UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1997
--------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
-------------------------
Commission file Number 0-13091
-------------------------
WASHINGTON TRUST BANCORP, INC.
(Exact name of registrant as specified in its charter)
RHODE ISLAND 05-0404671
- -------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23 BROAD STREET, WESTERLY, RHODE ISLAND 02891
- ----------------------------------------- -------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (401) 348-1200
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X]Yes [ ]No
The number of shares of common stock of the registrant outstanding as of July
31, 1997 was 4,400,488.
Page 1
<PAGE>
Washington Trust Bancorp, Inc. and Subsidiary
Form 10-Q For The Quarter Ended June 30, 1997
CONTENTS
Page No.
PART I. ITEM 1. Financial Information
Consolidated Balance Sheets
June 30, 1997 and December 31, 1996 3
Consolidated Statements of Income
Three Months and Six Months Ended June 30, 1997 and 1996 4
Consolidated Statements of Changes in Shareholders' Equity
Six Months Ended June 30, 1997 and 1996 5
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1997 and 1996 6
Condensed Notes to Consolidated Financial Statements 8
PART I. ITEM 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
PART II. Other Information 16
Signatures 17
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
Washington Trust Bancorp, Inc. and Subsidiary
<CAPTION>
June 30, December 31,
(Dollars in thousands) 1997 1996
- ---------------------------------------------------------------------------- ---------------- -----------------
Assets:
<S> <C> <C>
Cash and due from banks $20,489 $17,418
Federal funds sold 8,200 1,548
Mortgage loans held for sale 667 744
Securities:
Available for sale, at fair value 235,806 198,317
Held to maturity, at cost; fair value $49.6 million
in 1997 and $28.1 million in 1996 49,246 27,926
- ---------------------------------------------------------------------------- ---------------- -----------------
Total securities 285,052 226,243
Federal Home Loan Bank stock, at cost 16,444 11,683
Loans 440,150 418,993
Less allowance for loan losses 8,411 8,495
- ---------------------------------------------------------------------------- ---------------- -----------------
Net loans 431,739 410,498
Premises and equipment, net 20,609 19,040
Accrued interest receivable 5,015 4,160
Other real estate owned, net 520 1,090
Other assets 4,433 2,522
- ---------------------------------------------------------------------------- ---------------- -----------------
Total assets $793,168 $694,946
============================================================================ ================ =================
Liabilities:
Deposits:
Demand $76,088 $65,014
Savings 176,317 170,172
Time 261,985 241,375
- ---------------------------------------------------------------------------- ---------------- -----------------
Total deposits 514,390 476,561
Dividends payable 833 785
Short term borrowings 15,753 14,000
Federal Home Loan Bank advances 192,152 138,493
Accrued expenses and other liabilities 6,566 5,680
- ---------------------------------------------------------------------------- ---------------- -----------------
Total liabilities 729,694 635,519
- ---------------------------------------------------------------------------- ---------------- -----------------
Shareholders' Equity:
Common stock of $.0625 par value; authorized
10,000,000 shares; issued 4,400,443 shares in 1997
and 4,362,631 shares in 1996 275 273
Paid-in capital 4,042 3,764
Retained earnings 53,634 50,886
Unrealized gain on securities available for sale, net of tax 5,523 4,504
- ---------------------------------------------------------------------------- ---------------- -----------------
Total shareholders' equity 63,474 59,427
- ---------------------------------------------------------------------------- ---------------- -----------------
Total liabilities and shareholders' equity $793,168 $694,946
============================================================================ ================ =================
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
Washington Trust Bancorp, Inc. and Subsidiary
<CAPTION>
Three Months Six Months
--------------------------------------------------------
Periods ended June 30, 1997 1996 1997 1996
- -------------------------------------------------------------------------------------- -----------------------------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $9,712 $8,977 $18,986 $17,815
Income from securities:
Interest 4,239 1,532 7,977 3,021
Dividends 497 336 899 703
Federal funds sold and securities purchased
under agreements to resell 70 55 132 140
- --------------------------------------------------------------------------------------------------------------------
Total interest income 14,518 10,900 27,994 21,679
- -------------------------------------------------------------------------------------- -----------------------------
Interest expense:
Savings deposits 860 948 1,720 1,915
Time deposits 3,493 3,100 6,769 6,177
Federal Home Loan Bank advances 2,825 467 5,171 803
Other 228 40 528 48
- --------------------------------------------------------------------------------------------------------------------
Total interest expense 7,406 4,555 14,188 8,943
- -------------------------------------------------------------------------------------- -----------------------------
Net interest income 7,112 6,345 13,806 12,736
Provision for loan losses 300 300 600 600
- --------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 6,812 6,045 13,206 12,136
- -------------------------------------------------------------------------------------- -----------------------------
Noninterest income:
Trust revenue 1,223 1,016 2,311 1,892
Service charges on deposit accounts 623 554 1,176 1,047
Merchant processing fees 165 144 281 238
Net gains (losses) on sales of securities 373 (50) 627 148
Net gains on loan sales 62 46 134 75
Other income 256 244 505 493
- --------------------------------------------------------------------------------------------------------------------
Total noninterest income 2,702 1,954 5,034 3,893
- -------------------------------------------------------------------------------------- -----------------------------
Noninterest expense:
Salaries and employee benefits 3,203 2,778 6,156 5,482
Net occupancy 426 307 809 635
Equipment 506 372 970 737
Merchant processing costs 169 146 255 214
Office supplies 230 102 386 244
Advertising and promotion 190 153 312 219
Credit and collection 58 117 108 214
Other 1,370 1,049 2,647 2,170
- --------------------------------------------------------------------------------------------------------------------
Total noninterest expense 6,152 5,024 11,643 9,915
- -------------------------------------------------------------------------------------- -----------------------------
Income before income taxes 3,362 2,975 6,597 6,114
Income tax expense 1,101 948 2,185 2,078
- -------------------------------------------------------------------------------------- -----------------------------
Net income $2,261 $2,027 $4,412 $4,036
====================================================================================== =============================
Weighted average shares outstanding - primary 4,539.9 4,479.5 4,541.5 4,438.6
Weighted average shares outstanding - fully diluted 4,551.5 4,493.4 4,546.9 4,460.3
Earnings per share - primary $.50 $.45 $.97 $.91
Earnings per share - fully diluted $.50 $.45 $.97 $.90
Cash dividends declared per share $.19 $.17 $.38 $.35
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Washington Trust Bancorp, Inc. and Subsidiary
<CAPTION>
Six months ended June 30, 1997 1996
- ------------------------------------------------------------------------------- ---------------- ----------------
(Dollars in thousands)
<S> <C> <C>
Common Stock
Balance at beginning of year $273 $180
Issuance of common stock for stock option plan and other purposes 2 1
- ------------------------------------------------------------------------------- ---------------- ----------------
Balance at end of period 275 181
- ------------------------------------------------------------------------------- ---------------- ----------------
Paid-in Capital
Balance at beginning of year 3,764 3,071
Issuance of common stock for dividend reinvestment plan,
stock option plan and other purposes 278 483
- ------------------------------------------------------------------------------- ---------------- ----------------
Balance at end of period 4,042 3,554
- ------------------------------------------------------------------------------- ---------------- ----------------
Retained Earnings
Balance at beginning of year 50,886 45,631
Net income 4,412 4,036
Cash dividends declared (1,664) (1,504)
- ------------------------------------------------------------------------------- ---------------- ----------------
Balance at end of period 53,634 48,163
- ------------------------------------------------------------------------------- ---------------- ----------------
Unrealized Gain on Securities Available for Sale, Net of Tax
Balance at beginning of year 4,504 4,382
Change in unrealized gain on securities available for sale, net of tax 1,019 (440)
