• Washington Trust Bancorp, Inc.
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  • Washington Trust Quarterly Earnings Up 12%
    Company Release - 04/24/2006 08:20

    WESTERLY, R.I.--(BUSINESS WIRE)--April 24, 2006--Washington Trust Bancorp, Inc. (Nasdaq National Market; symbol: WASH), parent company of The Washington Trust Company, today announced first quarter 2006 net income of $6.1 million, an increase of 12 percent from the $5.4 million reported for the first quarter of 2005. On a per diluted share basis, the Corporation earned 44 cents for the first quarter of 2006, up 4 cents, or 10 percent, from the 40 cents earned for the same quarter in 2005. The returns on average equity and average assets for the three months ended March 31, 2006 were 15.09% and 1.01%, respectively, compared to 14.20% and 0.94%, respectively, for the same period in 2005.

    "Washington Trust had a very good first quarter despite intense price competition and a challenging interest rate environment, stated John C. Warren, Washington Trust Chairman and Chief Executive Officer. He added, "A key to our success in the first quarter was a significant increase in wealth management and trust revenues, which were 83% higher than the first quarter last year."

    Warren also noted that the Bank has plans to open two new branches in 2007; a branch at 1195 Oaklawn Avenue in Cranston, RI and a branch in Warwick, RI. Warren stated, "We've had tremendous growth in Cranston and Warwick areas and these branches are part of our plan to expand our footprint in the Greater Providence market." The opening of these branches is subject to regulatory approvals.

    Net interest income is Washington Trust's largest source of revenue, representing 62% of total revenue for the first quarter of 2006. Net interest income totaled $15.4 million, up 5% from the first quarter a year ago. The increase in net interest income is primarily attributable to growth in average earning assets and a higher amount of loans as a percentage of total interest-earning assets. The rise in short-term rates in the first quarter of 2006 caused deposit costs to rise, however, this was offset in part by higher yields on loans and securities. The net interest margin (annualized tax-equivalent net interest income as a percentage of average earning assets) for the three months ended March 31, 2006 amounted to 2.84%, unchanged from the fourth quarter of 2005, and up 8 basis points from the first quarter of 2005.

    Noninterest income, excluding gains on securities, comprised 38% of total revenue for first quarter of 2006, compared with 29% for the same period in 2005. Noninterest income amounted to $9.5 million for the three months ended March 31, 2006, an increase of 56% over the first quarter of 2005. This increase is primarily attributable to higher revenues from wealth management and trust services, mainly due to the acquisition of Weston Financial Group, Inc. in the third quarter of 2005.

    Revenue from wealth management and trust services, the largest component of noninterest income, totaled $5.9 million, up $2.7 million, or 83%, from the first quarter of 2005. As previously stated, this increase was primarily attributable to the acquisition of Weston Financial Group, Inc. completed on August 31, 2005. Revenue from wealth management and trust services is largely dependent on the value of assets under administration and is closely tied to the performance of the financial markets. Assets under administration totaled $3.443 billion at March 31, 2006, up $171 million, or 5%, from $3.272 billion at December 31, 2005. The increase is due to business development efforts and financial market appreciation. Assets under administration at March 31, 2005, prior to the Weston acquisition, were $1.831 billion.

    Noninterest expenses for the first quarter of 2006 increased $3.3 million, or 26%, over the first quarter a year ago. Approximately $1.9 million, or 59%, of this increase was attributable to the operating expenses of Weston Financial Group, Inc.

    The Corporation's effective tax rate for the first quarter of 2006 was 32.0%, unchanged from the rate during the same period in 2005 and down slightly from the effective rate of 32.7% recorded during the fourth quarter of 2005.

    Total assets were $2.433 billion at March 31, 2006, up from $2.402 billion at December 31, 2005. Loan growth was relatively quiet in the first quarter, with total loans increasing by $16.9 million, or 1.2%. Total commercial and commercial real estate loans rose by $4.1 million, or 0.7%. Residential mortgages increased by $8.7 million, or 1.5%, which includes the effect of $11.8 million in purchased mortgages during the period. Consumer loans rose by $4.1 million, or 1.5%, led by growth in home equity loans. The securities portfolio was little changed, up $2.7 million, or 0.3% during the quarter.

