

20,000 The number of apartments expected to come online in Boston in 2019 and 2020. See Scott Van Voorhis’ column on page 1.

Source: CoStar

$290,000 The 2018 median home sale price in Lowell, nearly $80,000 below the state median. See By the Numbers on page 6.

Source: The Warren Group’s Statistics Module

8.65 percent The current delinquency rate on FHA mortgages. See Kenneth Harney’s column on page 4.

Source: Federal Housing Administration

COMMERCIAL INTERESTS

DON’T EXPECT A CRASH IN BOSTON’S LUXURY MARKET

40 percent 40 percent of apartments in the Seaport had a rent special as a sweetener last year. See Scott Van Voorhis’ column on page 1.

Source: CoStar

$2.85 million The purchase price in the recent sale of a 3,142-square-foot Provincetown home. See the Gossip Report on page 10.

Source: The Warren Group

45 percent The new maximum debt-to-income ratio for Fannie Mae mortgages. See See Kenneth Harney’s column on page 4.

Source: Fannie Mae

38,470 The number of housing units in Lowell.

See the Town Spotlight in By the Numbers on page 6.

Source: U.S. Census Bureau

Data Suggest Soft Landing More Likely

BY SCOTT VAN VOORHIS BANKER & TRADESMAN COLUMNIST

BOSTON APARTMENT VACANCY RATES

B

oston’s high-flying luxury apartment market is surely headed for a landing of some sort. The only question now is what just exactly what kind of landing it will be.

Will it be a bit bumpy, but mostly smooth, glide in which rent growth stalls out, vacancies increase and plans for new luxury towers take a breather?

Or will it be a crash landing that will see vacancy rates soar, rents plunge and a few unlucky developers of gold-plated downtown digs with $6,000-a-month rents lose their shirts?

Continued on Page 3

Source: CoStar Boston Multifamily Market Report Feb. 2019

$367,000 The January median single-family home sale price in Massachusetts, a new record. See Week on the Web on page 2.

Source: The Warren Group’s Statistics Module

Unless otherwise noted, all data is sourced from The Warren Group’s Mortgage Market Share Module, Loan Originator Module, Statistics Module and/or proprietary database. For more information please visit www.thewarrengroup.com/business/ datasolutions.

BOUTIQUE BANKING

T H AT ’ S T H E T I C K E T

At Less Than $100M in Assets, Millbury National Bank is a Rarity

Mid-Sized Music Venues Fill Niche

By Bram Berkowitz | Banker & Tradesman Staff

By Steve Adams | Banker & Tradesman Staff

Among the Smallest Banks, Concert Halls One Is Bucking the Trend Turn Up the Volume

Banking & Lending PAGE 3

Commercial Real Estate PAGE 7

2 | BANKER & TRADESMAN

MARCH 4, 2019

The Week on the Web

Timothy M. Warren Jr., CEO and Publisher David B. Lovins, President and COO

BANKER & TRADESMAN

A ROUNDUP OF OUR MOST POPULAR STORIES FROM THE PAST WEEK

Published by The Warren Group

BOSTON MOVES UP IN WORLDWIDE TECH HUB RANKING

ESTABLISHED 1872

• Consulting firm KPMG has moved the Boston metro up three places in its latest worldwide ranking of tech hubs that will lead innovation over the next four years.

• The firm put Boston in 12th place alongside Chicago and Toronto in early 2018.

This year, Boston took ninth, vaulting past India’s Silicon Valley in Bangalore, Israel’s biggest city Tel Aviv and German capital Berlin.

• Austin, Texas shared ninth place with Boston in this year’s rankings. The report cited “headline-grabbing announcements by several of the tech giants” as why Boston and Austin moved up in the rankings.

• The cities ahead of Boston were, in order, New York City, Beijing, Tokyo, London, Shanghai, Taipei, Singapore, and Seoul.

PUBLISHING

Associate Publisher: Cassidy Murphy Managing Editor: James Sanna Associate Editor: Steve Adams Reporter: Bram Berkowitz Contributing Writer: Scott Van Voorhis Audience Solution Specialists: Jenell James, Sarah Ahlgren

BAKER ANNOUNCES DETAILS OF NEW HOUSING PRODUCTION BILL

DOWNTOWN CROSSING BUILDING IN APPRAISAL CASE SOLD FOR $22M

Advertising Account Manager: Steve Ketler Graphic Designer: William Samatis

DATA SOLUTIONS

Director of Sales & Marketing: John Bottini Communications Manager: Mike Breed Executive Data Solutions Account Manager: William Visconti Data Solutions Account Managers: Chris Mirakian, Peter Sullivan

INFORMATION SERVICES

Director of Operations & Product Strategy: Samantha Bullock Data Operations Supervisor: Tammy Dandurant Data Vendor Coordinator: Tracey Kelley Data Quality Auditor: Ellen Gendron Acquisitions Coordinator: Linda MacDonald Transaction Acquisition Coordinators: Wally Bullock

• Fidelity Real Estate Co. LLC acquired the 7-story, vintage 1894 Winthrop Building for $21.75 million from Buffalo-Water 1 LLC, according to documents filed in the Suffolk Registry of Deeds.

• Fidelity had sold the building to Buffalo in 2004, which then leased the building back to Fidelity, which was allowed to purchase the building back from Buffalo as part of the lease.

• Following a dispute over whether the appraiser used in the deal had a conflict of interest, Buffalo sued Fidelity, but lost when the case came before the state Supreme Judicial Court. The appraiser in that case had determined the building was worth $22.9 million.

INFORMATION TECHNOLOGY

LYNN CPA PLEADS GUILTY TO MORTGAGE AND TAX FRAUD

Senior Applications Developer: Joe Chan

• David Plunkett, 53, of Lynn, pleaded guilty to one count of bank fraud and one count of aiding in the submission of false tax returns • Plunkett’s co-conspirators engaged in a scheme to defraud banks and other financial institutions by causing false information to be submitted to those institutions on behalf of borrowers located primarily in Salem from 2006 through 2015.

• The properties were usually multifamily buildings with two to four units, which the co-conspirators then converted into condominiums. The co-conspirators recruited other borrowers to purchase the individual condominium units, which were also financed by fraudulent mortgage loans.

• Plunkett assisted the scheme by preparing tax returns for some of the borrowers that contained false and inflated income. Plunkett also signed letters falsely representing that his CPA firm had prepared corporate tax returns for one of the shell entities, when in fact no such returns had ever been prepared or filed.

Software Developers: Michael Paul, Mark Wearsch

FINANCE & ADMINISTRATION

Controller: Gena Salvo Accounts Payable: Olga Khalaydovsky Accounts Receivable Clerk: Stephanie Griffin Human Resources Manager: Linnea Blair HR Coordinator: Andy Wells

• Gov. Charlie Baker’s proposed bill closely mirrors legislation he filed in late 2017, but which never came up for a vote in the House or Senate despite a broad coalition of support.

• Some legislators and housing advocates at the time said they wanted to see a zoning reform bill go further, and include tenant protections and elements geared toward affordability, among other things.

• The bill proposed to lower the threshold for certain zoning changes from two-thirds to a simple majority of the local governing body: approval of Smart Growth or Starter Home districts; increased density; allowing for the transfer of development rights and enacting natural resource protection zoning; reducing parking requirements and dimensional requirements, such as minimum lot sizes; and to enable construction of certain multifamily or mixed-use projects with at least 10 percent affordable units in locations near transit or downtown areas.

