• Washington Trust Bancorp, Inc.
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  • Washington Trust Earnings Increase 26.9%
    Company Release - 04/17/2003 12:10

    WESTERLY, R.I.--(BUSINESS WIRE)--April 17, 2003--Washington Trust Bancorp, Inc. (NASDAQ: WASH), parent company of The Washington Trust Company, today reported first quarter 2003 net income of $4.7 million, an increase of 26.9 percent from the $3.7 million of net income reported for the first quarter of 2002. This increase was due in part to the acquisition of First Financial Corp. that occurred in the second quarter of 2002. Earnings per diluted share were $.36 for the quarter ended March 31, 2003, up 16.1 percent from the $.31 per diluted share for the quarter ended March 31, 2002.

    The return on average assets and return on average equity for the three months ended March 31, 2003 were 1.07% and 14.56%, compared to 1.11% and 14.98%, respectively, for the three months ended March 31, 2002.

    John C. Warren, Chairman and Chief Executive Officer of Washington Trust Bancorp, Inc., stated, "We are very pleased with our first quarter performance, as it reflects our ability to successfully manage our core business lines in a challenging economy." Warren also commented on the Bank's new 7,300 square foot Warwick branch, scheduled to open at the end of this month, stating, "The Warwick area offers tremendous market opportunities for us in the commercial lending, trust and investment management and retail banking areas."

    Net interest income for the first quarter of 2003 increased by 27.1 percent from the first quarter of 2002 and amounted to $11.9 million. The increase in net interest income was largely due to the April 2002 acquisition of First Financial Corp. For the quarter, average earning assets increased $388.1 million, or 30.5%, compared to the same period last year, of which approximately $178.5 million related to acquisition of First Financial Corp. The increase in net interest income due to earning asset growth was partially offset by a decrease of 10 basis points in the net interest margin from the first quarter of 2002. The net interest margin has been affected by the significant decline in market interest rates and reflects a decline in yields on loans and securities offset somewhat by lower funding costs of interest-bearing deposits and FHLB advances.

    Noninterest income, excluding net realized gains on securities, totaled $5.8 million for the quarter ended March 31, 2003, up 17.5 percent from the $4.9 million reported for the first quarter of 2002. The growth in noninterest income was attributable to increases in gains on loan sales and service charges on deposits. For the first quarter of 2003, gains on loan sales amounted to $1.2 million, an increase of $722 thousand from the first quarter of 2002. As a result of the decline in interest rates, the Corporation has experienced heavy residential mortgage activity, predominantly refinancing, which increased the amount of loans sold into the secondary market. The Corporation expects this activity to remain strong through the second quarter of 2003, however this level of activity may not be sustainable in future periods. In addition to selling residential mortgage loans, the Corporation began selling the guaranteed portion of SBA loan originations in 2002. Included in gains on loan sales for the first quarter of 2003 are approximately $100 thousand in gains on sales of SBA loans. For the three months ended March 31, 2003, service charges on deposit accounts amounted to $1.1 million, up $273 thousand from the corresponding period in 2002. Growth in deposits and changes in the fee structure of various deposit products were contributing factors in this increase. Revenue from trust and investment management services continues to be the largest component of noninterest income. Trust and investment management income totaled $2.5 million for the three months ended March 31, 2003 down slightly from the amount reported for the corresponding period in 2002, reflecting the financial market declines. Trust and investment assets under administration amounted to $1.479 billion at March 31, 2003, compared to $1.524 billion at December 31, 2002.

    The Corporation recognized net realized gains on securities amounting to $230 thousand and $291 thousand in the first quarter of 2003 and 2002, respectively. The gains resulted primarily from the sale of certain U.S. government agency and mortgage-backed securities to take advantage of market opportunities and to reposition the securities portfolio.

    For the first quarter of 2003, noninterest expenses totaled $11.0 million, up $1.8 million from the amount of noninterest expenses reported for first quarter of 2002. This increase was primarily due to normal growth and higher operating costs resulting from the April 2002 acquisition of First Financial Corp. Salaries and benefits, the largest component of total noninterest expense, amounted to $6.5 million for the three months ended March 31, 2003, compared to the $5.6 million reported for the first three months of 2002.

