-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GcNPtyEnmzu5fXPpylksHea4IVj245AB523U99vdwuuUS4GgwAXDGn82aZIr59VU B1wAxmvqONaYIYEq/qt16Q== 0000737468-97-000006.txt : 19970520 0000737468-97-000006.hdr.sgml : 19970520 ACCESSION NUMBER: 0000737468-97-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WASHINGTON TRUST BANCORP INC CENTRAL INDEX KEY: 0000737468 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 050404671 STATE OF INCORPORATION: RI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13091 FILM NUMBER: 97608247 BUSINESS ADDRESS: STREET 1: 23 BROAD ST CITY: WESTERLY STATE: RI ZIP: 02891 BUSINESS PHONE: 4013481200 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended MARCH 31, 1997 -------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------------------- Commission file Number 0-13091 ------------------------- WASHINGTON TRUST BANCORP, INC. (Exact name of registrant as specified in its charter) RHODE ISLAND 05-0404671 --------------------------------- ------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 23 BROAD STREET, WESTERLY, RHODE ISLAND 02891 ---------------------------------------- ------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (401) 348-1200 --------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [ X ]Yes [ ]No The number of shares of common stock of the registrant outstanding as of May 2, 1997 was 4,380,766. Page 1 WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARY Form 10-Q For The Quarter Ended March 31, 1997 CONTENTS Page No. PART I. ITEM 1. Financial Information Consolidated Balance Sheets March 31, 1997 and December 31, 1996 3 Consolidated Statements of Income Three Months Ended March 31, 1997 and 1996 4 Consolidated Statements of Changes in Shareholders' Equity Three Months Ended March 31, 1997 and 1996 5 Consolidated Statements of Cash Flows Three Months Ended March 31, 1997 and 1996 6 Condensed Notes to Consolidated Financial Statements 8 PART I. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 PART II. Other Information 16 Signatures 16 CONSOLIDATED BALANCE SHEETS Washington Trust Bancorp, Inc. and Subsidiary
March 31, December 31, (Dollars in thousands) 1997 1996 - ---------------------------------------------------------------------------- ---------------- ----------------- ASSETS: Cash and due from banks $16,072 $17,418 Federal funds sold 9,050 1,548 Mortgage loans held for sale 521 744 Securities: Available for sale, at fair value 252,090 198,317 Held to maturity, at cost; fair value $27.5 million in 1997 and $28.1 million in 1996 27,574 27,926 - ---------------------------------------------------------------------------- ---------------- ----------------- Total securities 279,664 226,243 Federal Home Loan Bank stock, at cost 16,255 11,683 Loans 425,194 418,993 Less allowance for loan losses 8,585 8,495 - ---------------------------------------------------------------------------- ---------------- ----------------- Net loans 416,609 410,498 Premises and equipment, net 20,229 19,040 Accrued interest receivable 5,136 4,160 Other real estate owned, net 1,218 1,090 Other assets 4,459 2,522 - ---------------------------------------------------------------------------- ---------------- ----------------- Total assets $769,213 $694,946 - ---------------------------------------------------------------------------- ---------------- ----------------- LIABILITIES: Deposits: Demand $64,399 $65,014 Savings 175,982 170,172 Time 248,713 241,375 - ---------------------------------------------------------------------------- ---------------- ----------------- Total deposits 489,094 476,561 Dividends payable 831 785 Short term borrowings 19,309 14,000 Federal Home Loan Bank advances 193,068 138,493 Accrued expenses and other liabilities 6,590 5,680 - ---------------------------------------------------------------------------- ---------------- ----------------- Total liabilities 708,892 635,519 - ---------------------------------------------------------------------------- ---------------- ----------------- SHAREHOLDERS' EQUITY: Common stock of $.0625 par value; authorized 10,000,000 shares; issued 4,372,302 shares in 1997 and 4,362,631 shares in 1996 273 273 Paid-in capital 3,862 3,764 Retained earnings 52,206 50,886 Unrealized gain on securities available for sale, net of tax 3,980 4,504 - ---------------------------------------------------------------------------- ---------------- ----------------- Total shareholders' equity 60,321 59,427 - ---------------------------------------------------------------------------- ---------------- ----------------- Total liabilities and shareholders' equity $769,213 $694,946 - ---------------------------------------------------------------------------- ---------------- -----------------
CONSOLIDATED STATEMENTS OF INCOME Washington Trust Bancorp, Inc. and Subsidiary
