EX-99.1 2 a4746894ex991.txt NEWS RELEASE Exhibit 99.1 Washington Trust Third Quarter Earnings Up 13%; Strong Loan and Deposit Growth WESTERLY, R.I.--(BUSINESS WIRE)--Oct. 21, 2004--Washington Trust Bancorp, Inc. (Nasdaq National Market; symbol: WASH), parent company of The Washington Trust Company, today announced net income of $5.3 million for the third quarter ended September 30, 2004, an increase of 13 percent from the $4.7 million reported for the third quarter of 2003. On a diluted earnings per share basis, the Corporation earned 39 cents for the third quarter of 2004, an 11 percent increase from the 35 cents earned for the same quarter a year ago. The returns on average assets and average equity for the three months ended September 30, 2004 were 0.96% and 14.70%, respectively, compared to 1.02% and 14.30%, respectively, for the three months ended September 30, 2003. "We had an outstanding quarter with earnings up 13 percent," said John C. Warren, Chairman and Chief Executive Officer of Washington Trust. "We've had excellent growth throughout the company; total loans are up 25 percent since December 31, 2003, while total deposits have risen by 22 percent since year-end. Trust and investment management revenues also showed significant gains, up 20 percent in the nine months ended 2004, compared to the same period in 2003." Net income for the nine months ended September 30, 2004 amounted to $15.3 million, an increase of 9 percent from the $14.1 million reported for the same period a year ago. On a diluted earnings per share basis, the Corporation earned $1.13 for the nine months ended September 30, 2004, an increase of 8 percent from $1.05 earned for the same period a year ago. The returns on average assets and average equity for the nine months ended September 30, 2004 were 0.97% and 14.35%, respectively, compared to 1.03% and 14.14%, respectively, for the nine months ended September 30, 2003. Balance sheet growth has been strong during 2004. Total assets amounted to $2.280 billion at September 30, 2004, an increase of 16 percent from December 31, 2003. Total loans amounted to $1.197 billion at September 30, 2004, up 25 percent since December 31, 2003. Commercial and commercial real estate loans amounted to $482.4 million at September 30, 2004, up $73.9 million, or 18 percent since December 31, 2003. Growth in consumer loans also continued increasing 34 percent to $217.2 million for the nine months ended September 30, 2004. Residential real estate loans grew to $497.9 million at September 30, 2004, an increase of $108.0 million or 28 percent from December 31, 2003, including an increase of $64.4 million in residential mortgages purchased from other financial institutions. At September 30, 2004, total securities amounted to $899.7 million, an increase of $60.3 million from the balance at December 31, 2003. Total deposits amounted to $1.469 billion at September 30, 2004 rising 22 percent since December 31, 2003. Savings deposits, including money market deposits, amounted to $640.3 million, up $146.4 million, or 30 percent, for the nine months ended September 30, 2004. Time deposits increased $94.9 million to $613.0 million, or 18 percent, from the December 31, 2003 balance, primarily due to increases in consumer certificates of deposit and brokered certificates of deposit. Demand deposits totaled $215.7 million at September 30, 2004, up 11 percent over the December 31, 2003 level. FHLB advances totaled $639.8 million at September 30, 2004, resulting in a $32.7 million increase from December 31, 2003 balance. Net interest income for the third quarter of 2004 amounted to $13.9 million, an increase of 18 percent from the $11.7 million amount reported for the same quarter a year ago. The net interest margin for the third quarter of 2004 was 2.69%, down 3 basis points from 2.72% reported in the second quarter of 2004 and down 6 basis points from 2.75% reported in the third quarter of 2003. The decrease in the net interest margin from the second quarter of 2004 is largely attributable to increased funding costs for deposits and borrowed funds, partially offset by higher yields on investment securities and loans. For the nine months ended September 30, 2004, net interest income amounted to $40.1 million, an increase of 11 percent from the amount reported for the corresponding 2003 period. The net interest margin for the nine months ended September 30, 2004 amounted to 2.76%, down 13 basis points from the 2.89% reported for the same period a year ago. Noninterest