Improving economy boosts Washington Trust profit

 / PBN FILE PHOTO
/ PBN FILE PHOTO

Continuing with its plan to focus on mortgages while also taking advantage of opportunities in other markets, Washington Trust Bancorp Inc., the parent company of The Washington Trust Co., last week reported a record quarterly profit of $8.4 million for the first quarter, which ended March 31.
It was the second straight quarter of record profits for the Westerly-based bank.
“This kind of performance is due to the efforts of all of the people that work at the company. We’re going to keep trying to do the best we can,” said Joseph J. MarcAurele, Washington Trust chairman, president and CEO. “We are obviously pleased with these results; it’s a great way to start the year. This was no easy task considering the difficult Rhode Island economy.”
The bank reported a net income of $8.4 million, a 19.4 percent increase over the $6.8 million reported at the same time last year.
One of the bank’s recent strategies has been to reach out to customers, MarcAurele said. He referenced a new branch in East Providence, the opening of its third branch office in Cranston later this year, at 2174 Plainfield Pike, and the new home-loan center, a mortgage loan-production office at 171 Service Ave. in Warwick. He also said that the bank will not expand for the sake of merely enlarging its presence.
“The key to our success has been our ability to strategically grow the corporation while adhering to the core values upon which Washington Trust was founded 212 years ago,” he said. “It’s important to keep our staffing levels in our retail branches strong. It’s important to provide personalized service to our customers. It’s the only way you can differentiate yourself from the competition.”
The bank’s ever-improving figures over the last two years stem from its exploration into new geographic markets. “We made a concerted effort to expand our residential-mortgage business into the Greater Boston market and the Hartford area. Those markets are a little stronger right now than the local markets and we weren’t in them at the time, so they presented a strong opportunity for us,” MarcAurele said. “We believe we will be able to keep up momentum there.”
The bank also recorded an all-time high for mortgage-banking revenue at $3.1 million for the quarter, up $162,000 from the previous quarter and up by $2.6 million from the first quarter of 2011. The record level indicates a focus on continued origination-volume activity in their residential mortgage-lending offices and to a lesser degree, according to MarcAurele, on low interest rates.
“These latest quarterly results reflect some excellent revenue increases in some of our business lines as well as continued improvement in asset quality,” said David V. Devault, senior executive vice president, secretary and chief finance officer.
The company posted some notable reductions with debt-related indicators; the loan-loss provision for the first quarter of 2012 was $900,000, a reduction of $100,000 from the last quarter and $600,000 less than the first quarter of 2011.
Net charge-offs amounted to $657,000 in the first quarter of 2012, as compared to $839,000 in net charge-offs last quarter and $974,000 in the first quarter of 2011.
Nonperforming assets rose to $23.6 million, from $22.3 million in the same quarter last year.
Throughout 2011, however, nonperformers steadily rose to a peak of $24.8 million in the fourth quarter of 2011. In February, MarcAurele said the 2011 increase was due to a still-struggling economy. The latest figures show that for the first time in one year, nonperformers are moving in the right direction. Furthermore, the bank made significant advances with its past-due loans. At the end of this quarter, total past-due loans equaled $21.1 million, or 0.98 percent of total loans, as opposed to $27.3 million, or 1.4 percent of total loans reported at the same time last year, a reduction of $6.2 million.
Loans classified as troubled-debt restructurings totaled $14.1 million, a $7 million improvement from the $21.1 million reported in the first quarter of 2011. Again, MarcAurele says the figures reflect an improving economy.
“Washington Trust has a solid foundation upon which we built upon to improve our key performance measures during the quarter. … We continue to be well-capitalized and our asset quality remains healthy,” MarcAurele said.
But lending is the name of the game for Washington Trust and mortgages are the bank’s focus.
Loans increased by $125.7 million, or 6 percent from the same time last year, including an 8 percent increase in total commercial loans. “We saw moderate increases in our commercial loan portfolio in the first quarter, however demand has not been robust,” MarcAurele said.
Deposits also reflected some healthy numbers, rising about $19 million, or 1 percent in the quarter for a total of $2.1 billion as of the end of this quarter. In the last year total deposits grew by $96.7 million, or 5 percent. The mix of deposits also improved with total demand and NOW deposits representing 28 percent of total deposits, a 3 percent increase from the same time last year.
Wealth-management revenue for the first quarter of 2012 was $7.2 million, an increase of $260,000 on a linked quarter basis and $105,000 compared to the first quarter of 2011. •

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