Exhibit 99.1
Washington Trust Announces Earnings; Annual Earnings Up 13%
WESTERLY, R.I.--(BUSINESS WIRE)--Jan. 22, 2004--Washington Trust
Bancorp, Inc. (Nasdaq National Market; symbol: WASH), parent company
of The Washington Trust Company, today reported fourth quarter of 2003
net income of $4.9 million, or 36 cents per diluted share, up 9
percent from net income of $4.5 million, or 34 cents per diluted
share, for the fourth quarter of 2002. The returns on average assets
and average equity for the three months ended December 31, 2003 were
1.01% and 14.19%, respectively, compared to 1.05% and 14.04%,
respectively, for the three months ended December 31, 2002.
For the year ended December 31, 2003, net income amounted to $18.9
million, up 13 percent from the $16.8 million in 2002. The Corporation
earned $1.41 per diluted share for 2003, up 8 percent from the $1.30
in 2002. The returns on average assets and average equity for 2003
were 1.03% and 14.15%, respectively. Comparable amounts for 2002 were
1.07% and 14.25%. Excluding the previously reported second quarter
2003 debt prepayment penalties of $649 thousand after tax (5 cents per
diluted share) and the 2002 acquisition related charges of $417
thousand after tax (3 cents per diluted share), earnings for 2003 were
$19.6 million, or $1.46 per diluted share, as compared to $17.2
million, or $1.33 per diluted share, for 2002.
"Washington Trust performed admirably in 2003, in light of an
unstable economy and historically low interest rates," stated John C.
Warren, Chairman and Chief Executive Officer. "We achieved a record
level of loans in 2003, led by strong mortgage refinancing and heavy
home equity loan volume. We had a solid increase in deposits and
experienced good growth in our commercial loan and trust and
investment areas. We're excited about the challenges ahead of us in
2004."
Net interest income for the quarter ended December 31, 2003
amounted to $12.9 million, up 13 percent from $11.3 million for the
same quarter a year ago. The net interest margin in the latest quarter
was 2.87%, up 12 basis points from the third quarter of 2003. The
improvement over the third quarter was primarily a result of a
slowdown in prepayment experience on mortgage-backed securities and a
related reduction in the amortization of premium on those instruments.
The Corporation's net interest margin for the three months ended
December 31, 2002 was 2.90%.
Net interest income for 2003 increased 10 percent from 2002 and
amounted to $48.8 million. The increase in net interest income was due
to earning asset growth including assets acquired through the April
2002 acquisition of First Financial Corp. The net interest margin for
2003 was 2.89%, down 21 basis points from 3.10% for 2002. This
decrease in the net interest margin reflects a decline in yields on
loans and securities offset somewhat by lower funding costs of
interest-bearing deposits and Federal Home Loan Bank ("FHLB")
advances.
Noninterest income (excluding net realized gains on securities)
amounted to $5.9 million for the quarter ended December 31, 2003, down
from $6.2 million for the same quarter a year ago. Noninterest income
totaled $26.1 million for 2003, up 16 percent from $22.6 million for
2002. The year to date growth in noninterest income was primarily
attributable to increases in gains on loan sales and service charges
on deposits. For the year ended December 31, 2003, gains on loan sales
totaled $4.7 million, up 63 percent from 2002. As a result of the
decline in interest rates during most of 2003, the Corporation
experienced strong residential mortgage activity, predominately
refinancing, which increased the amount of loans sold into the
secondary market. In recent months, the Corporation has experienced a
decline in the level of residential mortgage origination activity and
gains on loan sales declined to $628 thousand in the fourth quarter of
2003 compared to $1.4 million in the fourth quarter of 2002 and $1.4
million in the third quarter of 2003. Service charges on deposits
amounted to $4.9 million for 2003, up 30 percent from $3.8 million for
2002. Revenue from trust and investment management income, the largest
component of noninterest income, totaled $10.8 million for the year
ended December 31, 2003, up 6 percent from 2002. Trust and investment
assets under administration benefited from an improvement in the
equity markets in the fourth quarter of 2003. These assets amounted to
$1.742 billion at December 31, 2003, compared to $1.524 billion at
December 31, 2002.
