• Washington Trust Bancorp, Inc.
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  • Washington Trust Second Quarter Net Income Up 12%; Record Earnings and Earnings Per Share
    Company Release - 07/21/2005 08:30

    WESTERLY, R.I.--(BUSINESS WIRE)--July 21, 2005--Washington Trust Bancorp, Inc. (Nasdaq National Market; symbol: WASH), parent company of The Washington Trust Company, today announced second quarter ended June 30, 2005 net income of $5.6 million, an increase of 12 percent from the $5.0 million reported for the second quarter of 2004. On a diluted earnings per share basis, the Corporation earned 41 cents for the second quarter of 2005, up 11 percent from the 37 cents earned for the same quarter in 2004. The returns on average equity and average assets for the three months ended June 30, 2005 were 14.58% and 0.97%, respectively, compared to 14.46% and 0.96%, respectively, for the same period in 2004.

    "We're pleased to report record net income for the second quarter, with earnings up 12 percent since last year," stated John C. Warren, Washington Trust Chairman and Chief Executive Officer. Warren added, "We've had healthy loan and deposit growth in a year in which the Federal Reserve raised short-term interest rates nine times." He continued, "We're excited about our upcoming acquisition of Weston Financial Group, Inc. and the opportunities it presents for our wealth management group."

    As previously reported on March 21, 2005, Washington Trust announced the signing of a definitive agreement to acquire Weston Financial Group, a registered investment advisor with assets under management in excess of $1.2 billion. Located in Wellesley, Massachusetts, Weston specializes in providing high-quality, comprehensive financial planning and investment counseling services to high net worth individuals through third-party open-architecture wealth management products. It is currently anticipated that the acquisition, which is subject to state and federal regulatory approval and other customary conditions to closing, will most likely be completed in the third quarter of 2005.

    Net income for the six months ended June 30, 2005 amounted to $11.0 million, an increase of 11 percent from the $10.0 million reported for the same period a year ago. On a diluted earnings per share basis, the Corporation earned 81 cents for the six months ended June 30, 2005, an increase of 9 percent from the 74 cents earned for the first six months of 2004. The returns on average equity and average assets for the six months ended June 30, 2005 were 14.39% and 0.95%, respectively, compared to 14.18% and 0.98%, respectively, for the six months ended June 30, 2004.

    Net interest income, the primary source of Washington Trust's operating income, amounted to $15.0 million for the second quarter of 2005, up 14 percent from the $13.1 million reported for the same period a year ago. This increase in net interest income was primarily due to growth in interest-earning assets. The net interest margin for the three months ended June 30, 2005 was 2.76%, unchanged from the first quarter of 2005, and 4 basis points higher than the 2.72% level reported for the second quarter of 2004.

    For the six months ended June 30, 2005, net interest income amounted to $29.6 million, an increase of 13 percent from the amount reported for the corresponding 2004 period. The net interest margin for the six months ended June 30, 2005 amounted to 2.76%, down 4 basis points from the 2.80% reported for the same period a year ago.

    For the second quarter of 2005, noninterest income excluding net realized gains and losses on securities totaled $7.0 million, compared to $7.2 million reported for the same quarter a year ago. For the six months ended June 30, 2005, noninterest income on this basis amounted to $13.1 million, essentially unchanged from the comparable 2004 amount. Primary sources of noninterest income are trust and investment management fees, service charges on deposit accounts, merchant credit card processing fees and net gains on sales of loans. Included in noninterest income for 2004 was a first quarter non-routine item of $150 thousand unrelated to the Corporation's normal course of earnings and $280 thousand recovered in the second quarter of that year as a result of a favorable litigation decision.

    Revenue from trust and investment services totaled $3.5 million for the second quarter of 2005 and $6.7 million for the first six months of 2005, up 5 percent from the comparable periods in 2004. Trust and investment management services revenue represented 51% of other noninterest income for the first six months of 2005. This revenue is largely dependent on the value of assets under administration and is closely tied to the performance of the financial markets. Trust assets under administration amounted to $1.853 billion at June 30, 2005, compared to $1.871 billion at December 31, 2004.

