Looking down the federal government’s list of failed banks since 2000, it’s hard to believe there was ever a banking crisis in New England or, for that matter, in Rhode Island.
During the 19-year period from 2000 through 2018, 554 banks across the nation failed. Only four of them were in New England, with none in Rhode Island. Even at the peak of the banking crisis in 2009 and 2010, when 296 banks failed nationwide, the only failure in New England was Butler Bank in Lowell, Mass., according to data from the Federal Deposit Insurance Corp.
Meanwhile, banks in Florida, California, Texas and elsewhere were dropping like flies under the weight of housing market crashes.
Today, the American banking sector is in much better shape. There hasn’t been a bank failure since Dec. 15, 2017, when Washington Federal Savings Bank in Chicago closed, FDIC statistics show.
As for banks in Rhode Island and neighboring Bristol County, Mass., nearly all have strong ratings from BauerFinancial Inc., a widely cited banking-analysis company in Coral Gables, Fla. On Bauer’s zero to five-star scale, five means superior, four means excellent, three means adequate, two means problematic, one means troubled and zero is the lowest rating.
Of 23 banks doing business in Rhode Island, all but one received four or five stars in Bauer’s latest ratings as of Sept. 30. The one outlier was small, Boston-based Admirals Bank, which received two stars. The bank holds less than a 1 percent share of total deposits in Rhode Island.
All eight banks in Bristol County, Mass., received four- or five-star ratings from Bauer.
‘Customers are doing better, so their payments and financials are better.’
ANTHONY A. BOTELHO, Freedom National Bank president and CEO
Going back seven years to Sept. 30, 2011, the earliest reports that Bauer would release, banks in Rhode Island and Bristol County, Mass., still fared well. In September 2011, 19 of 23 banks doing business in Rhode Island received four or five stars, while all eight based in Bristol County, Mass., did so. The numbers suggest the local banking sector was strong even toward the end of the banking crisis.
As for the 20 credit unions doing business in Rhode Island, 17 received four- or five-star ratings on Sept. 30, an improvement from 15 in September 2011, Bauer reports show.
One of the credit unions that made the biggest improvement was Westerly Community Credit Union. The credit union, based in Westerly, received five stars from Bauer in September, up two spots from three stars in September 2011. During that stretch, it grew assets to $288 million from $211.6 million. It also increased net income to $1.5 million in the first nine months of last year from $93,000 during the same period in 2011, Bauer figures show.
“Our net worth has improved since 2011,” said Westerly credit union President and CEO Stephen White. “We’ve had very low delinquency in recent years [on loans].”
White attributed the credit union’s higher rating to improved loan-underwriting standards and a good economy. Since the banking crisis, it has diversified its lending portfolio so it’s not so heavily weighted on real estate, doing more small-business and consumer lending, White said.
Rhode Island banks making the largest jump in ratings during the seven-year period were: Home Loan Investment Bank in Warwick, up three spots to five stars last September from two stars in September 2011; Freedom National Bank, up two spots to five stars in September from three stars in September 2011; and Coastway Community Bank in Warwick, up one and a half spots to five stars in September from 3.5 stars in September 2011.
Rhode Island banks that improved one spot were: Bank of America Corp., of Charlotte, N.C., up to four stars from three stars; Bank of England, based in England, up to five stars from four stars; Bank Rhode Island in Providence, up to five stars from four stars; and Santander Bank, based in Wilmington, Del., up to five stars from four stars, according to Bauer.
As its name suggests, Home Loan Investment Bank was heavily into the residential mortgage market when many housing markets collapsed, although the blow wasn’t as great in New England, said Eric Rose, the bank’s executive vice president and chief operating officer.
“It was our primary line of business,” Rose said. When the crisis hit, “it was a tough workout for all banks.”
Starting in 2011, Rose added, a new management team was brought in and the bank started to reinvent itself. Similar to Westerly credit union, Home Loan Investment Bank diversified its lending to include more auto, home-improvement and small-business lending, he said.
Freedom National Bank President and CEO Anthony A. Botelho partly attributed his bank’s higher rating to an improved economy.
“Our customers are doing better,” Botelho said, “so their payments and financials are better.”
The bank also has done a better job managing its risk profile, he added. “We’re almost 100 percent commercial banking. …The market has warranted it.”
Scott Blake is a PBN staff writer. Email him at Blake@PBN.com.
