"Perfect Time To IPO" with JP Lapointe of Needham Bank (MA)

In this episode, the guys are joined by JP Lapointe, Chief Financial Officer of Needham Bank ($5B institution in the Boston metropolitan area), and DCG colleague Jeff Reynolds. The four dig into JP’s career progression from Wolf and Company to Northeast Bank to his current role at Needham. JP also expands on the nuances of working for a "specialty asset" business, why banking cannabis is not for the "faint of heart," Needham’s recent IPO and the "perfect time to go public," and why their customers have direct access to the CEO's personal cell phone.

For more insights and ideas, visit DCG at DarlingConsulting.com or follow us on LinkedIn.

Transcript

On the Balance Sheet: S4 E5: Perfect Time to IPO with JP Lapointe - Needham Bank

 Transcript

[Vinny, 00:07]

Welcome to On the Balance Sheet, Season 4, Episode 5, and today we've got a great episode. We're actually joined by a local banker; we have JP LaPointe from Needham Bank. 

[Zach, 00:15]

Yeah, Vin, we're super excited to have him in studio. I think it's probably only the second or third guest we've actually had in these four walls here in Newburyport, and we're very lucky to have our colleague Jeff Reynolds as well. So, we've got four of us here today and I think for the listeners, just a quick preview, JP has a pretty unique background as a CFO with some of the places he's worked. So we're going to focus a lot on his time at Northeast Bank, his time at Needham Bank, and I think it's a really compelling episode and a lot of good takeaways for the folks who are listening. 

[Vinny, 00:45]

So without further ado, JP LaPointe.

[Zach, 00:51]

And we are very pleased to have a special guest with us in studio today. It's JP LaPointe, Chief Financial Officer at Needham Bank. JP, thanks for coming and how are you doing today?

[JP, 01:01]

I'm doing great, thanks for having me. Really happy to be here in this lovely office you have in Newburyport. 

[Zach, 01:06]

Terrific and Jeff Reynolds joining us too, as he works with Needham and with JP and the crew there. And JP, we'll just start with the typical question we have all of our guests go through is, can you walk the listeners through just how you got into the banking industry and some of your steps to where you are today?

[JP, 01:22]

Yeah, so out of college, Wolf & Company, which is a, I guess not very national CPA firm, took a chance and hired me. And I started my career out in the Springfield office and out of that office, they were primarily almost 100% financial institution based. So, I didn't really have a choice but to work on the banks and credit unions out there. So, I spent three years in Springfield auditing all, you know, types of institutions, different sizes, different complexities. And then I transferred to the Boston office and spent another 10 plus years auditing financial institutions from $40, $50 million in assets up to almost $8 billion in assets, focusing on primarily financial statement audits. I got into some internal control audits and then got to do some of the non-routine transaction stuff, M&A, sub-debt issuances, IPOs, the fun stuff that everyone really likes getting the opportunity to work on. So that's kind of how I got into banking ,and then in in 2017 Northeast Bank reached out, see if I was interested in their CFO role and it seemed to check all the boxes for me and I seemed to check the boxes for them. So, I took that role, and that was a that was a really good opportunity for me to jump right into a CFO role and learn things that I probably wouldn't have learned elsewhere. And then I did a little over six years there and then Needham Bank reached out about a year and a half ago and kind of said, you know we're going through an IPO looking for someone who can bring us to the next level, operate a public bank and, you know really do things that we need on the on the SEC reporting and those other fronts and managing the interest rate risk of the bank as they continue to grow. And again, you know it seemed to check a lot of the boxes, kind of get back into your normal community bank type institution. And it's been a very busy year, but very, very exciting ,and I think we have a lot of opportunities as we continue to move forward.

[Zach, 03:08]

Terrific, and I was thinking through just kind of your background with Northeast and with with Needham and kind of two unique opportunities. So I figure we'll focus a lot on there, but Jeff and Vin, jump in and who knows where we're going to go JP with these guys, but I think we start with Northeast. Northeast Bank is not your typical community bank. I think that's a fair phrase. Could you walk them through, I guess without giving out any secrets, what their deal is, how they work, why are they so profitable, and why are they a thorn in a lot of folks' side in Maine and New England, you know ,over overall?