- ------------------------------------------------------------------------------- ---------------- ----------------
Balance at end of period 5,523 3,942
- ------------------------------------------------------------------------------- ---------------- ----------------
Treasury Stock
Balance at beginning of year - (327)
Repurchase of common stock (412) -
Issuance of common stock for dividend reinvestment plan
and stock option plans 412 327
- ------------------------------------------------------------------------------- ---------------- ----------------
Balance at end of period - -
- ------------------------------------------------------------------------------- ---------------- ----------------
Total Shareholders' Equity $63,474 $55,840
=============================================================================== ================ ================
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Washington Trust Bancorp, Inc. and Subsidiary
<CAPTION>
Six months ended June 30, 1997 1996
- ------------------------------------------------------------------------ ------------------- --------------------
(Dollars in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $4,412 $4,036
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 600 600
Provision for valuation of other real estate owned 27 186
Depreciation of premises and equipment 944 704
Amortization of net deferred loan fees and costs (122) (70)
Net gains on sales of securities (627) (148)
Net gains on sales of other real estate owned (75) (133)
Net gains on loan sales (134) (75)
Proceeds from sales of loans 9,259 7,193
Loans originated for sale (10,313) (9,784)
Increase in accrued interest receivable (855) (438)
(Increase) decrease in other assets (717) 273
Increase (decrease) in accrued expenses and other liabilities 262 (835)
Other, net 450 142
- ------------------------------------------------------------------------ ------------------- --------------------
Net cash provided by operating activities 3,111 1,651
- ------------------------------------------------------------------------ ------------------- --------------------
Cash flows from investing activities: Securities available for sale:
Purchases (84,505) (33,507)
Proceeds from sales 35,410 11,109
Maturities and principal repayments 13,456 7,012
Securities held to maturity:
Purchases (21,998) (3,471)
Maturities and principal repayments 661 2,780
Purchases of Federal Home Loan Bank stock (4,761) -
Loan originations over principal collected on loans (20,105) (10,869)
Purchase of loans (324) -
Proceeds from sales of other real estate owned 593 546
Purchases of premises and equipment (2,524) (1,126)
Purchase of deposits, net of premium paid 7,014 -
- ------------------------------------------------------------------------ ------------------- --------------------
Net cash used in investing activities (77,083) (27,526)
- ------------------------------------------------------------------------ ------------------- --------------------
Cash flows from financing activities:
Net increase in deposits 29,619 2,403
Net increase in other short term borrowings 1,753 -
Proceeds from Federal Home Loan Bank advances 244,100 30,044
Repayment of Federal Home Loan Bank advances (190,441) (15,604)
Repurchase of common stock (412) -
Proceeds from issuance of common stock 692 811
Cash dividends paid (1,616) (1,436)
- ------------------------------------------------------------------------ ------------------- --------------------
Net cash provided by financing activities 83,695 16,218
- ------------------------------------------------------------------------ ------------------- --------------------
Net increase (decrease) in cash and cash equivalents 9,723 (9,657)
Cash and cash equivalents at beginning of year 18,966 28,651
- ------------------------------------------------------------------------ ------------------- --------------------
Cash and cash equivalents at end of period $28,689 $18,994
======================================================================== =================== ====================
(continued)
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Washington Trust Bancorp, Inc. and Subsidiary
<CAPTION>
Six months ended June 30, 1997 1996
- --------------------------------------------------------------------------------- ------------- -------------
(Dollars in thousands)
<S> <C> <C>
Noncash Investing and Financing Activities:
Net transfers from loans to other real estate owned $248 $553
Loans charged off 828 733
Loans made to facilitate the sale of other real estate owned 270 293
Increase (decrease) in unrealized gain on securities available for sale,
net of tax 1,019 (440)
Supplemental Disclosures:
Interest payments $8,154 $3,819
Income tax payments 2,002 2,114
</TABLE>
<PAGE>
Condensed Notes to Consolidated Financial Statements
Washington Trust Bancorp, Inc. and Subsidiary
(1) Basis Of Presentation
The accounting and reporting policies of Washington Trust Bancorp, Inc. (the
"Corporation") are in accordance with generally accepted accounting principles
and conform to general practices within the banking industry. In the opinion of
management, the accompanying consolidated financial statements present fairly
the Corporation's financial position as of June 30, 1997 and December 31, 1996
and the results of operations and cash flows for the interim periods presented.
The consolidated financial statements include the accounts of the Corporation
and its wholly-owned subsidiary, The Washington Trust Company. All significant
intercompany balances and transactions have been eliminated.
The unaudited consolidated financial statements of Washington Trust Bancorp,
Inc. presented herein have been prepared pursuant to the rules of the Securities
and Exchange Commission for quarterly reports on Form 10-Q and do not include
all of the information and note disclosures required by generally accepted
accounting principles. These statements should be read in conjunction with the
consolidated financial statements and notes thereto for the year ended December
31, 1996, included in the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1996.
All amounts are presented in thousands, except per share amounts. All share and
per share amounts have been adjusted to reflect a 3-for-2 split of the
Corporation's common stock effected on October 15, 1996.
(2) Securities Available For Sale
Securities available for sale are summarized as follows:
<TABLE>
<CAPTION>
Amortized Unrealized Unrealized Fair
(Dollars in thousands) Cost Gains Losses Value
- ------------------------------------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
June 30, 1997
U.S. Treasury obligations
and obligations of U.S.
government-sponsored agencies $80,694 484 (219) $80,959
Mortgage-backed securities 133,321 1,127 (206) 134,242
Corporate stocks 12,641 8,057 (93) 20,605
- --------------------------------------------------------------------------------------------------------------
Total $226,656 9,668 (518) $235,806
==============================================================================================================
December 31, 1996
U.S. Treasury obligations
and obligations of U.S.
government-sponsored agencies $48,714 500 (112) $49,102
Mortgage-backed securities 129,232 144 (872) 128,504
Corporate stocks 12,865 7,919 (73) 20,711
- --------------------------------------------------------------------------------------------------------------
Total $190,811 8,563 (1,057) $198,317
==============================================================================================================
</TABLE>
Securities available for sale with a fair value of $14.0 million and $42.0
million were pledged to secure Treasury Tax and Loan deposits, short-term
borrowings and public deposits at June 30, 1997 and December 31, 1996,
respectively.
For the six months ended June 30, 1997, proceeds from sales of securities
available for sale amounted to $35.4 million, while net realized gains on these
sales amounted to $627,000.
<PAGE>
(3) Securities Held To Maturity
The amortized cost and fair value of securities held to maturity are summarized
as follows:
<TABLE>
<CAPTION>
Amortized Unrealized Unrealized Fair
(Dollars in thousands) Cost Gains Losses Value
- ------------------------------------------ ----------------- ---------------- ---------------- --------------
<S> <C> <C> <C> <C>
June 30, 1997
Obligations of U.S. government-
sponsored agencies $21,902 178 - $22,080
Mortgage-backed securities 11,699 174 - 11,873
States and political subdivisions 15,645 48 (15) 15,678
- -------------------------------------------------------------------------------------------------------------
Total $49,246 400 (15) $49,631
=============================================================================================================
December 31, 1996
Mortgage-backed securities $12,344 185 - $12,529
States and political subdivisions 15,582 47 (44) 15,585
- -------------------------------------------------------------------------------------------------------------
Total $27,926 232 (44) $28,114
=============================================================================================================
</TABLE>
There were no sales or transfers of securities held to maturity during the six
months ended June 30, 1997.