    Total deposits rose by $21.4 million, or 1.3%. Excluding a $22.0 million increase in brokered certificates of deposit, in-market deposits were down slightly by $641 thousand during the first quarter of 2006. This decrease reflects a seasonality trend whereby the Corporation has experienced outflow of demand deposit balances during the first quarter in recent years. Due to increases in short-term interest rates, the Corporation also experienced a continuation of a shift in the mix of deposits away from savings accounts and into premium money market accounts and certificates of deposit. Federal Home Loan Bank advances and other borrowings increased by $7.1 million during the quarter.

    Asset quality, as measured by the level of nonperforming assets, remained strong in the first quarter of 2006. Nonperforming assets (nonaccrual loans and property acquired through foreclosure) totaled $2.3 million, or 0.09% of total assets, at March 31, 2006, compared to $2.4 million, or 0.10%, a year ago. Loan recoveries, net of charge-offs, amounted to $29 thousand in the first quarter of 2006, compared to net charge-offs of $13 thousand in the same period a year ago.

    The allowance for loan losses was $18.2 million, or 1.29% of total loans, at March 31, 2006, compared to $17.1 million, or 1.32% of total loans, at March 31, 2005. The Corporation's loan loss provision charged to earnings amounted to $300 thousand for the first quarter of 2006, unchanged from both the fourth quarter of 2005 and the first quarter of 2005.

    Total shareholders' equity amounted to $159.9 million at March 31, 2006, compared to $158.4 million at December 31, 2005. Book value per share as of March 31, 2006 and December 31, 2005 amounted to $11.92 and $11.86, 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 Monday, April 24, at 4:30 p.m. (Eastern Time) to discuss the Corporation's first quarter results. This call is being webcast by VCall and can be accessed through the Investor Relations section of the Washington Trust website, www.washtrust.com. A replay of the call will be posted in this same location on the website shortly after the conclusion of the call. You may also listen to a replay by dialing (877) 660-6853, and entering Account #: 286 and Conference ID #: 193942. The replay will be available until 11:59 p.m. on April 30, 2006.

    Washington Trust Bancorp, Inc. is the parent of The Washington Trust Company, a Rhode Island state-chartered bank founded in 1800. Washington Trust offers personal banking, business banking and wealth management services through its offices in Rhode Island, Massachusetts 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 actual results, performance or achievements of the Corporation 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 wealth management and trust assets under administration, 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. The Corporation assumes no obligation to update forward-looking statements or update the reasons actual results, performance or achievements could differ materially from those provided in the forward-looking statements, except as required by law.

    Washington Trust Bancorp, Inc. and Subsidiaries
                              FINANCIAL SUMMARY
    
                                                 Three Months Ended
                                          --------------------------------
    (Dollars and shares in thousands,      Mar. 31,   Dec. 31,   Mar. 31,
     except per share amounts)               2006       2005       2005
                                          ---------- ----------  ---------
    
    Operating Results
    -----------------
    Net interest income                     $15,415    $15,703    $14,621
    Provision for loan losses                   300        300        300
    Net realized gains on securities             59        337          -
    Other noninterest income                  9,461      9,162      6,079
    Noninterest expenses                     15,704     15,766     12,444
    Income tax expense                        2,858      2,983      2,546
    Net income                                6,073      6,153      5,410
    
    Per Share
    ---------
    Basic earnings                            $0.45      $0.46      $0.41
    Diluted earnings                          $0.44      $0.45      $0.40
    Dividends declared                        $0.19      $0.18      $0.18
    
    Weighted Average Shares Outstanding
    -----------------------------------
           Basic                           13,386.8   13,352.4   13,282.7
           Diluted                         13,698.6   13,659.6   13,617.3
    