    The Corporation recognized net realized gains on securities sales of $3 thousand in the second quarter and first six months of 2005, compared to net realized losses of $240 thousand in the second quarter and first six months of 2004.

    Noninterest expenses amounted to $13.4 million for the second quarter of 2005 and $25.8 million for the first six months of 2005, up 7 percent from the comparable periods a year ago. Salaries and employee benefit expense, the largest component of noninterest expenses, totaled $7.5 million for the second quarter of 2005, up 3 percent from the second quarter of 2004. Salaries and employee benefit expense amounted to $14.9 million for the six months ended June 30, 2005, up 5 percent from the first six months of 2004. Expenses for legal, audit and professional fees have increased by $275 thousand and $409 thousand, respectively, for the three-month and six-month periods ended June 30, 2005. These increases are partly due to higher audit and other costs associated with the requirements of Section 404 of the Sarbanes-Oxley Act.

    At June 30, 2005, total assets amounted to $2.339 billion, up $31.4 million from December 31, 2004. In the first six months of 2005, total loans increased $95.5 million to $1.345 billion. Residential real estate loans grew $53.5 million, or 10 percent, during the first half of 2005, including an increase of $26.5 million in purchased residential mortgages. Consumer loans increased $21.2 million, or 9 percent, in the first six months of 2005, primarily due to growth in home equity lines and loans. Commercial loans, including commercial real estate and construction loans, amounted to $528.6 million at June 30, 2005, up $20.9 million, or 4 percent, from $507.7 million reported at December 31, 2004.

    Total deposits amounted to $1.531 billion at June 30, 2005, up $72.8 million, or 5 percent, from the balance at December 31, 2004. In the first six months of 2005, growth in demand/NOW deposits and consumer certificates of deposit was partially offset by declines in money market and savings account balances. In addition, brokered certificates of deposit grew $33.2 million, or 20 percent, during the six months ended June 30, 2005. The Corporation utilizes brokered certificates of deposit as part of its overall funding program along with other sources. During the first six months of 2005, the Corporation reduced its Federal Home Loan Bank advance borrowing position by $47.1 million.

    Nonperforming assets (nonaccrual loans and property acquired through foreclosure) declined during the first six months of 2005 and were below December 31, 2004 and June 30, 2004 levels. Nonperforming assets totaled $2.4 million, or .10% of total assets, at June 30, 2005. The allowance for loan losses was $17.4 million, or 1.30% of total loans, at June 30, 2005, compared to $16.8 million, or 1.34%, at December 31, 2004. The Corporation's loan loss provision amounted to $300 thousand for the second quarter of 2005 and $600 thousand for the first six months of 2005. Comparable amounts for the prior year totaled $120 thousand for second quarter 2004 and $240 thousand for the six months ended June 30, 2004. The increase in the Corporation's loan loss provision was in response to growth in the loan portfolio.

    Total shareholders' equity amounted to $156.9 million at June 30, 2005, compared to $151.9 million at December 31, 2004. Book value per share as of June 30, 2005 and December 31, 2004 amounted to $11.79 and $11.44, respectively.

    Washington Trust Chairman and Chief Executive Officer, John C. Warren, and David V. Devault, Executive Vice President, Secretary, Treasurer, and Chief Financial Officer, will host a conference call on Thursday, July 21, at 4:30 p.m. (Eastern Time) to discuss the Corporation's second quarter results. Access to the call is available in a listen-only mode on Washington Trust's web site, http://investorrelations.washtrust.com. A replay of the call will be posted in this same location on the web site shortly after the conclusion of the call.

