Like large banks, community banks are facing a steep decline in mortgage income over the next few quarters as the refinancing boom that has largely driven profits in recent years finally comes to an end.

But unlike their bigger competitors, smaller banks are resisting the temptation to pare staff or close production offices in response to the slowdown. Many community banks bulked up in mortgage lending at a time when large banks were being more selective, and, for now, they are staying the course in hopes of capturing a "bigger piece of the pie," says Joseph MarcAurele, the chairman and chief executive of $3 billion-asset Washington Trust Bancorp (WASH) in Westerly, R.I

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.