(4) Loan Portfolio
The following is a summary of loans:
June 30, December 31,
(Dollars in thousands) 1997 1996
- --------------------------------------------------------------------------------
Residential real estate:
Mortgages $175,130 $171,423
Homeowner construction 4,871 4,631
- --------------------------------------------------------------------------------
Total residential real estate 180,001 176,054
- --------------------------------------------------------------------------------
Commercial:
Mortgages 65,973 66,224
Construction and development 2,193 4,174
Other 123,057 109,485
- --------------------------------------------------------------------------------
Total commercial 191,223 179,883
- --------------------------------------------------------------------------------
Consumer 68,926 63,056
- --------------------------------------------------------------------------------
Total loans $440,150 $418,993
================================================================================
(5) Allowance For Loan Losses
The following is an analysis of the allowance for loan losses (dollars in
thousands):
<TABLE>
<CAPTION>
Three months Six months
-----------------------------------------------------------------
Periods ended June 30, 1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at beginning of period $8,585 $7,932 $8,495 $7,785
Provision charged to expense 300 300 600 600
Recoveries 38 325 144 498
Loans charged off (512) (407) (828) (733)
- -------------------------------------------------------------------------------------------------------------------
Balance at end of period $8,411 $8,150 $8,411 $8,150
===================================================================================================================
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Washington Trust Bancorp, Inc. and Subsidiary
Results of Operations - Quarters Ended June 30, 1997 and 1996 Net income for the
three months ended June 30, 1997 amounted to $2.3 million, up 11.5% over the
$2.0 million of net income recorded in the second quarter of 1996. Earnings per
share for the quarter ended June 30, 1997 amounted to $.50, up from the $.45 per
share on net income earned in the comparable 1996 period.
Net interest income for the first quarter of 1997 increased by 12.1% over the
prior year quarter, to $7.1 million. This increase was primarily attributable to
net interest income generated under an investment program, as well as higher
interest and fees on loans. (See additional discussion under the caption "Net
Interest Income".)
The provision for loan losses for the three months ended June 30, 1997 amounted
to $300,000, unchanged from the prior year period.
Other noninterest income (noninterest income excluding net gains on sales of
securities) amounted to $2.3 million for the second quarter of 1997, up 16.2%
from the same 1996 period. This increase is primarily due to higher revenues for
trust services as well as increases in service charges earned on deposit
accounts and net gains on loan sales. For the three months ended June 30, 1997
and 1996, net gains (losses) on sales of securities amounted to approximately
$373,000 and ($50,000), respectively. Approximately $208,000 of the securities
gains in the second quarter of 1997 were associated with a nonrecurring
charitable contribution.
Total noninterest expense for the quarter ended June 30, 1997 amounted to $6.1
million, an increase of 22.5% from the comparable 1996 amount. This increase was
primarily attributable to higher salaries and benefits expense and increases in
other variable expenses resulting from the expansion of the Corporation's market
area which began in the first quarter of 1997. (See additional discussion under
the caption "Financial Condition and Liquidity".) Equipment costs rose 36.0%
over the prior year period due primarily to depreciation expense associated with
purchases that occurred in 1997 and 1996. Other noninterest expense increased by
approximately $321,000, or 30.6%, over the comparable 1996 amount mainly due to
a nonrecurring charitable contribution of approximately $219,000 made during the
second quarter of 1997.
Results of Operations - Six Months Ended June 30, 1997 and 1996
Net income for the six months ended June 30, 1997 amounted to $4.4 million,
up 9.3% over the $4.0 million of net income recorded in the comparable 1996
period. Fully diluted earnings per share for the six months ended June 30, 1997
amounted to $.97, up 7.8% from the $.90 per share on net income earned in the
comparable 1996 period.
Net interest income for the six months ended June 30, 1997 increased by 8.4%
over the prior year period, to $13.8 million. This increase was primarily
attributable to net interest income generated under an investment program. (See
additional discussion under the caption "Net Interest Income".)
The provision for loan losses for the six months ended June 30, 1997 amounted to
$600,000, unchanged from the prior year period.
Other noninterest income (noninterest income excluding net gains (losses) on
sales of securities) amounted to $4.4 million for the six months ended June 30,
1997, up 17.7% from the same 1996 period. This increase was primarily due to
higher revenues for trust services as well as an increase in service charges on
deposit amounts and net gains on loan sales. For the six months ended June 30,
1997 and 1996, net gains on sales of securities amounted to $627,000 and
$148,000, respectively.
Total noninterest expense for the six months ended June 30, 1997 amounted to
$11.6 million, an increase of 17.4% from the comparable 1996 amount. This
increase was primarily attributable to
<PAGE>
Results of Operations - Six Months Ended June 30, 1997 and 1996 (continued)
higher salaries and benefits expense and increases in other variable expenses
resulting from the expansion of the Corporation's market area which began in the
first quarter of 1997. (See additional discussion under the caption "Financial
Condition and Liquidity".) Equipment costs rose 31.6% over the prior year period
due primarily to depreciation expense associated with purchases that occurred in
1997 and late 1996. Other noninterest expense increased by approximately
$477,000, or 22.0%, over the comparable 1996 amount due mainly to a nonrecurring
charitable contribution of approximately $219,000 made during the second quarter
of 1997.
Net Interest Income
(The accompanying schedule on the page 12 should be read in conjunction with
this discussion.)
FTE net interest income for the six months ended June 30, 1997 amounted to $14.5
million, up by 9.3%, over the same 1996 period due to the growth in
interest-earning assets. The interest rate spread and the net interest margin
for the six months ended June 30, 1997 amounted to 3.58% and 4.12%,
respectively. Comparable amounts for quarter ended June 30, 1996 were 4.55% and
5.18%, respectively.
For the six months ended June 30, 1997, average interest-earning assets amounted
to $705.9 million, an increase of $193.0 million, or 37.6%, over the comparable
1996 amount. The FTE rate of return on average interest-earning assets was 8.14%
for the six months ended June 30, 1997, down from 8.67% for the same 1996
period. The growth in average interest-earning assets was due primarily to the
increase in average taxable securities, which were up by $148.4 million from the
1996 amount. The increase in average taxable securities resulted primarily from
an investment securities purchase program which was implemented in the second
quarter of 1996. The objective of the program is to increase net interest income
and improve returns on equity, while incurring limited interest rate risk. The
securities purchased under this program were funded with Federal Home Loan Bank
(FHLB) advances with similar interest rate repricing characteristics.
The yield on average total loans amounted to 8.94% for the six months ended June
30, 1997, down from 9.11% in the comparable 1996 period due to changes in the
prime rate as well as lower yields on new loan originations. Average total loans
for the six months ended June 30, 1997 rose 8.7% over the prior year and
amounted to $426.4 million. Average consumer loans rose by 17.9% over the prior
year, while the average balance of residential real estate and commercial loans
increased by 2.3% and 12.5%, respectively. The yields on residential real estate
and consumer loans decreased by 13 basis points and 38 basis points,
respectively, from the comparable prior period, primarily due to lower yields on
new loan originations. The yield on total commercial loans for the six months
ended June 30, 1997 amounted to 9.57%, down 22 basis points from the comparable
1996 period due primarily to lower yields on new loan originations.
The Corporation's total cost of funds on interest-bearing liabilities amounted
to 4.56% for the six months ended June 30, 1997, up from 4.12% for the
comparable 1996 period. This increase was due primarily to higher average FHLB
advances outstanding. Average FHLB advances for the six months ended June 30,
1997 amounted to $178.6 million, up substantially from the $26.8 million average
balance for the same 1996 period. The additional advances were used primarily to
purchase securities under the investment program. The average rate paid on FHLB
advances for the six months ended June 30, 1997 was 5.79%, a decrease of 19
basis points from the prior year rate. Average time deposits rose 8.4% from the
prior year amount, to $250.9 million. The rate paid on time deposits increased
to 5.4, up 6 basis points from the prior year rate. Average savings deposits for
the six months ended June 30, 1997 declined slightly from the comparable 1996
amount. The rate paid on these deposits was 1.99% for the first six months of
1997, down from 2.20% for the same 1996 period. For the six months ended June
30, 1997, average demand deposits, an interest-free funding source, were up by
$7.2 million, or 12.7%, from the same prior year period.
<PAGE>
Average Balances/Net Interest Margin - Fully Taxable Equivalent Basis (FTE) The
following table presents average balance and interest rate information. Tax
exempt income is converted to a FTE basis by assuming the applicable federal
income tax rate adjusted for applicable state income taxes net of the related
federal tax benefit. For dividends on corporate stocks, the 70% federal
dividends received deduction is also used in the calculation of tax equivalency.