    Key Ratios
    ----------
    Return on average assets                   1.01%      1.03%      0.94%
    Return on average equity                  15.09%     15.63%     14.20%
    Interest rate spread (taxable
     equivalent basis)                         2.53%      2.53%      2.49%
    Net interest margin (taxable
     equivalent basis)                         2.84%      2.84%      2.76%
    
    Allowance for Loan Losses
    -------------------------
    Balance at beginning of period          $17,918    $17,614    $16,771
    Provision charged to earnings               300        300        300
    Net (charge-offs) recoveries                 29          4        (13)
                                          ---------- ----------  ---------
    Balance at end of period                $18,247    $17,918    $17,058
                                          ---------- ----------  ---------
    
    
    
    
               Washington Trust Bancorp, Inc. and Subsidiaries
                              FINANCIAL SUMMARY
    
    
    (Dollars and shares in thousands,   Mar. 31,    Dec. 31,     Mar. 31,
     except per share amounts)           2006        2005         2005
                                      ----------- -----------  -----------
    Period-End Balance Sheet
    ------------------------
    Assets                            $2,432,765  $2,402,003   $2,342,138
    Total securities                     786,674     783,941      866,873
    Loans:
           Commercial and other:
             Mortgages                   277,851     291,292      260,058
             Construction and
              development                 35,599      37,190       31,060
             Other                       245,376     226,252      219,346
           Total commercial and other    558,826     554,734      510,464
           Residential real estate:
             Mortgages                   573,262     565,680      529,177
             Homeowner construction       18,147      17,028       19,663
           Total residential real
            estate                       591,409     582,708      548,840
           Consumer:
             Home equity lines           157,769     161,100      157,752
             Other                       110,778     103,366       77,134
           Total consumer                268,547     264,466      234,886
           Total loans                 1,418,782   1,401,908    1,294,190
    
    Deposits:
           Demand deposits               181,345     196,102      190,883
           NOW accounts                  179,027     178,677      180,240
           Money market accounts         227,433     223,255      189,870
           Savings accounts              202,395     212,499      248,852
           Time deposits                 870,420     828,725      719,202
           Total deposits              1,660,620   1,639,258    1,529,047
    Brokered deposits included in
     time deposits                       222,118     200,115      207,652
    Federal Home Loan Bank advances      556,051     545,323      639,874
    Shareholders' equity                 159,880     158,446      149,225
    
    Capital Ratios
    --------------
    Tier 1 risk-based capital               9.26%       9.06%        9.21%
    Total risk-based capital               10.72%      10.51%       10.75%
    Tier 1 leverage ratio                   5.64%       5.45%        5.44%
    
    Share Information
    -----------------
    Shares outstanding at end of
     period                             13,412.7    13,361.8     13,291.1
    Book value per share                  $11.92      $11.86       $11.23
    Tangible book value per share          $7.90       $7.79        $9.44
    Market value per share                $28.07      $26.18       $27.48
    
    Credit Quality
    --------------
    Nonaccrual loans                      $2,268      $2,414       $2,376
    Other real estate owned, net               -           -            4
    Nonperforming assets to total
     assets                                 0.09%       0.10%        0.10%
    Nonaccrual loans to total loans         0.16%       0.17%        0.18%
    Allowance for loan losses to
     nonaccrual loans                     804.54%     742.25%      717.93%
    Allowance for loan losses to
     total loans                            1.29%       1.28%        1.32%
    
    Assets Under Administration
    ---------------------------
    Market value                      $3,442,941  $3,271,756   $1,831,045
    
    
    
    
    