• The bill has the backing of NAIOP-Massachusetts and the Massachusetts Municipal Association.

SINGLE-FAMILY HOME, CONDO PRICES REACH ALL-TIME HIGHS IN JANUARY • There were 3,230 single-family home sales recorded in Massachusetts in January, a 10.2 percent decline from January 2018 when there were 3,626 transactions.

This marked the fewest number of transactions for the month of January since 2015. Meanwhile, the median single-family sale price increased 4.9 percent on a yearover-year basis to $367,000, marking an all-time high for the month of January.

• “The last time January saw a sale volume this low was in 2015, and the local inventory still hovering near a historical low, you can expect to see fewer sales. Low supply is likely to push prices higher still,” Tim Warren, CEO of The Warren Group, said in a statement.

• In January, there were 1,250 condominiums sold, compared to 1,441 in January 2018 – a 13.3 percent decline and the fewest number of transactions recorded for the month of January since 2015. The median sale price rose by 2.8 percent, hitting $354,600 – the highest January median condo price in Massachusetts in history.

CORRECTION An article in the Feb. 25 issue of Banker & Tradesman, “Bank’s Core Technology, Attitudes Limit Fintechs,” misstated the maximum loan amount borrowers can access using fintech service Numerated. The company can connect borrowers to loans of up to $250,000.

HERE’S WHAT YOUR PEERS WERE INTERESTED IN LAST WEEK: BANKE R & TR AD ESMA N

1

Downtown Crossing Building in Appraisal Case Sold for $22M

2

Baker Plotting New Zoning Reform Bill

3

Boston Moves Up in Worldwide Tech Hub Ranking

4

Stoughton Apartments to Get $8M Renovation

(ISSN 0005-5409)

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5

Single-Family Home, Condo Prices Reach All-Time Highs in January

6

Lynn CPA Pleads Guilty to Mortgage and Tax Fraud

7

Staples, Workbar to Go Separate Ways

8

Braintree Man, Ex-Portland Developer Charged With Fraud

9

Baker Warns of ‘Grave Mistake’ if Beacon Hill Doesn’t Act on Housing

10

Former Mass. Man Pleads Guilty to Conspiracy to Hide Money from Bank

POLL RESULTS Banker & Tradesman readers are convinced Boston’s housing crisis is far beyond the market’s ability to solve.

What’s the best way to create more housing in Massachusetts?

towns to permit 50% Require multifamily building near transit stops.

accessory dwelling 30% Legalize units statewide. the Commuter Rail 20% Revamp to attract buyers to more communities.

0% Let the market sort it out.

MARCH 4, 2019

BANKER & TRADESMAN | 3

COMMERCIAL REAL ESTATE COMMERCIAL INTERESTS

Well-Paid Renters Driving Luxury Boom Continued from Page 1 For the pessimists who look at all the posh new high-rises in Boston and its environs and see a bubble about to burst, there are some new stats to brood over.

Thousands of Luxury Units Hit the Market

First up is the growing vacancy rate in the luxury rental market, pegged at around $2,700 a month and up, according to real estate data and research firm CoStar Group.

The new apartment high-rises in downtown Boston and the Seaport are most visible, but the luxury rental building boom has spread its wings deep into the suburbs as well.

There are now more than 71,000 luxury

apartments in Greater Boston, with much of the new rental construction taking place in that deluxe category.

The vacancy rate for the luxury market, including new properties just leasing up, is 7.4 percent, considerably higher than the average for the entire market, according to CoStar.

And that number is poised to go even higher, with 10 percent of all luxury apartments in the Boston area projected to be vacant by 2020, CoStar said.

Why? One big reason is a big bump in new supply, with the luxury rental building boom expected to peak over the next two years.

The last two years have seen 14,700 new apartments come on line through the Boston area.

EXPECTED DELIVERIES OF MULTIFAMILY UNITS

Source: CoStar Boston Multifamily Market Report Feb. 2019

Beacon Hill’s seven-unit Maison Vernon condominium development opens this year. More than 20,000 new apartments, most of them luxury, are expected to hit the Greater Boston market in 2019 and 2020.

However, the next two years will see a veritable glut of high-priced, new buildings expected to open their doors in 2019 and 2020, bringing online more than 20,000 new apartments, most of them luxury.

The influx of new supply is likely to mean, at the least, a slowing in rent growth and a rise in concessions, like free rent.

A fifth of all available luxury units in 2018 had a rent special as a sweetener. That number doubled in the Seaport/South Boston, with rent specials offered for 40 percent of all available luxury units in the neighborhood.

“As the ultraluxury product keeps rolling in, the question for many in the metro is, how many more deep-pocketed renters are out there?” CoStar New England analyst Peter Conway wrote in a recent report on the Greater Boston rental market.

The pessimists and doom-and-gloomers are likely to wind up disappointed in the end.

While the luxury market’s landing could get a bit bumpy over the next two years as thousands of new units hit the market, there’s no looming collapse on the horizon.

There’s a recent precedent for the big bump in luxury supply in the pipeline.

Thousands of new apartments hit the South End and Back Bay in recent years, driving down rents. But the apartments filled up and rents at the top of the market are growing again in both neighborhoods.

There are also signs that market forces have already begun to rein the luxury building boom.

New construction starts on luxury projects – which would then open in late 2020 and 2021 – have begun to drop off.

Not wanting to get too overextended in the luxury development market, local banks are looking at new projects more critically.

And construction prices are also throwing off developer’s projections, rising 8 perContinued on Page 10

BANKING & LENDING BOUTIQUE BANKING

Among the Smallest Banks, One Is Bucking the Trend At Less Than $100M in Assets, Millbury National Bank is a Rarity

BY BRAM BERKOWITZ BANKER & TRADESMAN STAFF

S

ince the implementation of Dodd-Frank, the community banking sector has been going through a period of consolidation. The number of state-charted banks in Massachusetts has decreased from 165 at the end of 2010 – around the time Dodd-Frank was implemented – to 120 at the end of 2018.

But not all community banks have performed the same.

Within that subset, many banks over $500 million in assets have seen record earnings in recent years, while most of the smallest banks, particularly those under $100 million in assets, are merging and being absorbed into bigger banks.

There were 24 banks under $100 million in assets in Massachusetts at the end of 2010, according to the FDIC. By 2013, that number had dropped to 18. After this past year, there were only five banks left under $100 million in assets and two in the group – Fidelity Personal Trust Co. and Boston Trust & Investment Management Co. – are not community banks.

One of the banks that has managed to survive in the fiercely competitive Massachusetts banking environment is the $88 million asset Millbury National Bank.

To stay independent, MNB has continued to focus on lines of business it already has experience in, said Kathleen Marcum, president, CEO and chairwoman of the board of directors at MNB. “One of the things that we’ve been able to do is to promote ourselves as a boutique, and we focus on small businesses,” she said. “So, we are not a commodity and we do what we do well and those things we don’t know a lot about, we just don’t even go there.”

Just being in business today is an accomplishment for MNB. The bank was one of the 10 smallest banks in the commonwealth at the end of 2013.