Nonaccrual and renegotiated loans, as well as interest earned on these loans (to
the extent recognized in the Consolidated Statements of Income), are included in
amounts presented for loans.
<TABLE>
<CAPTION>
Six months ended June 30, 1997 1996
- -------------------------------------- ------------------------------------- --------------------------------------
Average Yield/ Average Yield/
(Dollars in thousands) Balance Interest Rate Balance Interest Rate
- -------------------------------------- ------------- ------------ ---------- -------------- ----------- -----------
Interest-earning assets:
<S> <C> <C> <C> <C> <C> <C>
Residential real estate loans $176,664 7,200 8.15% $172,729 7,154 8.28%
Commercial and other loans 184,773 8,841 9.57% 164,312 8,039 9.79%
Consumer loans 64,972 3,016 9.28% 55,126 2,662 9.66%
- -------------------------------------------------------------------------------------------------------------------
Total loans 426,409 19,057 8.94% 392,167 17,855 9.11%
Federal funds sold 4,842 132 5.44% 5,301 140 5.28%
Taxable debt securities 231,061 7,892 6.83% 82,651 2,776 6.72%
Nontaxable debt securities 15,669 519 6.63% 15,885 520 6.55%
Corporate stocks 27,902 1,115 7.99% 16,913 943 11.15%
- -------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 705,883 28,715 8.14% 512,917 22,234 8.67%
Non interest-earning assets 44,449 36,109
- -------------------------------------------------------------------------------------------------------------------
Total assets $750,332 $549,026
- -------------------------------------------------------------------------------------------------------------------
Interest-bearing liabilities:
Savings deposits $173,223 1,720 1.99% $174,008 1,915 2.20%
Time deposits 250,866 6,769 5.40% 231,393 6,177 5.34%
FHLB advances 178,550 5,171 5.79% 26,801 802 5.98%
Other 19,063 528 5.54% 1,793 48 5.41%
- -------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities
621,702 14,188 4.56% 433,995 8,942 4.12%
Demand deposits 63,964 56,737
Non interest-bearing liabilities 3,278 3,549
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 688,944 494,281
Total shareholders' equity 61,388 54,745
- -------------------------------------------------------------------------------------------------------------------
Total liabilities and
shareholders' equity $750,332 $549,026
- -------------------------------------------------------------------------------------------------------------------
Net interest income /
interest rate spread $14,527 3.58% $13,292 4.55%
- -------------------------------------------------------------------------------------------------------------------
Net interest margin 4.12% 5.18%
- -------------------------------------------------------------------------------------------------------------------
<FN>
Interest income amounts presented in the table above include the following
adjustments for taxable equivalency:
Six months ended June 30, 1997 1996
- ------------------------------------------ ---------------- -----------------
Commercial and other loans $71 $41
Taxable debt securities (1) 250 88
Nontaxable debt securities 185 186
Corporate stocks 215 240
(1)Represents adjustments for US Treasury and government agency obligations
which are exempt from state income taxes only.
</FN>
</TABLE>
<PAGE>
Financial Condition and Liquidity
Total assets amounted to $793.2 million at June 30, 1997, an increase of $98.2
million, or 14.1% from the December 31, 1996 amount of $694.9 million. Average
assets totaled $750.3 million for the six months ended June 30, 1997, up by
36.7% over the comparable 1996 period.
Securities Available for Sale - The amortized cost of securities available for
sale at June 30, 1997 amounted to $226.7 million, an increase of 18.8% over the
December 31, 1996 amount of $190.8 million. This increase is attributable to
purchases of adjustable rate pass-through securities and collateralized mortgage
obligations issued by U.S. government-sponsored agencies which were purchased
under the investment program. (See "Net Interest Income" for additional
discussion of the investment program.) The net unrealized gain on securities
available for sale increased by approximately $1.6 million during the six months
ended June 30, 1997. This increase is attributable to both the rise in the
equity market and the effect of decreases in medium and long-term bond rates
that have occurred in the second quarter of 1997.
Securities Held to Maturity - The carrying value of securities held to maturity
amounted to $49.2 million at June 30, 1997, up from $27.9 million at December
31, 1996. The net unrealized gain on securities held to maturity amounted to
approximately $385,000 at June 30, 1997, up from $188,000 at December 31, 1996.
This increase is attributable to the decrease in medium and long-term bond rates
occurring in the second quarter of 1997.
Loans - Total loans amounted to $440.2 million at June 30, 1997, an increase of
$21.2 million, or 5.0%, from the December 31, 1996 balance of $419.0 million.
All categories of loans exhibited modest increases over the year-end 1996
amounts, with the largest increases occurring in the commercial and consumer
portfolios.
Deposits - Total deposits amounted to $514.4 million at June 30, 1997, up by
7.9% from the December 31, 1996 amount of $476.6 million. This increase was
primarily attributable to normal seasonal deposit inflow and the expansion of
the Corporation's market area which included approximately $8.2 million of
deposits that were acquired from another bank in March, 1997. Savings deposits
rose 3.6% and time deposits increased by 8.5% from the December 31, 1996
balance. Demand deposits amounted to $76.1 million, up 17.0% from the December
31, 1996 balance of $65.0 million.
Borrowings - The Corporation utilizes FHLB advances as a funding source. FHLB
advances amounted to $192.2 million at June 30, 1997, up by $53.7 million from
the December 31, 1996 amount. In addition, short-term borrowings outstanding at
June 30, 1997 amounted to $15.8 million. The additional FHLB advances and
short-term borrowings were used to fund loan growth and to purchase securities
under the investment program. The Corporation is required to maintain a level of
investment in FHLB stock which is based on the level of its FHLB advances. As a
result of the increase in FHLB advances during the three months ended June 30,
1997, the Corporation has increased its investment in FHLB stock from $11.7
million at December 31, 1996 to $16.4 million at June 30, 1997.
For the six months ended June 30, 1997, net cash provided by operations amounted
to $3.1 million, the majority of which was generated by net income. Proceeds
from sales of loans in the first six months of 1997 amounted to $9.3 million,
while loans originated for sale amounted to $10.3 million. Net cash used in
investing activities amounted to $77.1 million and was primarily used to
purchase securities available for sale and held to maturity and FHLB stock and
for loan originations. Net cash provided by investing activities was generated
mainly by a net increase in FHLB advances of $53.7 million, and by an increase
in deposits of $29.6 million. (See Consolidated Statements of Cash Flows for
additional information.)
Branch Expansion
During the first quarter of 1997, the Corporation expanded its market area into
contiguous communities. A de novo branch was opened in February, 1997 in North
Kingstown, Rhode Island. This branch is a full service banking office, offering
deposit and loan services for businesses and consumers, as well as trust and
investment services. The Corporation also acquired a branch of a
<PAGE>
Financial Condition and Liquidity (continued):
Connecticut bank, including its deposits of approximately $8.2 million, in March
1997. This is the Corporation's first full-service branch located in the state
of Connecticut. During the second quarter of 1997, the Corporation opened two
branches in local supermarkets. The supermarket branches offer a complete range
of financial products and services.
Asset Quality
Nonperforming assets are summarized in the following table:
<TABLE>
<CAPTION>
June 30, December 31,
(Dollars in thousands) 1997 1996
------------- ---------------
<S> <C> <C>
Nonaccrual loans 90 days or more past due $4,218 $3,099
Nonaccrual loans less than 90 days past due 4,544 4,443
------------- ---------------
Total nonaccrual loans 8,762 7,542
------------- ---------------
Other real estate owned:
Properties acquired through foreclosure 601 1,295
Valuation allowance (81) (205)
------------- ---------------
Total other real estate owned 520 1,090
------------- ---------------
Total nonperforming assets $9,282 $8,632
============= ===============
Nonaccrual loans as a % of total loans 2.0% 1.8%
Nonperforming assets as a % of total assets 1.2% 1.2%
Allowance for loan losses to nonaccrual loans 96.0% 112.6%
</TABLE>
Not included in the analysis of nonperforming assets at June 30, 1997 and
December 31, 1996 above are approximately $1.6 and $1.4 million, respectively,
of loans greater than 90 days past due and still accruing. These loans consist
primarily of residential mortgages which are considered well-collateralized and
in the process of collection and therefore are deemed to have no loss exposure.