    Washington Trust Bancorp, Inc. is the parent of The Washington Trust Company, a Rhode Island state-chartered bank founded in 1800. The Bank offers personal banking, business banking and wealth management services 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 loan demand, reductions in deposit levels necessitating increased borrowing to fund loans and investments, changes in loan default and charge-off rates, changes in the size and nature of the Corporation's competition, changes in legislation or regulation and accounting principles, policies and guidelines and changes in the assumptions used in making such forward-looking statements.

    Washington Trust Bancorp, Inc. and Subsidiary
                              FINANCIAL SUMMARY
    
                                                 Three Months Ended
                                          --------------------------------
    (Dollars and shares in thousands,       Jun. 30,   Jun. 30,   Mar. 31,
     except per share amounts)                2005       2004       2005
                                          ---------- ---------- ----------
    
    Operating Results
    -----------------
    Net interest income                     $14,972    $13,092    $14,621
    Provision for loan losses                   300        120        300
    Net realized gains (losses) on
     securities                                   3       (240)         -
    Other noninterest income                  6,991      7,164      6,079
    Noninterest expenses                     13,373     12,545     12,444
    Income tax expense                        2,654      2,308      2,546
    Net income                                5,639      5,043      5,410
    
    Per Share
    ---------
    Basic earnings                            $0.42      $0.38      $0.41
    Diluted earnings                          $0.41      $0.37      $0.40
    Dividends declared                        $0.18      $0.17      $0.18
    
    Weighted Average Shares Outstanding
    -----------------------------------
           Basic                           13,296.0   13,216.1   13,282.7
           Diluted                         13,592.3   13,517.0   13,617.3
    
    Average Balance Sheet
    ---------------------
    Federal funds sold and other short-
     term investments                       $12,018    $11,072    $10,670
    Taxable debt securities                 804,232    829,306    830,738
    Nontaxable debt securities               21,369     16,118     19,132
    Corporate stocks and Federal Home
     Loan Bank stock                         51,511     56,358     52,852
    Loans:
           Commercial and other             518,025    434,292    512,260
           Residential real estate          558,645    430,539    530,845
           Consumer                         243,756    192,529    230,728
    
           Total loans                    1,320,426  1,057,360  1,273,833
    
    Earning assets                        2,209,556  1,970,214  2,187,225
    Total assets                          2,336,973  2,091,943  2,313,405
    
    Deposits:
           Demand deposits                  189,465    190,906    182,281
           NOW accounts                     180,103    163,638    171,108
           Money market accounts            186,957    122,063    196,577
           Savings accounts                 241,594    258,169    248,957
           Time deposits                    733,927    545,266    688,878
    
           Total deposits                 1,532,046  1,280,042  1,487,801
    
    Federal Home Loan Bank advances         631,390    656,802    655,564
    Shareholders' equity                    154,663    139,525    152,420
    
    Key Ratios
    ----------
    Return on average assets                   0.97%      0.96%      0.94%
    Return on average equity                  14.58%     14.46%     14.20%
    Interest rate spread (taxable
     equivalent basis)                         2.48%      2.47%      2.49%
    Net interest margin (taxable
     equivalent basis)                         2.76%      2.72%      2.76%
    
    Allowance for Loan Losses
    -------------------------
    Balance at beginning of period          $17,058    $16,174    $16,771
    Provision charged to earnings               300        120        300
    Net (charge-offs) recoveries                 84        (86)       (13)
                                          ---------- ---------- ----------
    
    Balance at end of period                $17,442    $16,208    $17,058
                                          ---------- ---------- ----------
    
    
                Washington Trust Bancorp, Inc. and Subsidiary
                              FINANCIAL SUMMARY
    
                                                        Six Months Ended
                                                     ---------------------
    (Dollars and shares in thousands, except per       Jun. 30,   Jun. 30,
     share amounts)                                      2005       2004
                                                     ---------- ----------
    
