Five Questions With: David Devault

"The dividend payment practice of most companies is closely tied to their profitability trend."

David Devault is chief financial officer of Washington Trust and Washington Trust Bancorp Inc. (NASDAQ: WASH). Devault, a Westerly resident, has been a CPA since 1978 and joined Washington Trust in 1986. He’s responsible for the banks financial planning, accounting, financial reporting, asset and liability management and budgeting. On Dec. 18, Washington Trust Bancorp announced a fourth quarter dividend of $0.32 per share slated to be paid out Jan. 14 to shareholders of record on Jan. 2. Devault talks about what this means for shareholders.

PBN: Washington Trust’s fourth quarter dividend is consistent with last quarter’s, but up $0.05 from last year’s fourth quarter, what does this tell us?
DEVAULT
: The increase in our quarterly dividend rate over this period of time is consistent with the solid earnings growth of the company. This is shown by a comparison of profitability results in 2014 to the prior year. Washington Trust’s net income for the nine months ended Sept. 30, 2014, was $29.6 million, up 12 percent over the same period in 2013. The total cash dividends declared for 2014 amount to $1.22 per share, up from $1.03 per share in 2013.

PBN: Washington Trust continues to excel in areas of deposits, loans and wealth management revenues, how will the bank sustain this growth?
DEVAULT
: Our ability to achieve growth in these areas is the result of a sound business model that capitalizes on our strengths as a regional bank operating throughout southern New England. We have the benefit of a well-diversified range of banking services to meet the financial needs of depositors, borrowers and investors. Over a third of our total revenue is provided by sources other than net interest income, which places us above the 90th percentile among our peer banks. One of the important reasons for this is our Wealth Management business, which manages over $5 billion in client assets, and provides a significant contribution to the profitability of the company. We have also successfully expanded our mortgage lending business into Massachusetts and Connecticut.

PBN: Should shareholders expect dividends to grow in years to come, if so, why?
DEVAULT
: As a public company, growth in shareholder value over time is essential to success. Our business plan is designed to help us achieve that result. We certainly consider the dividend payout to be an essential component of shareholder value and we have demonstrated that over a long period of time. While there is no way to ensure a specific amount of future dividend growth, we have consistently paid quarterly dividends for many decades and have increased our total annual dividend payout in 21 of the past 22 years, which has been a good story for our shareholders.

- Advertisement -

PBN: Does the increasing of dividends paid out mean that the bank has enough cash flow to fund new initiatives?
DEVAULT:
Our track record of increases in dividends has been supported by a commensurate growth in earnings. There is more than sufficient cash flow provided through earnings retention, net of dividend payouts, and from other liquidity sources to continue to fund new initiatives and growth.

PBN: What reasons might there be to keep the dividend flat for a significant amount of time?
DEVAULT:
The dividend payment practice of most companies is closely tied to their profitability trend. Washington Trust has a solid track record of growth, profitability, capital adequacy and asset quality. Our goal is to continue to grow the company and our profitability in a prudent manner by continuing to focus on the lines of business that have made us successful.

No posts to display