Washington Trust Bancorp Inc., parent company of The Washington Trust Co., posted a record second-quarter profit of $8.7 million, or 53 cents per diluted share, a rise of 15 percent compared to the same period last year, on continued growth in mortgage and commercial loans.
The results marked the third consecutive record-setting quarter for the company, the Westerly-based bank announced July 23.
Washington Trust posted a 6 percent year-over-year increase in total revenue for the period to $46.4 million.
Bank Chairman, President and CEO Joseph J. MarcAurele attributed the results to “solid growth” in mortgage and commercial banking, as well as strong asset quality. “Our results for the quarter were very solid, particularly in light of the economy. We continue to feel good about our market position,” MarcAurele said. “We hope to keep the momentum going but remain somewhat cautious due to the sluggish economy.”
Total loans were $2.2 billion on June 30, 2012, up by $58 million, or 3 percent from the close of the first quarter. Loans were led by a growth of $53 million, or 5 percent, in the commercial-loan portfolio. Total deposits were $2.1 billion at June 30, 2012, down slightly from March 31, 2012. Year-to-date, total loans increased by $66.7 million, or 3 percent, including a 6 percent increase in total commercial loans. “We’ve seen considerable progress in improving commercial loan-asset quality. Residential is manageable but very low when compared to commercial property,” MarcAurele said.
Balances of nonperforming assets – nonaccrual loans, nonaccrual investment securities and property acquired through foreclosure or repossession – loan delinquencies and troubled debt restructurings all declined in the three months ended June 30.
Mortgage-banking revenue totaled $3 million for the quarter, consistent with the prior quarter and reflective of continued strong mortgage-origination volume, according to the bank’s release.
The loan-loss provision charged to earnings in the second quarter of 2012 was $600,000, compared to $900,000 in the previous quarter. The $600,000 was the lowest since the first quarter of 2008.
The net-interest margin for the second quarter was 3.3 percent, up from 3.27 percent in the previous quarter and reflecting continued improvement in the mix of interest-earning assets resulting from good loan growth and pay-downs in the securities portfolio, as well as continued reductions of deposit costs.
The second quarter 2012 net-interest margin was up by 9 basis points from 3.21 percent during the same period 2011, showing a reduction in the cost of funds, according to the bank.
Average interest-earning assets for the second quarter of 2012 grew by $104 million, or 4 percent, year over year from the second quarter 2011.
Second quarter 2012 noninterest income totaled $16.2 million, an increase of $1.9 million, or 14 percent, from the previous quarter and up by $2.9 million, or 22 percent from the second quarter of 2011. Meanwhile, noninterest expenses totaled $25.2 million for the second quarter of 2012, an increase of $1.8 million, or 8 percent, from the previous quarter and up by $3.0 million, or 13 percent, from the second quarter of 2011.
The investment-securities portfolio totaled $516.2 million at June 30, down by $42.1 million from March 31, 2012 and down by $77.2 million from Dec. 31, primarily due to principal payments received on mortgage-backed securities not being reinvested, as well as the sales of securities.
“It’s not uncommon for banks to use their excess liquidity to buy investment securities,” MarcAurele said. “In today’s world the actual rate you can earn on an investment security is so low that it really behooves the bank to try to put their excess liquidity into loans.
“Our loan balances went up, particularly our commercial loans by more than 5 percent, so the yield on those loans is much better than investment securities that are at about 1 percent,” he said. •