               Washington Trust Bancorp, Inc. and Subsidiaries
                         CONSOLIDATED BALANCE SHEETS
                                               (Unaudited)
    (Dollars in thousands)                        March 31,   December 31,
                                                    2006          2005
                                               ---------------------------
    Assets:
    Cash and due from banks                        $42,781        $48,997
    Federal funds sold and other short-term
     investments                                    29,794         17,166
    Mortgage loans held for sale                     2,211            439
    Securities:
     Available for sale, at fair value;
      amortized cost $627,902 in 2006 and
      $620,638 in 2005                             621,516        619,234
     Held to maturity, at cost; fair value
      $161,571 in 2006 and $162,756 in 2005        165,158        164,707
                                               ---------------------------
     Total securities                              786,674        783,941
    Federal Home Loan Bank stock, at cost           34,966         34,966
    Loans:
      Commercial and other                         558,826        554,734
      Residential real estate                      591,409        582,708
      Consumer                                     268,547        264,466
                                               ---------------------------
      Total loans                                1,418,782      1,401,908
     Less allowance for loan losses                 18,247         17,918
                                               ---------------------------
     Net loans                                   1,400,535      1,383,990
    Premises and equipment, net                     24,106         23,737
    Accrued interest receivable                     11,238         10,594
    Investment in bank-owned life insurance         30,639         30,360
    Goodwill                                        39,963         39,963
    Identifiable intangible assets                  14,004         14,409
    Other assets                                    15,854         13,441
                                               ---------------------------
     Total assets                               $2,432,765     $2,402,003
                                               ---------------------------
    
    Liabilities:
    Deposits:
     Demand deposits                              $181,345       $196,102
     NOW accounts                                  179,027        178,677
     Money market accounts                         227,433        223,255
     Savings accounts                              202,395        212,499
     Time deposits                                 870,420        828,725
                                               ---------------------------
     Total deposits                              1,660,620      1,639,258
    Dividends payable                                2,551          2,408
    Federal Home Loan Bank advances                556,051        545,323
    Junior subordinated debentures                  22,681         22,681
    Other borrowings                                 6,108          9,774
    Accrued expenses and other liabilities          24,874         24,113
                                               ---------------------------
     Total liabilities                           2,272,885      2,243,557
                                               ---------------------------
    
    Shareholders' Equity:
    Common stock of $.0625 par value;
     authorized 30,000,000 shares; issued
     13,425,573 shares in 2006 and 13,372,295
     in 2005                                           839            836
    Paid-in capital                                 34,006         33,676
    Retained earnings                              130,257        126,735
    Unearned stock-based compensation                    -           (898)
    Accumulated other comprehensive (loss)
     income                                         (4,903)        (1,653)
    Treasury stock, at cost; 12,843 shares in
     2006 and 10,519 in 2005                          (319)          (250)
                                               ---------------------------
     Total shareholders' equity                    159,880        158,446
                                               ---------------------------
     Total liabilities and shareholders' equity $2,432,765     $2,402,003
                                               ---------------------------
    
    
    
    
              Washington Trust Bancorp, Inc. and Subsidiaries
                     CONSOLIDATED STATEMENTS OF INCOME
    
    (Dollars and shares in thousands, except per
     share amounts)                                     (Unaudited)
    
    Three months ended March 31,                       2006      2005
                                                   --------------------
    Interest income:
     Interest and fees on loans                      $21,897   $17,825
     Interest on securities:
       Taxable                                         8,412     8,434
       Nontaxable                                        328       185
     Dividends on corporate stock and Federal Home
      Loan Bank stock                                    677       619
     Interest on federal funds sold and other
      short-term investments                             115        55
                                                   --------------------
     Total interest income                            31,429    27,118
                                                   --------------------
    Interest expense:
     Deposits                                         10,238     6,932
     Federal Home Loan Bank advances                   5,359     5,549
     Junior subordinated debentures                      338         -
     Other                                                79        16
                                                   --------------------
     Total interest expense                           16,014    12,497
                                                   --------------------
    Net interest income                               15,415    14,621
    Provision for loan losses                            300       300
                                                   --------------------
    Net interest income after provision for loan
     losses                                           15,115    14,321
                                                   --------------------
    Noninterest income:
     Wealth management and trust services              5,882     3,212
     Service charges on deposit accounts               1,119     1,011
     Merchant processing fees                          1,047       778
     Income from bank-owned life insurance               279       272
     Net gains on loan sales                             276       487
     Net realized gains on securities                     59         -
     Other income                                        858       319
                                                   --------------------
     Total noninterest income                          9,520     6,079
                                                   --------------------
    Noninterest expense:
     Salaries and employee benefits                    9,619     7,459
     Net occupancy                                       954       853
     Equipment                                           799       882
     Merchant processing costs                           887       636
     Outsourced services                                 518       413
     Advertising and promotion                           437       303
     Legal, audit and professional fees                  376       392
     Amortization of intangibles                         405       147
     Other                                             1,709     1,359
                                                   --------------------
     Total noninterest expense                        15,704    12,444
                                                   --------------------
    Income before income taxes                         8,931     7,956
    Income tax expense                                 2,858     2,546
                                                   --------------------
     Net income                                       $6,073    $5,410
                                                   --------------------
    