    Operating Results
    -----------------
    Net interest income                                $29,593    $26,175
    Provision for loan losses                              600        240
    Net realized gains (losses) on securities                3       (240)
    Other noninterest income                            13,070     13,104
    Noninterest expenses                                25,817     24,225
    Income tax expense                                   5,200      4,576
    Net income                                          11,049      9,998
    
    Per Share
    ---------
    Basic earnings                                       $0.83      $0.76
    Diluted earnings                                     $0.81      $0.74
    Dividends declared                                   $0.36      $0.34
    
    Weighted Average Shares Outstanding
           Basic                                      13,289.4   13,209.4
           Diluted                                    13,602.3   13,515.2
    
    Average Balance Sheet
    ---------------------
    Federal funds sold and other short-term
     investments                                       $11,349    $11,114
    Taxable debt securities                            817,412    819,405
    Nontaxable debt securities                          20,256     15,177
    Corporate stocks and Federal Home Loan Bank
     stock                                              52,178     55,438
    Loans:
           Commercial and other                        515,158    423,467
           Residential real estate                     544,822    410,686
           Consumer                                    237,278    181,559
    
           Total loans                               1,297,258  1,015,712
    
    Earning assets                                   2,198,453  1,916,846
    Total assets                                     2,325,254  2,040,042
    
    Deposits:
           Demand deposits                             185,893    180,598
           NOW accounts                                175,630    156,349
           Money market accounts                       191,740    108,247
           Savings accounts                            245,256    255,855
           Time deposits                               711,527    536,398
    
           Total deposits                            1,510,046  1,237,447
    
    Federal Home Loan Bank advances                    643,410    644,999
    Shareholders' equity                               153,548    141,053
    
    Key Ratios
    ----------
    Return on average assets                              0.95%      0.98%
    Return on average equity                             14.39%     14.18%
    Interest rate spread (taxable equivalent basis)       2.49%      2.54%
    Net interest margin (taxable equivalent basis)        2.76%      2.80%
    
    Allowance for Loan Losses
    -------------------------
    Balance at beginning of period                     $16,771    $15,914
    Provision charged to earnings                          600        240
    Net (charge-offs) recoveries                            71         54
                                                     ---------- ----------
    
    Balance at end of period                           $17,442    $16,208
                                                     ---------- ----------
    
    
    
                Washington Trust Bancorp, Inc. and Subsidiary
                              FINANCIAL SUMMARY
    
    
    (Dollars and shares in thousands,    Jun. 30,    Dec. 31,    Jun. 30,
     except per share amounts)             2005        2004        2004
                                       ----------- ----------- -----------
    
    Period-End Balance Sheet
    ------------------------
    Assets                             $2,339,264  $2,307,820  $2,178,990
    Total securities                      826,052     890,058     902,998
    Loans:
           Commercial and other:
             Mortgages                    274,330     266,670     239,651
             Construction and
              development                  32,382      29,263      20,376
             Other                        221,877     211,778     188,314
           Total commercial and other     528,589     507,711     448,341
    
           Residential real estate:
             Mortgages                    546,364     494,720     433,976
             Homeowner construction        20,846      18,975      17,079
           Total residential real
            estate                        567,210     513,695     451,055
    
           Consumer:
             Home equity lines            162,465     155,001     134,299
             Other                         86,960      73,269      67,344
           Total consumer                 249,425     228,270     201,643
    
           Total loans                  1,345,224   1,249,676   1,101,039
    
    Deposits:
           Demand deposits                201,509     189,588     200,923
           NOW accounts                   179,824     174,727     167,071
           Money market accounts          183,318     196,775     135,609
           Savings accounts               233,811     251,920     264,296
           Time deposits                  732,236     644,875     574,004
    
           Total deposits               1,530,698   1,457,885   1,341,903
    
    Brokered deposits included in time
     deposits                             202,754     169,587     153,373
    Federal Home Loan Bank advances       625,641     672,748     676,336
    Shareholders' equity                  156,870     151,852     138,542
    