Since that time, every other bank in that group has been acquired – Meetinghouse, Avon Cooperative, Merrimac Savings, Colonial Cooperative, Granite Savings, Lenox National, First Federal Savings of Boston, Chelsea Bank and FamilyFirst.

The bank also just outlasted one of its neighboring institutions – Millbury Savings Bank was purchased by Hometown Financial Group last week.

How to Make it on Less than $100M

When Marcum discussed not pursuing lines of business the bank didn’t know about, she wasn’t kidding.

Unlike most banks, which build their foundation on the mortgage business, MNB has never offered the standard 30-year fixed mortgage to its customers or sold them on the

To survive as one of the smallest banks in the state, Millbury National Bank’s leadership has focused the institution on small business lending, where it says it excels. From left: Chief Operations Officer John Latino; President, CEO and board chairwoman Kathleen Marcum; and Chief Financial Officer Suzanne Nydham.

secondary market. The bank does offer some portfolio adjustable-rate mortgage products that it keeps entirely in-house, but mainly focuses on commercial lending.

“By not pursuing that [mortgage] market,

it allows us to take our resources and focus on being one of the best small business lenders around,” MNB Chief Operating Officer John Latino said.

Continued on Page 10

4 | BANKER & TRADESMAN

MARCH 4, 2019

OPINION EDITORIAL

EDITORIAL CARTOON

Baker’s Zoning Reform Must Pass, But More Needed

M

assachusetts’ housing crisis has finally reached the point where nearly everyone is willing to support taking the first step to re-

solve it.

Gov. Charlie Baker last week unveiled a package of zoning reforms intended to spur the building of over 100,000 new housing units by 2025. If it passes the state legislature, town meetings, city councils and planning boards would no longer have to muster a two-thirds majority to adopt a slew of housingfriendly zoning, including mixed-use and 40R “Smart Growth” districts, legalizing accessory dwelling units, reducing parking and lot size minimums and special permits which grant a project increased density.

The bill is backed by both NAIOP-Massachusetts and the Massachusetts Municipal Association, a sign of how the far awareness of this crisis has spread.

It is also the sort of change that should have been made decades ago.

The two-thirds majority standard has locked many communities into a vicious cycle where good planning is impossible to pass, every land use decision becomes a political fight to the death and suitable projects die despite substantial community support.

A senior living facility proposed in Lexington last year offers a textbook example.

On overgrown land separated from most of the town by Route 2, and from Belmont residents by the Belmont Country Club, National Development sought to build a senior living facility with almost 200 units split between two buildings screened from the road and its few neighbors by a thick belt of trees and public nature trails protected by a conservation easement.

The project would have had limited impact on schools or traffic – free shuttles for residents and employee shift schedules that didn’t line up with rush hour ensured that – and would have provide desperately needed senior housing. Yet, the proposal lost a 106-56 Town Meeting ballot and only passed thanks to an alert resident’s use of parliamentary procedure to force a re-vote the next day, plus last-minute concessions from National Development.

Baker’s bill may not immediately generate schadenfreude – at the stroke of the governor’s pen, 30-story affordable housing towers won’t become as-of-right projects in Chilmark and Dover – but every single Bay Stater who understands that the state’s economic vitality depends on substantially boosting housing production should support for this measure.

They should not stop there, however.

For a variety of reasons – cowardice, myopia, ignorance and plain old inertia – Beacon Hill’s contemptable inaction on Massachusetts’ housing crisis has been allowed to continue for far too long.

Dozens of good ideas wait in the wings, from “Millennial Villages” of student-friendly microhousing, to mandatory TOD zoning, to Minneapolis-style blanket upzoning. However, many will need legislative action to become a reality, especially in the face of suburban intransigence.

Advocates, the business community and residents must use the momentum of this moment to carry the fight forward later in this session and in years to come as the state tries to dig itself out of the hole into which it has slid.

Banker & Tradesman Cassidy Murphy

Associate Publisher c m u r p h y @th e w a r r e n gr ou p . c om

Timothy M. Warren Jr.

Publisher T i m o t h y M. W a r r e n

Publisher 1975-1988 Keith F. Warren

Publisher 1928-1975 W i l l a r d C. W a r r e n

Publisher 1901-1928

T H E N AT I O N ’ S H O U S I N G

More Americans Are Paying Mortgages on Time Strict Standards Keep Out Borrowers Who Can’t Repay

BY KENNETH R. HARNEY WASHINGTON POST COLUMNIST

I

t’s a real estate and social barometer that doesn’t get a lot of publicity, but it’s important: More Americans are paying their mortgages on time today than they have in nearly two decades – maybe even longer.

That’s a big deal, because when large numbers of owners do the opposite – stop paying on their home loans for months at a time – the entire economy feels the effects.

Spiking delinquencies in 2007-2008 ushered in the global financial crisis and spawned tidal waves of foreclosures that devastated borrowers and their communities.

Some of the wounds are still fresh. Delinquency rates may sound like a yawn, but they are a key economic bellwether that shouldn’t be ignored by anyone serious about real estate.

Here’s the good news: The national delinquency rate on home loans hit the lowest level it’s been in 18 years as of the final quarter of 2018, according to data compiled by the Mortgage Bankers Association.

Borrowers with conventional mortgages, those eligible for sale to investors Fannie Mae and Freddie Mac, are the best performers; roughly 97 percent of them are paying on time. Borrowers with Federal Housing Administration-insured (FHA) mortgages pay late nearly three times more frequently; even so, more than 91 percent of them are on time.

In the conventional market, that’s why Fannie Mae and Freddie Mac – the country’s two largest sources of mortgage money -– have kept their average FICO credit scores near a relatively pristine 750, well above levels typical before the financial crisis. FICO scores run from 300 to 850, with low scores indicating a high probability of future delinquencies and foreclosures.

An improving economy has helped significantly as well. Mortgage interest rates continue to be below historical averages. Unemployment has fallen steadily and is now at or near multi-decade lows. Plus, many of today’s owners are sitting on sizable equity gains as they pay down mortgage balances on their homes while price inflation pushes their values up.

The Federal Reserve estimates homeowner equity now totals a stunning $1.5 trillion, the highest ever. For some owners, that cushion functions as an insurance policy should anything threaten their ability to pay the mortgage.

How long can the current impressive performance continue? No one can be certain, but here are a couple of observations.

Mortgages originated in the past several years under strict federal rules constitute what lenders and investors call “the cleanest book of business” they’ve seen in many years. If the lending industry begins to relax underwriting standards in any significant way in order to dig deeper into the pool of riskier credit applicants to pump up their volume of home-purchase mortgages, it’s inevitable that delinquencies will rise.

There’s some evidence that a modest loosening of standards got underway last year.

Homeowners’ demand for refinancing dissipated with rising interest rates, and some lenders began easing standards to include a broader mix of applicants.

FICO itself confirmed in a study that average credit scores were on the decline in the home-mortgage arena.

Fannie Mae relaxed its policy on debt-to-income (DTI) ratios for buyers, allowing more applicants with DTIs up to 50 percent to pass muster for a loan. Previously, the cut-off was 45 percent.

Meanwhile, the FHA has seen notable declines in average credit scores and is approving low-down-payment purchasers with DTI ratios well above 50 percent.

