Profits continued to grow for most local banks last year, although the sale of Citizens Bank of Rhode Island’s credit card business cut into the overall profitability figures for Ocean State banks in 1999. Net income at all commercial banks chartered in Rhode Island increased about 1.5 percent to $1.28 billion last year from $1.26 billion the previous year, according to financial information collected by the Federal Deposit Insurance Corp. in Washington, D.C.
Leading the pack was First Bank & Trust of Providence, whose profits jumped 21 percent to $1.9 million last year from $1.6 million the previous year.
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First Bank Treasurer Jack Macomber attributes the boost in net income to growth of the bank’s loan portfolio and a favorable interest rate environment. Most of the loan portfolio growth last year came from stepped-up commercial real estate lending, Macomber said.
“If you could do that year in and year out, it’d be a snap” to post double-digit profit gains every year, he said.
The community bank’s net loans and leases–a figure that basically represents the total amount of money it has loaned out, less the amount set aside to protect against loans that aren’t repaid–increased to $94.3 million last year from $85.4 million the previous year.
Also working in First Bank’s favor, Macomber said, is the relatively small number of bad loans.
“We have very, very strong asset quality,” he said. “We had only a couple of nonperforming loans, and we had no foreclosed real estate in our portfolio.”
Nonperforming loans are those that no longer earn interest for a bank because the borrower has stopped making payments. First Bank removed just $6,000 in loans that it deemed uncollectible from its books last year. By comparison, the bank charged off $569,000 in bad loans in 1998.
Bank Rhode Island and Newport Federal Savings Bank also reported double-digit net income growth in 1999.
Bank Rhode Island’s profit jumped to $4.4 million last year from $3.8 million the previous year, a 14-percent increase.
The bank’s higher profits are thanks mostly to increased checking and savings account deposits, up about 7 percent, and the resulting jump in commercial lending, said spokesman Stephen Turgeon.
CITIZENS ENJOYED double-digit profits in 1999.
Bank Rhode Island’s commercial loan portfolio had reached $174.5 million at year’s end, more than double what it was in 1996. The bank’s total loan portfolio was closing in on $460 million at the end of 1999.
“We’ve been doing a lot more lending across the board,” Turgeon said, adding that last year the amount of mortgage and consumer loans made by the bank represented more than half of its total loan portfolio for the first time. “That’s significant because the more loans you generate and service, the better your profitability.”
Bank Rhode Island’s charge-offs decreased slightly to $337,000 last year.
Newport Federal Savings Bank’s profit rose 13 percent last year, to $837,000 from $740,000 in 1998, according to the FDIC financial reports.
Washington Trust Co. of Westerly posted a 5-percent increase in net income to $10.6 million. Profits for both Centreville Savings Bank of West Warwick and Domestic Bank of Cranston rose by 3 percent last year, to $8 million and $1.6 million, respectively.
But not all local banks managed to turn higher profits last year.
Citizens Bank of Rhode Island, for example, reported net income of $88.2 million last year, a 6-percent slide from the previous year’s $93.8 million. However, the bank’s 1998 profit was unusually high because of the sale of its credit card business to MBNA of Wilmington, Del, officials noted. Not counting the $27.5 million Citizen’s pocketed from the sale, its net income increased to $88.2 million last year from about $66.3 million–a jump of about 33 percent.
Bank of Newport’s net income dropped 3 percent to $4.6 million last year from $4.8 million the previous year, and Westerly Savings Bank’s $318,000 in profit last year was a slight decrease from $322,000 in 1998.
Meanwhile, Rhode Island’s newest bank, Sovereign Bank of Wyomissing, Pa., reported net income of $226 million last year. That sum represents a 53-percent increase from $148 million the previous year.
Sovereign’s loan portfolio continued to grow and the fast-growing thrift also reported a sharp increase in fee income. As Sovereign has shifted its deposit base from mainly certificates of deposit to checking and savings accounts, its income from account fees has rocketed, achieving an increase of nearly 90 percent last year compared to the previous year.