Three months ended March 31, 1997 1996 - --------------------------------------------------------------------- -------------------- -------------------- (Dollars in thousands, except per share amounts) Interest income: Interest and fees on loans $9,274 $8,837 Income from securities: Interest 3,738 1,490 Dividends 402 367 Federal funds sold and securities purchased under agreements to resell 61 85 - --------------------------------------------------------------------- -------------------- -------------------- Total interest income 13,475 10,779 - --------------------------------------------------------------------- -------------------- -------------------- Interest expense: Savings deposits 860 968 Time deposits 3,276 3,077 Federal Home Loan Bank advances 2,345 335 Other 300 8 - --------------------------------------------------------------------- -------------------- -------------------- Total interest expense 6,781 4,388 - --------------------------------------------------------------------- -------------------- -------------------- Net interest income 6,694 6,391 Provision for loan losses 300 300 - --------------------------------------------------------------------- -------------------- -------------------- Net interest income after provision for loan losses 6,394 6,091 - --------------------------------------------------------------------- -------------------- -------------------- Noninterest income: Trust revenue 1,088 876 Service charges on deposit accounts 553 493 Merchant processing fees 116 94 Net gains on sales of securities 254 198 Net gains on loan sales 72 29 Other income 249 249 - --------------------------------------------------------------------- -------------------- -------------------- Total noninterest income 2,332 1,939 - --------------------------------------------------------------------- -------------------- -------------------- Noninterest expense: Salaries and employee benefits 2,953 2,705 Net occupancy 383 328 Equipment 464 365 Merchant processing costs 86 67 Office supplies 156 142 Advertising and promotion 122 65 Credit and collection 50 97 Other 1,277 1,122 - --------------------------------------------------------------------- -------------------- -------------------- Total noninterest expense 5,491 4,891 - --------------------------------------------------------------------- -------------------- -------------------- Income before income taxes 3,235 3,139 Income tax expense 1,084 1,130 - --------------------------------------------------------------------- -------------------- -------------------- Net income $2,151 $2,009 - --------------------------------------------------------------------- -------------------- -------------------- Weighted average shares outstanding - primary 4,542,453 4,397,183 Weighted average shares outstanding - fully diluted 4,542,411 4,400,334 Earnings per share - primary $.47 $.46 Earnings per share - fully diluted $.47 $.46 Cash dividends declared per share $.19 $.17
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY Washington Trust Bancorp, Inc. and Subsidiary
Three months ended March 31, 1997 1996 - ------------------------------------------------------------------------------- ---------------- ---------------- (Dollars in thousands) COMMON STOCK Balance at beginning of year $273 $180 Issuance of common stock for stock option plan and other purposes - - - ------------------------------------------------------------------------------- ---------------- ---------------- Balance at end of period 273 180 - ------------------------------------------------------------------------------- ---------------- ---------------- PAID-IN CAPITAL Balance at beginning of year 3,764 3,071 Issuance of common stock for dividend reinvestment plan, stock option plan and other purposes 98 237 - ------------------------------------------------------------------------------- ---------------- ---------------- Balance at end of period 3,862 3,308 - ------------------------------------------------------------------------------- ---------------- ---------------- RETAINED EARNINGS Balance at beginning of year 50,886 45,631 Net income 2,151 2,009 Cash dividends declared (831) (750) - ------------------------------------------------------------------------------- ---------------- ---------------- Balance at end of period 52,206 46,890 - ------------------------------------------------------------------------------- ---------------- ---------------- UNREALIZED GAIN ON SECURITIES AVAILABLE FOR SALE, NET OF TAX Balance at beginning of year 4,504 4,382 Change in unrealized gain on securities available for sale, net of tax (524) (293) - ------------------------------------------------------------------------------- ---------------- ---------------- Balance at end of period 3,980 4,089 - ------------------------------------------------------------------------------- ---------------- ---------------- TREASURY STOCK Balance at beginning of year - (327) Issuance of common stock for dividend reinvestment plan and stock option plans - 327 - ------------------------------------------------------------------------------- ---------------- ---------------- Balance at end of period - - - ------------------------------------------------------------------------------- ---------------- ---------------- TOTAL SHAREHOLDERS' EQUITY $60,321 $54,467 - ------------------------------------------------------------------------------- ---------------- ----------------
CONSOLIDATED STATEMENTS OF CASH FLOWS Washington Trust Bancorp, Inc. and Subsidiary
