Peter Judkins put a lot miles into a banking career that started in rural Maine, took him to financial centers in some of the country’s largest cities and eventually returned him to Maine. He’s bringing that experience with him to the board of the Federal Reserve Bank of Boston, where earlier this month he was appointed to a full term after completing the term of another director who resigned.
Judkins grew up in Farmington and graduated from the University of Maine. After a stint at Depositors Trust Co. – later part of KeyBank – he left the state for a career in financial services at American Express.
PETER JUDKINS, UP CLOSE
WHAT WAS YOUR FIRST JOB? Management training at Depositors Trust Co., which became part of KeyBank.
WHAT ABOUT YOUR BUSINESS KEEPS YOU UP AT NIGHT? My biggest concern is cybersecurity. Waking up in the morning and reading that our bank has been breached is my biggest nightmare.
WHAT DO YOU DO ABOUT THAT? We have an IT area that we feel keeps us well protected. It’s an expense that keeps growing, but I think we have enough safeguards in place – and the Fed certainly does. We’re doing everything we can to stay ahead of it.
WHAT’S THE BEST BUSINESS ADVICE YOU CAN OFFER TO OTHERS? Recognize it takes everyone to get a job done. No one’s job is more important than any other person’s.
Over the next 15 years, that job took him from New York to Pittsburgh; Washington, D.C.; Boston; Salt Lake City; and then back to Boston.
In 1999, he returned to Maine to become president and chief executive officer of Franklin Savings Bank, which has seven branches, 110 employees and assets of $344 million. It had net income of $3.3 million in 2014.
Q: How did you get on the Boston Fed board?
A: I’ve been pretty involved in the state with the Maine State Housing Authority and a local economic development board and the Maine Bankers Association. I was selected many years ago from our district to be on the Thrift Institutions Advisory Council. We would go into Washington and they would want a perspective from Main Street, so we’d sit and meet with (Federal Reserve Chairman Ben Bernanke) and the board of governors (of the Fed).
They don’t have the perspective from the people on the street, so I was fortunate to be part of that and that probably led to my appointment to the (Boston Fed) board of directors. I finished the term of a director who had resigned before his term was up, so now I’m into my second term and was selected as chair of the Audit Committee.
Q: Being on an audit committee for a Federal Reserve bank has to be a bit intimidating.
A: It’s a little daunting. It’s quite a complex operation. Two of the other committee members are bankers and then there’s the president of BJ’s Wholesale Club. We get a lot of presentations from the staff and there’s an external auditor who reports to us to give assurances that bank is in good hands. Cybersecurity is a big issue right now.
Q: What’s involved with being on a Federal Reserve Bank board?
A: The board meets 10 times a year for regular board meetings and the committee meets four or five times a year. Our role is really to give input. We get economic reports updating us on the local economy and the world economy. The directors are involved in different businesses, so we all spend about 10 minutes giving the ups and downs of a particular market.
I talk about what drives Maine, like in the winter the ski industry and the snowmobile industry. I also talk about the housing industry. It’s input that’s taken to the Open Market Committee (which sets policy for the central Federal Reserve). They try to tie that information into the economic data that they have to make decisions on where to go with economic accommodations.
You want to make sure you cover everything. Now it’s only me for Maine, New Hampshire and Vermont, so I try to reach out to people in the northern part of New England, with contacts in the snowmobile industry and ski industry and people I call on about tourism and bankers around the state that I’ll call to get the feeling about where the market is going. I try to give a general feel for where the economy is going. It’s a real interesting time to be involved with this, with the accommodations the Fed has made to keep interest rates down probably coming to end.
Q: The Fed is expected to raise interest rates from near zero soon, possibly by summer. What impact do you think that will have?
A: It’s going to have some positive and negative effects. A lot of banks have held loans on the books that are at very low interest rates. Those rates have been stimulating the economy, but it’s not sustainable, there’s not enough revenue from that. If all those mortgages are held (by banks, rather than sold on the secondary market) for 30 years, you’re going to see a lot of strain on banks and you’re going to see some consolidation in the industry. You’re going to have to pay more for deposits and if those low-rate mortgages are held, there will be some strain on those banks.
I think you’ll see some of that same thing we saw in the late 1970s and early ’80s. I doubt you’ll see rates return to where they were then – 18, 19 percent. It could happen, but I doubt it. But that will dictate what happens to the industry and it wouldn’t surprise me to see the number of banks decline because you’ll see mergers and consolidations.
In addition to the rates, there’s also a regulatory environment that puts a lot of burden on banking institutions, so it adds costs to your business. It takes so long and so many people to document a mortgage that it’s almost getting out of hand, especially for banks like ours that did things right. We never made a loan to someone who we didn’t think would pay it back.
We’re probably processing half the mortgages we were in peak times and we have more people doing that, more people processing fewer mortgages, which adds to expenses.
But I feel good about the place we are in. We’ll have some strain in the short term, but long -term were going to be fine.
Q: If rates are raised, what impact do you think that will have on the Maine economy?
A: I think a positive impact. Banks generally have money to lend and commercial deals normally don’t go as long as consumer mortgages. I feel good about where it’s going. We’ll have more jobs in the next couple of years than we have people to fill them.
And Portland is headed in the right direction, with a vibrant young community. The rest of the state I’m a little concerned about because of the paper industry. We’re not going to see the industry we have today in 10 years. Overall, though, things seem to be turning and people are optimistic and the great state of Maine will make it just fine.
Q: Six different postings in 15 years is a lot of moving. Do you appreciate the consistency of living in one place now or miss the constantly changing scenery?
A: It was a great experience, but it was nice to come home and run the hometown bank. We didn’t mind any of those moves.
Q: Why did you choose Franklin Savings to come back to?
A: I came back to a really strong bank. It was a nice strong community bank and we’ve had slow, calculated growth. We’re considered the strongest bank of Maine. It’s well capitalized and the earnings stream is strong. It’s a savings bank, but it’s really a small commercial bank.
Q: How was it to go from such a big company to a community bank?
A: It was a pretty big adjustment for me. I had a lot of flexibility (at American Express) and it was quite a transition to go through, to come back to a quieter pace where I wasn’t jumping on a plane every day. But it was nice to adjust. We’re able to give back to the community and we’re a mutual company, so we essentially report to our depositors. There’s not as much pressure for financial performance and we’ve made it through the last seven years of such a terrible economy and have come back very well. We’re well-positioned to move forward with the traditions we’ve had since 1868.
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