Luring business away from larger banks, maintaining diversified earnings streams and expanding into mortgage markets outside Rhode Island led Washington Trust Bancorp Inc., parent of The Washington Trust Co., to post a record profit of $36.2 million for 2013, an increase of 3.1 percent compared with $35.1 million of net income for 2012.
Diluted earnings per share were $2.16, an increase of 1 percent over $2.13 earnings per diluted share in 2012.
“We continued to grow the company during challenging economic times and compete head-to-head with our larger competitors,” Washington Trust Chairman and CEO Joseph J. MarcAurele said last week.
The bank’s fourth-quarter profit of $9.8 million represented an 8.5 percent increase over $9 million in 2012 fourth-quarter earnings.
The company’s record yearly net income came despite the bank’s 4.2 percent decline in total interest and noninterest income for 2013 to $178.4 million. That tip toward the positive is the result of a combination of factors, said MarcAurele.
“We’ve been able to effectively reduce our expenses overall and also reduce our funding cost,” said MarcAurele. “We’ve been able to change our deposit mix by more significantly penetrating the deposit business in our commercial banking group, so we have more checking-account balances that we don’t pay interest on than we had in the past. They’re primarily commercial. They’re the operating accounts of the larger commercial borrowers we’ve been able to bring into the bank.”
Total deposits reached an all-time high of $2.5 billion at year end, said MarcAurele.
“Demand deposits were up an impressive 16 percent from the end of 2012, primarily due to new commercial and cash-management relationships,” he said.
Future deposit growth is expected with the opening of a new branch in Johnston in the second quarter of this year.
Another factor in reaching record revenue is trimming interest expenses, said MarcAurele.
“We have a certain number of Federal Home Loan Bank of Boston borrowings that we’ve had over time and because our deposit growth has been so good, we’ve been able to pay some of those borrowings down, which effectively eliminates the interest expense we pay on those borrowings,” said MarcAurele.