    Total assets amounted to $1.816 billion at March 31, 2003, up $70.0 million from the December 31, 2002 balance of $1.746 billion. In the first quarter of 2003, total loans increased $16.0 million to $811.1 million at March 31, 2003, led by a $9.0 million increase in the commercial and commercial real estate portfolio. As of March 31, 2003, residential real estate loans totaled $285.7 million, up $4.8 million from the balance at December 31, 2002.

    Residential real estate loans were impacted by the refinancing of fixed rate residential loans being sold into the secondary market. In the first quarter of 2003, the Corporation purchased a total of $7.7 million of residential mortgages from other financial institutions. Total securities were $842.3 million at March 31, 2003, up $46.5 million from the December 31, 2002 balance. The increase in securities was primarily due to purchases of mortgage-backed securities and U.S. government agency securities. Purchases of securities were funded primarily with Federal Home Loan Bank advances. In the first quarter of 2003, Federal Home Loan Bank advances increased $64.3 million to $544.4 million at March 31, 2003. Total deposits at March 31, 2003 amounted to $1.121 billion, up from the December 31, 2002 balance of $1.110 billion. Demand deposits rose $12.1 million, or 7.7 percent, in the first quarter of 2003 and totaled $169.6 million at March 31, 2003. Time deposits increased $2.6 million from December 31, 2002 and amounted to $484.2 million at March 31, 2003. Savings deposits amounted to $467.0 million at March 31, 2003, down slightly from the $471.3 million at December 31, 2002.

    Asset quality continues to be strong, as measured by the level of nonperforming assets. Nonaccrual loans as a percentage of total loans at March 31, 2003 were .50%, compared to .53% at December 31, 2002. Similarly, nonperforming assets (nonaccrual loans and property acquired through foreclosure) as a percent of total assets at March 31, 2003 amounted to .22%, as compared to .24% at December 31, 2002. The Corporation's allowance for loan losses amounted to $15,495,000 at March 31, 2003, compared to $15,487,000 at December 31, 2002.

    Total shareholders' equity amounted to $131.0 million at March 31, 2003, up from $128.7 million at December 31, 2002. Book value per share as of March 31, 2003 and December 31, 2002 amounted to $10.02 and $9.87, respectively.

    Washington Trust Bancorp, Inc. Chairman and Chief Executive Officer, John C. Warren, and David V. Devault, Executive Vice President, Treasurer, and Chief Financial Officer will host a conference call today, Thursday, April 17, at 4:00 p.m. (Eastern Standard Time) to discuss the Corporation's first quarter earnings. Access to the call is available in a listen-only mode via the investor relations "news room" section of Washington Trust's web site at www.washtrust.com. In addition, a webcast replay of the call will be posted via the investor relations "news room" section of Washington Trust's web site at www.washtrust.com, shortly after conclusion of the call.

    Washington Trust Bancorp, Inc.'s Annual Meeting of Shareholders will be held at 11:00 a.m. (Eastern Standard Time), Thursday, April 29, 2003 at the Westerly Public Library, Westerly, RI.

    Washington Trust Bancorp, Inc. is the parent of The Washington Trust Company, a Rhode Island state-chartered bank founded in 1800. The Bank offers a full range of financial services, including trust and investment management, through its offices in Rhode Island and southeastern Connecticut. Washington Trust Bancorp, Inc.'s common stock trades on The Nasdaq Stock Market(R) under the symbol WASH. Investor information is available on the Corporation's web site: www.washtrust.com.

    This report contains certain statements that may be considered "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Corporation's actual results, performance or achievements could differ materially from those projected in the forward-looking statements as a result, among other factors, of changes in general national or regional economic conditions, changes in interest rates, reductions in the market value of trust and investment assets under management, reductions in deposit levels necessitating increased borrowing to fund loans and investments, changes in the size and nature of the Corporation's competition, changes in loan default and charge-off rates and changes in the assumptions used in making such forward-looking statements.

