Wainwright Bank & Trust Company Reports Year to Date and Fourth Quarter Results

Jan 21, 2010, 15:55 ET from Wainwright Bank & Trust Company

BOSTON, Jan. 21 /PRNewswire-FirstCall/ -- Wainwright Bank & Trust Company (Nasdaq: WAIN) reported consolidated net income of $1,779,000 for the fourth quarter of 2009 and basic and diluted earnings per share of $.19 and $.18, respectively.  This compares to $1,228,000 for the fourth quarter of 2008 and basic and diluted earnings per share of $.15.  Consolidated net income for 2009 was $6,319,000 with basic earnings per share of $.67 ($.63 per diluted share).  This compares to consolidated net income of $3,346,000 and basic earnings per share of $.41 ($.40 per diluted share) for 2008.  The increase in net income was primarily the result of an increase in both net interest income and net security gains which was partially offset by increases in noninterest expenses and the provision for loan losses.  Net income for the year coupled with the improvement in the value of the securities portfolio resulted in an increase in the Bank's book value per common share to $8.80 at December 31, 2009 compared to $8.00 at December 31, 2008.  The book value of $8.80 per common share at year end reflects the payment of $569,000 to repurchase the warrants originally issued to the U.S. Treasury in conjunction with the Capital Purchase Program.

The Bank's weighted average interest-earning assets increased $57 million, or 6%, to $992 million from $935 million for the years ending December 31, 2009 and 2008, respectively.  The average outstanding loan balances grew $57 million, or 7%, to $827 million in 2009 when compared to 2008.  Average residential real estate loans outstanding increased $45 million, or 12%, and accounted for the majority of the increase.  The Bank also saw increases in its average outstanding commercial and commercial real estate loans of $25 million.  In this soft economy, the Bank has reduced its exposure in the commercial construction segment of its loan portfolio.  Commercial construction loans were $35 million at December 31, 2009 compared to $64 million at December 31, 2008.  Jan A. Miller, President and CEO stated, "In these challenging financial markets, it's a pleasure for the Bank to be in a position to announce the significant increase in 2009 consolidated net income when compared to the prior year.  Wainwright continues to capture additional market share despite the turmoil in the financial markets throughout this past year, particularly with our residential real estate products.  During 2009 we have generated almost $155 million in various residential mortgage products which enabled our customers to purchase or refinance over 500 homes in our market.  This growth in residential loans reflects Wainwright's commitment to providing housing financing.  In the fourth quarter of this year, the Bank's community development team provided $7.5 million in financing for BC Sacred Heart LLC, providing needed affordable rental housing in Lawrence, MA.  This project consists of the historic rehabilitation and redevelopment of two former schools and a convent on the grounds of the Sacred Heart Church in Lawrence.  The buildings will be redeveloped as 44 affordable rental units for low income elderly residents 55 years of age and older."

Average deposits increased $38 million, or 6%, to $707 million in 2009 when compared to 2008, $26 million of which was due to an increase in core deposit products.  NOW, DDA, and savings products increased $22 million, $11 million, and $6 million, respectively.  These increases were partially offset by a decline of $13 million in money market accounts.  The Bank also used advances from the Federal Home Loan Bank, as needed, as a component of its balance sheet management to help fund the growth in earning assets.

Net interest income was $31.8 million for the year ended December 31, 2009 compared to $29.1 million for 2008, an increase of $2.7 million, or 9%.  The Bank's net interest margin increased to 3.20% for the year ending December 31, 2009, up from 3.11% for 2008.  As the economy continued to decline throughout 2008 and early 2009 the Federal Reserve addressed the decline with monetary policy and reduced the target Federal Funds reserve rate to historic levels.  As a result, the Bank's offering rates for various deposit products declined significantly over the last year and remain at these levels.  The primary reason for the increase in net interest income is the decline in the cost of interest-bearing liabilities, which decreased 71 basis points to 2.22% for the year ending December 31, 2009 compared to 2008, resulting in a decline in interest expense of $5.2 million.  In addition, the increase of $57 million in the loan portfolio described above contributed to the increase in net interest income.  Partially offsetting the benefit from reduced funding costs and higher loan volumes was the decline in investment securities' interest and dividend income.  The Bank reduced its level of investments due to principal amortization, maturities, and selected sales.  In addition, the Bank did not receive any income on its holding of Federal Home Loan Bank stock as a result of the FHLB's decision to suspend its dividend which amounted to $389,000 during 2008.

The provision for credit losses was $2.45 million, $1.80 million, and $700,000 for the years ended December 31, 2009, 2008, and 2007, 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 provision in the current period is attributable to the trend of increased delinquent and impaired loans, increasing charge-offs, as well as the continued economic uncertainty due to the slow economic response to various initiatives to stabilize the economy and the housing market in particular.  The reserve for credit losses was $10.3 million, $8.7 million, and $7.6 million representing 1.26%, 1.04%, and 1.07% of total loans at December 31, 2009, 2008, and 2007, respectively.  The Bank had net charge-offs of $872,000 and $702,000 in the years ended December 31, 2009 and 2008, respectively.  Nonaccrual loans amounted to $3.5 million, $2.1 million, and $50,000 at December 31, 2009, 2008, and 2007, respectively.  The nonaccrual loans as of December 31, 2009 consisted of twelve residential mortgage relationships totaling $3.2 million and three commercial relationships totaling $256,000.  The residential nonaccrual loans include two relationships in the amount of $585,000 that are in the process of foreclosure and four restructured mortgage loans totaling $936,000.  At December 31, 2009, loans 30 days or more past due represented 1.25% of the total portfolio compared to .88% at December 31, 2008.  