The following is an analysis of nonaccrual loans by loan category:
June 30, December 31,
(Dollars in thousands) 1997 1996
------------- ----------------
Residential mortgages $3,182 $2,067
Commercial:
Mortgages 2,174 2,133
Construction and development - 80
Other (1) 3,095 2,881
Consumer 311 381
------------- ---------------
Total nonperforming loans $8,762 $7,542
============= ===============
(1) Loans to businesses and individuals, a substantial portion of which is fully
or partially collateralized by real estate.
Impaired loans consist of all nonaccrual commercial loans. At June 30, 1997, the
recorded investment in impaired loans was $5.3 million, including $4.8 million
which had a related allowance amounting to $908,000. At December 31, 1996, the
recorded investment in impaired loans was $5.1 million, including $4.5 million
which had a related allowance amounting to $867,000. The balance of impaired
loans which did not require an allowance at June 30, 1997 and December 31, 1996
was $567,000 and $572,000, respectively. During the six months ended June 30,
1997, the average recorded investment in impaired loans was $5.3 million. Also
during this period, interest income recognized on impaired loans amounted to
approximately $226,000. Interest income on impaired loans is recognized on a
cash basis only.
Capital Resources
Total equity capital amounted to $63.5 million, or 8.0% of total assets at June
30, 1997. This compares to $59.4 million, or 8.6% at December 31, 1996. The
reduction in this ratio is due primarily to the growth in assets resulting from
the investment program. Total equity increased by approximately $4.0 million
from December 31, 1996. This increase was primarily attributable to a $2.7
million increase in earnings retention and a $1.0 million increase in unrealized
gain on securities available for sale, net of tax. (See the Consolidated
Statements of Changes in Shareholders' Equity for additional information.)
At June 30, 1997, the Corporation's Tier 1 capital ratio was 13.08%, the total
risk-adjusted capital ratio was 14.34% and the leverage ratio was 7.57%. These
ratios were all above the ratios required to be categorized as well-capitalized.
Dividends payable at June 30, 1997 amounted to approximately $833,000,
representing $.19 per share payable on July 15, 1997, an increase of 11.8% over
the $.17 per share declared in the fourth quarter of 1996.
The source of funds for dividends paid by the Corporation is dividends received
from its subsidiary bank. The subsidiary bank is a regulated enterprise, and as
such its ability to pay dividends to the parent is subject to regulatory review
and restriction.
Recent Accounting Developments
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings per Share". SFAS 128
specifies the computation, presentation, and disclosure requirements for
earnings per share (EPS) for entities with publicly held common stock or
potential common stock. The objective of this Statement is to simplify the
computation of EPS and to make the U.S. standard for computing EPS more
compatible with such standards of other countries and with that of the
International Accounting Standards Committee. SFAS 128 is effective for
reporting periods ending after December 15, 1997. The adoption of this
pronouncement is not expected to have a material impact on the Corporation's
computation of earnings per share.
Also in February 1997, the Financial Accounting Standards Board issued SFAS No.
129, "Disclosure of Information about Capital Structure". This Statement
establishes standards for disclosing information about an entity's capital
structure. It applies to all entities and is effective for reporting periods
ending after December 15, 1997. The Corporation's disclosures currently comply
with these new requirements.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income". SFAS No. 130 establishes standards for
reporting and display of comprehensive income, which is defined as all changes
in equity, except for those resulting from investments by and distributions to
shareholders. This Statement classifies net income as a component of
comprehensive income, with all other components referred to in the aggregate as
other comprehensive income. The provisions of this Statement are effective for
fiscal years beginning after December 15, 1997.
Also in June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information". This
Statement establishes standards for reporting information about operating
segments. An operating segment is defined as a component of an enterprise for
which separate financial information is available and reviewed regularly by the
enterprise's chief operating decision maker in order to make decisions about
resources to be allocated to the segment and also to evaluate the segment's
performance. SFAS No. 131 requires a corporation to disclose certain balance
sheet and income statement information by operating segment, as well as provide
a reconciliation of operating segment information to the corporation's
consolidated balances. This Statement is effective for reporting periods
beginning after December 15, 1997.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
No material changes since the filing of the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item4. Submission of Matters to a Vote of Security Holders (a) The Annual
Meeting of Shareholders was held on April 29, 1997.
(c) Matters voted upon were as follows:
i. A proposal to elect Steven J. Crandall, Richard A. Grills, James W.
McCormick, Jr., Victor J.Orsinger II, James P. Sullivan, and Neil H.
Thorp as directors of the Corporation for three year terms expiring
at the 2000 Annual Meeting of Shareholders passed as follows:
Abstentions
Votes Votes and Broker
In Favor Withheld Non-votes
Steven J. Crandall 3,620,892.32 25,735.53 0
Richard A. Grills 3,621,142.62 25,485.53 0
James W. McCormick, Jr. 3,621,142.62 25,485.53 0
Victor J. Orsinger, II 3,620,892.32 25,735.53 0
James P. Sullivan 3,612,268.93 34,358.53 0
Neil H. Thorp 3,621,142.62 25,485.53 0
ii. A proposal to adopt the Washington Trust Bancorp, Inc. 1997 Equity
Incentive Plan was passed by a vote of 2,646,875.01 shares in favor,
271,348.72 shares against, with no abstentions or broker non-votes.
iii.A proposal to amend Article FOURTH of the Corporation's Restated
Articles of Incorporation to increase the number of shares of the
Corporation's Common Stock, $.0625 par value, that may be issued
thereunder from 10,000,000 shares to 30,000,000 shares was passed by a
vote of 3,383,485.53 shares in favor and 198,050.74 shares against, with
no abstentions or broker non-votes.
iv. A proposal for the ratification of KPMG Peat Marwick LLP to serve as
independent auditors of the Corporation for the current fiscal year
ending December 31, 1997 was passed by a vote of 3,582,460.91 shares in
favor; 40,973.5 shares against; with no abstentions or broker non-votes.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit index
Exhibit No.
3.i Amendment to Articles of Incorporation
*10.a Washington Trust Bancorp, Inc. 1997 Equity Incentive Plan
*10.b Change in Control Agreements with Executive Officers
11 Statement re Computation of Per Share Earnings
* Management contract or compensatory plan or arrangement
(b) There were no reports on Form 8-K filed during the quarter ended
June 30, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WASHINGTON TRUST BANCORP, INC.
(Registrant)
August 12, 1997 By: John C. Warren
-----------------------
John C. Warren
President and Chief Executive Officer
(principal executive officer)
August 12, 1997 By: David V. Devault
-------------------------
David V. Devault
Vice President, Treasurer and Chief Financial Officer
(principal financial officer)
<PAGE>
Exhibit 3.i
Filing Fee: $50 Corp. I.D. #16323
State of Rhode Island and Providence Plantations
Office of the Secretary of State
100 North Main Street
Providence, Rhode Island 02903-1335
PLEASE TAKE NOTICE that the corporation must be in good standing prior to filing
ORIGINAL ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
WASHINGTON TRUST BANCORP, INC.
Pursuant to the provisions of Section 7-1.1-56 of the General Laws, 1956,
as amended, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation:
FIRST: The name of the corporation is Washington Trust Bancorp, Inc.
SECOND: The shareholders of the corporation on April 29, 1997, in the
manner prescribed by Chapter 7-1.1 of the General Laws, 1956, as amended,
adopted the following amendment(s) to the Articles of Incorporation:
FOURTH. Capital Stock. The aggregate number of shares which the
Corporation shall have authority to issue is 30,000,000, par value $.0625
per share, all of which shares are to be a class designated as "Common
Stock".
