Rockland Trust built up its leading position in the Massachusetts banking market – and entered the New Hampshire market in a big way – on 20 years of successful acquisitions. But these days, it’s focused on demonstrating it can grow on its own.
In response to an investment analyst’s question during the Hanover-based bank’s second-quarter earnings call July 18, CEO Jeffrey Tengel said M&A is “really not a priority right now” with the need to integrate Lowell-based Enterprise Bank into its operations after the deal closed at the start of this month.
That deal will bring Rockland seven branches in a triangular area from Derry to Nashua to Salem.
“Frankly, there aren’t very many Enterprises left. We have a major core conversion next May [to FIS’ IBS software system], and we really need to demonstrate our ability to grow organically while reducing our office exposure,” Tengel said.
So far, integrating Enterprise’s staff and its similar business model has felt “like two puzzle pieces coming together,” Tengel said.
Tengel sounded a skeptical note about how much drag area banks were feeling from troubled office loans that still need to be resolved.
“I’d like to think the worst is behind but I don’t feel comfortable calling the ball quite yet,” he said. “I wouldn’t say we’re out of the woods. We may be past the worst of it as an inflection point but we’re still working through the challenges we have.”
To help the bank build more organic growth, Tengel outlined three areas where the bank would try to win new borrowers as it keeps pushing to shrink its overall commercial real estate loan book, which grew again thanks to the Enterprise acquisition.
The first, small commercial real estate and C&I loans to borrowers that has traditionally been what Tengel called the “ballast” of Rockland’s commercial banking operations, will grow if the bank can both take market share from other banks and “do more with existing customers.”
Second, the bank plans to target middle-market companies with revenues between $50 million and $500 million for C&I loans with credit holds between $2 million and $35 million. The bank recently hired an executive for this initiative, Tengel said, who’s recently completed hiring for their own team.
And lastly, while the bank will keep shrinking its commercial real estate loan book through the end of 2027, it plans to target “investment CRE” borrowers looking for loans $10 million and up.
“Our goal is to exit transactional CRE as quickly and economically as possible while still serving our legacy client base,” Tengel said.