[JP, 03:39]

Yeah, you're absolutely right, they're not your typical community bank. So Rick, the CEO, and a lot of the executive team came from a previous bank, Capital Crossing Bank, which was a a bank that, Rick got in there around 88’, 90’, somewhere around there, and ran it until 2007 when he sold it to Lehman Brothers, which was a great time to sell to Lehman, and they had a monoline business. Their business was buy distressed commercial real estate loans across the country. It started in the early 90s, and they were able to buy them from the FDIC at cheap discounts and then they said, hey we can keep this going, buy troubled loans from other institutions, work them out, and make money on them. So, they were able to do that, they had no branches, so it was all wholesale funding. You know, and then he sold it to Lehman in in 2007, took a couple years off, and then some investors wanted to start a bank and met with some attorneys. And they reached out to Rick and they said, it might be easier to buy a bank and recapitalize it than to start a bank. So, they found a bank that was willing to sell, Northeast Bank out of Lewiston, Maine. They came in, they recapitalized it, changed the business model from a typical community bank to a national commercial real estate lending platform. They were about $400 million when they went in and acquired them. And it was difficult at the time with the regulators in 2010 to take a profitable, not highly profitable, but a profitable, well-capitalized institution and try to do a national commercial real estate lending platform where you're purchasing loans nationally. The Fed wasn't a big fan of that, you know to their credit they were able to get the regulators there, but they did put some restrictions over their business, which actually, I think, in the long term helped them. It forced them, they limited the amount of purchase loans that they could have on their balance sheet to 40% at the time, later increased, but it forced them to get into the origination business, which has been a very good business line for them. So Northeast Bank, they're about $4 billion in assets now, purchasing and originating commercial real estate loans nationally. They have expertise in real estate, so that they stick to what they know and they're very good at it. And they, you know, the originated stuff is typically your short-term bridge lending, so they can get higher rates, but you know the hard part is you're constantly on the treadmill. So, you know, you originate $500 million, you only grow $100 million because $400 million rolled off during the year. So, it's it’s constantly a battle there and then they've been successful over the past couple of years in really buying some purchase loans, typically a result of M&A, where the acquirer will take on a pool and either have to divest a portfolio of loans or choose to divest a portfolio of loans. And they price it well and it works out for them, they're very good. So given their high yields on the asset side, they can pay up for liabilities on on the other side of the balance sheet. And they do that with their seven branches they have in the Maine market, which I'm sure you know some of their competitors aren't a big fan of because it's harder for them to compete where they're making loans in market at much lower asset rates. They don't have the ability to pay up on the liability side, but Northeast can. But they still utilize a lot of the wholesale funding between brokered CDs and FHLB advances to fund it, but whatever they can grow in the footprint in the branch network, they certainly try to take advantage of.

[Vinny, 06:55]

JP, this is Vin, thanks so much for joining us. You know, one of the things I just want to follow up there, in those in your time there, my guess is from a regulatory perspective, there must have been a little bit of heat put on kind of the level of wholesale that that institution must have had at that point in time. I can be, I just we had worked with, I guess Rick's partner at a different institution, and there was always an issue from a liquidity perspective. How did how did Northeast overcome the challenges that another institution might have faced in that regard?

[JP, 07:25]

So, when they first started, they had, I want to say somewhere around 13 regulatory requirements that they were required to follow. Some of those sunset over time, some of them were removed or reduced. So, until 2018, when they were still bank holding company under the Fed's purview, the five restrictions that they had were 60% of loans could be purchased. The CRE to total capital limit of 300% was a limit, not a a guide, they couldn't go over that. They had two higher than normal regulatory capital ratios. The total capital ratio and the tier one leverage ratio were both higher than other institutions had to follow. And then the fifth one was 100% of loans had to be funded by core deposits. So they had to use core deposits, which to their benefit at the time, quick rate CDs fell under core money, so they used a lot of quick rate at the time to fill the loan bucket. What they did in 2018 to remove the restrictions was the bank acquired the holding company. And with the Fed going away and the Fed's oversight over the bank, because they were an FDIC regulated institution, those restrictions went away. And then they were able to use more FHLB advances and brokered CDs going forward as they really saw growth in the last five to six years, they were able to fund it with more of the wholesale stuff. That would have been very limiting to their business if they still had the loans had to be funded by core deposits.

[Vinny, 08:51]

Right, no, absolutely. 