Three months ended March 31, 1997 1996 - ------------------------------------------------------------------------ ------------------- -------------------- (Dollars in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $2,151 $2,009 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 300 300 Provision for valuation of other real estate owned 23 126 Depreciation of premises and equipment 449 349 Amortization of net deferred loan fees and costs (66) (28) Net gains on sales of securities (254) (198) Net (gains) losses on sales of other real estate owned 4 (58) Net gains on loan sales (72) (29) Proceeds from sales of loans 4,249 2,872 Loans originated for sale (5,219) (2,974) Increase in accrued interest receivable (976) (505) Increase in other assets (393) (70) Increase in accrued expenses and other liabilities 912 576 Other, net 223 80 - ------------------------------------------------------------------------ ------------------- -------------------- Net cash provided by operating activities 1,331 2,450 - ------------------------------------------------------------------------ ------------------- -------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Securities available for sale: Purchases (63,389) (8,209) Proceeds from sales 1,847 1,651 Maturities and principal repayments 6,931 2,270 Securities held to maturity: Purchases (105) (2,518) Maturities and principal repayments 444 1,575 Purchases of Federal Home Loan Bank stock (4,572) - Loan originations over principal collected on loans (4,926) (5,261) Purchase of loans (324) - Proceeds from sales of other real estate owned 15 402 Purchases of premises and equipment (1,644) (577) Purchase of deposits, net of premium paid 7,029 - - ------------------------------------------------------------------------ ------------------- -------------------- Net cash used in investing activities (58,694) (10,667) - ------------------------------------------------------------------------ ------------------- -------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net increase (decrease) in deposits 4,322 (10,978) Net increase in other short term borrowings 5,309 - Proceeds from Federal Home Loan Bank advances 132,600 9,000 Repayment of Federal Home Loan Bank advances (78,025) (4,011) Proceeds from issuance of common stock 98 564 Cash dividends paid (785) (686) - ------------------------------------------------------------------------ ------------------- -------------------- Net cash provided by (used in) financing activities 63,519 (6,111) - ------------------------------------------------------------------------ ------------------- -------------------- Net increase (decrease) in cash and cash equivalents 6,156 (14,328) Cash and cash equivalents at beginning of year 18,966 28,651 - ------------------------------------------------------------------------ ------------------- -------------------- Cash and cash equivalents at end of period $25,122 $14,323 - ------------------------------------------------------------------------ ------------------- --------------------
(continued) CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) Washington Trust Bancorp, Inc. and Subsidiary
Three months ended March 31, 1997 1996 - --------------------------------------------------------------------------------- --------------- --------------- (Dollars in thousands) Noncash Investing and Financing Activities: Net transfers from loans to other real estate owned $248 $323 Loans charged off 316 326 Loans made to facilitate the sale of other real estate owned 77 81 Decrease in unrealized gain on securities available for sale, net of tax (524) (293) Supplemental Disclosures: Interest payments $3,599 $1,871 Income tax payments 44 58
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Washington Trust Bancorp, Inc. and Subsidiary (1) BASIS OF PRESENTATION The accounting and reporting policies of Washington Trust Bancorp, Inc. (the "Corporation") are in accordance with generally accepted accounting principles and conform to general practices within the banking industry. In the opinion of management, the accompanying consolidated financial statements present fairly the Corporation's financial position as of March 31, 1997 and December 31, 1996 and the results of operations and cash flows for the interim periods presented. The consolidated financial statements include the accounts of the Corporation and its wholly-owned subsidiary, The Washington Trust Company. All significant intercompany balances and transactions have been eliminated. The unaudited consolidated financial statements of Washington Trust Bancorp, Inc. presented herein have been prepared pursuant to the rules of the Securities and Exchange Commission for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 1996, included in the Corporation's Annual Report on Form 10-K for the year ended December 31, 1996. All amounts are presented in thousands, except per share amounts. All share and per share amounts have been adjusted to reflect a 3-for-2 split of the Corporation's common stock effected on October 15, 1996. (2) SECURITIES AVAILABLE FOR SALE Securities available for sale are summarized as follows:
Amortized Unrealized Unrealized Fair Cost Gains Losses Value - ---------------------------------------- ---------------- ---------------- ---------------- -------------- March 31, 1997 U.S. Treasury obligations and obligations of U.S. government-sponsored agencies $71,727 281 (614) $71,394 Mortgage-backed securities 160,894 337 (1,206) 160,025 Corporate stocks 12,851 7,906 (86) 20,671 - ---------------------------------------------------------------------------------------------------------- Total $245,472 8,524 (1,906) $252,090 - ---------------------------------------------------------------------------------------------------------- December 31, 1996 U.S. Treasury obligations and obligations of U.S. government-sponsored agencies $48,714 500 (112) $49,102 Mortgage-backed securities 129,232 144 (872) 128,504 Corporate stocks 12,865 7,919 (73) 20,711 - ---------------------------------------------------------------------------------------------------------- Total $190,811 8,563 (1,057) $198,317 - ----------------------------------------------------------------------------------------------------------
Securities available for sale with a fair value of $40.8 million and $42.0 million were pledged to secure Treasury Tax and Loan deposits, short-term borrowings and public deposits at March 31, 1997 and December 31, 1996, respectively. For the three months ended March 31, 1997, proceeds from sales of securities available for sale amounted to $1.8 million. Net realized gains on these sales amounted to $254,000. (3) SECURITIES HELD TO MATURITY The amortized cost and fair value of securities held to maturity are summarized as follows:
Amortized Unrealized Unrealized Fair Cost Gains Losses Value - ------------------------------------------ -------------- ------------- --------------- ------------- March 31, 1997 Mortgage-backed securities $11,908 41 (58) $11,891 States and political subdivisions 15,666 25 (79) 15,612 - ----------------------------------------------------------------------------------------------------- Total $27,574 66 (137) $27,503 - ----------------------------------------------------------------------------------------------------- December 31, 1996 Mortgage-backed securities $12,344 185 - $12,529 States and political subdivisions 15,582 47 (44) 15,585 - ----------------------------------------------------------------------------------------------------- Total $27,926 232 (44) $28,114 - -----------------------------------------------------------------------------------------------------
There were no sales or transfers of securities held to maturity during the three months ended March 31, 1997. (4) LOAN PORTFOLIO The following is a summary of loans:
March 31, December 31, 1997 1996 - ------------------------------------------------------------------------------------------------ Residential real estate: Mortgages $172,483 $171,423 Homeowner construction 4,257 4,631 - --------------------------------------------------------------------------------------------- Total residential real estate 176,740 176,054 - --------------------------------------------------------------------------------------------- Commercial: Mortgages 66,761 66,224 Construction and development 2,821 4,174 Other 114,395 109,485 - --------------------------------------------------------------------------------------------- Total commercial 183,977 179,883 - --------------------------------------------------------------------------------------------- Consumer 64,477 63,056 - --------------------------------------------------------------------------------------------- Total loans $425,194 $418,993 - ---------------------------------------------------------------------------------------------
(5) ALLOWANCE FOR LOAN LOSSES The following is an analysis of the allowance for loan losses:
Three months ended March 31, 1997 1996 - ------------------------------------------------------- ----------------- ---------------- Balance at beginning of period $8,495 $7,785 Provision charged to expense 300 300 Recoveries 106 173 Loans charged off (316) (326) - ------------------------------------------------------- ----------------- ---------------- Balance at end of period $8,585 $7,932 - ------------------------------------------------------- ----------------- ----------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Washington Trust Bancorp, Inc. and Subsidiary RESULTS OF OPERATIONS - QUARTERS ENDED MARCH 31, 1997 AND 1996 Net income for the three months ended March 31, 1997 amounted to $2.2 million, up 7.1% over the $2.0 million of net income recorded in the first quarter of 1996. Earnings per share for the quarter ended March 31, 1997 amounted to $.47, up from the $.46 per share on net income earned in the comparable 1996 period Net interest income for the first quarter of 1997 increased by 4.7% over the prior year quarter, to $6.7 million. This increase was primarily attributable to net interest income generated under an investment program, as well as higher interest and fees on loans. (See additional discussion under the caption "Net Interest Income".) The provision for loan losses for the three months ended March 31, 1997 amounted to $300,000, unchanged from the prior year period. Other noninterest income (noninterest income excluding net gains on sales of securities) amounted to $2.1 million for the first quarter of 1997, up 19.4% from the same 1996 period. This increase is primarily