    Washington Trust Bancorp, Inc. and Subsidiary
                               FINANCIAL SUMMARY
    
    (Dollars and shares in thousands,
     except per share amounts)
                                            THREE MONTHS ENDED
                                  MAR. 31,         MAR. 31,      DEC. 31,
    OPERATING RESULTS               2003             2002          2002
    
    Net interest
     income                        $11,929$9,384$11,339
    Provision for loan losses          100              100           100
    Net realized gains on
     securities                        230              291            58
    Other noninterest income         5,803            4,937         6,158
    Noninterest expenses            10,978            9,164        11,023
    Income tax expense               2,134            1,604         1,954
    Net income                       4,750            3,744         4,478
    
    PER SHARE
    
    Basic earnings                   $0.36$0.31$0.34
    Diluted earnings                 $0.36$0.31$0.34
    Dividends declared               $0.15$0.14$0.14
    
    SHARES OUTSTANDING
    
    Weighted average: Basic       13,059.3         12,004.9      13,038.0
                      Diluted     13,230.2         12,174.6      13,225.8
    
    AVERAGE BALANCE SHEET
    
    Assets                      $1,778,338$1,351,387$1,709,378
    
    Federal funds sold and other
     short-term investments         14,946           15,005        15,336
    Taxable debt securities        764,975          590,107       733,668
    Nontaxable debt securities      17,462           19,999        18,812
    Corporate stocks and Federal
     Home Loan Bank stock           48,025           41,981        44,315
    
    Loans:        Commercial       389,545          260,320       380,085
                  Residential      292,276          234,395       264,888
                  Consumer         133,050          110,413       130,625
    
                     Total loans   814,871          605,128       775,598
    
    Earning assets               1,660,279        1,272,220     1,587,729
    
    Deposits:     Demand           155,944          121,530       162,490
                  Savings          459,777          313,578       465,080
                  Time             481,766          381,311       485,542
    
                  Total deposits 1,097,487          816,419     1,113,112
    
    Federal Home Loan Bank
     advances                      532,698          422,769       449,317
    Shareholders' equity           130,506           99,952       127,607
    
    KEY RATIOS
    
    Return on average assets          1.07%            1.11%         1.05%
    Return on average equity         14.56%           14.98%        14.04%
    Interest rate spread
     (taxable equivalent basis)       2.68%            2.63%         2.54%
    Net interest margin (taxable
     equivalent basis)                2.97%            3.07%         2.90%
    
    ALLOWANCE FOR LOAN LOSSES
    
    Balance at beginning of
     period                        $15,487$13,593$15,660
    Provision charged to earnings      100              100           100
    Net (charge-offs) recoveries       (92)             (28)         (273)
    
    Balance at end of period       $15,495$13,665$15,487Washington Trust Bancorp, Inc. and Subsidiary
                               FINANCIAL SUMMARY
    
    (Dollars and shares in thousands,
     except per share amounts)
    
                                  MAR. 31,        MAR. 31,       DEC. 31,
    PERIOD END BALANCE SHEET        2003            2002          2002
    
    Assets                      $1,815,627$1,362,650$1,745,661
    Total securities               842,307          655,595       795,833
    
    Loans:           Commercial    391,158          259,367       382,169
                     Residential   285,689          225,931       280,886
                     Consumer      134,285          111,510       132,071
    
                     Total loans   811,132          596,808       795,126
    
    Deposits:        Demand        169,636          119,904       157,539
                     Savings       467,027          322,729       471,354
                     Time          484,183          390,353       481,600
    
                     Total
                      deposits   1,120,846          832,986     1,110,493
    
    Federal Home Loan Bank
     advances                      544,387          414,067       480,080
    Shareholders' equity           131,010           99,163       128,721
    
    SHARE INFORMATION
    
    Shares outstanding at end of
     period                       13,071.0         11,998.9      13,042.4
    Book value per share            $10.02$8.26$9.87
    Market value per share          $20.21$19.42$19.53
    
    CREDIT QUALITY
    
    Nonaccrual loans                $4,034$3,191$4,177
    Other real estate owned, net         4               30            86
    Nonperforming assets to
     total assets                     0.22%            0.24%         0.24%
    Nonaccrual loans to total loans   0.50%            0.53%         0.53%
    Allowance for loan losses to
     nonaccrual loans               384.11%          428.24%       370.78%
    Allowance for loan losses to
     total loans                      1.91%            2.29%         1.95%
    
                 Washington Trust Bancorp, Inc. and Subsidiary
                          CONSOLIDATED BALANCE SHEETS
    
    (Dollars in thousands)
                                                   (Unaudited)
                                                      March       December
                                                        31,          31,
                                                       2003          2002
    
    Assets:
    
