As WashTrust profit increases, it looks to grow R.I. footprint

WASHINGTON TRUST BANCORP saw its first-quarter profit rise, but is looking to grow its bricks-and-mortar footprint in the Providence area to gain greater deposit market share.
WASHINGTON TRUST BANCORP saw its first-quarter profit rise, but is looking to grow its bricks-and-mortar footprint in the Providence area to gain greater deposit market share.

WESTERLY – Top executives at The Washington Trust Co. are looking to grow the bank’s presence in Rhode Island organically and gradually – in part – by capturing more of the hometown deposit market.

Washington Trust Bancorp Inc., parent of Washington Trust Co., announced its first-quarter earnings on Tuesday, reporting a year-over-year net income increase of 18.4 percent to $11 million, or 65 cents per diluted share, compared with net income of $9.3 million and earnings per diluted share of 55 cents in the 2014 first quarter.

Following a shareholder conference on Wednesday, Joseph J. MarcAurele, chairman and CEO of Washington Trust, told Providence Business News that while the company continues to bolster its commercial real estate lending efforts in outside markets, including Connecticut and Massachusetts, the brick-and-mortar portion of the business is still growing at home.

“We still have plenty to do in Rhode Island,” MarcAurele said, when asked whether he had any interest in opening branches outside of Rhode Island.

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The company, based in Westerly and largely doing business in the southern part of the state, has slowly, but surely, been entering the greater Providence market.

In this year’s first quarter, which ended March 31, the bank opened a new branch in Rumford, marking its second East Providence location. The bank also has received regulatory approval to open another branch in the east side of Providence, which MarcAurele says he expects should open by year’s end or the beginning of 2016.

MarcAurele says they already have identified a couple more locations in the greater Providence where they would like to open branches, but wouldn’t disclose specifics and hasn’t yet received regulatory approval.

“We are still very focused on growing the company organically, particularly in the Rhode Island market,” MarcAurele added.

Washington Trust Co. grew its deposits 7.4 percent to $2.8 billion, which President and Chief Operating Officer Edward O. Handy III says it could increase steadily by opening one-to-two new branches per year.

“That’s meaningful deposit growth,” he said.

The bank is also looking to bolster its lending activity and wealth under management business. Washington Trust recorded a year-over-year increase of 16.2 percent in total loans, ending the first quarter at $2.9 billion. First-quarter lending dropped slightly from the fourth quarter of last year, but Handy says the bank has about $184 million in commitments over the next 90 days, which should increase the amount of loans on the books.

The bank took no loan loss provision in the quarter, which MarcAurele says is due to the overall credit metrics of formally troubled loans having resolved themselves. Looking forward he doesn’t expect that to happen again.

“We believe we will have some provisioning in the next few quarters because loan growth will be significantly better,” he said.

David V. Devault, vice chair secretary and chief financial officer, says he cannot remember the bank ever having a zero provision for loan losses, but added that a resumption wouldn’t necessarily be a bad thing. A close watcher of banking metrics, Devault says he’s noticed a number of other banks also reducing provision for loan losses to zero in this year’s first quarter.

The bank is having no problems with loan volume, says Handy, but the nation’s easy-money policies, which have kept federal loan rates near zero since the financial crisis in 2008, is slightly hurting the bank’s net interest income.

“This is something that every bank is dealing with,” Handy said.

The bank’s total assets grew 12.8 percent to $3.6 billion from the same period last year and wealth assets under management increased 7.4 percent to $5.2 billion.

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