due to higher revenues for trust services as well as an increases in service charges earned on deposit accounts and net gains on loan sales. For the three months ended March 31, 1997 and 1996, net gains on sales of securities amounted to approximately $254,000 and $198,000, respectively. Total noninterest expense for the quarter ended March 31, 1997 amounted to $5.5 million, an increase of 12.3% from the comparable 1996 amount. This increase was primarily attributable to higher salaries and benefits expense resulting from additional employees hired to staff new branches. Equipment costs rose 27.1% over the prior year period due primarily to depreciation expense associated with purchases that occurred in 1996. NET INTEREST INCOME (The accompanying schedule on the page 12 should be read in conjunction with this discussion.) FTE net interest income for the three months ended March 31, 1997 amounted to $7.0 million, up by 5.2%, over the same 1996 period due to the growth in interest-earning assets. The interest rate spread and the net interest margin for the three months ended March 31, 1997 amounted to 3.55% and 4.10%, respectively. Comparable amounts for quarter ended March 31, 1996 were 4.66% and 5.28%, respectively. For the three months ended March 31, 1997, average interest-earning assets amounted to $684.7 million, an increase of $179.3 million, or 35.5%, over the comparable 1996 amount. The FTE rate of return on average interest-earning assets was 8.06% for the three months ended March 31, 1997, down from 8.75% for the same 1996 period. The growth in average interest-earning assets was due primarily to the increase in average taxable securities, which were up by $136.0 million from the 1996 amount. The increase in average taxable securities resulted primarily from an investment program which was implemented in the second quarter of 1996. The objective of the program is to increase net interest income and improve returns on equity, while incurring limited interest rate risk. The investments purchased under this program were funded with Federal Home Loan Bank (FHLB) advances with similar interest rate repricing characteristics. The overall yield on average total loans amounted to 8.84% for the three months ended March 31, 1997, down from 9.12% in the comparable 1996 period due to changes in the prime rate as well as lower yields on new loan originations. Average consumer loans rose by 16.6% over the prior year, while the average balance of residential real estate and commercial loans increased by 2.8% and 11.7%, respectively. The yields on residential real estate and consumer loans decreased by 17 basis points and 56 basis points, respectively, from the comparable prior period, primarily due to lower yields on new loan originations. The yield on total commercial loans for the three months ended March 31, 1997 amounted to 9.44%, down 38 basis points from the comparable 1996 period. This decrease is primarily attributable to a 25 basis point decline in the prime rate that occurred in the first quarter of 1996. A substantial portion of the Corporation's commercial loans reprice periodically based upon the prime rate. The prime rate rose 25 basis points to 8.5% late in the first quarter of 1997. The Corporation's total cost of funds on interest-bearing liabilities amounted to 4.51% for the three months ended March 31, 1997, up from 4.09% for the comparable 1996 period. This increase was due primarily to higher average FHLB advances outstanding, as well as to changes in deposit mix. These factors offset the benefit of an increase in average demand deposits, an interest-free source of funding. Average demand deposits for the three months ended March 31, 1997 were up by $7.8 million, or 14.4%, from the same prior year period. Average time deposits rose 6.4% from the prior year amount, to $245.3 million. The rate paid on time deposits remained unchanged from the prior year at 5.34%. Average savings deposits for the three months ended March 31, 1997 declined by 2.8% from the comparable 1996 amount. The rate paid on these deposits was 2.01% for the first three months of 1997, down from 2.20% for the same 1996 period. Average FHLB advances for the three months ended March 31, 1997 amounted to $163.7 million, up substantially from the $22.0 million average balance for the same 1996 period. The additional advances were used primarily to purchase securities under the investment program. The average rate paid on FHLB advances for the three months ended March 31, 1997 was 5.73%, a decrease of 35 basis points from the prior year rate. AVERAGE BALANCES/NET INTEREST MARGIN - FULLY TAXABLE EQUIVALENT BASIS (FTE) The following table presents average balance and interest rate information. Tax exempt income is converted to a FTE basis by assuming the applicable federal income tax rate adjusted for applicable state income taxes net of the related federal tax benefit. For dividends on corporate stocks, the 70% federal dividends received deduction is also used in the calculation of tax equivalency. Nonaccrual and renegotiated loans, as well as interest earned on these loans (to the extent recognized in the Consolidated Statements of Income), are included in amounts presented for loans.