    Cash and due from banks                         $39,084$39,298
    Federal funds sold and other short-term
     investments                                     10,550        11,750
    Mortgage loans held for sale                     11,583         4,566
    Securities:
        Available for sale, at fair value           578,260       553,556
        Held to maturity, at cost; fair value
         $271,849 in 2003 and $250,446 in 2002      264,047       242,277
    
        Total securities                            842,307       795,833
    
    Federal Home Loan Bank stock, at cost            28,600        24,582
    
    Loans                                           811,132       795,126
    Less allowance for loan losses                   15,495        15,487
    
        Net loans                                   795,637       779,639
    
    Premises and equipment, net                      25,485        24,415
    Accrued interest receivable                       8,459         7,773
    Goodwill and other intangibles                   25,083        25,260
    Other assets                                     28,839        32,545
    
        Total assets                             $1,815,627$1,745,661
    
    Liabilities:
    
    Deposits:
        Demand                                     $169,636$157,539
        Savings                                     467,027       471,354
        Time                                        484,183       481,600
    
        Total deposits                            1,120,846     1,110,493
    
    Dividends payable                                 1,962         1,825
    Federal Home Loan Bank advances                 544,387       480,080
    Other borrowings                                  1,926         9,183
    Accrued expenses and other liabilities           15,496        15,359
    
        Total liabilities                         1,684,617     1,616,940
    
    Shareholders' Equity:
    
    Common stock of $0.625 par value;
     authorized 30 million shares;
     issued 13,086,795 shares in 2003
     and 2002                                           818           818
    Paid-in capital                                  28,411        28,767
    Retained earnings                                93,505        90,717
    Unamortized employee restricted stock               (20)          (24)
    Accumulated other comprehensive income            8,602         9,294
    Treasury stock, at cost; 15,788 shares
     in 2003 and 44,361 in 2002                        (306)         (851)
    
        Total shareholders' equity                  131,010       128,721
    
        Total liabilities and
         shareholders' equity                    $1,815,627$1,745,661Washington Trust Bancorp, Inc. and Subsidiary
                       CONSOLIDATED STATEMENTS OF INCOME
    
    (Dollars and shares in thousands,
     except per share amounts)
                                                          (Unaudited)
    Three months ended March 31,                       2003          2002
    
    Interest income:
        Interest and fees on loans                  $12,646$10,981
        Interest on securities                        8,555         8,188
        Dividends on corporate stock and
         Federal Home Loan Bank stock                   487           483
        Interest on federal funds sold and
         other short-term investments                    37            62
    
        Total interest income                        21,725        19,714
    
    Interest expense:
        Savings deposits                                950           971
        Time deposits                                 3,934         4,123
        Federal Home Loan Bank advances               4,893         5,219
        Other                                            19            17
    
        Total interest expense                        9,796        10,330
    
    Net interest income                              11,929         9,384
    Provision for loan losses                           100           100
    
    Net interest income after
     provision for loan losses                       11,829         9,284
    
    Noninterest income:
        Trust and investment
         management                                   2,533         2,565
        Service charges on
         deposit accounts                             1,100           827
        Merchant processing fees                        457           446
        Net gains on loan sales                       1,238           516
        Income from bank-owned
         life insurance                                 284           288
        Net realized gains on
         securities                                     230           291
        Other income                                    191           295
    
        Total noninterest income                      6,033         5,228
    
    Noninterest expense:
        Salaries and employee benefits                6,534         5,575
        Net occupancy                                   762           625
        Equipment                                       837           785
        Merchant processing costs                       362           357
        Legal, audit and
         professional fees                              305           173
        Advertising and promotion                       270           240
        Outsourced services                             371           261
        Amortization of intangibles                     180            32
        Other                                         1,357         1,116
    
        Total noninterest expense                    10,978         9,164
    
    Income before income taxes                        6,884         5,348
    Income tax expense                                2,134         1,604
    
    Net income                                       $4,750$3,744
    
    Weighted average shares
     outstanding - basic                           13,059.3      12,004.9
    Weighted average shares
     outstanding - diluted                         13,230.2      12,174.6
    Per share information:
        Basic earnings per share                      $0.36$0.31
        Diluted earnings per share                    $0.36$0.31
        Cash dividends declared per share             $0.15$0.14
    
        CONTACT: Washington Trust Bancorp, Inc.
                 Elizabeth B. Eckel, 401/348-1309
                 ebeckel@washtrust.com
    
        SOURCE: Washington Trust Bancorp, Inc.