THIRD: The number of shares of the corporation outstanding at the time
of such adoption was 4,372,302; and the number of shares entitled to vote
thereon was 4,372,302.
FOURTH: The designation and number of outstanding shares of each class
entitled to vote thereon as a class were as follows:
(If inapplicable, insert "none")
Class Number of Shares
None
<PAGE>
FIFTH: The number of shares voted for such amendment was 3,383,485.53;
and the number of shares voted against such amendment was 198,050.74.
SIXTH: The number of shares of each class entitled to vote thereon as
a class voted for and against such amendment, respectively, was:
(If inapplicable, insert "none")
Number of Shares Voted
Class For Against
None
SEVENTH: The manner, if not set forth in such amendment, in which any
exchange, reclassification, or cancellation of issued shares provided for
in the amendment shall be effected, is as follows: (If no change, so
state) No Change
EIGHTH: The manner in which such amendment effects a change in the
amount of stated capital, and the amount of stated capital as changed by
such amendment, are as follows: (If no change, so state) No Change
Dated: May 14, 1997
WASHINGTON TRUST BANCORP, INC.
By: John C. Warren
-----------------
Its President
and Harvey C. Perry II
---------------------
Its Secretary
<PAGE>
STATE OF RHODE ISLAND )
) Sc.
COUNTY OF WASHINGTON )
At Westerly in said county on this 14th day of May, 1997, personally
appeared before me John C. Warren, who, being by me first duly sworn, declared
that he is the President of Washington Trust Bancorp, Inc., that he signed the
foregoing document as President of the corporation, and that the statements
therein contained are true.
Tawny M. Beckman
------------------
Notary Public
my commission expires 7/14/97
(NOTARIAL SEAL)
STATE OF RHODE ISLAND )
) Sc.
COUNTY OF WASHINGTON )
At Westerly in said county on this 6th day of May, 1997, personally
appeared before me Harvey C. Perry, II, who, being by me first duly sworn,
declared that he is the Secretary of Washington Trust Bancorp, Inc., that he
signed the foregoing document as Secretary of the corporation, and that the
statements therein contained are true.
Tawny M. Beckman
------------------
Notary Public
my commission expires 7/14/97
NOTARIAL SEAL)
<PAGE>
Exhibit 10.a
WASHINGTON TRUST BANCORP, INC.
1997 EQUITY INCENTIVE PLAN
Section 1. Purpose
The purpose of the Washington Trust Bancorp, Inc. 1997 Equity Incentive
Plan (the "Plan") is to attract and retain key employees, directors, advisors
and consultants, to provide an incentive for them to assist Washington Trust
Bancorp, Inc. (the "Corporation") to achieve long-range performance goals, and
to enable them to participate in the long-term growth of the Corporation.
Section 2. Definitions
(a) "Affiliate" means any business entity in which the Corporation owns
directly or indirectly 50% or more of the total combined voting power or
has a significant financial interest as determined by the Committee.
(b) "Annual Meeting" means the annual meeting of shareholders or special
meeting in lieu of annual meeting of shareholders at which one or more
directors are elected.
(c) "Award" means any Option, Stock Appreciation Right, Performance or
Award Share, or Restricted Stock awarded under the Plan.
(d) "Award Share" means a share of Common Stock awarded to an employee,
director, advisor or consultant without payment therefor.
(e) "Board" means the Board of Directors of the Corporation.
(f) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(g) "Committee" means the Stock Option Committee of the Board, or such other
committee of not less than three members of the Board appointed by the
Board to administer the Plan, provided that the members of such Committee
must be Non-Employee Directors as defined in Rule 16b-3(b) promulgated
under the Securities Exchange Act of 1934, as amended.
(h) "Common Stock" or "Stock" means the Common Stock, par value $.0625 per
share, of the Corporation.
(i) "Corporation" means Washington Trust Bancorp, Inc.
(j) "Designated Beneficiary" means the beneficiary designated by a Participant,
in a manner determined by the Board, to receive amounts due or exercise
rights of the Participant in the event of the Participant's death. In the
absence of an effective designation by a Participant, Designated
Beneficiary shall mean the Participant's estate.
(k) "Fair Market Value" means, with respect to Common Stock or any other
property, the fair market value of such property as determined by the Board
in good faith or in the manner established by the Board from time to time.
(l) "Incentive Stock Option" means an option to purchase shares of Common
Stock, awarded to a Participant under Section 6, which is intended to meet
the requirements of Section 422 of the Code or any successor provision.
(m) "Nonqualified Stock Option" means an option to purchase shares of Common
Stock, awarded to a Participant under Section 6 or Section 11, which is not
intended to be an Incentive Stock Option.
(n) "Option" means an Incentive Stock Option or a Nonqualified Stock Option.
(o) "Participant" means a person selected by the Board to receive an Award
under the Plan.
(p) "Performance Cycle" or "Cycle" means the period of time selected by the
Board during which performance is measured for the purpose of determining
the extent to which an award of Performance Shares has been earned.
(q) "Performance Shares" mean shares of Common Stock which may be earned by the
achievement of performance goals, awarded to a Participant under Section 8.
(r) "Restricted Period" means the period of time selected by the Board during
which an award of Restricted Stock may be forfeited to the Corporation.
(s) "Restricted Stock" means shares of Common Stock subject to forfeiture,
awarded to a Participant under Section 9.
(t) "Stock Appreciation Right" or "SAR" means a right to receive any excess in
value of shares of Common Stock over the reference price, awarded to a
Participant under Section 7.
(u) "Stock Unit" means an award of Common Stock and/or other rights granted as
units that are valued in whole or in part by reference to, or otherwise
based on, the value of Common Stock, awarded to a Participant under Section
10.
Section 3. Administration
The Plan shall be administered by the Committee, which shall initially
be the Stock Option Committee. The Board shall have authority to adopt, alter
and repeal such administrative rules, guidelines and practices governing the
operation of the Plan as it shall from time to time consider advisable, and to
interpret the provisions of the Plan. The Board's decisions shall be final and
binding. To the extent permitted by applicable law, the Board may delegate to
the Committee the power to make Awards to Participants and all determinations
under the Plan with respect thereto.
Section 4. Eligibility
All employees and, in the case of Awards other than Incentive Stock
Options, directors, advisors and consultants of the Corporation or any Affiliate
capable of contributing significantly to the successful performance of the
Corporation, other than a person who has irrevocably elected not to be eligible,
are eligible to be Participants in the Plan.
Section 5. Stock Available for Awards
(a) Subject to adjustment under subsection (b), Awards may be made under the
Plan, of Options to acquire not in excess of 450,000 shares of Common Stock.
Other Awards may be made as the Board may determine, provided that a maximum of
450,000 shares of Common Stock may be issued under this Plan. If any Award in
respect of shares of Common Stock expires or is terminated unexercised or is
forfeited for any reason or settled in a manner that results in fewer shares
outstanding than were initially awarded, including without limitation the
surrender of shares in payment for the Award or any tax obligation thereon, the
shares subject to such Award or so surrendered, as the case may be, to the
extent of such expiration, termination, forfeiture or decrease, shall again be
available for award under the Plan, subject, however, in the case of Incentive
Stock Options, to any limitation required under the Code. Common Stock issued
through the assumption or substitution of outstanding grants from an acquired
corporation shall not reduce the shares available for Awards under the Plan.
Shares issued under the Plan may consist in whole or in part of authorized
but unissued shares or treasury shares.