Three months ended March 31, 1997 1996 - ------------------------------------------ ------------------------------------ ---------------------------------- Average Yield/ Average Yield/ (Dollars in thousands) Balance Interest Rate Balance Interest Rate - -------------------------------------- ------------- ------------ ---------- -------------- ----------- ----------- Interest-earning assets: Residential real estate loans $175,687 3,558 8.10% $170,825 3,531 8.27% Commercial and other loans 182,002 4,293 9.44% 162,973 3,999 9.82% Consumer loans 63,687 1,456 9.15% 54,638 1,327 9.71% - ------------------------------------------------------------------------------------------------------------------- Total loans 421,376 9,307 8.84% 388,436 8,857 9.12% Federal funds sold 4,819 61 5.11% 6,319 85 5.37% Taxable debt securities 216,114 3,670 6.79% 80,106 1,379 6.89% Nontaxable debt securities 15,678 259 6.61% 15,128 248 6.56% Corporate stocks 26,699 507 7.59% 15,432 493 12.77% - ------------------------------------------------------------------------------------------------------------------- Total interest-earning assets 684,686 13,804 8.06% 505,421 11,062 8.75% Non interest-earning assets 43,132 35,763 - ------------------------------------------------------------------------------------------------------------------- Total assets $727,818 $541,184 - ------------------------------------------------------------------------------------------------------------------- Interest-bearing liabilities: Savings deposits $170,830 860 2.01% $175,671 968 2.20% Time deposits 245,245 3,276 5.34% 230,412 3,077 5.34% FHLB advances 163,714 2,345 5.73% 22,032 335 6.08% Other 21,627 300 5.54% 597 8 5.35% - ------------------------------------------------------------------------------------------------------------------- Total interest-bearing liabilities 601,416 6,781 4.51% 428,712 4,388 4.09% Demand deposits 62,287 54,452 Non interest-bearing liabilities 3,641 3,873 - ------------------------------------------------------------------------------------------------------------------- Total liabilities 667,344 487,037 Total shareholders' equity 60,474 54,147 - ------------------------------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity $727,818 $541,184 - ------------------------------------------------------------------------------------------------------------------- Net interest income / interest rate spread $7,023 3.55% $6,674 4.66% - ------------------------------------------------------------------------------------------------------------------- Net interest margin 4.10% 5.28% - ------------------------------------------------------------------------------------------------------------------- Interest income amounts presented in the table above include the following adjustments for taxable equivalency: Three months ended March 31, 1997 1996 - ------------------------------ -------------------- --------------------- Commercial and other loans $33 $20 Taxable debt securities (1) 99 49 Nontaxable debt securities 92 88 Corporate stocks 105 126 (1)Represents adjustments for US Treasury and government agency obligations which are exempt from state income taxes only.