Steps like these may appear – and be – helpful for marginally qualified first-time buyers. But what will they look like through hindsight during the next recession?

Since 2010, stricter federal underwriting rules imposed on the mortgage industry have banned some of the lending industry’s previous worst habits.

Credit Strict Lending Criteria

The big gap between homeowners with conventional loans and FHA borrowers shouldn’t be surprising, because FHA borrowers have lower credit scores, higher debt-to-income ratios and lower down payments on average. All three factors multiply the risk that borrowers will pay late. Yet even at 8.65 percent, the current FHA delinquency rate is much better than it was a decade ago, when it hovered around 14 percent.

Overall, U.S. homeowners are performing better today in terms of on-time payments and foreclosure avoidance than they have in 30 years, said Freddie Mac Chief Economist Sam Khater.

What’s contributing to this good behavior? It’s no secret: Since 2010, stricter federal underwriting rules imposed on the mortgage industry have banned some of the lending industry’s previous worst habits and required them to screen out high-risk borrowers, essentially limiting their customer base to people who can truly afford the mortgages they’re seeking.

Ken Harney’s email address is harneycolumn@gmail.com

MARCH 4, 2019

BANKER & TRADESMAN | 5

OPINION BETTER BANKING

Give Your Back Office More Empathy for Your Clients An Out-of-Touch Back-Office Team Can Drag Down Your Bank

BY LAUREL EGAN KENNY SPECIAL TO BANKER & TRADESMAN

I

f your commercial bank’s organizational structure and culture are like most, your back-office team takes its place, well, behind the scenes – out of the way and most certainly out of limelight.

Back-office teams consist of support staff that drive the bank’s innovation, client relationships and operations before and after the sale. But critical functions such as product development and product management, implementation and client service cannot be performed well without interfacing with – and empathy for – the client.

For that reason, banks are tripling down to ensure back-office teams know the client (particularly highly valued ones) through goal alignment, sophisticated tools and training.

No one, not even back-office professionals, can hide from direct accountability for the commercial bank’s goals in an environment where differentiation is hard to come by, competition is unprecedented and margins are lean.

Complex client systems track client interfaces, interactions and evaluations, and tie performance to compensation and job security.

Empathy Leads to Better Service

Still, some back-office staff members are out of touch with human touch – lacking empathy for end clients and the opportunity, ability or desire to engage with clients/ end users. Pioneering bank leaders are taking the unprecedented step – or perhaps a leap of faith – to invest heavily in back-office teams’ professional development with the recognition that educating these employees about the bank’s clients will have a direct impact on the work they produce and how well they work with or for their customers.

Empathy training, or “A Day in the Life of …” training can be an impactful, enlightening approach to professional development when it teaches participants to have an appreciation for the end user’s challenges and how they overcome them in the course of their role in their organization.

Training helps learners understand how, when and why

the end client and his or her team perform certain tasks, the nuances of specific roles on the team and with whom and with which applications they interface with and how they use technology in the scope of their jobs in a course of a day, week, month, quarter or year.

Empathy training is especially compelling when a seasoned practitioner not only provides insights for, but presents alongside, an industry professional as part of a structured curriculum. It is advantageous for back-office team members to interface with a client directly and dynamically on their own terms. Testimonials and quotations from focus groups, surveys, evaluations or other written documentation is not a substitute for interpersonal contact and the ability to learn directly from a human being with thoughts, emotions, experience, opinions, perspectives and stories.

Interestingly, back-office professionals often reject “client intelligence” from salespeople at their bank because they view it as tainted, incomplete, inaccurate or too high-level as compared to their detailed knowledge of individual and aggregate client volumes, payment types, timing, cash flows, process flows, customer service requests, systems interfaces, etc.

spective job functions.

Learning directly from a sample of actual clients or prospects is best, but if it is not possible, empathy training is the next best thing if it is done right. An effort should be made to find a training company with broad networks that is likely to result in access to “clients” in the same role, industry and similarly-sized company. Any nuances should be understood, noted and explained.

Finally, it is very important that the training is fully vetted for accuracy by senior executives to avoid offering up clients who are similar in scope but not quite right. This may cause more harm than good. For example: perspectives and goals of accounting professionals and treasury professionals are very different.

Testimonials and quotations from focus groups, surveys, evaluations or other written documentation is not a substitute for interpersonal contact and the ability to learn directly from a human being with thoughts, emotions, experience, opinions, perspectives and stories.

Training Puts Human Face on End Users

Empathy and day-in-the-life-of trainings pick up where back-office professionals’ knowledge leaves off.

The training puts a human face, senses, emotions and behaviors into the client relationship, thereby allowing the back-office professional to have empathy for the end user.

Ideally, the end user will provide back-office team members a sense of his or her short-term and long-term goals, the challenges she or he faces or has faced and how he or she overcomes challenges. Back-office professionals are engaged in the conversation when they are able to ask the end user/practitioner questions that pertain to their re-

An investment in empathy training for back-office professionals is an investment in a commercial bank’s future given its profound effect on new and seasoned employee morale and perspective – and the bottom line. The impact of empathy training can be life-changing for back-office professionals, in that they learn directly from industry practitioners how to significantly improve the tactical and strategic functions of the client/end user and how his or her team performs within an organization.

Laurel Egan Kenny is president and CEO of Boston-based Turningpoint Communications, a treasury managementfocused marketing, business development support and training company.

A BETTER CITY

Massachusetts Needs a Comprehensive Transportation Finance Plan New Report Identifies Funding Gap for Transportation Needs

BY RICK DIMINO SPECIAL TO BANKER & TRADESMAN

I

f Massachusetts wants to maintain its reputation as a great place to live, and as a global leader with a dynamic economy, our transportation infrastructure must improve to keep pace with our growing needs.

Heavy congestion on both roadways and transit suggest we are outgrowing our current transportation system and need to adopt strategies to expand and increase transit service and capacity.

Currently we are underfunding our transportation system in Massachusetts. A Better City and the UMass Donahue Institute recently released an analysis that identified a projected $8.4 billion funding gap over the next 10 years to properly maintain our existing system.

Based on current projected funding levels, the state can expect to see an increase in the number of structural deficient bridges, poor quality in roadway pavement and a delayed rate of progress in fixing the existing MBTA transit system.

This estimate does not include funding necessary to modernize, expand and decarbonize the commonwealth’s transportation system as called for in the Baker administration’s 2018 Future of Transportation Commission recommendations. Finally, this projected financial gap does not account for any substantive steps to address the commonwealth’s growing traffic congestion problems. With obvious accessibility needs from a growing population and economy, we face difficult decisions today on the quality of the system that we will use for decades to come.

Certainly, the size of the problem can appear to be insurmountable. However, the first step towards a transportation solution is agreeing on the size of our funding challenge. Then we can design a finance plan for ad-

dressing and prioritizing these needs in a fair and equitable manner.

Over 10 years ago, Massachusetts faced a similar challenge with transportation finance and we have seen the fruits of a 10-year effort to change our public sector management and bureaucracy. With the establishment of a Massachusetts Department of Transportation, the creation of the MBTA Fiscal and Management Control Board and the implementation of all-electronic tolling, the progress from meaningful reforms is producing real results.

On the funding side, the Baker administration has put in place a historic funding plan for the MBTA over the next five years.

