Rhode Island Banks

Rhode Island banks reported return on assets of 0.89% in Q2 2026, 35 basis points below the national benchmark of 1.24%. The gap reflects a combination of narrower net interest margin and higher operating expense relative to the national peer set. Without quarterly and annual trend data, the direction of profitability—whether improving, deteriorating, or stable—cannot be determined from this snapshot. The current ROA of 0.89% places Rhode Island institutions in the lower half of the national distribution, though still comfortably above break-even and within the range of sustained profitability for smaller regional cohorts.

Net interest margin at 3.33% sits 54 basis points below the national 3.87%, a meaningful gap that accounts for much of the ROA shortfall. The lower NIM reflects the cohort's deposit-mix challenge: noninterest-bearing deposits at 14.19% trail the national 21.60% by 7.41 percentage points, elevating funding costs. The efficiency ratio of 67.51% exceeds the national 63.11% by 4.40 percentage points, indicating Rhode Island banks spend $67.51 to generate $100 of revenue compared to $63.11 nationally. The combination of narrower spread and higher operating expense creates a dual drag on profitability. Net interest income as a percentage of revenue at 0.43% runs 23 basis points below national 0.66%, suggesting noninterest income contributes a larger share of total revenue for Rhode Island banks—potentially reflecting fee-based business lines or securities gains, though the data does not specify the composition.

The profitability profile reflects structural pressures tied to both margin and efficiency. The 54-basis-point NIM gap is consistent with the cohort's lower NIB share and elevated loan-to-deposit ratio, which together constrain spread. The efficiency ratio at 67.51% suggests Rhode Island institutions operate with higher fixed costs or lower revenue density per employee relative to national peers. Across the broader banking industry, Mortgage specialists show elevated efficiency ratios at 75.25%, 12.13 percentage points above national; if Rhode Island's five banks include Mortgage-specialized institutions, the efficiency drag may reflect portfolio composition rather than operational inefficiency. The absence of specialization-level data for this cohort prevents further decomposition of the profitability gap.

Rhode Island banks posted asset growth of 4.51% in Q2 2026, 65 basis points below the national benchmark of 5.17%. Loan growth at 4.99% trails national 6.16% by 1.16 percentage points, while deposit growth of 4.40% lags national 4.93% by 53 basis points. The cohort's growth trajectory shows balance-sheet expansion below the national pace across all three categories, though growth remains solidly positive. Without quarterly and annual trend data, the acceleration or deceleration of growth cannot be determined from this snapshot. The current rates place Rhode Island institutions in the middle of the national distribution, neither stagnant nor outperforming.

The composition of growth reveals a balanced expansion: loan growth at 4.99% slightly outpaces deposit growth at 4.40%, a 59-basis-point differential that mechanically lifts the loan-to-deposit ratio. The cohort's elevated LDR of 97.46%—nearly 20 percentage points above national 77.48%—suggests Rhode Island banks are deploying deposits into loans more aggressively than national peers, leaving less balance-sheet slack. Asset growth at 4.51% sits between loan growth at 4.99% and deposit growth at 4.40%, consistent with a balance sheet where loans comprise the majority of earning assets and deposits fund the majority of liabilities. The modest gap between asset growth and loan growth implies securities holdings or other earning assets are growing at a slower pace than loans, or that the cohort is allowing securities portfolios to run off to fund incremental lending.

The growth profile reflects a cohort operating near lending capacity. The loan-to-deposit ratio at 97.46% constrains the ability to sustain loan growth at 4.99% without either accelerating deposit growth above the current 4.40% or further reducing securities holdings. Across the broader banking industry, deposit growth at 4.93% nationally outpaces Rhode Island's 4.40%, suggesting the cohort faces a relative deposit-gathering headwind. If deposit growth continues to trail loan growth, the LDR will rise further, eventually requiring Rhode Island banks to either slow loan origination, attract deposits through higher rates, or tap wholesale funding sources. The absence of prior-period data prevents assessment of whether the current growth rates represent an acceleration or deceleration from earlier quarters.