For the fourth quarter of 2003, noninterest expenses totaled $11.6
million, up 5 percent from the amount of noninterest expenses reported
for the fourth quarter of 2002. For the year 2003, noninterest
expenses amounted to $46.7 million, up 10 percent from 2002 (excluding
the 2003 debt prepayment penalties and the 2002 acquisition related
charges). The increase in noninterest expenses was primarily due to
normal growth, costs associated with the new Warwick, Rhode Island
branch opened in the second quarter of 2003 and the full year effect
of higher operating costs resulting from the April 2002 acquisition of
First Financial Corp.
Total assets amounted to $1.974 billion at December 31, 2003, up
by $228 million, or 13 percent, from the December 31, 2002 balance of
$1.746 billion.
During 2003, total loans increased $165.9 million, with the
largest increase in residential real estate loans. The Corporation
purchased a total of $132.0 million of fixed and adjustable rate
residential mortgages from other financial institutions in 2003,
including $27.5 million of adjustable rate mortgages in the fourth
quarter of 2003. The purchases of loans were funded with FHLB advances
and brokered certificates of deposit. Consumer loans increased $30.6
million, or 23 percent, from the balance at December 31, 2002,
primarily due to growth in home equity lines. Commercial loans
increased $26.3 million, or 7 percent, to $408.5 million at December
31, 2003.
Total securities were $839.4 million at December 31, 2003, up
$43.6 million from the balance at December 31, 2002. The increase in
securities was mainly due to purchases of mortgage-backed securities,
U.S. government agency securities and corporate bonds.
Total deposits at December 31, 2003 amounted to $1.206 billion, up
$95.6 million, or 9 percent, from the December 31, 2002 balance of
$1.110 billion. Demand deposits increased $36.6 million, or 23
percent, in 2003 and totaled $194.1 million at December 31, 2003. The
increase in demand deposits included a temporary placement of
approximately $18.6 million in funds on deposit at December 31, 2003
that were withdrawn in January 2004. Savings deposits rose $22.5
million in 2003 and amounted to $493.9 million at December 31, 2003.
Time deposits totaled $518.1 million at December 31, 2003, up $36.5
million from the 2002 balance, primarily due to increases in brokered
certificates of deposit. Total brokered certificates of deposit
amounted to $118.2 million at December 31, 2003, compared to $56.5
million at December 31, 2002. In 2003, FHLB advances increased $127.0
million to $607.1 million at December 31, 2003.
Asset quality, as measured by the level of nonperforming assets,
continued to improve in 2003 compared to already favorable historical
levels. Nonaccrual loans as a percentage of total loans at December
31, 2003 were .29%, down from .53% at December 31, 2002. Similarly,
nonperforming assets (nonaccrual loans and property acquired through
foreclosure) as a percent of total assets at December 31, 2003
amounted to .14% as compared to .24% at December 31, 2002. The
Corporation incurred favorable loan loss experience in 2003 as
indicated by a $33 thousand excess of actual charge-offs over loan
loss recoveries. In 2002, charge-offs, net of recoveries, amounted to
$335 thousand.
Total shareholders' equity amounted to $138.1 million at December
31, 2003, up from $128.7 million at December 31, 2002. Book value per
share as of December 31, 2003 and December 31, 2002 amounted to $10.46
and $9.87, respectively.
Washington Trust Bancorp, Inc. 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 Friday, January 23, at 8:30 a.m. (Eastern Standard
Time) to discuss the Corporation's fourth quarter and year-end
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 typically adjust GAAP
performance measures to exclude the effects of charges and expenses
related to the consummation of acquisitions and costs related to the
integration of merged entities. These non-GAAP measures also may
exclude other significant gains or losses that are unusual in nature.