FINANCIAL CONDITION AND LIQUIDITY Total assets amounted to $769.2 million at March 31, 1997, an increase of $74.3 million from the December 31, 1996 amount of $694.9 million. Average assets totaled $727.8 million for the three months ended March 31, 1997, up by 34.5% over the comparable 1996 period. Securities Available for Sale - The amortized cost of securities available for sale at March 31, 1997 amounted to $245.5 million, an increase of 28.7% over the December 31, 1996 amount of $190.8 million. This increase is attributable to adjustable rate pass-through securities and collateralized mortgage obligations issued by U.S. government-sponsored agencies which were purchased under the investment program. (See Net Interest Income for additional discussion of the investment program). The net unrealized gain on securities available for sale decreased by approximately $888,000 during the three months ended March 31, 1997. This decrease is attributable to both the decline in the equity market and the effect of increases in Treasury rates that have occurred since December 31, 1996. Securities Held to Maturity - The carrying value of securities held to maturity amounted to $27.6 million at March 31, 1997, down from $27.9 million at December 31, 1996. The net unrealized loss on securities held to maturity amounted to approximately $71,000 at March 31, 1997, representing a reduction of $259,000 since December 31, 1996. This decline was attributable to the rise in Treasury rates occurring since December 31, 1996. Loans - Total loans amounted to $425.2 million at March 31, 1997, an increase of $6.2 million, or 1.2%, from the December 31, 1996 balance of $419.0 million. All categories of loans exhibited modest increases over the year-end 1996 amounts, with the largest increases occurring in the commercial and consumer portfolios. Deposits and Other Borrowings - Total deposits amounted to $489.1 million at March 31, 1997, up by 2.6% from the December 31, 1996 amount of $476.6 million. This increase resulted primarily from deposits of approximately $8.2 million which were acquired in March, 1997. Savings deposits rose 3.4% and time deposits increased by 3.0% from the December 31, 1996 balance. Demand deposits amounted to $64.4 million, down slightly from the December 31, 1996 balance of $65.0 million. The Corporation utilizes FHLB advances as a funding source. FHLB advances amounted to $193.1 million at March 31, 1997, up by $54.6 million from the December 31, 1996 amount. In addition, short-term borrowings outstanding at March 31, 1997 amounted to $19.3 million. The additional FHLB advances and short-term borrowings were used to fund loan growth and to purchase securities under the investment program. The Corporation is required to maintain a level of investment in FHLB stock which is based on the level of its FHLB advances. As a result of the increase in FHLB advances during the three months ended March 31, 1997, the Corporation has increased its investment in FHLB stock from $11.7 million at December 31, 1996 to $16.3 million at March 31, 1997. For the three months ended March 31, 1997, net cash provided by operations amounted to $1.3 million, the majority of which was generated by net income. Proceeds from sales of loans in the first three months of 1997 amounted to $4.3 million, while loans originated for sale amounted to $5.2 million. Net cash used in investing activities amounted to $58.7 million and was primarily used to purchase securities available for sale, FHLB stock and for loan originations. Net cash provided by investing activities was generated mainly by a net increase in FHLB advances of $54.6 million, and by an increase in short-term borrowings of $5.3 million. Additionally, $4.3 million was generated from a net increase in deposits. (See Consolidated Statements of Cash Flows for additional information.) During the first quarter of 1997, the Corporation expanded its market area into contiguous communities. A de novo branch was opened in February, 1997 in North Kingstown, Rhode Island. This branch is a full service banking office, offering deposit and loan services for businesses and consumers, as well as trust and investment services. The Corporation installed the first of two branches in local supermarkets during the first quarter of 1997. The supermarket branch offers a complete range of financial products and services. The second supermarket branch will open during the second quarter of 1997. The Corporation also acquired a branch of a Connecticut bank including its deposits in March, 1997. This is the Corporation's first full-service branch located in Connecticut. ASSET QUALITY Nonperforming assets are summarized in the following table:
March 31, December 31, (Dollars in thousands) 1997 1996 --------------- --------------- Nonaccrual loans 90 days or more past due $4,205 $3,099 Nonaccrual loans less than 90 days past due 4,124 4,443 --------------- --------------- Total nonaccrual loans 8,329 7,542 --------------- --------------- Other real estate owned: Properties acquired through foreclosure 1,443 1,295 Valuation allowance (225) (205) --------------- --------------- Total other real estate owned 1,218 1,090 --------------- --------------- Total nonperforming assets $9,547 $8,632 --------------- --------------- Nonaccrual loans as a % of total loans 2.0% 1.8% Nonperforming assets as a % of total assets 1.2% 1.2% Allowance for loan losses to nonaccrual loans 103.1% 112.6%
Not included in the analysis of nonperforming assets at March 31, 1997 and December 31, 1996 above are approximately $1.4 million of loans greater than 90 days past due and still accruing. These loans consist primarily of residential mortgages which are considered well-collateralized and in the process of collection and therefore are deemed to have no loss exposure. The following is an analysis of nonaccrual loans by loan category:
March 31, December 31, (In thousands) 1997 1996 ---------------- ---------------- Residential mortgages $2,756 $2,067 Commercial: Mortgages 1,897 2,133 Construction and development 80 80 Other (1) 3,247 2,881 Consumer 349 381 --------------- --------------- Total nonperforming loans $8,329 $7,542 --------------- --------------- (1) Loans to businesses and individuals, a substantial portion of which is fully or partially collateralized by real estate.
