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December 6, 2004

The right mix | Lorraine Boston is singled out for transforming Kennebunk Savings' lending department

By Michaela Cavallaro
At first glance, Lorraine Boston seems a bit out of place on the list of 25 women to watch in the October issue of U.S. Banker. The list is thick with bankers from national institutions, the kind of banks that run slick national ad campaigns ˆ— names such as Wells Fargo, JP Morgan Chase, Citigroup and Wachovia. And then, at number 12, is Boston, the 47-year-old executive vice president of commercial lending at Kennebunk Savings Bank.

The magazine's reasons for selecting Boston, however, quickly make it clear that she's not just a token small-bank selection: In six years as the head of Kennebunk's commercial lending division, Boston transformed the institution from one that focused almost entirely on retail customers to one that today evenly splits its business between retail and commercial clients. What's more, last year Kennebunk Savings made more Small Business Administration loans by volume than any other institution in the state.

Mainebiz recently asked Boston to explain her strategy in transforming Kennebunk Savings' lines of business, as well as for her thoughts on the changing roles of women in banking. Following is an edited transcript of that conversation.

Mainebiz: Why is the mix between retail and commercial business important at Kennebunk Savings?

Boston: Kennebunk Savings Bank historically has been a retail bank, a traditional savings bank. Probably about 11 years ago, with the addition of a president, Joel Stevens, who had a strong commercial background, and the addition of several other individuals, including myself, who had commercial backgrounds, we identified the opportunity to change that mix.

If people have always thought of Kennebunk Savings as doing retail banking, I'd imagine that in addition to communicating the message externally, you've got to do a fair amount of work internally to be able to handle the commercial business.

That's correct. When I went out and spoke to business owners as a line lender at that time, they never thought that Kennebunk Savings was sophisticated enough to do what they needed in order to run their business.

Internally, I had to look at staffing a commercial department that enabled us to go out and deliver the message that we were sending to small businesses. We needed to have products to offer and have the systems in place in order to facilitate that changeover. It was a matter of changing the mix of employees as well as changing the mix of customers.

When did all this take place?

By the late 90s, we were positioned well so that we were able to continue to grow. Growing the portfolio so we reached the 50% mix has taken the past four years. We've had approximately 20%-25% growth year over year in the commercial portfolio over the past five years.

Less than one percent of your loans are nonperforming, which is much better than the industry average of three percent, especially if you're working with high-risk businesses like hospitality. To what do you attribute that rate?

That's attributed to our underwriting ˆ— how we mitigate the risk, and our collection efforts; we work with our customers as opposed to taking a hard line with them. We don't sit around the table and say, because hospitality is extremely risky, we're not going to lend to them anymore. We sit around the table and find a way to make it happen.

You worked at Fleet Bank just prior to Kennebunk Savings. What led you to make the switch?

Because of where I was in my career and because of my growing family ˆ— at the time, my kids were young ˆ— I wanted to work more locally and I wanted to work for a community bank, so I decided to seek a job here. I was able to land a job as a branch manager and commercial loan officer in 1992, and then a year later was promoted to commercial lending officer full-time and five years later, when the senior lender at the time left, I was promoted into that position. That was about the time we made the strategic move to grow the portfolio.

The U.S. Banker story pointed out the growing but still small percentage of women in banks' upper management. I'm curious what you see from your position as a woman in upper management.

I've been very fortunate. Kennebunk Savings actually has several women who are in senior management positions. However, in the state of Maine, I believe there are only about three women who are presidents of banks. That's where you start to see the field narrow, whether it's in presidents' positions or even on the board of trustees or directors ˆ— you see very few women.

Do you see that changing?

I do. If you look across the country, there are many women who are taking on that role, but it is a slow change.

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