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, DEC. 31, DEC. 31, SEP. 30,
except per share amounts) 2003 2002 2003
OPERATING RESULTS
Net interest income $12,861 $11,339 $11,727
Provision for loan losses 100 100 100
Net realized gains on securities - 58 -
Other noninterest income 5,900 6,158 7,447
Noninterest expenses 11,616 11,023 12,190
Income tax expense 2,186 1,954 2,144
Net income 4,859 4,478 4,740
PER SHARE
Basic earnings $0.37 $0.34 $0.36
Diluted earnings $0.36 $0.34 $0.35
Dividends declared $0.16 $0.14 $0.16
SHARES OUTSTANDING
Weighted Average: Basic 13,172.3 13,038.0 13,133.8
Diluted 13,538.9 13,225.8 13,486.8
AVERAGE BALANCE SHEET
Federal funds sold and other short-
term investments $10,804 $15,336 $18,451
Taxable debt securities 789,173 733,668 787,056
Nontaxable debt securities 14,783 18,812 15,964
Corporate stocks and Federal Home
Loan Bank stock 53,743 44,315 51,859
Loans: Commercial 405,710 380,085 393,224
Residential 380,913 264,888 315,193
Consumer 155,382 130,625 146,834
Total loans 942,005 775,598 855,251
Earning assets 1,810,508 1,587,729 1,728,581
Total assets 1,933,259 1,709,378 1,850,939
Deposits: Demand 180,858 162,490 193,908
Savings 490,866 465,080 491,690
Time 501,852 485,542 477,485
Total deposits 1,173,576 1,113,112 1,163,083
Federal Home Loan Bank advances 606,806 449,317 537,486
Shareholders' equity 136,964 127,607 132,559
KEY RATIOS
Return on average assets 1.01% 1.05% 1.02%
Return on average equity 14.19% 14.04% 14.30%
Interest rate spread (taxable
equivalent basis) 2.61% 2.54% 2.45%
Net interest margin (taxable
equivalent basis) 2.87% 2.90% 2.75%
ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period $15,813 $15,660 $15,742
Allowance on acquired loans - - -
Provision charged to earnings 100 100 100
Net (charge-offs) recoveries 1 (273) (29)
Balance at end of period $15,914 $15,487 $15,813
Washington Trust Bancorp, Inc. and Subsidiary
FINANCIAL SUMMARY
TWELVE MONTHS ENDED
(Dollars and shares in thousands, DEC. 31, DEC. 31,
except per share amounts) 2003 2002
OPERATING RESULTS
Net interest income $48,799 $44,282
Provision for loan losses 460 400
Net realized gains on securities 630 678
Other noninterest income 26,105 22,580
Noninterest expenses 47,632 42,990
Income tax expense 8,519 7,393
Net income 18,923 16,757
PER SHARE
Basic earnings $1.44 $1.32
Diluted earnings $1.41 $1.30
Dividends declared $0.62 $0.56
SHARES OUTSTANDING
Weighted Average: Basic 13,114.1 12,737.3
Diluted 13,393.6 12,932.4
AVERAGE BALANCE SHEET
Federal funds sold and other short-term
investments $14,911 $14,477
Taxable debt securities 781,425 674,095
Nontaxable debt securities 16,079 19,544
Corporate stocks and Federal Home Loan Bank
stock 51,372 43,491
Loans: Commercial 396,148 341,434
Residential 321,442 246,915
Consumer 143,370 121,110
Total loans 860,960 709,459
Earning assets 1,724,747 1,461,066
Total assets 1,845,939 1,568,663
Deposits: Demand 174,338 149,382
Savings 478,794 399,548
Time 485,126 454,239
Total deposits 1,138,258 1,003,169
Federal Home Loan Bank advances 556,689 431,000
Shareholders' equity 133,725 117,591
KEY RATIOS
Return on average assets 1.03% 1.07%
Return on average equity 14.15% 14.25%
Interest rate spread (taxable equivalent
basis) 2.60% 2.71%
Net interest margin (taxable equivalent
basis) 2.89% 3.10%
ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period $15,487 $13,593
Allowance on acquired loans - 1,829
Provision charged to earnings 460 400
Net (charge-offs) recoveries (33) (335)
Balance at end of period $15,914 $15,487
