Wainwright Bank & Trust Company Reports Second Quarter Results

BOSTON, July 20 /PRNewswire-FirstCall/ -- Wainwright Bank & Trust Company (Nasdaq: WAIN) reported consolidated net income of $2,199,000 for the quarter ended June 30, 2010 and basic earnings per share of $.29 ($.27 per diluted share).  This compares to consolidated net income of $1,395,000 and basic and diluted earnings per share of $.14 for the quarter ended June 30, 2009.  Consolidated net income of $4,308,000 for the six months ended June 30, 2010 represents an increase of $1,353,000 from $2,955,000 for the same six-month period in 2009.  Basic earnings per share were $.57 for the six months ended June 30, 2010 ($.52 per diluted share) compared to $.31 for the six months ended June 30, 2009 ($.29 per diluted share).  

The average balance of core deposit products increased $63 million, or 15%, to $490 million in the six months ending June 30, 2010 compared to June 30, 2009.  NOW, demand deposit, savings, and money market products increased $26 million, $20 million, $12 million, and $5 million, respectively.  This increase in core deposits was partially offset by a decline of $23 million in higher cost certificates of deposit.  In addition, the Bank has benefited from the maturities of higher cost, long term Federal Home Loan Bank advances resulting in a net repayment of $29 million.

The Bank's average interest-earning assets decreased $8 million, or 1%, to $995 million from $1.0 billion for the six months ending June 30, 2010 and 2009, respectively.  The Bank's average outstanding loan balances declined $12 million, or 1%, to $811 million in the first half of 2010 when compared to the same period in 2009.  As a result of the soft economy, the Bank has continued to reduce its exposure in the commercial construction segment of the loan portfolio, which has decreased $27 million.  Contributing to the decline was the commercial loan portfolio which decreased $10 million.  Residential real estate loans increased $24 million, or 6%, during the period which partially offset the decline in the commercial and commercial construction portfolios.  

Net interest income was $17.1 million for the six months ended June 30, 2010 compared to $15.3 million for the same period of 2009, an increase of $1,818,000, or 12%.  The Bank's net interest margin climbed to 3.47% in the six months ending June 30, 2010 compared to 3.08% in the same six-month period in 2009.  The primary reason for the increase in net interest income is the decline in the cost of interest-bearing liabilities, which decreased 56 basis points to 1.80% for the six months ending June 30, 2010 compared to 2009, resulting in a decline in interest expense of $2.4 million.  Partially offsetting the benefit from reduced funding costs was the decline in interest and dividend income.  The $12 million decrease in the average balance of the loan portfolio described above contributed to the decrease in interest income.  Similarly, the current low rate environment contributed to reduced interest and dividend income earned on its securities portfolio.  

Jan A. Miller, President and CEO, stated, "We are very pleased with our financial performance in the first half of 2010.  Our interest margin has continued to improve as we have replaced maturing certificates of deposit and Federal Home Loan Bank advances with lower cost core deposits.  We closed on the final portion of our New Markets Tax Credit allocation in June and have applied for an additional allocation in 2010. Our residential lending has been very strong in 2010 and our commercial loan activity picked up in the 2nd quarter as well. In late June we announced our intent to merge with Eastern Bank and we are excited about the opportunities the combined banks will present to our retail, non-profit and commercial customers."

The provision for credit losses was $200,000 and $1.0 million for the six months ended June 30, 2010 and 2009, respectively.  A provision is made based on management's assessment of the adequacy of the allowance for credit losses after considering historical experience, current economic conditions, changes in the composition of the loan portfolio, and the level of non-accrual and other non-performing loans.  The reserve for credit losses was $10.3 million, $10.3 million, and $9.5 million representing 1.24%, 1.26%, and 1.15% of total loans at June 30, 2010, December 31, 2009, and June 30, 2009, respectively.  The Bank had net charge-offs of $173,000 and $263,000 in the six months ended June 30, 2010 and 2009, respectively.  Nonaccrual loans amounted to $4.2 million, $3.5 million, and $4.2 million at June 30, 2010, December 31, 2009, and June 30, 2009, respectively.  The nonaccrual loans as of June 30, 2010 included thirteen residential customers that total $3.7 million, of which six totaling $1.7 million represent modified mortgages where the borrower is current on payments and two totaling $693,000 that are in the process of foreclosure.  The remaining nonaccrual loans include six commercial relationships totaling $510,000.  At June 30, 2010, loans 30 days or more past due represented 0.98% of the total loan portfolio, a decrease from 1.25% at December 31, 2009.  