[Jeff, 08:54]

Yeah JP, it's it’s interesting where you say that, and this is Jeff, by the way, you went from this more of a specialty asset sort of organization to where you characterize as being more of a typical community bank. And my background with the bank, my first meeting with them was probably back in 1996. And at that time, it was Jack McGeorge, Bill Day, sitting behind the teller line, meeting people as they came in the door. And then Mr. Day, a lot of interesting stories about him and his connection with the community and how they were with, in particular, builders in and around the Needham area, but what has this been like? Like what different challenges, and for people that don't know Needham - Needham was a mutual, did a conversion, just celebrated the one year anniversary of the conversion date from a mutual to a stock company. What has this been like, and were there any things that were kind of interesting or different moving from one role or or from one seat to another?

[JP, 10;04]

Yeah, for one, when I went to Northeast, they had been a public company for 20, 30 years, so they had a lot of the processes, controls, financial reporting already set up. Getting to Needham, you're you’re building everything out for the first time so it's it’s fun and challenging getting to start from scratch and creating your own 10K, 10Qs, earnings releases, and, you know, writing it how you want and saying this is what I think investors care about. I think my time at Northeast, when I went there, one of the things I really was able to dig into and learn was what you guys do, interest rate risk, asset liability management, because they manage it in-house. So that's one of the things coming out of public accounting that we don't have knowledge of because we don't dig into that in our banks. So really learning the inputs, the assumptions, the sensitivity that they have on the output, and how you structure your balance sheet to make sure that you can understand the asset liability management really helped me to help implement that when I went to Needham and making sure that the liabilities that we're putting on the balance sheet, how do we price them, how do we structure them, what term do we want to do to help match the assets we're putting on the books. So, I think that was a big help and, you know Jeff, your quarterly reporting certainly helps us to look at that and you know I think when we got there, we were a little more asset sensitive than we are now. We're kind of a little more getting closer to neutral now but really trying to help ourselves to fix that without having to put hedges or swaps on the balance sheet, I think is the easiest. We get to the point where we have to put an instrument on the balance sheet to help us to mitigate; in certain interest rate scenarios, we're ready to do that. But I think trying trying to do it naturally and fix the composition of, you know, our deposit portfolio was really my big priority to to shift over the past year, and I think we've been pretty successful with that. Who knows what rates are going to do in the future? I'm hoping you're going to tell us next month at our ALCO meeting. 

[Vinny, 11:58]

Good luck. 

[Jeff, 12:00]

I'll bring the magic eight ball.

[JP, 12:01]

Yeah, but, you know it's funny because when I took the job, everyone's like, oh interesting, time to go public with interest rates and credit concerns and everything, but I actually I thought it was a perfect time to go public because we raised $400 million of capital. So, $400 million of cash that we're sitting on. And when we first raised it, we're earning 5.5%, just holding it in cash. I didn't have to do anything crazy, I didn't have to do what SVB and others did with their excess cash and put it in long-term bonds earning 1.5% because that's the best place I could earn. I could sit on it in cash, earn 5.5% which is a good return on my cash and then as I'm ready to deploy it, put it into loans or whatever. So, we sat there, it gave us liquidity, it gave us earnings, it gave us everything we needed with the cash that we had. So, I thought from my perspective, it was it was the perfect time to do an IPO and raise that much money.

[Zach, 12:48]

Makes perfect sense, and JP, I'm just thinking about the liquidity side and the funding and the differences between the two banks, right? And one was a little more national and they have, as you mentioned, Northeast has those CDs, which that's what we're talking about for our listeners. If you're in Maine, you know, but if you're not in Maine, you don't have to deal with the 4.25% or 4.50% CDs right now that they have. But how is Needham focused on the deposit side? Because it's a little different model, right, than what Northeast was, and I know you guys have a cannabis line. Can you can you dive in a little more about how that helps and maybe other things that you guys are looking at on that funding side?