    Capital Ratios
    --------------
    Tier 1 risk-based capital                9.26%       9.15%       9.41%
    Total risk-based capital                10.78%      10.72%      10.95%
    Tier 1 leverage ratio                    5.53%       5.35%       5.51%
    
    Share Information
    -----------------
    Shares outstanding at end of
     period                              13,307.4    13,269.4    13,227.9
    Book value per share                   $11.79      $11.44      $10.47
    Tangible book value per share          $10.01       $9.64       $8.64
    Market value per share                 $27.67      $29.31      $25.99
    
    Credit Quality
    --------------
    Nonaccrual loans                       $2,435      $4,731      $4,987
    Other real estate owned, net                4           4           8
    Nonperforming assets to total
     assets                                  0.10%       0.21%       0.23%
    Nonaccrual loans to total loans          0.18%       0.38%       0.45%
    Allowance for loan losses to
     nonaccrual loans                      716.30%     354.49%     325.01%
    Allowance for loan losses to total
     loans                                   1.30%       1.34%       1.47%
    
    Assets Under Administration
    ---------------------------
    Market value                       $1,852,925  $1,870,510  $1,783,747
    
    
    
                Washington Trust Bancorp, Inc. and Subsidiary
                         CONSOLIDATED BALANCE SHEETS
                                                   (Unaudited)
                                                      June       December
    (Dollars in thousands)                             30,          31,
                                                      2005         2004
                                                   -----------------------
    
    Assets:
    Cash and due from banks                           $41,227     $34,801
    Federal funds sold and other short-term
     investments                                        5,100      17,280
    Mortgage loans held for sale                        2,092       1,095
    Securities:
     Available for sale, at fair value; amortized
      cost $647,181 in 2005 and $724,209 in 2004      656,025     735,666
     Held to maturity, at cost; fair value $170,668
      in 2005 and $156,270 in 2004                    170,027     154,392
                                                   -----------------------
    
     Total securities                                 826,052     890,058
    
    Federal Home Loan Bank stock, at cost              34,966      34,373
    
    Loans:
      Commercial and other                            528,589     507,711
      Residential real estate                         567,210     513,695
      Consumer                                        249,425     228,270
                                                   -----------------------
    
      Total loans                                   1,345,224   1,249,676
     Less allowance for loan losses                    17,442      16,771
                                                   -----------------------
    
     Net loans                                      1,327,782   1,232,905
    
    Premises and equipment, net                        24,166      24,248
    Accrued interest receivable                         9,896       9,367
    Investment in bank-owned life insurance            29,800      29,249
    Goodwill                                           22,591      22,591
    Identifiable intangible assets                      1,063       1,309
    Other assets                                       14,529      10,544
                                                   -----------------------
    
     Total assets                                  $2,339,264  $2,307,820
                                                   -----------------------
    
    Liabilities:
    Deposits:
     Demand deposits                                 $201,509    $189,588
     NOW accounts                                     179,824     174,727
     Money market accounts                            183,318     196,775
     Savings accounts                                 233,811     251,920
     Time deposits                                    732,236     644,875
                                                   -----------------------
    
     Total deposits                                 1,530,698   1,457,885
    
    Dividends payable                                   2,397       2,257
    Federal Home Loan Bank advances                   625,641     672,748
    Other borrowings                                    2,876       3,417
    Accrued expenses and other liabilities             20,782      19,661
                                                   -----------------------
    
     Total liabilities                              2,182,394   2,155,968
                                                   -----------------------
    
    Shareholders' Equity:
    Common stock of $.0625 par value; authorized 30
     million shares; issued 13,316,075 shares in
      2005 and 13,278,685 in 2004                         832         830
    Paid-in capital                                    32,383      31,718
    Retained earnings                                 119,572     113,314
    Unearned stock-based compensation                    (981)       (737)
    Accumulated other comprehensive income              5,262       6,937
    Treasury stock, at cost; 8,642 shares in 2005
     and 9,309 in 2004                                   (198)       (210)
                                                   -----------------------
    
