Successful second year for Castle.
By Record-Journal

Entering its third full year of operation, Castle Bank and Trust is poised for continued growth and possible expansion, according to results of the independent bank�s 2001 annual report.

In its second full year of operation, the local bank has gone from a $171,069 net loss to a $350,267 net gain, increased its assets by 6.3 percent and doubled the amount of money it has loaned, from $1.7 million in 2000 to $14.7 million in 2001.

�That�s a lot of work, a lot of good effort and a lot of recruiting,� said Tim Cook, an analyst with the Independent Community Banks Association.  With interest rates at a 4-year low, banks had to compete harder and get bigger loans to maintain stable levels of interest income.

During 2001, Castle Bank also added 651 new accounts, the majority of which were commercial.

Total assets increased 6.3 percent to $50.2 million, while the total amount of deposits increased 29 percent.  Interest bearing accounts went from $16.2 million to nearly $21 million, while accounts on which the bank does not pay interest increased from $6.7 million to $8.5 million.

Start-up banks typically begin showing profits within three years of opening, said John Carusone of the Bank Analysis Center in Hartford, but Castle Bank, which opened in May of 1999, began showing profit ahead of schedule, as early as November of 2000.  The fact that the bank already has opened a second branch is further evidence that it is in a good position.  �(The second branch� is a testament to the authorities� confidence in the bank,� said Carusone, referring to the government agencies that monitor bank behavior, including the Federal Deposit Insurance Corp. and the state Department of Banking.

�Ultimately, they want to provide a return to their shareholders,� said Carusone, adding that the next hurdle after profitability is recovering the start-up costs.

�To me there are two pieces,� said bank president and CEO Lawrence McGoldrick.  �Yes, we want to be financially strong and pay dividends to our investors, but we also want to contribute to the community and continue to help it improve.�

Since its inception, Meriden�s only independent bank has been an active force in community and economic development initiatives.  While Castle Bank continues to compete against other independent local banks like Apple Valley Bank and Trust in Cheshire, the recent acquisition of Southington Savings Bank by Banknorth of Maine may give banks more community-bank oriented customers to compete over.  �It creates a competition vacuum,� Carusone said, �and creates an opportunity for community banks like Castle.�

McGoldrick said that he could not speculate as to when shareholders may begin to receive dividends, but suggested that in the future, the bank may look to open a branch in Wallingford, noting that �adding products and services takes investments.�

And while new investments may mean a longer time before the bank issues dividends, in the long run it be good for investors.  �Taking profits to reinvest in the bank is building on an asset and increasing the value of the bank,� Cook said.

Tuesday, May 14, 2002

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Meriden, CT 06451

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