income (excluding net realized gains and losses on securities) totaled $7.0 million for the third quarter of 2004, compared to $7.4 million for the same quarter a year ago. For the nine months ended September 30, 2004, noninterest income amounted to $20.1 million, down $135 thousand, or 1 percent, from the comparable 2003 amount. Trust and investment management revenues increased $1.6 million, or 20 percent, in the nine months ended September 30, 2004 compared to the same period in 2003. Trust assets under administration amounted to $1.837 billion at September 30, 2004, compared to $1.742 billion at December 31, 2003 and $1.618 billion at September 30, 2003. Net gains on loan sales for the nine months ended September 30, 2004 amounted to $1.3 million, down from $4.1 million for the same period in 2003. Total third quarter 2004 net gains on loan sales were $348 thousand, down from $1.4 million for the same quarter a year ago. Loan sale gains have declined due to a drop off in fixed rate mortgage origination and sales activity. Also included in loan sale gains are gains resulting from the sale of the guaranteed portion of SBA loans. Total of such gains for the nine months ended 2004 were $575 thousand, up from $260 thousand for the same period in 2003. During the quarter ended September 30, 2004 the Corporation recognized net realized gains on securities of $101 thousand, which represents the disposal of certain equity securities for portfolio restructuring purposes. For the nine months ended September 30, 2004, the Corporation recognized net realized losses on securities amounting to $139 thousand. For the nine months ended September 30, 2003, net realized gains on securities totaled $630 thousand, including approximately $400 thousand in gains resulting from the Corporation's contribution of appreciated equity securities to the Corporation's charitable foundation. The cost of this 2003 contribution amounted to approximately $433 thousand and was included in other noninterest expense for the nine months ended September 30, 2003. The Corporation expects to make an annual contribution to its charitable foundation in the fourth quarter of 2004. Noninterest expenses totaled $13.1 million for the third quarter of 2004, an increase of 7 percent from the same period a year ago. Exclusive of the pre-tax debt prepayment penalty charge of $941 thousand in 2003, noninterest expenses for the nine months ended September 30, 2004 increased 6 percent to $37.3 million, with the largest increase in personnel related costs. In addition, included in noninterest expenses for the nine months ended September 30, 2004, were costs associated with the conversion of certain technology systems amounting to $318 thousand. Nonaccrual loans as a percentage of total loans at September 30, 2004 were .43%, up from .29% at December 31, 2003. Nonperforming assets (nonaccrual loans and property acquired through foreclosure) amounted to $5.2 million, or .23% of total assets, at September 30, 2004, up from $2.7 million, or .14%, at December 31, 2003. The increase was largely due to a single $2.1 million commercial lending relationship classified as nonaccrual during the second quarter of 2004. The Corporation continued to benefit from favorable loan loss experience during the nine months ended September 30, 2004 as indicated by a $353 thousand excess of loan loss recoveries over charge-offs. For the nine months ended September 30, 2003, charge-offs, net of recoveries, amounted to $34 thousand. Total shareholders' equity amounted to $148.4 million at September 30, 2004, compared to $138.1 million at December 31, 2003. Book value per share as of September 30, 2004 and December 31, 2003 amounted to $11.20 and $10.46, respectively. Washington Trust 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 on Thursday, October 21, at 4:30 p.m. (Eastern Daylight Time) to discuss the Corporation's third 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 section of 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 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. Note: This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Corporation's management uses these non-GAAP measures in its analysis of the Corporation's performance. These measures adjust GAAP performance measures to exclude the effect of significant gains or losses that are unusual in nature such as debt prepayment penalty charges. Because these items and their impact on the Corporation's performance are difficult to predict, management believes that presentations of financial measures excluding the impact of these items provide useful supplemental information that is essential to a proper understanding of the operating results of the Corporation's core businesses. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other Corporations. A quantitative reconciliation of the differences between the non-GAAP financial information discussed herein and the most directly comparable financial information calculated and presented in accordance with GAAP is contained in the Financial Summary statements attached to this press release. 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, SEP. 30, SEP. 30, JUN. 30, except per share amounts) 2004 2003 2004 ---------- ---------- ---------- OPERATING RESULTS ------------------ Net interest income $13,882 $11,727 $13,092 Provision for loan losses 120 100 120 Net realized gains (losses) on securities 101 - (240) Other noninterest income 6,966 7,447 7,164 Noninterest expenses 13,054 12,190 12,545 Income tax expense 2,442 2,144 2,308 Net income 5,333 4,740 5,043 PER SHARE --------- Basic earnings $0.40 $0.36 $0.38 Diluted earnings $0.39 $0.35 $0.37 Dividends declared $0.17 $0.16 $0.17 SHARES OUTSTANDING ------------------- Weighted Average: Basic 13,235.7 13,133.8 13,216.1 Diluted 13,514.0 13,486.8 13,517.0 AVERAGE BALANCE SHEET --------------------- Federal funds sold and other short- term investments $16,206 $18,451 $11,072 Taxable debt securities 855,908 787,056 829,306 Nontaxable debt securities 16,402 15,964 16,118 Corporate stocks and Federal Home Loan Bank stock 55,566 51,859 56,358 Loans: Commercial 471,164 393,224 434,292 Residential 468,212 315,193 430,539 Consumer 209,615 146,834 192,529 ---------- ---------- ---------- Total loans 1,148,991 855,251 1,057,360 Earning assets 2,093,073 1,728,581 1,970,214 Total assets 2,221,439 1,850,939 2,091,943 Deposits: Demand 210,974 193,908 190,906 Savings 611,911 491,690 543,870 Time 601,822 477,485 545,266 ---------- ---------- ---------- Total deposits 1,424,707 1,163,083 1,280,042 Federal Home Loan Bank advances 634,346 537,486 656,802 Shareholders' equity 145,151 132,559 139,525 KEY RATIOS ----------- Return on average assets 0.96% 1.02% 0.96% Return on average equity 14.70% 14.30% 14.46% Interest rate spread (taxable equivalent basis) 2.40% 2.45% 2.47% Net interest margin (taxable equivalent basis) 2.69% 2.75% 2.72% ALLOWANCE FOR LOAN LOSSES -------------------------- Balance at beginning of period $16,208 $15,742 $16,174 Provision charged to earnings 120 100 120 Net (charge-offs) recoveries 299 (29) (86) ---------- ---------- ---------- Balance at end of period $16,627 $15,813 $16,208 ---------- ---------- ---------- Washington Trust Bancorp, Inc. and Subsidiary FINANCIAL SUMMARY NINE MONTHS ENDED --------------------- (Dollars and shares in thousands, SEP. 30, SEP. 30, except per share amounts) 2004 2003 ---------- ---------- OPERATING RESULTS ----------------- Net interest income $40,057 $35,938 Provision for loan losses 360 360 Net realized (losses) gains on securities (139) 630 Other noninterest income 20,070 20,205 Noninterest expenses 37,279 36,016 Income tax expense 7,018 6,333 Net income 15,331 14,064 PER SHARE --------- Basic earnings $1.16 $1.07 Diluted earnings $1.13 $1.05 Dividends declared $0.51 $0.46 SHARES OUTSTANDING ------------------ Weighted Average: Basic 13,217.1 13,094.5 Diluted 13,520.1 13,341.8 AVERAGE BALANCE SHEET --------------------- Federal funds sold and other short-term investments $12,824 $16,293 Taxable debt securities 831,661 778,815 Nontaxable debt securities 15,588 16,515 Corporate stocks and Federal Home Loan Bank stock 55,481 50,573 Loans: Commercial 439,482 392,926 Residential 430,002 301,402 Consumer 190,979 139,321 ---------- ---------- Total loans 1,060,463 833,649 Earning assets 1,976,017 1,695,845 Total assets 2,100,949 1,816,512 Deposits: Demand 190,797 172,141 Savings 551,160 474,725 Time 558,365 479,490 ---------- ---------- Total deposits 1,300,322 1,126,356 Federal Home Loan Bank advances 641,422 539,799 Shareholders' equity 142,429 132,634 KEY RATIOS ---------- Return on average assets 0.97% 1.03% Return on average equity 14.35% 14.14% Interest rate spread (taxable equivalent basis) 2.50% 2.59% Net interest margin (taxable equivalent basis) 2.76% 2.89% ALLOWANCE FOR LOAN LOSSES ------------------------- Balance at beginning of period $15,914 $15,487 Provision charged to earnings 360 360 Net (charge-offs) recoveries 353 (34) ---------- ---------- Balance at end of period $16,627 $15,813 ---------- ---------- Washington Trust Bancorp, Inc. and Subsidiary FINANCIAL SUMMARY NINE MONTHS ENDED ----------------- (Dollars and shares in thousands, SEP. 30, SEP. 30, except per share amounts) 2004 2003 -------- -------- EARNINGS AND RATIOS EXCLUDING SPECIAL ITEMS ------------------------------------------- (Non GAAP Financial Information): Noninterest expenses (1) $37,279 $35,075 Return on average assets (2) 0.97% 1.08% Return on average equity (2) 14.35% 14.79% Reconciliation Table - Non GAAP Financial Information ----------------------------------------------------- Net income, including special items $15,331 $14,064 Add back special items, net of tax: Debt prepayment penalties - 649 Net income, excluding special items $15,331 $14,713 Basic earnings per share $1.16 $1.07 Effects of special items, net of tax - 0.05 Basic earnings per share, excluding special items $1.16 $1.12 Diluted earnings per share $1.13 $1.05 Effects of special items, net of tax - 0.05 Diluted earnings per share, excluding special items $1.13 $1.10 Return on average assets 0.97% 1.03% Effects of special items, net of tax - 0.05% Return on average assets, excluding special items 0.97% 1.08% Return on average equity 14.35% 14.14% Effects of special items, net of tax - 0.65% Return on average equity, excluding special items 14.35% 14.79% (1) Excludes second quarter 2003 Federal Home Loan Bank debt prepayment penalties of $941 thousand (pretax). (2) Excludes second quarter 2003 Federal Home Loan Bank debt prepayment penalties of $649 thousand after income taxes. Washington Trust Bancorp, Inc. and Subsidiary FINANCIAL SUMMARY (Dollars and shares in thousands, except per SEP. 30, JUN. 30, DEC. 31, SEP. 30, share amounts) 2004 2004 2003 2003 ----------- ----------- ----------- ----------- PERIOD END BALANCE SHEET ------------------------ Assets $2,280,115 $2,178,990 $1,973,807 $1,931,190 Total securities 899,678 902,998 839,421 844,490 Loans: Commercial: Mortgages 253,327 239,651 227,334 214,412 Construction and development 22,504 20,376 12,486 13,352 Other 206,559 188,314 168,657 167,747 ----------- ----------- ----------- ----------- Total Commercial: 482,390 448,341 408,477 395,511 Residential: Mortgages 476,705 433,976 375,706 358,489 Homeowner construction 21,154 17,079 14,149 13,616 ----------- ----------- ----------- ----------- Total Residential: 497,859 451,055 389,855 372,105 Consumer: Home equity lines 146,291 134,299 116,458 106,075 Other 70,932 67,344 46,191 44,664 ----------- ----------- ----------- ----------- Total Consumer: 217,223 201,643 162,649 150,739 Total loans 1,197,472 1,101,039 960,981 918,355 Deposits: Demand 215,685 200,923 194,144 196,952 Savings 640,277 566,976 493,878 492,322 Time 613,036 574,004 518,119 495,594 ----------- ----------- ----------- ----------- Total deposits 1,468,998 1,341,903 1,206,141 1,184,868 Brokered deposits included in time deposits 169,795 153,373 118,234 106,724 Federal Home Loan Bank advances 639,835 676,336 607,104 590,675 Shareholders' equity 148,402 138,542 138,055 136,006 CAPITAL RATIOS -------------- Tier 1 risk-based capital 9.09% 9.41% 10.00% 10.00% Total risk-based capital 10.63% 10.95% 11.57% 11.49% Tier 1 leverage ratio 5.34% 5.51% 5.65% 5.72% SHARE INFORMATION ----------------- Shares outstanding at end of period 13,247.7 13,227.9 13,194.6 13,153.7 Book value per share $11.20 $10.47 $10.46 $10.34 Tangible book value per share $9.39 $8.64 $8.60 $8.46 Market value per share $26.15 $25.99 $26.20 $24.01 CREDIT QUALITY -------------- Nonaccrual loans $5,163 $4,987 $2,743 $3,345 Other real estate owned, net - 8 11 23 Nonperforming assets to total assets 0.23% 0.23% 0.14% 0.17% Nonaccrual loans to total loans 0.43% 0.45% 0.29% 0.36% Allowance for loan losses to nonaccrual loans 322.04% 325.01% 580.17% 472.74% Allowance for loan losses to total loans 1.39% 1.47% 1.66% 1.72% ASSETS UNDER ADMINISTRATION --------------------------- Market value $1,837,302 $1,783,747 $1,741,948 $1,618,239 Washington Trust Bancorp, Inc. and Subsidiary CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (Unaudited) September 30, December 31, 2004 2003 -------------- -------------- Assets: Cash and due from banks $45,316 $40,710 Federal funds sold and other short-term investments 11,560 20,400 Mortgage loans held for sale 11,702 2,486 Securities: Available for sale, at fair value; amortized cost $739,516 in 2004 and $663,529 in 2003 751,240 673,845 Held to maturity, at cost; fair