On the funding side, the Baker administration has put in place a historic funding plan for the MBTA over the next five years. This includes following through on the Green Line Extension project and the purchases of new vehicles for the Red and Orange lines, but to eliminate the MBTA’s $7.3 billion repair backlog in 15 years, the MBTA must increase its project development and delivery capacity and receive a reliable funding stream.

Today, we need to move forward to establish a comprehensive transportation finance plan to move beyond its 20th century transportation infrastructure. Transportation is a cornerstone of quality of life and our economy.

We need a system that is functional, flexible and equitable, regardless of where people live or what form of transportation they use.

Fare increases at the MTBA are only a piecemeal approach to raising revenue for transportation. We need a larger effort and vision to support smart growth, equity concerns, greenhouse gas reduction and climate resilience.

It is worth studying the potential for expanding tolling – through the all-electronic tolling system – onto other key corridors throughout the commonwealth and potentially at Massachusetts’ borders with our neighboring states.

The Baker administration is showing true leadership by partnering with other states on the Transportation and Climate Initiative to address greenhouse gas emissions in the transportation sector, but the timing and amounts of potential new revenue a from this effort is unclear at this time. Congestion pricing strategies should also be on the table to better managing our network of roadways and could be a way to support a robust mass transit system that would options for commuters. We should also reconsider the future of our Commuter Rail system as an enhanced regional and urban rail network.

Finally, this is not just an issue facing metropolitan Boston or the riders of the MBTA. The entire commonwealth can than prosper if we unlock economic growth and access to affordable housing in gateway cities, particularly in Central and Western Massachusetts, by improving accessibility to these communities through improved mass transit service.

The state needs an immediate blueprint for both our maintenance needs and funding to build the 21st century system we all deserve. The challenge is real and the funding need is substantial, but now is the time for us to work together to ensure we make progress on improving and expanding our system. Let’s start this legislative session and creating a plan that moves Massachusetts forward toward this essential goal.

Rick Dimino is president and CEO of A Better City.

6 | BANKER & TRADESMAN

MARCH 4, 2019

BY THE NUMBERS COUNTY CLOSE-UP

MIDDLESEX

STATISTICAL SNAPSHOT MEDIAN SALES PRICE

Community Acton Arlington Ashby Ashland Ayer Bedford Belmont Billerica Boxboro Burlington Cambridge Carlisle Chelmsford Concord Dracut Dunstable Everett Framingham Groton Holliston Hopkinton Hudson Lexington Lincoln Littleton Lowell Malden Marlborough Maynard Medford Melrose Natick Newton North Reading Pepperell Reading Sherborn Shirley Somerville Stoneham Stow Sudbury Tewksbury Townsend Tyngsboro Wakefield Waltham Watertown Wayland Westford Weston Wilmington Winchester Woburn Middlesex County

Jan. 2019

Change from 2018

SPOTLIGHT Lowell

YEAR SETTLED 1653

Lowell has long been a city of immigrants, from Irish famine refugees in the early 1800s to Cambodians fleeing the Khmer Rouge genocide in the 1970s and ’80s and Africans from Liberia, Kenya, Ghana and Togo today.

According to the 2010 Census, Lowell has the highest proportion of residents of Cambodian origin of any place in the United States, at 12.5 percent of the city.

YEAR INCORPORATED 1826 (town) 1836

TOTAL AREA 14.5 square miles POPULATION 106,519 DENSITY 7,300 people per square mile TAX RATES Residential: Commercial:

Change from 2018

$695,500 7.16% 6 -33.33% $795,000 16.31% 21 31.25% $232,500 -5.10% 4 33.33% $386,500 -12.46% 10 -28.57% $305,000 -37.11% 5 66.67% $815,000 23.11% 3 -50% $1,195,000 8.64% 10 11.11% $401,000 4.16% 16 -36% N/A N/A N/A N/A $500,000 -2.44% 17 6.25% $1,550,000 -56.94% 10 233.33% $829,000 -18.28% 3 -25% $426,000 -11.43% 28 40% $1,162,500 76.81% 12 -33.33% $315,000 -3.08% 15 -25% N/A N/A N/A N/A $425,000 3.03% 7 -30% $410,000 2.5% 27 -42.55% $547,000 24.89% 3 -57.14% $514,875 35.14% 8 166.67% $660,000 1.93% 13 -7.14% $389,250 14.82% 18 80% $897,500 -24.07% 14 7.69% $2,052,500 97.17% 4 -20% $490,500 26.89% 8 0% $290,000 -0.85% 30 7.14% $458,000 -8.86% 17 13.33% $300,000 -15.49% 11 -26.67% $328,500 -5.93% 4 -33.33% $647,000 15.54% 21 -8.7% $602,500 -7.73% 13 116.67% $553,500 -18% 18 50% $1,275,000 34.21% 30 -26.83% $554,000 33.49% 17 13.33% $327,500 14.91% 5 -37.5% $562,500 9.22% 16 77.78% N/A N/A N/A N/A N/A N/A N/A N/A $699,000 -36.07% 5 -37.5% $597,500 11.68% 8 -11.11% N/A N/A N/A N/A $640,000 12.28% 5 -28.57% $440,000 25.64% 13 -31.58% $250,000 0% 8 60.00% $361,000 3.88% 10 11.11% $528,750 8.57% 12 -29.41% $537,500 -3.99% 18 -35.71% $647,250 3.56% 9 -10% $757,000 -6.25% 3 -70% $540,000 -8.09% 22 120% $2,140,000 18.89% 10 -23.08% $485,000 22.78% 13 -23.53% $1,161,000 0.69% 17 6.25% $410,000 -13.14% 17 21.43% $525,000 5% 624 -6.31%

• Statistics based on single-family home sales of $1,000 and above, excluding condominiums and foreclosure deeds • Source: The Warren Group

$14.04 $28.59

TOTAL NUMBER OF HOUSING UNITS 38,470

SALES VOLUME Jan. 2019

(city)

“The stars belong to everyone.”

— Helen Sawyer Hogg, Lowell native, groundbreaking astronomer and science journalist.

MEDIAN SALES PRICES 600000 $600,000 500000 $500,000 $400,000 400000 $300,000 300000 $200,000 200000

2009 ’09

2010 ’10

2011 ’11

2012 ’12

2013 ’13

2014 ’14

2015 ’15

2016 ’16

2017 ’17

• All sales thru January 2019

Middlesex Massachusetts

• Graph based on single-family home sales of $1,000 and above, excluding condominiums and foreclosure deeds • Source: The Warren Group

SALE VOLUME

TOP 3 MORTGAGE LENDERS Rank

1500 15000 1200 12000 900 9000

% of Market Share

1

Guaranteed Rate Inc.

5.85%

2

Guaranteed Rate Inc.

4.59%

3

Leader Bank N.A.

3.45%

TOP 3 LOAN ORIGINATORS

300 3000

0

Lender

Rankings and Mortgage Market Share stats include purchase and refinance mortgages for single-family homes through December 2018 Market share percentage based on volume of mortgages • Source: The Warren Group

600 6000

0

2018 ’18

Rank

2010 2011 2012 2013 2014 2015 2016 2017 2018 ’10

’11

’12

’13

’14

’15

’16

’17

’18

• All sales thru January 2019

• Graph based on single-family home sales of $1,000 and above, excluding condominiums and foreclosure deeds • Source: The Warren Group

’19

Lender

Organization

1

Shant Banosian

Guaranteed Rate Inc.