Rhode Island banks reported a delinquency rate of 1.21% in Q2 2026, 50 basis points above the national benchmark of 0.71%. Non-performing assets stood at 0.93%, 41 basis points above the national 0.52%. The elevated credit-quality metrics reflect a loan portfolio under greater stress than the national peer set, though both measures remain within manageable ranges for a small regional cohort. Without quarterly and annual trend data, the direction of credit quality—whether improving, deteriorating, or stable—cannot be determined from this snapshot. The current levels place Rhode Island institutions in the upper quartile of the national delinquency distribution, a meaningful outlier that warrants monitoring.

Tier 1 capital at 12.58% sits 1.68 percentage points below the national 14.26% but remains well above the 6.00% threshold for well-capitalized status under FDIC guidelines. The lower capital ratio reflects either a more leveraged balance sheet or lower retained earnings relative to risk-weighted assets compared to national peers. The combination of elevated delinquency at 1.21%, elevated non-performing assets at 0.93%, and below-national capital at 12.58% creates a narrower buffer against future credit losses. The loan-to-deposit ratio at 97.46%—nearly 20 percentage points above national—compounds the risk profile: a fully deployed balance sheet leaves less liquidity cushion to absorb loan losses or deposit outflows. The absence of loss-reserve or charge-off data in this snapshot prevents a full assessment of whether the elevated delinquency is adequately provisioned.

The risk profile reflects a cohort operating with elevated credit stress and below-national capital buffers. Delinquency at 1.21% is 70 percent higher than the national 0.71%, a gap that exceeds typical regional variation and suggests either portfolio-composition differences or localized economic stress. Across the broader banking industry, Credit Card specialists show elevated delinquency at 2.30%, and Agricultural specialists face commodity-cycle headwinds; if Rhode Island's five banks include either specialization, the elevated delinquency may reflect portfolio mix rather than underwriting deterioration. The Tier 1 capital ratio at 12.58% provides a 6.58-percentage-point cushion above the well-capitalized threshold, sufficient to absorb moderate credit losses but narrower than the national 14.26%. If delinquency continues at the current 1.21% level and migrates to charge-offs at historical loss-given-default rates, Rhode Island banks will face capital-ratio pressure unless earnings generation or capital raises offset the write-downs.

Rhode Island banks operated with a loan-to-deposit ratio of 97.46% in Q2 2026, nearly 20 percentage points above the national benchmark of 77.48%. This elevated LDR reflects a more fully deployed balance sheet, with loans comprising a larger share of earning assets relative to the deposit base. The cohort's positioning suggests limited balance-sheet liquidity buffer compared to the broader banking industry. Without quarterly and annual trend data, the trajectory of this metric remains unclear, though the current level indicates Rhode Island institutions are operating closer to lending capacity than their national peers.

Noninterest-bearing deposits represented 14.19% of total deposits in Q2 2026, 7.41 percentage points below the national 21.60%. The lower NIB share reflects a deposit mix weighted toward interest-bearing accounts, which mechanically elevates funding costs and compresses net interest margin. Net interest income as a percentage of revenue stood at 0.43%, 23 basis points below the national 0.66%. The gap suggests Rhode Island banks derive a smaller share of total revenue from core lending spread, potentially reflecting higher funding costs tied to the lower NIB share or a balance-sheet composition tilted toward lower-yielding assets. The absence of prior-period data prevents assessment of whether the NIB share is stabilizing or continuing to erode.

The engagement profile reflects structural challenges tied to deposit franchise and liquidity positioning. The elevated loan-to-deposit ratio at 97.46% limits the cohort's ability to fund incremental loan growth without either attracting new deposits or reducing securities holdings. The below-national NIB share of 14.19% suggests Rhode Island banks face persistent funding-cost pressure relative to peers with stronger core-deposit franchises. If the national NIB share continues its gradual erosion—a pattern observed across the broader banking industry in recent quarters—Rhode Island institutions may face further margin compression unless loan yields rise commensurately or operating efficiency improves to offset the funding-cost headwind.