Even as it posted a record quarterly profit of $10 million for the third quarter, Washington Trust Bankcorp Inc., parent company of The Washington Trust Co., is confronting the sluggish economy and competitive market. The effort includes a long-term plan to revise company pensions and expanding business with nonprofits, particularly hospitals and other medical practices.
“This record performance reflects our continued success at managing the corporation during challenging economic times,” Washington Trust Chairman, President and CEO Joseph J. MarcAurele said in an Oct. 22 conference call discussing the Westerly-based bank’s quarterly earnings. “Our management team focused on making strategic decisions that will help us grow the company efficiently and effectively, while continuing to generate a solid return for our shareholders.”
The bank’s third-quarter 2013 net income of $10 million, or 59 cents per diluted share, represented an 11.9 percent increase over the $8.9 million, or 54 cents per diluted share, posted in the third quarter 2012.
The profit record came on total interest and noninterest income of $46.8 million, a 0.8 percent decline from the 2012 third quarter.
Return on average equity was 12.82 percent for third quarter 2013, compared with 12.02 percent a year earlier. Return on average assets was 1.29 percent in third quarter 2013, compared to 1.17 percent in the third quarter last year. Net interest margin increased slightly to 3.29 percent in the third quarter 2013, compared with 3.26 percent in the previous quarter.
In noninterest expenses, Washington Trust reduced salaries and employee benefits in the third quarter to $14.6 million, down from $15.2 million in the third quarter of 2012.
“The real reduction quarter-over-quarter in salaries and benefits had to do with reduced commission payments to mortgage originators,” Marc-Aurele said.
The bank’s 50 mortgage originators in two offices in Connecticut, two in Massachusetts and three in Rhode Island are paid primarily on commission, so as the volume of mortgage origination has declined, that expense has decreased, said Marc-Aurele.
“We still originated quite a few mortgages, just not as much as we had been doing during what was a refinance boom that lasted almost two years,” MarcAurele said. “As rates bumped up a bit, origination volume has fallen off to some extent.
“The mortgage business for purchased homes is improving somewhat, clearly better in the Greater Boston market, where we have a fairly big presence, and the Fairfield County, Conn. area than in Rhode Island,” said MarcAurele.