2

Andrew Marquis

Guaranteed Rate Inc.

3

Marcus J. Sohn

Leader Bank N.A.

Ranked by volume of loans through December 2018

TOP 10 EXISTING HOME SALES Street Address Community

Buyer Seller

Date Price

1

12 Hubbard Park Road Cambridge

Peter Palandjian FT Joseph P. Glenmullen

1/25/2019 $15,000,000

2

5 Fayerweather St. Cambridge

Aman Patel Rachelle Selkovits IRT

3

16 Sacramento St. Cambridge

4 5

Rank

Street Address Community

Buyer Seller

Date Price

6

32 Highland St. Cambridge

Amos Third Corner LLC Lois Stiles-Edgerly

12/14/2018 $4,500,000

1/31/2019 $7,000,000

7

304 Marsh St. Belmont

Marcia W. White William W. Hunt

1/22/2019 $3,900,000

Larry E. Kim 16 Sacramento Street NT

12/13/2018 $5,400,000

8

33 Tabor Hill Road Lincoln

Mark R. Nebelung Edvaldo A. Morata

1/4/2019 $3,400,000

12 Kirkland Place Cambridge

Jennifer Mackay-Pyle Lesley University

12/12/2018 $4,800,000

9

4 Cerulean Way Lincoln

Tai K. Liu Madeline Osit

1/30/2019 $3,150,000

6 Woodchester Drive Newton

Jeffrey W. Mittleman 6 Wood LLC

1/7/2019 $4,650,000

10

121 Windsor Road Newton

121 Windsor Road RT David D. Mackinnon

12/12/2018 $3,116,000

• Statistics from Nov. 2018 - Jan. 2019 • New Construction Excluded • Source: The Warren Group

Rank

MARCH 4, 2019

BANKER & TRADESMAN | 7

COMMERCIAL REAL ESTATE T H AT ’ S T H E T I C K E T

Concert Halls Turn Up the Volume Mid-Sized Music Venues Fill Niche

BY STEVE ADAMS BANKER & TRADESMAN STAFF

I

n the Fenway, the live music scene is following the housing market on the road to gentrification.

Gritty rock clubs are giving way to upscale music halls touting chef-inspired dishes, LED walls and $3,200 VIP memberships.

As Fenway Park warms up for another summer slate of classic rock headliners, the Red Sox owners are eyeing some of their underutilized real estate to accommodate a sought-after niche in the live music business: mid-sized venues. The proposed Fenway Theater touts an intimate concert experience for 5,400 patrons on four levels.

It’s the same story at The Hub on Causeway, which will supplement the TD Garden’s 20,000-capacity arena with a new 40,000-squarefoot music hall. And in Brighton, the Boston Landing development recently leased 41,000 square feet at its 172,000-square-foot track and field complex to the nation’s second largest concert promoter, Los Angeles-based AEG. A confluence of factors is contributing to the concert hall boom, industry watchers say. Mixed-use developments are competing for distinct attractions to bring visitors to the property. With the decline of the big-box retail model, projects are adding more entertainment and dining to ground-floor spaces.

And industry-leading concert promoters such as Live Nation and AEG continue to assert their market dominance, seeking to extend their reach from outdoor stadiums and arenas to mid-sized concert halls once controlled by independent promoters.

“Nobody’s going to make a fortune on this in a development, but you want it as a component,” said Mark Rosenshein, a partner at Boston-based development consultants Trademark Partners. “It’s really just a driver for people and a way to differentiate yourself.”

vate suites and a stage wrapped in LED walls.

Boston-based Big Night, operator of such upscale nightclubs as the Grand and Scorpion Bar in the Seaport District, will manage the North Station venue scheduled to open this fall.

“Big Night Entertainment Group is an established luxury brand, and the way Bostonians are currently dining and socializing calls for a new way to enjoy live music as well. Big Night Live offers a first-of-its-kind hospitalityfocused experience in Boston where a night out can include great dining, exceptional service and world-class entertainment,” Big Night Principal Ed Kane said in a statement.

NB Development, New Balance’s real estate arm that is developing the 1.9-million-squarefoot Boston Landing, declined to comment on AEG’s plans for the 71 Guest St. facility.

The owners of Charlestown’s Hood Park had also proposed a 4,000seat concert hall in 2017 as they expand the 20acre business park with new office buildings and apartments. The live music component was silenced by neighborhood opposition.

That points to some of the unique challenges of concert halls, said Rosenshein, who is an adviser to Hood Park owners Catamount Management. Building designs require aggressive noise abatement, transportation plans need to account for brief bursts of heavy traffic, and developers need to select an operator well-versed in crowd control.

“There’s relatively few promoters that manage these well. You would not want to go into it with someone who doesn’t have experience,” Rosenshein said.

Industry-leading concert promoters such as Live Nation and AEG continue to assert their market dominance, seeking to expand their reach from outdoor stadiums and arenas to mid-sized concert halls once controlled by independents.

The owners of the Boston Red Sox are expanding their concert business with plans for an 87,000-squarefoot music hall on Lansdowne Street.

A venue proposed for Hood Park was silenced by its Charlestown neighbors, pointing to the challenges such venues face: noise, sudden and intense traffic and the need for an experienced operator.

No companies fit that description better than Los Angeles-based Live Nation, which has built a $10 billion a year empire through dozens of acquisitions of smaller concert promoters. Live Nation’s 2009 acquisition of Ticketmaster gave it a powerful marketing tool and has spurred accusations that Live Nation pressured venues owned by AEG and others to contract with Ticketmaster or lose bookings. The TD Garden is among the venues allegedly threatened by Live Nation, ac-

Shrinking Options for Smaller Venues

The growth of the music hall category coincides with challenging prospects for smaller independent nightclub venues, which face rising rents throughout the city.

Continued on Page 10

HOT PROPERTY WHAT: 50 POST OFFICE SQUARE

Each week, Banker & Tradesman commercial real estate reporter Steve Adams spotlights a commercial real estate property in Massachusetts notable for its high deal activity, unique design or one-of-a-kind special features.

WHERE: BOSTON OWNER: LASALLE INVESTMENT MANAGEMENT BUILT: 1947

Lansdowne Street Nightclub Row Grows

A triangle of land behind the Fenway Park bleachers is envisioned as a new magnet for hundreds of live events annually.

Fenway Sports Group Real Estate submitted plans in late February for the nearly 87,000-square-foot Fenway Theater on a 1.5acre parcel currently occupied by parking and a commissary.

The 4-story structure with a roof terrace will be run by a joint venture with Live Nation, which already manages the nearby House of Blues, and will coordinate bookings between the two venues, according to materials submitted to the Boston Planning and Development Agency. The theater will be laid out with flexible seating for approximately 150 concerts and 75 special events a year.

Across town, Live Nation, operator of the recently-renamed Rockland Trust Pavilion in the Seaport District, is partnering with Bostonbased Big Night Entertainment at the 1.9-million-square-foot Hub on Causeway at North Station. Festooned with Venetian curtains and crystal chandeliers, the 40,000-square-foot Big Night Live will include 30 VIP tables, pri-

cording to a New York Times report detailing a U.S. Department of Justice probe into possible anti-trust violations. Live Nation denied the allegations.

