Bancorp Rhode Island Inc. has made its mark.
The Providence holding company for Bank Rhode Island ended 2002 with assets of $1.01 billion, making good on chief executive officer Merrill W. Sherman's prediction in a 1999 interview with American Banker that it would surpass the $1 billion plateau before its seventh anniversary, which will be March 25.
It helped to have the type of head start that most other start-ups do not get: Bank Rhode Island opened with 12 branches and $470.3 million of assets that the U.S. Department of Justice ordered Fleet Financial Group (now FleetBoston Financial Corp.) to sell when it merged in 1995 with Shawmut National Bank.
Still, it has more than doubled its size without making an acquisition. Washington Trust Bancorp Inc. in Westerly, whose $1.6 billion of assets make it Rhode Island's largest community bank, has grown more than twice as much as Bancorp Rhode Island since 1996 - 220% versus 108% - but it has bought two banks in that stretch.
Ms. Sherman gave some of the credit for her company's rise to the peculiar dynamics of Rhode Island's banking scene. According to the Federal Deposit Insurance Corp., three out-of-state regional bank companies - FleetBoston, Citizens Financial Group Inc., which is headquartered in Providence but owned by Royal Bank of Scotland, and Sovereign Bancorp Inc. of Wyomissing, Pa. - control more than three-fourths of the state's $15.7 billion deposit market.
"Our growth has come from differentiating ourselves from the big players," Ms. Sherman said in an interview this month. "Fleet, Citizens, and Sovereign have been our competition, and we like to think we've been a little more nimble and a little more feisty, an entrepreneurial David battling the Goliaths."
William McCrystal, an analyst with McConnell, Budd & Romano Inc. in Morristown, N.J., said Bancorp Rhode Island has had an easy time wresting small and midsize business clients away from bigger banks.
"Obviously, it took advantage of the consolidation that has gone on in New England, and particularly in Providence," he said. "The small-business market has been the one most affected by that consolidation. Small-business owners want to know that when they call their bank they'll be talking to the same person, not a new loan officer every three months."
Throughout its short history, Bancorp Rhode Island has confined its operation to the nation's smallest state. Its franchise is concentrated in Rhode Island's two most populous counties, Providence and Kent, where it has nearly 6% of the $12.3 billion deposit market.
And though her company has begun to look north, to Massachusetts, Ms. Sherman said there is plenty of room for it to grow further in Rhode Island. It now has 13 branches - it has opened three branches on its own and closed two - and has scheduled two more branch openings for 2003.
"We think we can grow to $1.5 billion of assets and not leave the state," Ms. Sherman said.
One thing has changed, though: the composition of Bancorp Rhode Island's loan portfolio.
For its first six years and into 2002, the company was "incredibly concentrated" on small-business lending, Ms. Sherman said. But last year it began promoting a consumer product, home equity loans. Its consumer lending rose 50%, to $92 million, with virtually all the growth coming as a result of the home equity push, Ms. Sherman said.
"For us to grow $30 million in a year was pretty good," she said.
The foray appears to have whetted Bancorp Rhode Island's appetite. Ms. Sherman said it will continue marketing home equity loans in 2003 and seek to begin expanding its mortgage portfolio, which actually shrank 4% last year.
Consumer lending has its limits, and Ms. Sherman said it will never be as important to her company as small-business lending.
"Commercial credit isn't something that gives us pause," she said. "It's what we were all about."