value $150,918 in 2004 and $169,401 in 2003 148,438 165,576 -------------- -------------- Total securities 899,678 839,421 Federal Home Loan Bank stock, at cost 34,373 31,464 Loans 1,197,472 960,981 Less allowance for loan losses 16,627 15,914 -------------- -------------- Net loans 1,180,845 945,067 Premises and equipment, net 24,620 24,941 Accrued interest receivable 9,206 7,911 Goodwill 22,591 22,591 Identifiable intangible assets 1,470 1,953 Other assets 38,754 36,863 -------------- -------------- Total assets $2,280,115 $1,973,807 ============== ============== Liabilities: Deposits: Demand $215,685 $194,144 Savings 640,277 493,878 Time 613,036 518,119 -------------- -------------- Total deposits 1,468,998 1,206,141 Dividends payable 2,254 2,113 Federal Home Loan Bank advances 639,835 607,104 Other borrowings 2,637 2,311 Accrued expenses and other liabilities 17,989 18,083 -------------- -------------- Total liabilities 2,131,713 1,835,752 -------------- -------------- Shareholders' Equity: Common stock of $.0625 par value; authorized 30 million shares; issued 13,256,668 shares in 2004 and 13,204,024 shares in 2003 828 825 Paid-in capital 31,363 29,868 Retained earnings 110,073 101,492 Unearned stock-based compensation (811) (22) Accumulated other comprehensive income 7,150 6,101 Treasury stock, at cost; 8,993 shares in 2004 and 9,463 in 2003 (201) (209) -------------- -------------- Total shareholders' equity 148,402 138,055 -------------- -------------- Total liabilities and shareholders' equity $2,280,115 $1,973,807 ============== ============== Washington Trust Bancorp, Inc. and Subsidiary CONSOLIDATED STATEMENTS OF INCOME (Dollars and shares in thousands, except per share amounts) (Unaudited) Three Months Nine Months Periods ended September 30, 2004 2003 2004 2003 --------- --------- --------- --------- Interest income: Interest and fees on loans $15,762 $12,568 $43,690 $38,067 Interest on securities 8,742 7,592 25,104 24,480 Dividends on corporate stock and Federal Home Loan Bank stock 562 528 1,542 1,546 Interest on federal funds sold and other short-term investments 47 35 87 111 --------- --------- --------- --------- Total interest income 25,113 20,723 70,423 64,204 --------- --------- --------- --------- Interest expense: Savings deposits 1,180 724 2,803 2,554 Time deposits 4,756 3,740 12,904 11,473 Federal Home Loan Bank advances 5,281 4,514 14,615 14,184 Other 14 18 44 55 --------- --------- --------- --------- Total interest expense 11,231 8,996 30,366 28,266 --------- --------- --------- --------- Net interest income 13,882 11,727 40,057 35,938 Provision for loan losses 120 100 360 360 --------- --------- --------- --------- Net interest income after provision for loan losses 13,762 11,627 39,697 35,578 --------- --------- --------- --------- Noninterest income: Trust and investment management 3,218 2,692 9,593 7,969 Service charges on deposit accounts 1,066 1,242 3,428 3,690 Merchant processing fees 1,643 1,412 3,335 2,731 Net gains on loan sales 348 1,383 1,257 4,062 Income from bank-owned life insurance 293 298 887 845 Net realized gains (losses) on securities 101 - (139) 630 Other income 398 420 1,570 908 --------- --------- --------- --------- Total noninterest income 7,067 7,447 19,931 20,835 --------- --------- --------- --------- Noninterest expense: Salaries and employee benefits 7,439 6,974 21,634 20,127 Net occupancy 770 671 2,382 2,169 Equipment 837 830 2,395 2,504 Merchant processing costs 1,398 1,139 2,746 2,184 Advertising and promotion 429 261 1,433 1,073 Outsourced services 357 328 1,200 1,024 Legal, audit and professional fees 379 394 882 990 Amortization of intangibles 161 180 483 539 Debt prepayment penalties - - - 941 Other 1,284 1,413 4,124 4,465 --------- --------- --------- --------- Total noninterest expense 13,054 12,190 37,279 36,016 --------- --------- --------- --------- Income before income taxes 7,775 6,884 22,349 20,397 Income tax expense 2,442 2,144 7,018 6,333 --------- --------- --------- --------- Net income $5,333 $4,740 $15,331 $14,064 --------- --------- --------- --------- Weighted average shares outstanding - basic 13,235.7 13,133.8 13,217.1 13,094.5 Weighted average shares outstanding - diluted 13,514.0 13,486.8 13,520.1 13,341.8 Per share information: Basic earnings per share $.40 $.36 $1.16 $1.07 Diluted earnings per share $.39 $.35 $1.13 $1.05 Cash dividends declared per share $.17 $.16 $.51 $.46 CONTACT: Washington Trust Bancorp, Inc. Elizabeth B. Eckel, 401-348-1309 ebeckel@washtrust.com