Total noninterest income was $7.1 million and $1.7 million for the years ended December 31, 2009 and 2008, respectively, an increase of $5.4 million.  The Bank recorded $1.8 million in net gains on securities in the year ending December 31, 2009, compared to a loss of $1.2 million in 2008.  In addition, other-than-temporary impairment losses declined $1.5 million, from $1.9 million in 2008 to $390,000 in 2009.  As a result of sponsoring a portion of the awarded allocation of federal New Market Tax Credits, the Bank recorded fee income in the amount of $447,000 in 2009 that was not present in 2008.  The Bank recorded $387,000 and $43,000 in mortgage banking income during the years ending December 31, 2009 and 2008, respectively.  The increase in mortgage banking income was the result of the Bank taking advantage of market opportunities, which presented itself with a decrease in residential mortgage rates and subsequent increase in refinanced loan activity.  Deposit service charges increased $73,000 to $2.4 million for the year ended December 31, 2009 when compared to the same period of 2008 as a result of increased volume for certain business products.  The Bank benefited from the Bank Enterprise award totaling $477,000 in 2009 from the Community Development Financial Institutions fund of the U.S. Treasury.  The award is provided in recognition of the Bank's lending activities in distressed communities.  A comparable award of $300,000 was received in 2008.  These increases were offset by declines in loan fees, investment management fees, and bank owned life insurance income of $87,000, $54,000, and $44,000 respectively.  Loan fees decreased as a result of the declining economy and the overall market for commercial and commercial real estate loans while bank owned life insurance income and investment management fees declined due to the financial markets.  

Total operating expenses were $28.8 million and $25.5 million for the years ended December 31, 2009 and 2008, respectively, an increase of $3.3 million, or 13%.  Salaries and employee benefits increased $1,251,000, a result of normal merit increases, increased head count primarily in our asset management subsidiary and in our new branch in Ashmont, commission pay related to residential mortgage production, contract labor, and increased medical costs.  The Bank absorbed a $936,000 increase in regulatory assessment fees as a result of increased FDIC insurance premiums, including an additional special assessment of approximately $460,000.  Premiums increased as a result of the FDIC's plan to reestablish the Deposit Insurance Fund to levels required by the Federal Deposit Institution Reform Act of 2005.  Professional fees increased $507,000 primarily due to various enterprise risk management costs and legal fees.  Advertising and marketing costs increased $120,000 as a result of promotional costs for various product specials.  Occupancy and equipment costs increased $127,000 due to increased rent costs and real estate taxes for the branches as well as an increase in depreciation on leasehold improvements and furniture and equipment.  

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 $700 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 Press Release contains statements relating to future results of the Bank (including certain projections and business trends) that are considered "forward-looking statements" as defined in the Private Securities Legislation Reform Act of 1995.  Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to changes in political and economic conditions, interest rate fluctuations, competitive product and pricing pressures within the Bank's market, bond market fluctuations, personal and corporate customers' bankruptcies, and inflation, as well as other risks and uncertainties.

FINANCIAL HIGHLIGHTS:

(dollars in thousands)

Twelve months ended December 31,

2009

2008

Net interest income

$             31,763

$             29,116

Provision for credit losses

                 2,450

                 1,800

Noninterest income

                 7,085

                 1,679

Other noninterest expense

               28,788

               25,522

Income before taxes

                 7,610

                 3,473

Income tax provision

                 1,115

                    129

Net income

                 6,495

                 3,344

Net income (loss) attributable to noncontrolling interest

                    176

                      (2)

Net income attributable to Wainwright Bank & Trust

                 6,319

                 3,346

Net income available to common shareholders

                 4,891

                 3,007

Earnings per share:

  Basic

$                 0.67

$                 0.41

  Diluted

$                 0.63

$                 0.40

Return on average shareholders' equity

                   7.06

%

                   4.85

%

Return on average assets

                   0.61

%

                   0.34

%

Net interest yield

                   3.20

%

                   3.11

%

Weighted average common shares outstanding:

  Basic

          7,299,429

          7,317,485

  Diluted

          8,238,009

          8,287,572

at December 31, 2008 and 2007

Total Assets

$        1,014,476

$        1,055,288

Total Loans

             819,955

             841,786

Total Investments

             118,492

             126,628

Total Deposits

             718,055

             717,134

Shareholders' Equity

               72,455

               87,439

Book Value Per Common Share

$                 8.80

$                 8.00

FINANCIAL HIGHLIGHTS:

(dollars in thousands)

Three months ended December 31,

2009

2008

Net interest income

$               8,268

$               7,810

Provision for credit losses

                    500

                    400

Noninterest income

                 1,888

                    424

Noninterest expense

                 7,383

                 6,646

Income before taxes

                 2,273

                 1,188

Income tax (benefit) provision

                    495

                    (40)

Net income

                 1,778

                 1,228

Net income (loss) attributable to noncontrolling interest

                      (1)

                        -

Net income attributable to Wainwright Bank & Trust

                 1,779

                 1,228

Net income available to common shareholders

                 1,421

                 1,116

Earnings per share:

  Basic

$                 0.19

$                 0.15

  Diluted

$                 0.18

$                 0.15

Return on average shareholders' equity

                   8.16

%

                   7.21

%

Return on average assets

                   0.69

%

                   0.48

%

Net interest yield

                   3.34

%

                   3.20

%

Weighted average common shares outstanding:

  Basic

          7,306,584

          7,250,653

  Diluted

          8,241,916

          8,202,134


    James J. Barrett
    Senior VP and Chief Financial Officer
    Tel: (617) 478-4000
    Fax: (617) 439-4854

Website: www.wainwrightbank.com

SOURCE Wainwright Bank & Trust Company



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