THEY SAID IT:

“This new environment blurs the lines between indoor and outdoor to showcase the interactive media experience and engage the tenants, visitors and the community. It’s a project that embraces history while stepping with confidence into the future of our city.”

— Mark Sardegna, principal, Elkus Manfredi Architects

• A new glass box lobby completed this winter at 50 Post Office Square completed was designed to make the 782,000-square-foot Art Deco office tower more appealing to prospective tenants including tech companies.

• Designed by Elkus Manfredi Architects, the 3-story, 3,000-square-foot lobby at the 110 High St. entrance creates a contemporary accent to the limestone office tower. A 100-foot media band by ESI Design is programmed with three modes that interactively play off activity in the lobby measured by ceiling sensors.

• Following a 117,000-square-foot lease with Medidata Solutions’ SHYFT Analytics division, the building’s occupancy has risen to 100 percent. Dave Martel and Gil Dailey of Newmark Knight Frank represented ownership in the Medidata lease, while Lisa Kiell and Kelly Lockberg of JLL represented Medidata Solutions.

• LaSalle owns 2.5 million square feet of real estate in Boston worth $1.1 billion.

THINK YOUR PROPERTY IS HOT? Drop Steve a line at sadams@thewarrengroup.com

8 | BANKER & TRADESMAN

MARCH 4, 2019

IN PERSON

Bankruptcies Are About Solutions

Q: A:

What is the main reason most companies you work with end up declaring bankruptcy?

There are multiple paths that can lead companies into a workout or bankruptcy proceeding. In some instances, disruption of an industry from outside forces makes continuation of the status quo impossible. For example, our office has worked with more than one borrower in the challenged taxicab industry. The vagaries of the economic cycle often led by commercial real estate and changes in interest rates can lead to a wave of filings. Occasionally, a change in a company’s leadership, a mistake in judgment or an adverse result in litigation can be the precipitating cause.

Q: What is one recent interesting bankruptcy case that you did in Massachusetts?

A:

Our office serves as counsel to the Chapter 11 bankruptcy trustee for TelexFree, one of the largest Ponzi schemes in United States history. The case, while based in Massachusetts, involved upwards of a million participants in the scheme from dozens of countries. Over the course of the past few years, we have worked with the trustee and his financial advisors to establish the existence of the Ponzi scheme and to establish a process for recovering funds and distributing those funds to participants who were harmed by the scheme.

In that regard, we assisted the trustee in bringing actions against participants who were “net winners” from their involvement in the scheme and have worked collaboratively with federal authorities in connection with recovery of asset forfeitures. We also worked with the trustee and his advisors in establishing a methodology for determining allowable claims and creating an orderly process to resolve more than 130,000 claims filed in the case. The case has thus far been a good example of multiple parties working together to unravel and administer a complex business case for the benefit of those harmed.

Q: Is there a specific geography in Massachusetts where you see a lot of commercial real estate bankruptcy cases?

A:

Most of the commercial bankruptcy cases we have seen tend to be focused in the Greater Boston area, extending out to Routes 128 and 495. Beyond geography, difficulties tend to be based on industry trends such as the rise of e-commerce, its effect on brick and mortar stores and shopping malls and continuing efforts to repurpose some of this real estate.

Q: When it comes to bankruptcy, what do financial institutions get right in the process? What is one thing you wish they did better when negotiating a bankruptcy?

A:

ANDREW LIZOTTE

Resolution of a troubled loan often works best when there is a cooperative approach. This type of collaboration may include providing a borrower with the opportunity needed to sell off unproductive assets or business lines that will enable the borrower to return to profitability and restructure the loan so that it is again performing. The borrower and lender can also work consensually to achieve a sale or refinancing that will provide a recovery greater than that which would be obtained in a liquidation.

Title: Shareholder and Bankruptcy Attorney, Murphy & King Age: 53 Industry experience: 28 years

BY BRAM BERKOWITZ BANKER & TRADESMAN STAFF

W

hen companies can’t make their loan payments, that’s when bankruptcy attorneys like Andrew Lizotte step in. Lizotte is a shareholder at the law firm Murphy & King and has extensive experience representing different factions in bankruptcy proceedings including operating Chapter 11 businesses, committees of unsecured creditors, lenders, both liquidating and operating trustees, examiners and individuals. His experience has gained him expertise on how bankruptcies can be solved, and how banks can make their loans wisely.

Prior to his current role, Lizotte was law clerk to the late U.S. District Court bankruptcy judge James F. Queenan Jr. Before that he worked at KPMG. Banker & Tradesman caught up with Lizotte to discuss bankruptcy proceedings and how banks can make smarter choices to not only avoid bankruptcy, but to come up with smart solutions when facing it.

The borrower and lender can also work consensually to achieve a sale or refinancing that will provide a recovery greater than that which would be obtained in a liquidation.

In many instances we will prepare a liquidation projection of the borrower and use that analysis as the springboard for negotiations on a repayment proposal. An aggressive approach to resolving a distressed loan that is not sufficiently tethered to achievable goals often results in mounting professional costs and distraction from the pursuit of a practical business solution.

Q: Is there a metric that financial institutions should be looking at when making loans that they don’t pay close attention to now?

A:

In addition to traditional metrics for loan evaluation such as collateral coverage and immediate prior performance, prospective lenders may also consider broader industry trends including potential for disruption in an industry and adaptation to any disruption that may arise from innovation or changes in the regulatory or policy environment. An example of this would be a consideration of potential impact that certain sectors may experience from changing regulations relating to trade and tariffs.

FIVE FACTS ABOUT LIZOTTE:

1

Favorite movie: “The Fighter”

2

Favorite place to visit: Narragansett, Rhode Island

3

Favorite musician: John Mellencamp

4

Favorite hobby: Spending time with his family

5

Favorite food: DQ Blizzards

MARCH 4, 2019

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10 | BANKER & TRADESMAN

MARCH 4, 2019

Will the Smallest Banks Survive?

Continued from Page 3 The bank has used a similar strategy in all aspects of its business.

For instance, when it comes to technology Latino said the bank knows it has to innovate, but that it must weigh the costs and benefits very carefully before implementing anything new.

“We are never going to be the first bank on the block to roll out the latest and greatest tech tool, but we do want to make sure we are rolling out technology to stay relevant,” he said. “We want to make sure it’s a technology that is here to stay.”

MNB recently redesigned its website for a more modern, user-friendly feel. The bank has also started allowing customers to make loan payments or fund accounts with a debit or credit card, rolled out online account openings and partnered with the financial services firm Kasasa, which allows qualifying customers to earn cash back or receive higher interest on their checking accounts.

Latino said Kasasa has helped the bank open 250 new accounts since 2017, a big number for the bank. MNB is also looking at creating an app for its customers and offering some text banking services in the future, he said.

While MNB has been able to succeed in an competitive landscape and remain profitable, it has challenges ahead.

The bank has grown its assets by about $14 million since the end of 2013 and by a little more than $3 million since the end of 2015.

Its efficiency ratio has been on the rise, reaching 90 percent at the end of 2018, according to the FDIC, while its return on assets and equity has been on the decline as well.