Washington Trust Bancorp, Inc. and Subsidiary
FINANCIAL SUMMARY
TWELVE MONTHS ENDED
(Dollars and shares in thousands, DEC. 31, DEC. 31,
except per share amounts) 2003 2002
EARNINGS AND RATIOS EXCLUDING SPECIAL ITEMS
(Non GAAP Financial Information):
Noninterest expenses (1) $46,691 $42,385
Return on average assets (2) 1.06% 1.09%
Return on average equity (2) 14.64% 14.60%
Reconciliation Table - Non GAAP Financial Information
Net income, including special items $18,923 $16,757
Add back special items, net of tax:
Debt prepayment penalties 649 -
Acquisition costs - 417
Net income, excluding special items $19,572 $17,174
Basic earnings per share $1.44 $1.32
Effects of special items, net of tax 0.05 0.03
Basic earnings per share, excluding special
items $1.49 $1.35
Diluted earnings per share $1.41 $1.30
Effects of special items, net of tax 0.05 0.03
Diluted earnings per share, excluding
special items $1.46 $1.33
Return on average assets 1.03% 1.07%
Effects of special items, net of tax 0.03% 0.02%
Return on average assets, excluding special
items 1.06% 1.09%
Return on average equity 14.15% 14.25%
Effects of special items, net of tax 0.49% 0.35%
Return on average equity, excluding special
items 14.64% 14.60%
(1) Excludes second quarter 2003 Federal Home Loan Bank debt
prepayment penalties of $941 thousand (pretax) and second quarter
2002 First Financial Corp. acquisition costs of $605 thousand
(pretax).
(2) Excludes second quarter 2003 Federal Home Loan Bank debt
prepayment penalties of $649 thousand after income taxes and
second quarter 2002 First Financial Corp. acquisition costs of
$417 thousand after income taxes.
Washington Trust Bancorp, Inc. and Subsidiary
FINANCIAL SUMMARY
(Dollars and shares in thousands, DEC. 31, DEC. 31,
except per share amounts) 2003 2002
PERIOD END BALANCE SHEET
Assets $1,973,807 $1,745,661
Total securities 839,421 795,833
Loans: Commercial 408,477 382,169
Residential 389,855 280,886
Consumer 162,649 132,071
Total loans 960,981 795,126
Deposits: Demand 194,144 157,539
Savings 493,878 471,354
Time 518,119 481,600
Total deposits 1,206,141 1,110,493
Federal Home Loan Bank advances 607,104 480,080
Shareholders' equity 138,055 128,721
CAPITAL RATIOS
Tier 1 risk-based capital 9.95% 10.13%
Total risk-based capital 11.53% 11.55%
Tier 1 leverage ratio 5.65% 5.63%
SHARE INFORMATION
Shares outstanding at end of period 13,194.6 13,042.4
Book value per share $10.46 $9.87
Tangible book value per share $8.60 $7.93
Market value per share $26.20 $19.53
CREDIT QUALITY
Nonaccrual loans $2,743 $4,177
Other real estate owned, net 11 86
Nonperforming assets to total assets 0.14% 0.24%
Nonaccrual loans to total loans 0.29% 0.53%
Allowance for loan losses to nonaccrual loans 580.17% 370.78%
Allowance for loan losses to total loans 1.66% 1.95%
ASSETS UNDER MANAGEMENT
Market value $1,741,948 $1,524,126
Washington Trust Bancorp, Inc. and Subsidiary
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
December 31, December 31,
2003 2002
Assets:
Cash and due from banks $40,710 $39,298
Federal funds sold and other short-term
investments 20,400 11,750
Mortgage loans held for sale 2,486 4,566
Securities:
Available for sale, at fair value;
amortized cost $663,529 in 2003 and
$539,109 in 2002 673,845 553,556
Held to maturity, at cost; fair value
$169,401 in 2003 and $250,446 in 2002 165,576 242,277
Total securities 839,421 795,833
Federal Home Loan Bank stock, at cost 31,464 24,582
Loans 960,981 795,126
Less allowance for loan losses 15,914 15,487
