Joseph Campanelli, Chairman, President & CEO, Needham Bank

In an interview with Invest:, Joseph Campanelli, chairman, president and CEO of Needham Bank, discussed the bank’s resilience and growth over the past year amidst challenging economic conditions. He highlighted the bank’s strategic shift from primarily commercial and residential real estate lending to supporting a diverse portfolio of middle market companies, small businesses and nonprofits. “We emphasize a strong culture, knowing that while our money may be the same color as anyone else’s, our relationship-driven approach sets us apart,” said Campanelli.

What are the highlights for Needham Bank in Greater Boston over the past 12 months?

Despite challenging banking markets, Needham Bank continues to grow. Our business model is robust, focusing on retaining top-tier talent with extensive experience in larger, more complex companies. We operate in a disciplined, focused environment, enabling us to compete effectively across various economic cycles. Notably, we were one of the few companies to go public in the last year, closing a significant equity transaction on one of the last trading days of December. It’s been a fantastic start to 2024.

What makes Boston an ideal location for businesses?

Boston has been fortunate to attract a great talent pool over the past few decades, bolstered by top-tier colleges, universities, and world class healthcare providers. It’s become an international destination with a high quality of life. Whether skiing, visiting the lakes to the north, or heading to Cape Cod and the islands in the summer, Boston offers a blend of great cultural and recreational opportunities. Despite its rich history of a couple hundred years, when compared to Europe, Boston feels youthful and offers a diverse and vibrant international marketplace.

Which industries or sectors are primarily seeking your services?

We’ve been instrumental across various sectors. Over the last five years, we’ve shifted from a focus on real estate lending to a more diverse portfolio. We now support entities ranging from nonprofit organizations, which strengthen communities and aid those in need, to middle-market businesses that drive regional growth. Essentially, we offer full-service banking solutions.

How would you describe your role in supporting business owners as they launch their new ventures?

It’s an exciting role. Our bank operates with a flat organizational structure and employs experienced professionals. We emphasize a strong culture, knowing that while our money may be the same color as anyone else’s, our relationship-driven approach sets us apart. This creates a supportive, dynamic environment for our clients, helping them strengthen the community and achieve a work-life balance.

What strategies are being implemented for risk management?

The financial services sector has always been vulnerable to cycles where asset valuations can become volatile and subsequently lead to banking issues. However, the recent bank failures primarily stemmed from problematic asset-liability management, exacerbated by rapid interest rate hikes which were predictable post-COVID. We expected changes with a shift from the era of free money, which wasn’t sustainable, and managed our balance sheet accordingly. Moving forward, we anticipate stricter regulatory measures. Our response involves leveraging the vast experience of our executives, who are familiar with handling complex economic situations across various cycles. This blend of seasoned professionals and enthusiastic young talent, including interns keen on emerging technologies like AI and machine learning, equips us with a balanced perspective essential for navigating current challenges.

How are you advising your clients to manage the economic challenges?

The key is patience and discipline. Despite the challenges, our economy remains fundamentally strong, marked by solid job creation and continued economic expansion. However, with interest rates rising and a significant contraction in the money supply, access to capital will be more challenging. Clients should be strategic, patient, and choose a reliable banking partner to navigate these times.

How would you describe Boston’s capacity to handle economic challenges?

Boston is well-positioned, largely due to the nature of our workforce, along with a diverse employer base.  Developing a skilled workforce is crucial and we’re lucky to have access to an educated workforce thanks to our robust system of community colleges and top tier universities. However, we must address the high cost of living, ensuring access to quality housing and transportation. While Boston has significant assets and resources, we must not become complacent. We need to adapt and continue to make Boston an attractive place for young people to build their lives.

How is the Needham Bank attracting and retaining talent?

Our bank prides itself on being a great place to work, evidenced by our low turnover rate. We treat everyone with dignity and respect, providing opportunities for career advancement as the bank grows. We emphasize a caring work environment and maintain regular communication through town halls and virtual meetings. Adapting to remote work was challenging, but we’re constantly learning and adjusting. Each company must find the right balance, especially in accommodating challenges like childcare and transportation, to build a strong culture. We expect a lot from our team and are thoughtful about recognizing and rewarding significant accomplishments. 

How is Needham Bank handling concerns like cybersecurity and data protection?

Cybersecurity is a significant challenge. We protect every possible entry point, from physical mail to digital channels. The evolution of technology, especially AI, poses new threats and opportunities. AI affects every industry and enhances productivity, but it also raises concerns about misuse, like identity fraud. Ensuring the security of our communications and transactions is paramount, and we are always vigilant about potential threats.

Could you discuss any regulatory concerns you are currently monitoring?

I’m concerned about the disparities between economically thriving cities and towns and those facing decline. For instance, consider Memphis and Nashville; they’re only 150 miles apart yet experiencing vastly different economic cycles. Even within Massachusetts, economic conditions vary significantly from one city or town to another. It all comes down to leadership and crafting policies that benefit everyone without leaving anyone behind. It’s a challenging time given the multiple levels of changes and challenges we all face. Our goal is to develop policies and practices that benefit the entire community, making it a better place to live and work. 

What is your outlook for the banking industry over the next three years?

The banking sector may see a divide between the successful and the less successful. Preparedness, thoughtful planning, and understanding of how to manage a business’s financials are key. Banks that have struggled typically exhibited fundamental flaws in managing their balance sheets and weren’t ready for rapid changes in interest rates, along with the impact of the Federal Reserve Bank’s quantitative tightening. It’s about being thoughtful, understanding the community’s and businesses’ needs, and continuing to provide banking services effectively. We have witnessed many economic cycles over the past 40 years and expect more to come. It’s about preparing and managing these cycles thoughtfully.

What are Needham Bank’s top priorities and goals for the next two to three years?

Our focus is to continue what we’ve been doing, as it’s proven effective. We prioritize attracting and retaining passionate individuals who are deeply connected with their communities and the relationships they build. We look for clients that understand their industries and know how to manage through different economic cycles. It’s a lot like betting on the jockey rather than just the horse. Each company is unique, and understanding their specific goals and aspirations is crucial. We have a substantial amount of capital, and we’re thoughtful about how we will deploy that capital in the coming years. So, we’re planning to continue exactly our successful strategies.