Lending growth lifts Chelsea Groton profits
Groton - Chelsea Groton Bank saw its profits increase by 17 percent last year, according to financial results released Thursday, thanks largely to one of its best years ever for loan originations.
The Groton-based bank's profits of $4.75 million last year compared with net income of $4.06 million the prior year.
"We're sticking to our core business and executing very well," B. Michael Rauh Jr., Chelsea Groton's president and chief executive officer, said in an interview this week at the bank's headquarters on Poquonnock Road. "We focus on customer service."
Rauh said 2013 was the bank's second-best year ever for loan originations. Total loans approached $592 million, up 5.5 percent on the year.
Rauh said last year featured strong interest in mortgage refinancing - accounting for more than three-quarters of all residential loan activity. This year, with rising interest rates, he said the bank's home-purchase loans are accounting for 75 percent of mortgage activity, with refinancing down to 25 percent.
Charter Oak Federal Credit Union may have accounted for about 100 more mortgages than Chelsea Groton last year in the region, but Rauh said the Groton mutual bank's $117 million in originations made it No. 1 in total dollar volume. Chelsea Groton has 14 local branches.
Rauh said he is proud of the bank's continued ability to fund local business projects, including Thames Edge at Fairview in Groton, a Starbucks franchise in Norwich, Mystic Drawbridge Ice Cream and Mike's Famous Harley-Davidson in New London.
"As a local company, that's kind of what we do," he said.
Rauh added that the bank's financial-services group had one of its best years ever.
In addition, the bank has seen a dramatic dropoff in nonperforming loans, Rauh said, with no need to set aside additional money for loan losses last year. The bank and its foundation donated more than $300,000 to local charities in 2013, he said.
In addition, Rauh said, the bank's capital position continues to grow, with 14.1 percent of its assets held in reserve. That's far above the Federal Deposit Insurance Corp.'s 5 percent minimum for well-capitalized banks, he said.
"We are laying the groundwork for continued success in the years to come," Rauh said in a statement.
To celebrate its 160th year in business in 2014, Rauh said, Chelsea Groton is giving each of its employees $160 to donate to a cause that they choose - whether it be a homeless shelter, a food pantry or supplies for a classroom.
At its 159th annual meeting Thursday at Mystic Marriott, members of the mutual bank heard a recap of last year's financial highlights. They also elected Marilynn "Lynn" Malerba, 18th chief of the Mohegan Tribe, as a new board member, while choosing as new corporators Michael Alfultis, director of the University of Connecticut at Avery Point campus, attorney Ellen C. Brown of Groton and financial expert Fred A. Conti of Mystic.
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