New owners lead once-ailing bank to 1Q turnaround

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What a difference a change in name and ownership can make.
Admirals Bank, the Cranston bank formerly known as Domestic Bank, posted a $640,000 profit for the first quarter of 2011, a significant improvement over the $129,000 loss it recorded in the same period a year earlier.
The troubled, family-run Domestic was purchased last May by a Boston-based, private-equity firm – Federal One Holdings LLC – which promised to pump money and management resources into the bank. It also changed the name to Admirals Bank – a nod to Rhode Island’s maritime heritage – shedding the institution’s last connections to the Baker family that founded Domestic Bank in 1967.
The difference is visible on the balance sheet. The assets of Admirals, which purchased four former Millennium Bank branches in Massachusetts, have climbed nearly 50 percent in the last year, from $234.06 million to $345.01 million.
At the same time, the bank’s mortgage-loan portfolio has ballooned from $61.87 million to $161.32 million. That’s largely the result of a wholesale loan-acquisition program that new owners instituted after taking over last year.
Admirals wasn’t the only local bank to experience a strong start to 2011.
RBS Citizens, the holding company for Citizens Bank, swung to profitability in the 2011 first quarter, posting a $66.21 million profit after losing $61.68 million in the first quarter last year before write-downs and loan charge-offs.
And publicly traded Webster Financial Corp., the holding company for Waterbury, Conn.-based Webster Bank, said its bottom line moved from a $6.07 million loss in the 2010 first quarter to $33.47 million in the black for the same period this year.
Also, Bancorp Rhode Island, parent of Bank Rhode Island, and Washington Trust Bancorp, the parent of The Washington Trust Co., reported increased profits in the first quarter, compared with a year earlier. Newport Bancorp, the publicly traded parent of NewportFed, said its first-quarter net income climbed from $101,000 in 2010 to $301,000 in 2011, in part because of a $217,000 loss a year earlier on the sale of securities that did not occur in the 2011 first quarter. The numbers weren’t so rosy for some of the privately held, local banks.
Centreville Bank – the No. 7 Rhode Island bank by deposits – saw its net income shrink to $629,000 in the first quarter, down more than 53 percent from $1.35 million in the first quarter of the previous year in part because of $1.24 million in interest income.
Home Loan Investment Bank, which has been weighed down in recent years by a troubled loan portfolio, saw its bottom line go deeper into the red in the first quarter, largely because of a $5.12 million provision the bank made in anticipation of losses on interest-bearing assets.
The bank finished the first quarter with a $6.43 million loss, compared with a $1.98 million loss it posted in the same period a year earlier.
Meanwhile, BankNewport posted a $1.14 million profit for the 2011 first quarter, down about one-third from $1.82 million from the first three months of 2010, thanks in part to lower interest income and a $250,000 set-aside for anticipated loan losses. BankNewport did not make a provision in the 2010 first quarter.
Some of smallest banks in the market by deposits weren’t immune to lowered performance.
Freedom National Bank in Smithfield ended the 2011 first quarter with a $31,000 profit – down from $95,000 from a year earlier – largely because of a sizable increase in the loan-loss set-aside, from $67,000 added to the provision in the 2010 first quarter to $181,000 in the first quarter this year.
And Randolph, Mass.-based Randolph Savings Bank, which has offices in Cranston and Coventry, saw its first-quarter profits drop from $434,000 in 2010 to $145,000 this year.
Union Federal Savings Bank, a one-branch outfit in North Providence, continued to lose money as its parent, publicly traded First Marblehead Corp., considers selling it.
In the first quarter, Union Federal – which was crippled when the credit crisis hit the student-loan market in 2007 — lost $313,000, an improvement over the $798,000 loss it suffered in the 2010 first quarter. The regulatory filings looked much better for Cranston-based Coastway Community Bank, which posted a net income of $302,000 for the first quarter, up from $90,000 a year earlier, as it collected $4.79 million in interest and noninterest income, up about $500,000 from a year earlier.
Taunton-based Bristol County Saving Bank, which has a branch in Pawtucket, showed improved performance in the first quarter, largely because it lowered a set-aside for anticipated loan losses, from $1.11 million in the 2010 first quarter to $356,000 in the first quarter this year. It’s generally a sign that the bank believes the credit quality of its loan portfolio is improving.
Bristol County Savings said it finished the first quarter with a $1.92 million profit, up from $1.61 million in the same period a year ago.
Independent Bank, a one-branch bank in East Greenwich, posted better numbers in the first quarter – a $38,000 profit compared with a $226,000 loss from the same period in 2010, according to regulatory filings – thanks in part to $395,000 in sales of loans and leases recorded in the first quarter.
At Admirals Bank, the changes on the financial statements are dramatic since the new owners took over, particularly in the loan portfolio.
Home-improvement loans have climbed from $75.68 million as of March 31, 2010, to $97.13 million on March 31 this year – a 28 percent increase.
And mortgage loans on nonresidential property have jumped from $12.34 million at the end of the 2010 first quarter to $99.81 million the same time this year. That growth is part of Admirals strategy of purchasing well-performing loans wholesale from other financial institutions, said executives familiar with the bank’s strategy.
And the changes continue for Admirals. The bank is set to move its headquarters July 8 from its longtime Cranston offices to the Gateway Center, the former location of Fidelity Investments, next to the train station. •

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