Impaired loans consist of all nonaccrual commercial loans. At March 31, 1997, the recorded investment in impaired loans was $5.2 million, including $4.7 million which had a related allowance amounting to $899,000. At December 31, 1996, the recorded investment in impaired loans was $5.1 million, including $4.5 million which had a related allowance amounting to $867,000. The balance of impaired loans which did not require an allowance at March 31, 1997 and December 31, 1996 was $536,000 and $572,000, respectively. During the three months ended March 31, 1997, the average recorded investment in impaired loans was $5.3 million. Also during this period, interest income recognized on impaired loans amounted to approximately $99,000. Interest income on impaired loans is recognized on a cash basis only. CAPITAL RESOURCES Total equity capital amounted to $60.3 million, or 7.8% of total assets at March 31, 1997. This compares to $59.4 million, or 8.6% at December 31, 1996. The reduction in this ratio is due primarily to the growth in assets resulting from the investment program. Total equity increased by approximately $894,000 from December 31, 1996. A $1.3 million increase attributable to earnings retention was offset by the $524,000 decrease in unrealized gain on securities available for sale, net of tax. (See the Consolidated Statements of Changes in Shareholders' Equity for additional information.) At March 31, 1997, the Corporation's Tier 1 capital ratio was 13.03%, the total risk-adjusted capital ratio was 14.29% and the leverage ratio was 7.83%. These ratios were all above the ratios required to be categorized as well-capitalized. Dividends payable at March 31, 1997 amounted to approximately $831,000, representing $.19 per share payable on April 15, 1997, an increase of 5.6% over the $.18 per share declared in the fourth quarter of 1996. The source of funds for dividends paid by the Corporation is dividends received from its subsidiary bank. The subsidiary bank is a regulated enterprise, and as such its ability to pay dividends to the parent is subject to regulatory review and restriction. RECENT ACCOUNTING DEVELOPMENTS In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share". SFAS 128 specifies the computation, presentation, and disclosure requirements for earnings per share (EPS) for entities with publicly held common stock or potential common stock. The objective of this Statement is to simplify the computation of EPS and to make the U.S. standard for computing EPS more compatible with such standards of other countries and with that of the International Accounting Standards Committee. SFAS 128 is effective for reporting periods ending after December 15, 1997. The adoption of this pronouncement is not expected to have a material impact on the Corporation's computation of earnings per share. PART II OTHER INFORMATION Item 1. Legal Proceedings No material changes since the filing of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1996. Item 2. Changes in Securities None Item 3. Defaults upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibit index Exhibit No. Exhibit 11 Statement re Computation of Per Share Earnings (b) There were no reports on Form 8-K filed during the quarter ended March 31, 1997. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WASHINGTON TRUST BANCORP, INC. (Registrant) May 15, 1997 By: John C. Warren ----------------------- John C. Warren President and Chief Executive Officer (principal executive officer) May 15, 1997 By: David V. Devault ------------------------- David V. Devault Vice President, Treasurer and Chief Financial Officer (principal financial officer) EX-11 2 EXHIBIT 11 Washington Trust Bancorp, Inc. Computation of Per Share Earnings For the Three Months Ended March 31, 1997 and 1996
(Shares in thousands) 1997 1996 --------------- --------------- PRIMARY: Weighted average shares 4,366.3 4,259.0 Common stock equivalents 176.2 138.2 --------------- --------------- Primary weighted average shares 4,542.5 4,397.2 --------------- --------------- FULLY DILUTED: Weighted average shares 4,366.3 4,259.0 Common stock equivalents 176.1 141.3 --------------- --------------- Fully diluted weighted average shares 4,542.4 4,400.3 --------------- --------------- Net income $2,151 $2,009 --------------- --------------- Primary earnings per share $.47 $.46 --------------- --------------- Fully diluted earnings per share $.47 $.46 --------------- ---------------
EX-27 3 FDS --
9 THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO OF WASHINGTON TRUST BANCORP, INC. AS OF MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1997 MAR-31-1997 16,072 0 9,050 0 252,090 27,574 27,503 425,194 8,585 769,213 489,094 19,309 200,489 0 0 0 273 60,048 769,213 9,274 4,140 61 13,475 4,136 6,781 6,694 300 254 5,491 3,235 3,235 0 0 2,151 .47 .47 8.06 0 0 0 0 8,495 316 106 8,585 0 0 0
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