As macroeconomic signs show continued improvement, it follows that banks would also show improved results. And for banks with operations in Rhode Island, that was certainly the case in 2011, according to year-end filings made with the Federal Deposit Insurance Corporation.
The data clearly indicates that last year was better for most banks than a year earlier, when lenders were still adjusting for loans and defaults caused by the Great Recession. Profits stabilized or increased while the financial institutions reduced the amount set aside in anticipation of bad loans, an indication of improving credit quality.
Citizens Bank, for example, the bank with the largest share of deposits in the region, set aside $815 million last year to cover anticipated bad loans, 55.4 percent of the $1.47 billion it took in 2010.
BankNewport, No. 8 on Providence Business News’ list of regional banks published in the 2012 Book of Lists based on 2010 data, cut its loan-loss provision by more than half, to $667,000. At the same time, charge-offs were trimmed 62 percent to $841,000. Attributing the 2010 figures to one customer, bank president and CEO, Sandra J. Pattie, told PBN “Those problems have since been resolved.”
Despite a decline in net income to $5.13 million from 2010’s $7.14 million, Pattie said, “We had a good year. … We became more balanced and stable.”
“Net income was down, but it was a very healthy year. We had great deposit growth of about $40 million and had exceptional loan growth, over $50 million in commercial loans. We have money to lend and are more than willing to lend it,” she added. BankNewport was not alone.
Citizens Financial Group Inc.’s largest division, RBS Citizens, the holding company for most Citizens and Charter One banks, posted a $345.13 million profit in 2011. The figure is a stark contrast to the $39.17 million in losses in reported in 2010 and the $600.40 million loss in 2009.
Publically owned Washington Trust Bancorp Inc., the parent company of The Washington Trust Co., had a record year. Its fourth-quarter profit was the highest quarterly profit ever reported, as was its annual net income of $29.7 million. The bank also breached the $3 billion mark in total assets.
Bancorp Rhode Island Inc., parent of Bank Rhode Island, ceased to be the state’s second-largest independent bank, when its purchase by Massachusetts-based Brookline Bancorp Inc. was completed on Jan. 3. For 2011, BankRI posted $8.31 million in net income, a decline of 27 percent. The bank, however, reduced its loan-loss reserve 35 percent to $4.45 million, and its charge-offs 31 percent to $5.37 million.
Webster Financial Corp., the Connecticut holding company for Webster Bank, reported net income growth of 38 percent over the past year to $39.6 million, compared with $24.3 million in 2010.
In fact, most local banks saw credit quality – as well as profits – improve.
Bristol County Savings Bank saw net income grow by more than 19 percent in 2011 to $8.43 million. The Massachusetts bank also made marked gains in reducing its loan-loss provision, shrinking it by 65 percent to $1.59 million in 2011. Significant progress was also made in reducing the amount of debt that was deemed uncollectable, to $2.06 million by the end of the year from $4.47 million in 2010. BCSB had suffered from heavy increases in uncollected debt and loan-loss provisions in 2010.
West Warwick-based Centreville Bank reported a slightly larger profit of $5.1 million on the year after posting profits of $4.83 million in 2010. Its reserve for bad loans declined 89 percent to $183,000 last year.
Coastway Community Bank posted net income of $941,000 for 2011, up from $730,000 a year earlier, as the Cranston-based bank collected $21.58 million in interest and noninterest income, a $2.61 million improvement from 2010.
Newport Bancorp Inc., parent of Newport Federal Savings Bank, found itself coming up short compared with 2010, as net income totaled $1.5 million, a decline from the $1.8 million reported in 2010.
One of the smallest banks in the market showed signs of a better economy and healthier loan climate. In East Greenwich, Independence Bank posted net income of $568,000 in 2011, an increase of 261,000. But the bank also significantly increased its loan-loss prevention fund to $890,000. In 2010 the bank allotted only $162,000 for bad debt.
Freedom National Bank in Smithfield reported a profit of $63,000 in 2011, smaller than the $197,000 posted the previous year. The company held ground on its loan-loss provision but posted $993,000 in charge offs, distributed between commercial, industrial and residential loans.
Randolph Savings Bank, which has offices in Cranston and Coventry but is based in Massachusetts, reported a net income of $836,000, a figure less than its 2010 profit of $1.83 million. It was only two years ago, in 2009, that the bank reported a loss of $1.24 million. The bank also cut the amount it added to its loan-loss provision by almost 60 percent, to $555,000.
Four other banks that do business in Rhode Island are considered thrifts – Sovereign Bank, Union Federal Savings Bank, Admirals Bank and Home Loan Investment Bank – and are regulated by the U.S. Office of Thrift Supervision. Data has not been released for these institutions. •