[JP, 13:21]

Yeah, the cannabis all break into two different pieces because there's kind of the core business that's basically the the reliable money that sits here that we depend on, and then other parts of the business are inflows and outflows. And that's a little tougher to manage on the liquidity side and whenever we see a big wire come in, we're typically reaching out to the account officer saying, is this money going back out or is it going to be here longer term? So, it gives us a low-cost funding source and it kind of has to be low-cost because there's other costs that are associated with it, there's a lot of BSA, regulatory risk. So we have a lot of headcount that's allocated to the cannabis deposits to make sure that we know our customers, know who we're banking, and make sure that we're meeting the regulatory burden that when they come in, they're going to be comfortable with what we're doing. And obviously, they have been so far because we haven't had any issues that you know have come out on that front, so that's been good. But, you know, it is it is a nice funding source as we as we continue to move forward and we go through it and we say, who do we who do we want to keep in this portfolio and who do we not? And it's an industry that as as states approve it and legalize it in the state, everyone thinks it's a license to print money, and it is for a short period of time. And then when it comes down, you see a lot of consolidation and, you know, those licenses aren't worth anything and people are handing them in because it's more of a liability than it is an asset. So about three to five years into legalization you see the you see the price start to come down and and the consolidation happening in those states. So, you know, and really who we'd like to continue working with is the multi-state operators, the big guys who are going into the states and saying, all right here's where we're going to be, we're going to acquire these guys who started up and grow in these states. So, we've been successful banking those multi-state operators and continue to try to grow with them as they grow their business into new states. And we look at new products and services and opportunities to keep growing and become a bigger part of their wallets as we move forward. We do look at our checking, our savings, our money market. What are we offering to customers? We just rolled out a new checking account that gives you a lot of the the other stuff. On top of being free checking, we offer free ATMs anywhere in the world. Now we offer credit scoring and ID theft monitoring and stuff like that that is important to people given the day and age that we're in where everyone's identity is probably stolen on a daily basis - you just don't know it and someone's not using it yet. So, really giving the people the tools to monitor their credit and their identity to make sure that someone's not out there opening credit cards or taking out loans in their name. So trying to protect our customers and then we just rolled out a new savings account that pays up to 4.25%, but it's only up to $10,000. So, it's really for younger people who are trying to build up savings to help become their bank of choice. So, they have to have a checking account and it's linked to a savings account and you can earn up to 4.25% up to $10,000, which I think is a good product for, you know, people who are in their mid to late 20s trying to build up some wealth. We're helping to, you know, help them to grow their account faster so.

[Vinny, 16:17]

This, you know, the cannabis business and forgive my ignorance here, I've worked with banks over the years who have used it and have have leveraged it and it was a tremendous source of deposits for some, some others would look at it sort of quasi-tabu fashion. But it seems like when I'm looking at your deposit growth last year, according to the numbers I saw you guys grew by 21%. Of that 21%, what percent is related to the cannabis? And was there any of it related to that? Or was that just organic just from, you know, from the product suite you just kind of spoke to?

[JP, 16:56]

Yeah, you're right we grew 21% in core deposits last year. About $100 million of that was in the cannabis business. The cannabis business is never going to be the largest part of our business. It's always going to be an add-on business that we do. It’s and it's on the loan and deposit side, it's never going to be more than 10% to 15% of the overall book, either in loans or deposits. So, it's something that's there and we take it and you know if we can grow it, we grow it. But we try to be selective about where we grow it, and we're not going to grow it and have it be a large part of our balance sheet because if for some reason the federal government decides that they're going to crack down on, you know, institutions who bank cannabis businesses, we don't want to have, you know, 50% of our deposits flow out immediately. So, we try to safeguard that by limiting how much we will take on. So, it's going to stay a small portion of our business; I think right now it's somewhere around 8% of deposits probably so.

[Vinny, 17:49]

What would your advice be then? And obviously, I think if if anyone's listening, they probably could have a few takeaways in regards to that business. But what would your advice be to somebody who's listening to this thinking about incorporating this type of business into their own institution? What kind of keys are do you think are for execution?

[JP, 18:08]

It's not for the faint of heart. There's a lot of build out that you need to do in your back office and make sure that you have all the lines of defense in place. And it's it’s not that you do it when you onboard the customer, there's constant monitoring of your customers that you have to keep doing. I think even if it gets legalized, the big banks still aren't going to bank cannabis. It's not something because they'd have to hire thousands and thousands of people just to manage the oversight of the cannabis customers, because it's a business that if someone wants to launder money, you can launder money through cannabis. So, you have to make sure that you're monitoring your customers constantly, so I still think the big banks aren't going to get involved. You may see some smaller banks take it on if it gets legalized because there's less of a scrutiny around it, but I think if it does get legalized the regulators will come out with more of a framework. Right now, they defer to FinCEN and their requirements, but I think if it does get legalized, you'll see the federal regulators kind of build a framework around it. Here's what you need to do, here's how you need to do it, the frequency, the auditing of it, and here's how we're going to regulate and enforce it when we come into our examinations. So I think it'll be a little easier because there'll be a little more of a playbook, but it's still to to try to build out that back office and that framework and not knowing how successful you can be and how much deposits you can bring in, it's probably not worth it unless you have some big customers lined up who, for some reason, want to bank with you. You can build it out and you have the deposits coming in on day one to help pay for that back office. 

