Somerset-based Slade’s Ferry Bank has reported a 36 percent increase in annual earnings for 2004, which bank officials attribute to a sound business strategy.

Anyone can design a strategy, but implementing one can determine a bank’s success. Slade’s Ferry Bank recently proved its business strategy has worked. The Somerset-based bank reported a 36 percent increase in annual earnings for 2004.

“Our growth in 2004 is significant, thanks to the dedication of a fine group of professionals and a board of directors committed to both shareholders and community,” said Slade’s Ferry Bancorp Chief Executive Officer Mary Lynn Lenz in a prepared statement. “Increasing earnings and a stronger, more diverse asset base allows Slade’s Ferry to improve our levels of service to the communities we serve and create more value for our shareholders.”

Bank executives said the primary reason for the increase in earnings is the company’s growth in 2004. Because the bank instituted programs to attract significant levels of deposits during the period of low interest rates, earnings were higher than last year, according to information provided by the bank.

Net income for the three months ending Dec. 31 of last year totaled $1.33 million compared to $1.07 million for the three months ending Dec. 21, 2003, an increase of 25 percent.

Deborah McLaughlin, chief financial officer at Slade’s Ferry, said the bank saw growth throughout 2004 and into the new year. Despite its increase in assets, the bank continues to call itself a local institution.

“We still enjoy that we are a community bank,” McLaughlin said.

Making It Easy

Slade’s Ferry has more than $549 million in assets and 10 retail branches in southeastern Massachusetts. A new branch in Freetown’s Assonet section will open this year. Among the other banks with branches in Somerset, where it is based, include Citizens-Union Savings Bank, Fall River Five Cents Savings Bank and Lafayette Federal Savings Bank.

As part of its strategy to grow, Slade’s Ferry introduced new technology. Customers who have a Coastal account enjoy more Internet banking products, such as free online banking and bill pay. The bank offers personal banking products like Coastal Silver Checking, which provides free checks, a range of special discounts and preferred loan rates as long as customers maintain a $5,000 combined balance total in all Slade’s Ferry deposit and loan accounts. Coastal Gold offers no-fee benefits and a higher ATM withdrawal limit with a $20,000 total balance in loan and deposit accounts. The bank also prides itself on knowing the business climate in southeastern Massachusetts and offers checking and savings accounts for businesses, as well as business lending and credit cards.

“We know [our customers] really well and also have the resources [they] need,” McLaughlin said. “We make it a lot easier to bank.”

Cash management for commercial customers was added to Slade’s Ferry’s services in April 2004. The bank offers investment services, as well.

Lending business also has impacted the bank’s success. Residential loans have picked up since 2003, McLaughlin said.

“We’re diversified,” she said.

The bank offers mortgages at fixed and adjustable rates, home equity lines and personal loans.

Net loans increased by almost $31 million, or 9.3 percent, to $362 million last year. Deposits also jumped from $333 million to $400 million over the last year, an increase of 20 percent.

“[There was] a huge increase in deposits,” McLaughlin said.

The increase in loans and deposits isn’t necessarily luck. McLaughlin said the bank intentionally designed a strategy to see such growth.

“It is a relationship issue,” she said. “We want to have your loans. We want to have your deposits.”

Like other community banks, Slade’s Ferry is also trying to capitalize on recent mergers and acquisitions in the area. McLaughlin said because many people become displaced during a merger, customers are looking for a bank that will provide personal service.

McLaughlin said despite her role as chief financial officer, she focuses on marketing the bank’s products, as well.

“I think [marketing] is essential,” she said. “People know who we are.”

Looking at the bank’s balance sheet, McLaughlin said she is most impressed by the earnings per share. Basic earnings per share totaled 90 cents for 2004. In 2003, earnings per share totaled 68 cents. McLaughlin said if deposits grow, but the bank makes no money, it is meaningless.

“It really tells the whole story,” McLaughlin said.

Earnings show that the bank is balancing its revenue, according to McLaughlin, who described the 36 percent earnings increase as “solid.”

“This is significant,” she said. “You don’t see many banks with this kind of growth.”

Robert B. Segal of J. William Mantz Investment Advisors in Gloucester said that like many community banks, Slade’s Ferry was able to grow in 2004. He said loan demand picked up and commercial lending also has improved.

“[Slade’s Ferry] has done a good job of taking advantage of the competitive market,” said Segal.

Segal said mergers and acquisitions have given community banks a stronger edge in the marketplace. However, a bank’s strategy is the determining factor for its success, he said.

“It’s no secret,” Segal said. “You do well by growing loans and deposits.”

Segal said the bank’s expenses were higher in 2004 than in 2003, but despite that, the bank still had strong earnings.

“In order to grow, expenses will be higher,” Segal said. “You can’t grow without spending more on advertising, [and] hiring people.”

And spending more has paid off for Slade’s Ferry, he added.

“The benefit from growth has outweighed the extra operating costs,” he said.

Segal said the bank’s 9 percent increase in loans is average for a lot of community banks in Massachusetts last year. However, many of those banks had a tough time meeting the average, Segal said.

Because the bank was able to attract deposits and put them to work in loan and investment portfolios, Segal said Slade’s Ferry did better than many community banks in 2004.

“It’s a good strategy,” Segal said.

McLaughlin said a strong network of employees also was key to the bank’s success.

“It does take a team to produce these numbers,” McLaughlin said.

Jennifer Jope may be reached at jjope@thewarrengroup.com.