(b) In the event that the Board determines that any stock dividend,
extraordinary cash dividend, creation of a class of equity securities,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination, exchange of shares, warrants or rights offering to purchase
Common Stock at a price substantially below fair market value, or other similar
transaction affects the Common Stock such that an adjustment is required in
order to preserve the benefits or potential benefits intended to be made
available under the Plan, then the Board, subject, in the case of Incentive
Stock Options, to any limitation required under the Code, shall equitably
adjust any or all of (i) the number and kind of shares in respect of which
Awards may be made under the Plan, (ii) the number and kind of shares subject
to outstanding Awards, and (iii) the award, exercise or conversion price with
respect to any of the foregoing, and if considered appropriate, the Board
may make provision for a cash payment with respect to an outstanding Award,
provided that the number of shares subject to any Award shall always be a whole
number.
Section 6. Stock Options
(a) Subject to the provisions of the Plan, the Board may award Incentive Stock
Options and Nonqualified Stock Options and determine the number of shares
to be covered by each Option, the option price therefor and the conditions
and limitations applicable to the exercise of the Option. The terms and
conditions of Incentive Stock Options shall be subject to and comply with
Section 422 of the Code, or any successor provision, and any regulations
thereunder.
(b) The Board shall establish the option price at the time each Option is
awarded, which price shall not be less than 100% of the Fair Market Value
of the Common Stock on the date of award with respect to Incentive Stock
Options.
(c) Each Option shall be exercisable at such times and subject to such terms
and conditions as the Board may specify in the applicable Award or
thereafter. The Board may impose such conditions with respect to the
exercise of Options, including conditions relating to applicable federal or
state securities laws, as it considers necessary or advisable.
(d) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price therefor is received by the
Corporation. Such payment may be made in whole or in part in cash or, to
the extent permitted by the Board at or after the award of the Option,
by delivery of a note or shares of Common Stock owned by the optionholder,
including Restricted Stock, valued at their Fair Market Value on the date
of delivery, by the reduction of the shares of Common Stock that the
optionholder would be entitled to receive upon exercise of the Option, such
shares to be valued at their Fair Market Value on the date of exercise,
less their option price (a so-called "cashless exercise"), or such
other lawful consideration as the Board may determine. In addition, an
optionholder may engage in a successive exchange (or series of exchanges)
in which the shares of Common Stock that such optionholder is entitled to
receive upon the exercise of an Option may be simultaneously utilized as
payment for the exercise of an additional Option or Options.
(e) The Board may provide for the automatic award of an Option upon the
delivery of shares to the Corporation in payment of an Option for up to the
number of shares so delivered.
(f) In the case of Incentive Stock Options the following additional conditions
shall apply:
(i) Such options shall be granted only to employees of the Corporation,
and shall not be granted to any person who owns stock that possesses
more than ten percent of the total combined voting power of all
classes of stock of the Corporation or of its parent or subsidiary
corporation (as those terms are defined in Section 422(b) of the
Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder), unless, at the time of such grant, the
exercise price of such option is at least 110% of the fair market
value of the stock that is subject to such option and the option
shall not be exercisable more than five years after the date of
grant;
(ii) Such options shall not be granted more than ten years from the
effective date of the Plan and shall not be exercisable more than ten
years from the date of grant;
(iii)Such options shall, by their terms, be transferable by the optionee
only by the laws of descent and distribution, and shall be
exercisable only by such employee during his lifetime.
Section 7. Stock Appreciation Rights
Subject to the provisions of the Plan, the Board may award SARs in
tandem with an Option (at or after the award of the Option), or alone and
unrelated to an Option. SARs in tandem with an Option shall terminate to the
extent that the related Option is exercised, and the related Option shall
terminate to the extent that the tandem SARs are exercised.
Section 8. Performance Shares
(a) Subject to the provisions of the Plan, the Board may award Performance
Shares and determine the number of such shares for each Performance Cycle
and the duration of each Performance Cycle. There may be more than one
Performance Cycle in existence at any one time, and the duration of
Performance Cycles may differ from each other. The payment value of
Performance Shares shall be equal to the Fair Market Value of the Common
Stock on the date the Performance Shares are earned or, in the discretion
of the Board, on the date the Board determines that the Performance Shares
have been earned.
(b) The Board shall establish performance goals for each Cycle, for the purpose
of determining the extent to which Performance Shares awarded for such
Cycle are earned, on the basis of such criteria and to accomplish such
objectives as the Board may from time to time select. During any Cycle, the
Board may adjust the performance goals for such Cycle as it deems equitable
in recognition of unusual or non-recurring events affecting the
Corporation, changes in applicable tax laws or accounting principles, or
such other factors as the Board may determine.
(c) As soon as practicable after the end of a Performance Cycle, the Board
shall determine the number of Performance Shares which have been earned on
the basis of performance in relation to the established performance goals.
The payment values of earned Performance Shares shall be distributed to the
Participant or, if the Participant has died, to the Participant's
Designated Beneficiary, as soon as practicable thereafter. The Board shall
determine, at or after the time of award, whether payment values will be
settled in whole or in part in cash or other property, including Common
Stock or Awards.
Section 9. Restricted Stock
(a) Subject to the provisions of the Plan, the Board may award shares of
Restricted Stock and determine the duration of the Restricted Period during
which, and the conditions under which, the shares may be forfeited to the
Corporation and the other terms and conditions of such Awards. Shares of
Restricted Stock may be issued for no cash consideration or such minimum
consideration as may be required by applicable law.
(b) Shares of Restricted Stock may not be sold, assigned, transferred, pledged
or otherwise encumbered, except as permitted by the Board, during the
Restricted Period. Shares of Restricted Stock shall be evidenced in such
manner as the Board may determine. Any certificates issued in respect of
shares of Restricted Stock shall be registered in the name of the
Participant and unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the
Corporation. At the expiration of the Restricted Period, the Corporation
shall deliver such certificates to the Participant or if the Participant
has died, to the Participant's Designated Beneficiary.
Section 10. Stock Units
(a) Subject to the provisions of the Plan, the Board may award Stock Units
subject to such terms, restrictions, conditions, performance criteria,
vesting requirements and payment rules as the Board shall determine.
(b) Shares of Common Stock awarded in connection with a Stock Unit Award shall
be issued for no cash consideration or such minimum consideration as may be
required by applicable law. Such shares of Common Stock may be designated
as Award Shares by the Board.
Section 11. Options Granted to Non-Employee Directors
Unless otherwise determined by the Board, each director of the
Corporation who is not an employee of the Corporation shall automatically be
granted a Nonqualified Option covering 750 shares as of the date of each Annual
Meeting of the Corporation after which such director will continue to serve as a
director of the Corporation, beginning with the 1997 Annual Meeting and in lieu
of options which would have been granted pursuant to Section 14 of the
Corporation's Amended and Restated 1988 Stock Option Plan, the option price for
which shall be the Fair Market Value of the Common Stock on such date and the
expiration of which shall be the tenth anniversary thereof.
Each Nonqualified Option granted pursuant to this Section 11 may be
exercised on and after the date that is one year after the date of grant.
In addition, the Board may provide for such other terms and conditions
of the Options granted pursuant to this Section 11 as it may determine in its
sole discretion and as shall be set forth in the applicable Option agreements,
including, without limitation, acceleration of exercise upon a change of
control, termination of the Options, and the effect on such Options of the
death, retirement or other termination of service as a director of the option
holder. Notwithstanding the foregoing, nothing herein shall preclude the Board
from granting Options to such non-employee directors in addition to, or in
substitution for, those provided for in this Section 11.
Section 12. General Provisions Applicable to Awards
(a) Documentation. Each Award under the Plan shall be evidenced by a written
document delivered to the Participant specifying the terms and conditions
thereof and containing such other terms and conditions not inconsistent
with the provisions of the Plan as the Board considers necessary or
advisable to achieve the purposes of the Plan or comply with applicable tax
and regulatory laws and accounting principles.
(b) Board Discretion. Each type of Award may be made alone, in addition to or
in relation to any other type of Award. The terms of each type of Award
need not be identical, and the Board need not treat Participants uniformly.
Except as otherwise provided by the Plan or a particular Award, any
determination with respect to an Award may be made by the Board at the time
of award or at any time thereafter. Without limiting the foregoing, an
Award may be made by the Board, in its discretion, to any 401(k), savings,
pension, profit sharing or other similar plan of the Corporation in lieu of
or in addition to any cash or other property contributed or to be
contributed to such plan.