[Vinny, 19:42]

Gotcha.

[Jeff, 19:43]

Yeah, it seems like when you get into these patches where deposit growth is just harder to come by, rates are up, every banker is looking for the silver bullet, and look at this. I was going to say the grass is always greener, but you know that pun probably doesn't necessarily work right now. But but when you do take a look at banking as a service, everybody kind of thinks of that as being something of a panacea, but you just don't know what you don't know until you start getting into it, and it's that back office cost that you really have to be efficient and get it scaled very quickly. 

[JP, 20:25]

You're right. Everyone thinks it's an easy cash grab, and it is until the regulators come in and tell you you have to cease and desist that line of business, and then that's all public, and that's not what any institution wants. It really comes down to the BSA, the AML, and the know your customers is really, at the end of the day, is what you need, and you see that with TD Bank and the trouble that they're in, given the regulatory scrutiny they've been under lately, and you know no one wants to be the next one that where you have an asset cap, and you have all these restrictions, and it really makes it tough to operate and do your business when you're under this regulatory scrutiny and you can't grow.

[Zach, 21:02]

JP, you guys mentioned 21% core deposit growth last year, double-digit asset growth last year too. You got a ton of capital, obviously from the IPO. What's the future here, like for Needham Bank here, in terms of next couple years, in terms of growth or technology, things you're doing? I'm just curious what the path is.

[JP 21:18]

It's interesting, right? And you've seen a number of IPOs announced in in New England recently, and a lot of them are trying to use the capital to implement technology and to grow and to build up their balance sheet into more commercial side of business. At Needham Bank we did that before the IPO, so we've been investing in technology since Joe came in in 2017 and really built out that technology infrastructure before going public. And now it's, all right let's build out the ancillary services and systems that we need to better suit our customers, but we were a commercial bank before the IPO, and it it makes it easier because we're not transitioning. We're just continuing to grow in what we know and what we've been doing well over the past few years. So, I think there's a lot of opportunity; Joe knows a lot of people. So, it's easy when they reach out to him and they say, we want to bank with you now. We've seen what you've done, we've seen your name, now we want to bring you our business. So, it's not even that we have to reach out to customers and say, hey, we want to be your bank. A lot of times they reach out to us and say, we want you to be our bank, you know what, can you give us in this front? So, it makes it easier, the name travels well, the name's getting out there. We, you know, we say our real market area is from southern New Hampshire down through Rhode Island and into eastern Connecticut. So, it's a pretty big market for a bank where we only have 11 branches, you know, in and around Needham, except for Medford, which was a a great location for us so.

[Jeff, 22:39]

And and just you know for the people listening Joe, I think you're obviously talking about Joe Campanelli, who's the CEO and president of the bank. Joe, probably like one of the best stories I could tell about Joe was the day Silicon Valley Bank went down. Probably within 20 minutes of that, I was on the phone, I'm on the deck at Wildcat Mountain up skiing, and he’s trying to we're trying to put different guardrails around, are there risks that we have to be worried about? And more importantly, are there also some potential opportunities? The pace of which Joe can move is astounding. How does that fit with the CFO that sometimes has to be the traffic cop or you know the flow of different strategic items that kind of flow through on a daily basis, weekly basis, etcetera? It's not just an annual thing - it can be by the minute with somebody that's as engaged. 

[JP, 23:40]

Joe's Joe’s a mover. I've never seen someone who goes to so many dinners and so many events and sits on so many boards as he does. He's he’s tough to get a hold of sometimes, but he's always available somehow. And it's it’s tough to keep up with him some days. He has an idea, and all right, let's let’s get it on paper, and let's, you know, figure out what we need to do, and let's move forward with it. So, it's it’s hard because some people don't move at the same pace that Joe does. Some people that are half his age don't move at the pace that Joe does. And I don't know how he does it some days because just watching him some days I get tired, but he's a great leader. He's really built a great culture, and you know when he wants something, he, you know, he does it right, and he builds it out the right way. But he expects you to be responsive and get it done quickly so that we don't miss the opportunity. You know, and I think one of those things was when SVB failed, his responsiveness was probably going and parking a Needham Bank van in front of the SVB branch in Wellesley. And it was very successful, I think we brought in over $100 million in deposits from from, you know, their failures. So just parking a van in front of their branch was a move that that paid dividends for us. So he sees the opportunity and and he takes advantage of it. 