MNB is not alone.

Most banks under $100 million in assets have performed modestly compared to bigger community banks. They are also reporting worse credit quality.

Banks under $100 million in Massachusetts averaged a 1.3 percent ratio of nonperforming loans to total loans at the end of the third

Well-Paid Renters Drive Luxury Boom

quarter of 2018, more than double what banks between $100 million and $1 billion in assets were seeing, and more than double that seen by banks over $1 billion in assets, according to The Navis Group.

When Mutual Bank and North Easton Savings Bank merged late last year, the CEOs of each bank told Banker & Tradesman they believed there was an asset threshold community banks would need to reach to be sustainable.

“I think as bankers, we believe the $1 billion mark is the new equilibrium,” said Rich Spencer, CEO of Mutual Bank, who will become CEO of the combined entity once the merger is complete. “But we also believe the number is going to move, and it’s going to move swiftly.”

Still, despite the regulatory burden and challenges ahead, MNB intends to remain independent.

“Our stockholders and directors are very committed to that,” Marcum said. “There is a place in the market for us. We have maintained our capital position as well as our profitability and rewarding our stockholders as well. We plan on remaining independent and changing as we need to, to meet the changing needs of our customers.”

Email: bberkowitz@thewarrengroup.com

Continued from Page 3 cent. That’s far faster than rents are growing, and it is giving some builders pause.

Most investors, though, continue to be high on the Boston apartment market, including luxury buildings, and are bidding up prices when they come up for sale.

We’ll see. That wouldn’t be such a bad thing and frankly, a 4 or 5 percent drop in rents would be more than welcome.

But it’s a far cry from the luxury market implosion some have been predicting for years now and which just doesn’t seem to be in the cards, however you shuffle them.

Market Newcomers Power Rental Sector

Scott Van Voorhis is Banker & Tradesman’s columnist; opinions expressed are his own. He may be reached at sbvanvoorhis@hotmail.com.

While there is hardly an endless supply of renters out there able to shell out $3,000 a month, the demographics in the Boston market have been especially favorable for such high-end construction.

The last decade has seen an influx of well-compensated newcomers in tech, biotech and research, not to mention traditional mainstays like our big health care and academic institutions.

While highly paid, many of these New Economy migrants also have high student debt loads, making renting, rather than buying, the best option.

Nearly 51,000 households pulling down over $100,000 have entered the renter pool in Greater Boston since 2009, a disproportionate number landing in Boston and Cambridge, CoStar noted, citing U.S. Census Bureau stats. That’s compared to just 9,000 earning less than $50,000.

As Millennials age, that pool of highly paid renters will begin to shrink, but the full effects won’t be felt until 2023.

Developers Turn to Concert Operators Continued from Page 7 The high rents for ground floor space in the Seaport District – in the $100 per square foot range on a triple-net basis – have sent ripple effects into lower-priced neighborhoods, said Todd Smith, owner of Boston-based restaurant broker Corbett Restaurant Group.

“The growing neighborhoods certainly have seen an increase in rent, and that’s challenging with all the new competition,” Smith said. “It’s not just higher rent – they’re competing for the same customer base.”

Displacement pressures from high-end housing projects are a continuing theme.

In the latest example, London-based private student housing developer Scape is proposing a 500-unit student housing tower at 1252-1268 Boylston St. The 205,500-square-foot building would replace a 2-story office and retail building including the gay nightclub Machine.

“There’s not a lot of smaller space like that and if something like that will get redeveloped, you’d probably have to move to a new neighborhood,” Smith said. “There’s definitely still a desire for that type of venue.”

Don’t Expect Crash, Even in Recession

All that said, there’s one wild card that could have a significant impact on the luxury apartment market, and that’s the possibility of a recession.

Economists are chattering about the possibility of a downturn in late 2020 or early 2021.

While that could push luxury rents down a bit, barring another Great Recession, the high-end rental market won’t be collapsing, as some fear.

CoStar’s Conway sees a single percentage drop in luxury market rents from a mild recession.

Email: sadams@thewarrengroup.com

GOSSIP REPORT 1

2

DOVER

Address: 6 Wilsons Way, Dover Price: $3,999,999 Buyer: Teena Kamal and Rakesh Kamal Seller: Stephen W. Bisson Size: 19,355 square feet on 5.07 acres Sold: 2/14/2019

5

1,3

4 Tucked behind the Seaglass Inn and Spa on a bluff overlooking Provincetown’s West End, the fourth property in this week’s Gossip Report presents a unique sight. Built in 1978, this two-bedroom home with two and a half bathrooms has been renovated with respectful cues taken from a Japanese imperial palace, according to BuildingProvincetown.com. A ceiling-high stone wood-burning fireplace adorns the living room compliments sweeping views of Cape Cod Bay.

2

WELLESLEY

Address: 90 Arnold Road, Wellesley Price: $3,700,000 Buyer: Bharat Singh and Mona Singh Seller: Newlex Construction LLC Agent: Melissa Dailey, Coldwell Banker Residential Brokerage – Wellesley Size: 7,900 square feet on 0.63 acres Sold: 2/13/2019

3

DOVER

Address: 12 Miller Hill Road, Dover Price: $3,280,000 Buyer: Francois Mallette Seller: Gregory E. Bulger and Richard J. Dix Agent: Mizner and Simon Team, Benoit Mizner Simon & Co. Size: 8,243 square feet on 4.04 acres Sold: 2/14/2019

4

PROVINCETOWN

Address: 11 Oppen Lane, Provincetown Price: $2,850,000 Buyer: Christopher J. Loughlin and Wendy A. Loughlin Seller: Jerome C. Crepeau and Louis L. Lima Size: 3,142 square feet on 1.12 acres Sold: 2/15/2019

5

MILTON

Address: 1383 Brush Hill Road, Milton Price: $2,675,000 Buyer: Mark Fayne and Tricia Fayne Seller: Brian W. Dougherty and Nicholas J. Robert Agent: Brian Dougherty, Compass Size: 6,644 square feet on 2.92 acres Sold: 2/15/2019

MARCH 4, 2019

BANKER & TRADESMAN | 11

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A Powerful Platform With Massachusetts’s Premier Real Estate and Financial News Source Banker & Tradesman has been a flagship publication for more than 140 years, making it an unparalleled editorial authority in the real estate and banking industries.

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Also boasting a heavily-trafficked website and a popular daily e-news alert with more than 7,000 readers, Banker & Tradesman serves as a direct route to position your brand’s messaging in front of an audience of key decision makers.

To learn more about Banker & Tradesman or to customize a marketing program unique to your business needs, call 617-896-5307 or email advertising@thewarrengroup.com.

12 | BANKER & TRADESMAN

MARCH 4, 2019

THE WARREN GROUP | LOAN ORIGINATOR MODULE

LOAN ORIGINATOR MODULE WHERE DO LOAN ORIGINATORS RANK IN YOUR COUNTY? Identify top loan originators with The Warren Group’s Loan Originator Module. Analyze the local mortgage lending market with custom reports that highlight rankings, competitors, and individual loan officers. View data across various time periods, geographies, and so much more.

Visit www.thewarrengroup.com to view a sample report. Contact 617.896.5388 or email customerservice@thewarrengroup.com for more information.