Jim Dunphy, CEO & President, South Shore Bank

CEO and President of South Shore Bank James Dunphy spoke with Invest: about the past year’s achievements, its differentiator in the region, and dealing with cybersecurity risks. “That keeps me up at night. With technology comes a lot of fraud, and the bad actors only continue to get better at what they do, so we have to make sure we’re investing heavily there,” he said.

Reflecting on the past year, what have been some of South Shore Bank’s most significant accomplishments? 

Succeeding in staying profitable amid the challenges of an inverted yield curve and fluctuating interest rates is a success for us. South Shore Bank has ample liquidity to meet our clients’ transactional needs. Additionally, we’ve completed an affiliation with Dedham Savings Bank. Our goal with this partnership is to increase scale and efficiency by merging our holding companies while keeping our banking entities distinct. With the industry experiencing narrowing margins, finding efficiencies is critical, and this affiliation will enhance our ability to scale and invest in technology

What is your differentiator in the region? What makes you competitive? 

We have two main strengths. First, our deposit base and liquidity have remained stable, which is an achievement considering the challenges some other banks are facing in this area. Second, we’re deeply engaged with our clients and the community. We have local decision-makers. We’re a very flat organization that prides itself in rolling up our sleeves and working with our clients to find solutions, even when some of the metrics are a little challenging, as they are right now.

What is your overview of the banking sector in Boston? Where do you see the biggest opportunities moving forward? 

The business climate in Boston is highly competitive, leading to positive developments across a diverse set of industries. With respect to the banking sector, there’s been a consistent trend towards consolidation through acquisitions or affiliations with more anticipated.

What specific sectors or industries are driving your demand, or where are you seeing the most growth in the region? 

In community banking, there’s considerable growth in residential housing, apartment complexes, and condominiums. We’ve seen significant growth in lending in the condominium association segment where upgrades are frequently required. Many of these condominiums that have been standing for decades require comprehensive refurbishment including full building envelopes. Since these entities may not have accrued sufficient reserve funds to cover these expenses, they often require financing options. Our Bank has achieved significant success in facilitating these loans. That is also true for operating companies – we’ve been very good in that space across the board, from manufacturing to service companies, helping them navigate through their challenges and find opportunities for growth.

What advice would you give to someone looking to start a business or invest in Boston?

My best advice is to put together a strong advisory team. Ensure you have a competent banker, a good lawyer, and a skilled accountant. Acquire industry-specific knowledge. We want to see positive outcomes, and there are excellent federal and state-supported programs available to assist startups with additional financing, including those provided by the Small Business Administration and Mass financing. We frequently utilize these programs to address any financial gaps.

What is the bank’s strategy to remain sustainable in the coming years, specifically with the shift in long growth dynamics and profitability. 

As our margins compress, the need for increased efficiency grows, and leveraging technology is the key. The benefits of technology offer a two-pronged advantage: not only does it boost our productivity but also meets our clients’ expectations and demands for advanced services. We’ve dedicated substantial resources over the past five plus years to enhance our infrastructure as well as our project management and technology teams. And I believe this trend will continue. While our clients appreciate personal interactions and face-to-face consultations with us, they also want the ability to interact with us virtually and have digital services available 24×7.

How are you dealing with the cybersecurity risks that digital technologies represent?

The concern of fraud is something that keeps many of us in the industry up at night. As technology advances, so do the methods of malicious actors, which means we must be proactive in heavily investing there. The recent incident with CrowdStrike, a key security provider for many businesses, hit many organizations in a significant way. I’m proud to report that despite some initial difficulties caused by the CrowdStrike disruption, all our systems were online by that afternoon —a testament to the robustness of our technology and the strength of our support team. As we proceed with the integration of systems through our new affiliation with Dedham Savings, we recognize we have an ideal chance to evaluate our current technological infrastructure and make sure that together we are at the cutting edge. 

From an AI perspective, we’re exploring ways that will make our small-business lending more seamless. We see this as a growth opportunity to increase lending in this area and adding automation will be a win both for the Bank and small business owners.

What is your view of the labor market for the banking sector, and how are you enhancing your workplace culture and employee satisfaction at South Shore? 

Over the past 5-7 years, the labor market has been challenging, but it’s improved considerably in the last six months. In terms of enhancing workplace culture and satisfaction we’ve implemented a number of initiatives. We conducted thorough compensation reviews to remain competitive, enhanced retirement benefits, and evaluated our health insurance offerings. To foster engagement, we established employee committees for program development aligned with our values, hold regular town hall meetings for consistent open communication and feedback, conduct employee surveys, and organize events like a company-wide cornhole tournament and barbecue. Other smaller gestures include inviting ice cream trucks to all our locations. Through these initiatives, we find ways to listen to our workforce and understand what they desire and what kind of training and development to invest in. Through all of this, we need to make sure the Bank remains financially healthy – it can be a tough balancing act.