[Jeff, 24:50]

I had not heard that story, nor am I surprised by it. That's great.

[Zach, 24:54]

But I keep hearing the word opportunity, and that's what it seems like is whether it's from the leadership up top with Joe, just kind of permeating throughout the bank with the capital you have, a lot of opportunities overall. And JP, what do you think, maybe not for Needham, but just for the industry? Like you're not as old as Jeff, right? You're more more in in Vin and I’s age. So how do you see the next 3, 5, 10 years in terms of opportunities here in the banking industry, whether it's tech. You take it wherever you want to, but I'm just curious - I think bankers are always interested in hearing other leaders' thoughts on on on that.

[JP, 25:28]

I think there's a lot of opportunity from disruption. I think you see a lot of M&A going on in our market, and I think you're going to see more of it as we continue to move forward. Just because you take one and one, it doesn't always make two. So, because you have a bigger bank doesn't make it a better bank. So, if some of them fumble, I think there's some opportunity there. You've seen some institutions kind of pivot in their direction of what they were doing and the kind of assets they were putting on the balance sheet, and I think that offers opportunity for us as we as we continue to move forward. And I think technology is a huge opportunity if you can implement it and and do it right to better serve your customers and meet their needs and compete with the bigger banks. Because conversely, I think the biggest threat to banks are the larger banks. Not just that they're larger or that they're better, I think a lot of times it's perception of customers that the larger banks can offer better products, better services, and faster movement of money, but it's not true. So, they need to give the smaller community local banks a chance to prove that we can do the same thing that the big banks do just as quickly, just as good, just as easily. And I think when they realize that, you'll see some of the money move out of the bigger banks back into the community banks, and you'll have less of this fight for deposits and liquidity because we're all fighting each other for the same population of customers that are not at the big banks. So I think if you see some of the shift move back to the community banks, and you know we try, we donated over a million and a half dollars to our community last year, you know, from our charitable foundation, and that number is going up this year and should go up next year, and we try to give back to our communities, and we want to be the bank that our community members bank with. So, I think that's that’s a threat and it doesn't help that the regulators, in theory, guarantee the deposits of the big banks when they struggle, because you know if the smaller banks were to struggle, we're not going to get that same coverage. And if that's the case, then have all the banks pay for their excess deposits, and the FDIC fully insures every deposit that's in the country. Otherwise, you're going to give the bank the big banks an unfair advantage that we don't get.

[Zach, 27:33]

That's all I had just for questions. I mean, Jeff you got anything else, or Vin you have any other follow-ups? 

[Vinny, 27:38]

No, I think that's a great way to end it, and I think one thing you did leave out, because I totally agree with you in regards to the services, the product set, the delivery, customer service. I remember when I first met my wife, she was banking with a large bank, and I'm like, what are you doing? And we swung her over to the same community bank that's located right here in this town, but she she couldn't get over the fact that when you call that particular bank, somebody picks up and answers, and you have a conversation with a human being. And I just wish more people were aware of that, you know? And I know a place like Needham Bank, clearly who's growing deposits and also loans, like we kept, we didn't even hit on that. This bank had a hell of a year, you know some of these bankers listening to this podcast are going to say, hang on this bank grew by 21%, and your loan growth was right on top of it, basically. That's during 2024 in a wildly inverted yield curve environment when there's kind of that wasn't going on, that wasn't going on. So, I think that's a lot to be said for your institution, what you folks have accomplished in a short period of time here. 