     Total shareholders' equity                       156,870     151,852
                                                   -----------------------
    
     Total liabilities and shareholders' equity    $2,339,264  $2,307,820
                                                   -----------------------
    
    
                Washington Trust Bancorp, Inc. and Subsidiary
                      CONSOLIDATED STATEMENTS OF INCOME
    
    (Dollars and shares in
     thousands, except per share
     amounts)                                     (Unaudited)
                                        Three Months        Six Months
    Periods ended June 30,             2005     2004      2005     2004
                                     -------------------------------------
    Interest income:
     Interest and fees on loans       $19,096  $14,287   $36,921  $27,928
     Interest on securities             8,489    8,107    17,108   16,362
     Dividends on corporate stock
      and Federal Home Loan Bank
      stock                               625      506     1,244      980
     Interest on federal funds sold
      and other short-term
      investments                          79       20       134       40
                                     -------------------------------------
    
     Total interest income             28,289   22,920    55,407   45,310
                                     -------------------------------------
    
    Interest expense:
     Deposits                           7,627    5,024    14,559    9,771
     Federal Home Loan Bank advances    5,670    4,789    11,219    9,334
     Other                                 20       15        36       30
                                     -------------------------------------
    
     Total interest expense            13,317    9,828    25,814   19,135
                                     -------------------------------------
    
    Net interest income                14,972   13,092    29,593   26,175
    Provision for loan losses             300      120       600      240
                                     -------------------------------------
    
    Net interest income after
     provision for loan losses         14,672   12,972    28,993   25,935
                                     -------------------------------------
    
    Noninterest income:
     Trust and investment management
      fees                              3,486    3,320     6,698    6,375
     Service charges on deposit
      accounts                          1,168    1,192     2,179    2,362
     Merchant processing fees           1,337    1,095     2,115    1,692
     Net gains on loan sales              418      560       905      909
     Net realized gains (losses) on
      securities                            3     (240)        3     (240)
     Income from bank-owned life
      insurance                           279      295       551      594
     Other income                         303      702       622    1,172
                                     -------------------------------------
    
     Total noninterest income           6,994    6,924    13,073   12,864
                                     -------------------------------------
    
    Noninterest expense:
     Salaries and employee benefits     7,450    7,218    14,909   14,195
     Net occupancy                        802      796     1,655    1,612
     Equipment                            869      788     1,751    1,558
     Merchant processing costs          1,098      882     1,734    1,348
     Advertising and promotion            733      538     1,036    1,004
     Outsourced services                  444      467       857      843
     Legal, audit and professional
      fees                                520      245       912      503
     Amortization of intangibles           99      161       246      322
     Other                              1,358    1,450     2,717    2,840
                                     -------------------------------------
    
     Total noninterest expense         13,373   12,545    25,817   24,225
                                     -------------------------------------
    
    Income before income taxes          8,293    7,351    16,249   14,574
    Income tax expense                  2,654    2,308     5,200    4,576
                                     -------------------------------------
    
     Net income                        $5,639   $5,043   $11,049   $9,998
                                     -------------------------------------
    
    Weighted average shares
     outstanding - basic             13,296.0 13,216.1  13,289.4 13,209.4
    Weighted average shares
     outstanding - diluted           13,592.3 13,517.0  13,602.3 13,515.2
    Per share information:
     Basic earnings per share           $0.42    $0.38     $0.83    $0.76
     Diluted earnings per share         $0.41    $0.37     $0.81    $0.74
     Cash dividends declared per
      share                             $0.18    $0.17     $0.36    $0.34
    
    
        CONTACT: Washington Trust Bancorp, Inc.
                 Elizabeth B. Eckel,401-348-1309
                 Senior Vice President, Marketing
                 ebeckel@washtrust.com
    
        SOURCE: Washington Trust Bancorp, Inc.