Total noninterest income was $4.1 million and $3.6 million for the six months ended June 30, 2010 and 2009, respectively, an increase of $571,000, or 16%.  The variance between the two periods is due to an increase in New Market Tax Credit fees and one-time fees of $433,000 paid upon the payoff of commercial real estate loans which were partially offset by a decrease in the gains on the sales of securities.  As a result of using a portion of the awarded allocation of federal New Market Tax Credits, the Bank recorded fee income in the amounts of $750,000 and $447,000 in the six months ended June 30, 2010 and 2009, respectively.  Service charge increases in various products as well as the volume increase in debit card usage led to a $116,000 increase in deposit service charges.  The Bank recorded an increase of $49,000 in mortgage banking income as residential mortgage rates remained low in the first quarter of 2010 and the volume of both refinance and purchase activity within the Bank's residential mortgage loan products remained high.  The Bank recorded $458,000 in net gains on securities in the six months ending June 30, 2010, compared to a gain of $876,000 in the same period of 2009.  In addition, there were no other-than-temporary impairment losses during the six months ended June 30, 2010 compared with $90,000 in 2009.  

Total operating expenses were $15.2 million and $14.3 million for each of the six months ending June 30, 2010 and 2009, respectively.  The Bank incurred $734,000 in acquisition related costs during the second quarter of 2010 as a result of the expected acquisition of the Bank, as detailed in our press release in late June.  Salaries and employee benefits increased $583,000, a result of normal merit increases, commission pay, and increased medical costs and other employee benefits.  Occupancy and equipment costs increased $205,000.  The Bank saw normal increases in rent and absorbed the loss of a tenant in its headquarters building.  This was partially offset by a decrease in depreciation on leasehold improvements and furniture and equipment.  The Bank had a decrease in assessment fees of $401,000 as there was a special assessment paid in the second quarter of 2009 in order to increase FDIC insurance fund.  Advertising and marketing costs decreased $175,000 as a result of promotional costs for various product specials in the prior period.  Professional fees decreased $272,000 primarily due to a decline in consulting, legal, and audit and accounting fees.  

Founded in 1987, with $1 billion in assets and 12 branches serving Greater Boston, Wainwright Bank is widely recognized as the country's leading socially progressive bank.  It has committed over $800 million in loans to socially responsible development projects including affordable housing, environmental protection, HIV/AIDS services, homeless shelters, immigration services and more.  The Bank was named the "ultimate high-purpose company" in a recently published book by award-winning author, Christine Arena, entitled "The High-Purpose Company: The Truly Responsible (and Highly Profitable) Firms That Are Changing Business Now".  With Boston branches in the Financial District, Back Bay/South End, Jamaica Plain, Dorchester, Cambridge branches within Harvard Square, Kendall Square, Central Square and the Fresh Pond Mall, its Watertown, Somerville, Newton, and Brookline branches, Wainwright is strategically positioned to provide consumer and commercial mortgages, loans, and deposit services to individuals, families, businesses, and non-profit organizations.

This release contains "forward-looking statements" that are based on assumptions and may describe future plans, strategies and expectations of the Bank.  These forward-looking statements are generally identified by the use of the words "believe," "expect," "intend," "anticipate," "estimate," "project" or similar expressions.  The Bank's ability to predict results or the actual effect of future plans or strategies is inherently uncertain.  Factors that could have a material adverse effect on the operations of the Bank and its subsidiaries include, but are not limited to, changes in market interest rates, regional and national economic conditions, legislative and regulatory changes, monetary and fiscal policies of the United States government, including policies of the United States Treasury and the Federal Reserve Board, the quality and composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Bank's market area, changes in the real estate market values in the Bank's market area, the ability to operate new branch offices profitably, the ability to effectively and efficiently integrate acquisitions and changes in relevant accounting principles and guidelines.  For discussion of these and other risks that may cause actual results to differ from expectations, refer to our Annual Report on Form 10-K for the year ended December 31, 2009, including the section entitled "Risk Factors," and Quarterly Reports on Form 10-Q on file with the FDIC. These risks and uncertainties should be considered in evaluating any forward-looking statements and undue reliance should not be placed on such statements.  Except as required by applicable law or regulation, the Bank does not undertake, and specifically disclaims any obligation, to release publicly the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

SOURCE Wainwright Bank & Trust Company

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