Since opening a decade ago, Bank Rhode Island has carved out a niche in the state’s crowded banking market by catering to business customers, a focus the Providence-based institution plans to continue as it looks to the future.
In simple terms, according to BankRI CEO Merrill W. Sherman, people hunt for the best rates on consumer products such as CDs, mortgages and savings accounts. To stay competitive, banks must offer them the cheapest options.
Seifert Systems Invests in Energy Efficiency to Strengthen Operations
For manufacturers, energy is more than just another operating expense. It plays a critical role…
Learn More
However, commercial lending has escaped this commoditization, Sherman said, as businesses find value in working with institutions that understand their unique financial needs.
Thus, BankRI has attracted business customers through building relationships and offering services that make rates on products less of an issue. With ongoing financial needs, she explained, a business has no desire to retell its story every time it needs a loan.
The bank has also added services to increase what it can offer customers, and specifically in two areas that Sherman expects will soon show growth.
She plans to expand the bank’s options to business customers with its equipment leasing division, Macrolease, the Plainfield, N.Y., company it acquired last year.
Also, the bank has formed a private banking division last year through an agreement with Providence’s Coastline Trust Co., which will provide investment services to high net-worth customers.
In terms of branch expansion, Sherman said immediate plans are to gain market share with the bank’s 16 existing branches, concentrated in northern Rhode Island.
Still, the bank plans to open branches next year in Narragansett and Pawtucket, which would bring the total to 18. Two more branches are tentatively planned for Barrington and South Kingstown.
Believing 20 branches would satisfy its customers’ needs in Rhode Island, Sherman said the bank’s next frontier would be southeastern Massachusetts. “If you ask me about a 10-year horizon, then these areas definitely come into play,” she added, “but the immediate [goal] is to really focus on our existing footprint.”
BankRI began forging that footprint in October 1995, when a group of investors purchased 12 Shawmut National Corp. branches, sold off to satisfy antitrust laws after Shawmut merged with Fleet Financial Group. The branches reopened under BankRI’s name in March 1996.
The results in the past 10 years have been mostly positive. As of Dec. 31, 2005, the bank’s total assets had grown to $1.4 billion from $465 million. Deposits had more than doubled, to $980.9 million, up from $421.1 million. Commercial loans were up to $438.3 million and consumer loans to $206.5 million from $85.3 million and $32 million, respectively.
BankRI went public in early 1998, and from then to last December, its common stock value has more than tripled, according to SNL Financial, a Charlottesville, Va.-based research firm.
Alper Sungur, an analyst at Sidoti & Company in New York City, noted that the bank’s stock price has grown about 20 percent per year, outperforming average small-cap bank stocks in New England and across the country.
However, the bank’s stock price fell over the course of 2005. Sungur said that was in part due to the unexpected departures of two top executives at BankRI, Albert R. Rietheimer, the bank’s chief financial officer, and Chief Operating Officer Donald C. McQueen.
The stock had another setback in December, when Sherman reduced the bank’s earnings-per-share projection for 2006 by 18 basis points and announced that the bank would delay the openings of two branches from this year to 2007. The CEO said that lower net interest margins were behind her decisions.
Sungur said the bank made steps in the right direction in January when it hired former Citizens Bank executives – Mark Meiklejohn, director of corporate banking, and Will Tsonos, head of business banking – to bolster its commercial banking business. Due to rising interest rates last year, he said, the bank’s commercial loan growth – 9 percent – failed to reach double digits.
Still, last year’s performance has not diminished BankRI’s strides, he said.
“Ten years is still quite young and quite new for a bank,” Sungur said. “But they have definitely outperformed the competition.”
