WashTrust follows recipe to another profit record

Washington Trust Bancorp Inc. knows how to follow a game plan, as evidenced by a second straight third quarter profit record.
The recipe for success, according to Chairman and CEO Joseph J. MarcAurele, is familiar to investors: Solid growth in loans, deposits and wealth-management revenue, built in part due to an unwavering commitment to customer service and the reputation that comes from a strong statewide brand.
“We felt very good about the way the momentum of the company is going and we are confident the fourth quarter will produce similar-type results. It’s a competitive business, and we feel we’re doing everything we can to maximize returns for shareholders,” MarcAurele told Providence Business News on Oct. 21.
Rhode Island’s largest community bank posted earnings of $10.5 million, a 5.8 percent increase over the same period last year. The bank also declared a 32 cent per-share dividend, a 3 cent increase over the second-quarter dividend and 6 cents more than the 2013 third quarter. Earnings per diluted share totaled 62 cents for the period that ended Sept. 30, an increase from 59 cents a year earlier.
The parent of Westerly-based The Washington Trust Co. had total interest and noninterest revenue fall 7.1 percent to $43.5 million, an effect of selling its credit card processing business last year that boosted revenue in the year-earlier period.
Total assets for the bank were $3.4 billion, a gain of 9.1 percent from the prior year, fueled by increases of 7.1 percent and 29.2 percent, respectively, in total commercial loans and total residential real estate loans for the first three quarters, compared to the previous year.
MarcAurele credited the company’s successful expansion into Massachusetts and Connecticut, on both the commercial and residential mortgage side, as the reason for that growth, adding the two neighboring states both have stronger economies than in Rhode Island. He said 55 percent of residential mortgage growth comes from Greater Boston and Connecticut.
“That all being said, Rhode Island is still a very important part of the residential mortgage business and still represents [about] 45 percent of what the group does,” MarcAurele said. He said there is a plan to open a new retail banking branch in the Rumford section of East Providence in the first quarter of 2015, which would be the company’s 20th. There are no other plans to expand into other New England states.
“We have a very strong statewide brand in Rhode Island, but we don’t have statewide convenience yet. I feel we can continue to build out our branch network in Rhode Island at the pace of one or two a year. So far, the ones we’ve opened have performed very well,” MarcAurele said.
“I think the way of the future is that branches don’t need to be as big or have as many people. We find when people want to make a significant transaction, a home mortgage or make a relatively high deposit, they still want to come in and talk to someone. So far, that’s working for us, but I don’t think we can lose sight of technology and doing things online will be the way of the world more and more going forward,” MarcAurele said.
Wealth-management revenue also increased 9.8 percent year over year to $8.4 million, as assets under administration grew 8.4 percent year over year to just under $5 billion.
“The combination of wealth-management revenues and mortgage banking revenues were again very solid for the quarter,” MarcAurele said.
He said the size of Washington Trust’s wealth-management business distinguishes it from other community banks its size.
“Most community banks are in it on a very limited basis or not at all. … We’re always trying to bring new customers into that division and constantly looking at potential acquisition opportunities. … The last acquisition was seven or eight years ago,” MarcAurele said. That acquisition was Weston Financial Group, which is still part of the company, he said. It is in Wellesley, Mass.
With so much competition in the banking industry, MarcAurele said Washington Trust stands out by distinguishing itself with good customer service. He said there has been a steady pattern of growth for the past five years.
“An advantage is that we are very local and all decisions are made locally, so we can react pretty quickly to changes in the environment and things our customers need,” he said. •

No posts to display