[JP, 28:42]

And I think as far as the customer service goes, you know, what Joe hears a lot is, I can't believe you have your cell phone number on your website, and his cell phone number is on the website. So, if anyone wants to reach out and get in touch with Joe and say, hey I have this issue, either, you know someone stole money from my account, or I want to originate a loan or whatever, his number is right there. He's available to anybody, and I don't think you're going to go on Bank of America's or JPMorgan site and find, you know Brian Moynihan or Jamie Dimon's cell phone numbers and be able to give them a call. So, he's approachable, he's reachable, and I think we're all like that, and one of the things that really benefits us in our branches is the lack of turnover at the branch manager level. And that's really, you know, what keeps the customers engaged because they come in year after year and see the same branch managers and they have relationships with all them and the branch managers know their customers inside and out. So, we can better serve them, we can better protect them, we can understand their needs and what they're going through personally. And to your point, customer service is very important, you know, even though people don't use branches as much as they used to, knowing that they can, and when they go there, they're going to know the people is important to them.

[Jeff, 29:51]

That was something that was kind of unique in working through with the bank on the on the conversion and bringing in $400 million of capital. You know, one of the first things you go from being a mutual to being a publicly traded company, you have to deploy that capital pretty quickly. And a lot of institutions get backed into having to make a very costly, probably too expensive acquisition. But knowing the loan machine that was that has been Needham Bank over the last 5, 6 years, again, another good reason to do the IPO when it was done.

[JP, 30:31]

Yeah, and last year was actually down here on the loan side. I think the previous two years were more in the 25 to 30% growth on the loan side, so last year we tried to keep it under control a little more.

[Zach, 30:42]

It dampened. 

[JP, 30:43]

Yeah, but we continue to move forward with the opportunities that we have in front of us, and there's no shortage of demand out there for the products and services that we have. And you know, as we continue to grow, the size of our customers continue to grow and we can better serve and meet the needs of of larger customers, whether it's on the lending side and then get their cash management and payment processing and all of that and make sure that we can meet their needs from start to finish. 

[Zach, 31:05]

Perfect way to end it, I think. JP, thanks so much again for coming up and and joining us. That was a great great conversation.

[JP, 31:12]

All right, thanks guys. 

[Vinny, 31:19] 

We're back here and what a great discussion with JP, and like you said Zach, just terrific having, you know, someone in studio. We don't get that luxury quite so often, but you know one of the things I'm gonna take away from this conversation is JP's enthusiasm for really the community banking model. He kind of talked about how important it is for them to service their markets, he talked about how the CEO's cell phone number is on the website. Maybe we shouldn't be broadcasting that that could be causing a headache for some people down the roads. But just how enthusiastic he is about that model you know, you can see he's got every right to be so. That institution grew at a rate that I think would be mind boggling for a lot of our listeners that are banking in different parts of the country, and so they're doing a great job and very much look forward to see kind of what comes of Needham Bank in the years ahead.

[Zach, 32:10]

Absolutely, Vin. I think my takeaway is maybe a combination of two. And whether it's talking how he talks so glowingly about Joe, you know Kevin Elliott, the CEO there. And I think just the opportunisticness, if that's a word, that they have at Needham and that they had at Northeast Bank, too. When we talked about the founders there, that to me, those are two very profitable banks, so take a look at the color reports or take a look at S&P if you're listening. I mean, they have a lot of specialty lines, or they do things a little bit differently and they're prepared, but they also jump on opportunities, right? And I think that's one of the areas where you gotta be willing to do some stuff, I think that to stand out in the pack, and these guys have done a great job, both at Needham and at Northeast Bank, and it was really fun to hear JP, his his view on how he played a role in that. And also, it was great to have Jeff in studio, too, you know, with his work with Needham, which dates back over 30 years, right? And how he's seen those guys evolve, so I really appreciate him him joining us too.

[Vinny, 33:10]

Yeah, just great discussion and it’s so, to me, it's clear there's no accident. You know, their success is no accident. These are folks who are willing to jump on any opportunity they have and so, great discussion today, and we thank you very much for joining On the Balance Sheet. And we look forward to you joining us again for future episodes.

[Dana, 33:34]

On the Balance Sheet is a podcast produced by Darling Consulting Group (DCG). All views and opinions expressed by the hosts and guests are solely their own and may not represent those at DCG. All third parties are independent entities and are not affiliated with DCG. This podcast is intended for informational and educational purposes only and is not considered as advice. All views and opinions expressed are based on the information available at the time and may have changed based on the current market and other conditions. For more information about DCG, please visit  www.darlingconsulting.com or e-mail us at info@darlingconsulting.com. Today's background music is provided by John Sid, at Coma-Media and can be found on pixabay.com.

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