Net loans 945,067 779,639
Premises and equipment, net 24,941 24,415
Accrued interest receivable 7,911 7,773
Goodwill and other intangibles 24,544 25,260
Other assets 36,863 32,545
Total assets $1,973,807 $1,745,661
Liabilities:
Deposits:
Demand $194,144 $157,539
Savings 493,878 471,354
Time 518,119 481,600
Total deposits 1,206,141 1,110,493
Dividends payable 2,113 1,825
Federal Home Loan Bank advances 607,104 480,080
Other borrowings 2,311 9,183
Accrued expenses and other liabilities 18,083 15,359
Total liabilities 1,835,752 1,616,940
Shareholders' Equity:
Common stock of $.0625 par value;
authorized 30 million shares; issued
13,204,024 shares in 2003 and 13,086,795
shares in 2002 825 818
Paid-in capital 29,868 28,767
Retained earnings 101,492 90,717
Unamortized employee restricted stock (22) (24)
Accumulated other comprehensive income 6,101 9,294
Treasury stock, at cost; 9,463 shares in
2003 and 44,361 in 2002 (209) (851)
Total shareholders' equity 138,055 128,721
Total liabilities and shareholders'
equity $1,973,807 $1,745,661
Washington Trust Bancorp, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME
(Dollars and shares in
thousands, except per share
amounts)
(Unaudited) (Unaudited)
Three Months Twelve Months
Periods ended December 31, 2003 2002 2003 2002
Interest income:
Interest and fees on loans $13,536 $12,814 $51,603 $49,576
Interest on securities 7,950 8,734 32,430 35,571
Dividends on corporate stock
and Federal Home Loan Bank
stock 535 493 2,081 1,973
Interest on federal funds
sold and other short-term
investments 20 48 131 219
Total interest income 22,041 22,089 86,245 87,339
Interest expense:
Savings deposits 667 1,672 3,221 5,598
Time deposits 3,860 4,152 15,333 16,776
Federal Home Loan Bank
advances 4,635 4,904 18,819 20,596
Other 18 22 73 87
Total interest expense 9,180 10,750 37,446 43,057
Net interest income 12,861 11,339 48,799 44,282
Provision for loan losses 100 100 460 400
Net interest income after
provision for loan losses 12,761 11,239 48,339 43,882
Noninterest income:
Trust and investment
management 2,800 2,471 10,769 10,171
Service charges on deposit
accounts 1,230 999 4,920 3,787
Net gains on loan sales 628 1,362 4,690 2,884
Merchant processing fees 679 559 3,410 3,002
Income from bank-owned life
insurance 316 291 1,161 1,155
Net realized gains on
securities - 58 630 678
Other income 247 476 1,155 1,581
Total noninterest income 5,900 6,216 26,735 23,258
Noninterest expense:
Salaries and employee
benefits 6,818 6,163 26,945 23,793
Net occupancy 810 724 2,979 2,694
Equipment 876 863 3,380 3,333
Merchant processing costs 532 455 2,716 2,391
Legal, audit and professional
fees 252 684 1,242 1,893
Advertising and promotion 367 233 1,440 1,180
Outsourced services 309 305 1,333 1,077
Debt prepayment penalties - - 941 -
Amortization of intangibles 180 210 719 651
Acquisition related expenses - - - 605
Other 1,472 1,386 5,937 5,373
Total noninterest expense 11,616 11,023 47,632 42,990
Income before income taxes 7,045 6,432 27,442 24,150
Income tax expense 2,186 1,954 8,519 7,393
Net income $4,859 $4,478 $18,923 $16,757
Weighted average shares
outstanding - basic 13,172.3 13,038.0 13,114.1 12,737.3
Weighted average shares
outstanding - diluted 13,538.9 13,225.8 13,393.6 12,932.4
Per share information:
Basic earnings per share $.37 $.34 $1.44 $1.32
Diluted earnings per share $.36 $.34 $1.41 $1.30
Cash dividends declared per
share $.16 $.14 $.62 $.56
CONTACT: Washington Trust Bancorp, Inc.
Elizabeth B. Eckel, 401-348-1309
ebeckel@washtrust.com