    Weighted average shares outstanding - basic     13,386.8  13,282.7
    Weighted average shares outstanding - diluted   13,698.6  13,617.3
    Per share information:
     Basic earnings per share                          $0.45     $0.41
     Diluted earnings per share                        $0.44     $0.40
     Cash dividends declared per share                 $0.19     $0.18
    
    
    
    
               Washington Trust Bancorp, Inc. and Subsidiaries
                     CONSOLIDATED AVERAGE BALANCE SHEETS
    
                                           (Unaudited)
    Three months ended
     March 31,                      2006                     2005
                        --------------------------------------------------
    (Dollars in           Average          Yield/  Average          Yield/
     thousands)           Balance  Interest Rate   Balance  Interest Rate
                        --------------------------------------------------
    Assets:
    Residential real
     estate loans         $589,837  $7,404  5.09%  $530,845  $6,505  4.97%
    Commercial and other
     loans                 556,013  10,254  7.48%   512,260   8,426  6.67%
    Consumer loans         267,068   4,289  6.51%   230,728   2,939  5.17%
                        --------------------------------------------------
     Total loans         1,412,918  21,947  6.30% 1,273,833  17,870  5.69%
    Federal funds sold
     and other short-
     term investments       10,178     115  4.62%    10,670      55  2.10%
    Taxable debt
     securities            737,563   8,412  4.63%   830,738   8,434  4.12%
    Nontaxable debt
     securities             35,177     504  5.81%    19,132     284  6.01%
    Corporate stocks and
     FHLB stock             49,344     761  6.26%    52,852     723  5.54%
                        --------------------------------------------------
     Total securities      832,262   9,793  4.77%   913,392   9,496  4.22%
                        --------------------------------------------------
     Total interest-
      earning assets     2,245,180  31,739  5.73% 2,187,225  27,366  5.07%
    Non interest-earning
     assets                149,361                  126,180
                        --------------------------------------------------
     Total assets       $2,394,541               $2,313,405
                        --------------------------------------------------
    
    Liabilities and
     Shareholders' Equity:
    NOW accounts          $170,421     $67  0.16%  $171,108     $78  0.18%
    Money market
     accounts              228,305   1,607  2.85%   196,577     841  1.73%
    Savings deposits       204,768     287  0.57%   248,957     377  0.61%
    Time deposits          851,298   8,277  3.94%   688,878   5,636  3.32%
    FHLB advances          547,391   5,359  3.97%   655,564   5,549  3.43%
    Junior subordinated
     debentures             22,681     338  6.04%         -       -     -
    Other                    7,017      79  4.64%     1,507      16  4.24%
                        --------------------------------------------------
     Total interest-
      bearing
      liabilities        2,031,881  16,014  3.20% 1,962,591  12,497  2.58%
    Demand deposits        179,954                  182,281
    Other liabilities       21,759                   16,113
    Shareholders' equity   160,947                  152,420
                        --------------------------------------------------
      Total liabilities
       and shareholders'
       equity           $2,394,541               $2,313,405
                        --------------------------------------------------
     Net interest income
      (FTE)                        $15,725                  $14,869
                        --------------------------------------------------
    Interest rate spread                    2.53%                    2.49%
    Net interest margin                     2.84%                    2.76%
    
    
        CONTACT: Washington Trust Bancorp, Inc.Elizabeth B. Eckel, 401-348-1309
                 ebeckel@washtrust.com
    
        SOURCE: Washington Trust Bancorp, Inc.