You might say 2018 was the year of Trump in banking. It’s debatable whether President Donald Trump is accomplishing his campaign promise to make America great again. But he’s certainly helped make banking great again for investors. The initiatives he has spearheaded or supported have boosted the industry’s bottom line – a lot.
The year started with a bang thanks to corporate tax reform, which took effect in January. Championed by Trump and fellow Republicans in Congress, the legislation slashed the federal corporate tax rate. By the end of the third quarter, Sept. 30, the banking industry’s profits had risen by 29 percent compared with the same period last year. Federal officials attributed about half of the increase to the tax cut. Many banks responded to the windfall by giving employees pay raises.
The story was much the same in Rhode Island. The nine state-chartered banks raked in a collective $1.1 billion in profits over the first three quarters of the year. That was up from $889 million in the same period last year and $697 million in the same period of 2016, federal statistics show.
The Trump administration didn’t stop there. It helped ease banking regulations through more legislation passed in the spring. The measures effectively reduce compliance costs and loosen constraints on banking business models. But after November’s midterm election, the industry was feeling some political pushback on the regulatory front. Democrats captured a majority in the U.S. House and promised an end to the regulatory rollbacks.
The president’s name also came up in banking in other interesting ways during the year. Take the case of Paul Manafort, Trump’s former campaign chairman. It involved Rhode Island’s own Citizens Financial Group Inc. In February, Manafort was indicted on tax-evasion and bank-fraud charges partly connected to a $3.4 million loan he received from Providence-based Citizens Bank. Although Citizens employees who handled the loan testified at his trial, the bank was not implicated. Prosecutors said Manafort gave Citizens false information in obtaining the loan.
Banking giant Bank of America Corp. made a few waves of its own in Rhode Island this year. It vaulted into the state’s top spot in market share, reporting a staggering $4.8 billion gain in deposits in Rhode Island.
Bank of America and others in Rhode Island continued their march toward more mobile and online banking services. Citizens added the new Zelle payments system to its digital offerings and followed that with the launch of Citizens Access, an online digital deposit platform. Connecticut-based Webster Bank N.A., with a lesser presence in Rhode Island, launched its own digital investments platform. Boston-based Santander Bank N.A., a now major player in Rhode Island retail banking, initiated a blockchain voting system for investors.
Meanwhile, BankNewport asserted its presence in the Capital City. The bank opened two Providence branches – one in the spring downtown and another this past fall in Wayland Square, with plans to open a third office near Brown University.
In March one of Rhode Island’s largest retail banks, Westerly-based The Washington Trust Co., changed leadership. Edward O. Handy III assumed the position of chairman and CEO in place of the retiring Joseph J. MarcAurele. Handy previously served as the bank’s president and chief operating officer. The positions were filled by Mark K. W. Gim, previously the bank’s senior executive vice president of wealth management and chief strategy officer.
The year’s biggest acquisition among Rhode Island-based banks came when Citizens completed its purchase of Tennessee-based Franklin American Mortgage Co. this past summer for $511 million in cash. The deal tripled the size of Citizen’s mortgage-service business. Citizens followed that with more big news: the opening in August of its new $285 million corporate campus in Johnston. Citizens Chairman and CEO Bruce Van Saun described it as Rhode Island’s largest construction project in a decade.
In October, another banking behemoth – J.P. Morgan Chase & Co. – made a splash when announcing it is entering retail banking in the Boston-Providence market. The bank plans to open eight to 10 branches in Rhode Island and another 50 branches in Greater Boston, starting in December and continuing through 2019. As part of the expansion, the bank said it will lend an extra $3 billion to small businesses and people who want to buy a house, including in low- and moderate-income areas.
Rhode Island’s credit unions also made a few moves this year. Perhaps the biggest was by Pawtucket Credit Union. It planned to begin moving employees into a $4.5 million operation center, located across the street from its headquarters, in January. “We’re outgrowing [the headquarters] building in several departments,” said President and CEO George Charette.
Scott Blake is a PBN staff writer. Email him at Blake@PBN.com.