(c) Settlement. The Board shall determine whether Awards are settled in whole
or in part in cash, Common Stock, other securities of the Corporation,
Awards or other property. The Board may permit a Participant to defer all
or any portion of a payment under the Plan, including the crediting of
interest on deferred amounts denominated in cash and dividend equivalents
on amounts denominated in Common Stock.
(d) Dividends and Cash Awards. In the discretion of the Board, any Award under
the Plan may provide the Participant with (i) dividends or dividend
equivalents payable currently or deferred with or without interest, and
(ii) cash payments in lieu of or in addition to an Award.
(e) Termination of Employment. The Board shall determine the effect on an Award
of the disability, death, retirement or other termination of employment of
a Participant and the extent to which, and the period during which, the
Participant's legal representative, guardian or Designated Beneficiary may
receive payment of an Award or exercise rights thereunder.
(f) Change in Control. In order to preserve a Participant's rights under an
Award in the event of a change in control of the Corporation, the Board
in its discretion may, at the time an Award is made or at any time
thereafter, take one or more of the following actions: (i) provide for
the acceleration of any time period relating to the exercise or realization
of the Award, (ii) provide for the purchase of the Award upon the
Participant's request for an amount of cash or other property that could
have been received upon the exercise or realization of the Award had the
Award been currently exercisable or payable, (iii) adjust the terms of the
Award in a manner determined by the Board to reflect the change in control,
(iv) cause the Award to be assumed, or new rights substituted therefore,
by another entity, or (v) make such other provision as the Board may
consider equitable and in the best interests of the Corporation.
(g) Withholding. The Participant shall pay to the Corporation, or make
provision satisfactory to the Board for payment of, any taxes required by
law to be withheld in respect of Awards under the Plan no later than the
date of the event creating the tax liability. In the Board's discretion,
such tax obligations may be paid in whole or in part in shares of Common
Stock, including shares retained from the Award creating the tax
obligation, valued at their Fair Market Value on the date of delivery. The
Corporation and its Affiliates may, to the extent permitted by law, deduct
any such tax obligations from any payment of any kind otherwise due to the
Participant.
(h) Amendment of Award. The Board may amend, modify or terminate any
outstanding Award, including substituting therefor another Award of the
same or a different type, changing the date of exercise or realization and
converting an Incentive Stock Option to a Nonqualified Stock Option,
provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any
related action, would not materially and adversely affect the Participant.
Section 13. Miscellaneous
(a) No Right To Employment. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as
giving a Participant the right to continued employment. The Corporation
expressly reserves the right at any time to dismiss a Participant free from
any liability or claim under the Plan, except as expressly provided in the
applicable Award.
(b) No Rights As Shareholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
shareholder with respect to any shares of Common Stock to be distributed
under the Plan until he or she becomes the holder thereof. A Participant to
whom Common Stock is awarded shall be considered the holder of the Stock at
the time of the Award except as otherwise provided in the applicable Award.
(c) Effective Date. Subject to the approval of the shareholders of the
Corporation, the Plan shall be effective on April 29, 1997. Prior to such
approval, Awards may be made under the Plan expressly subject to such
approval.
(d) Amendment of Plan. The Board may amend, suspend or terminate the Plan or
any portion thereof at any time, provided that no amendment shall be made
without shareholder approval if such approval is necessary to comply with
any applicable tax requirement, any applicable rules or regulation of the
Securities and Exchange Commission, including Rule 16(b)-3 (or any
successor rule thereunder), or the rules and regulations of The Nasdaq
Stock Market or any other exchange or stock market over which the
Corporation's securities are listed.
(e) Governing Law. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of the State of Rhode Island.
(f) Indemnity. Neither the Board nor the Committee, nor any members of either,
nor any employees of the Corporation or any parent, subsidiary, or other
affiliate, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with their
responsibilities with respect to this Plan, and the Corporation hereby
agrees to indemnify the members of the Board, the members of the Committee,
and the employees of the Corporation and its parent or subsidiaries in
respect of any claim, loss, damage, or expense (including reasonable
counsel fees) arising from any such act, omission, interpretation,
construction or determination to the full extent permitted by law.
EXHIBIT 10.b
WASHINGTON TRUST BANCORP, INC.
23 BROAD STREET
WESTERLY, RHODE ISLAND 02891
The Registrant has entered into a Change of Control Agreement with certain of
its executive officers. The form of Agreement attached contains blanks where
the term and the multiple of the executive's base amount provided under the
Agreement vary for certain executives. The executive officers who have entered
into the Agreement, the term of the Agreement and the multiple of the
executive's base amount provided under the agreement for each executive are
listed in the following chart:
Term of Agreement Number Times Base Amount
Executive Officer (Sections 3, 4 and 13) (Section 5 a)
- ------------------- ----------------------- ------------------------
John C. Warren
President and Chief
Executive Officer 3 years 3 times
David V. Devault
Vice President,
Treasurer and Chief
Financial Officer 2 years 2 times
Harvey C. Perry, II
Vice President and
Secretary 2 years 2 times
Stephen M. Bessette
Senior Vice President -
Retail Lending, of the
Bank 1 year 1 time
Vernon F. Bliven
Senior Vice President -
Human Resources, of the
Bank 1 year 1 time
Robert G. Cocks, Jr.
Senior Vice President -
Lending, of the Bank 1 year 1 time
Louis W. Gingerella, Jr.
Senior Vice President -
Credit Administration,
of the Bank 1 year 1 time
B. Michael Rauh, Jr.
Senior Vice President -
Retail Banking, of the
Bank 1 year 1 time
April 11, 1997
[Name and Address of Executive]
Dear _________________:
Washington Trust Bancorp, Inc. ( the "Corporation") considers it
essential to the best interests of its shareholders to foster the continued
employment of key management personnel employed by its wholly-owned subsidiary,
The Washington Trust Company (the "Bank"). In this connection, the Board of
Directors of the Corporation (the "Board") recognizes that the possibility of a
change in control exists and that such possibility, and the uncertainty and
question which it necessarily raises among management, may result in the
departure or distraction of management personnel to the detriment of the
Corporation and its shareholders in this period when their undivided attention
and commitment to the best interests of the Corporation and its shareholders are
particularly important.
Accordingly, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the Corporation and the Bank's management.
1. Defined Terms. Certain laws, rules and regulations referenced
in this agreement are attached hereto as Appendices and are hereby incorporated
herein by reference.
2. Change in Control. For purposes of this Agreement, the term
"Change in Control" shall mean:
a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")), of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the then
outstanding shares of common stock of the Corporation (the "Outstanding
Corporation Common Stock"); provided, however, that any acquisition by the
Corporation or its subsidiaries, or any employee benefit plan (or related trust)
of the Corporation or its subsidiaries of 20% or more of Outstanding Corporation
Common Stock shall not constitute a Change in Control; and provided, further,
that any acquisition by a corporation with respect to which, following such
acquisition, more than 50% of the then outstanding shares of common stock of
such corporation, is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial owners
of the Outstanding Corporation Common Stock immediately prior to such
acquisition in substantially the same proportion as their ownership, immediately
prior to such acquisition, of the Outstanding Corporation Common Stock, shall
not constitute a Change in Control; or
b) Individuals who, as of the date of this Agreement, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a director
subsequent to the date of this Agreement whose election, or nomination for
election by the Corporation's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office is in connection with either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a person other than the Board; or
c) Consummation by the Corporation of (i) a reorganization, merger or
consolidation, in each case, with respect to which all or substantially all of
the individuals and entities who were the beneficial owners of the Outstanding
Corporation Common Stock immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 40% of the then outstanding
shares of common stock of the corporation resulting from such a reorganization,
merger or consolidation; (ii) a reorganization, merger or consolidation, in each
case, (A) with respect to which all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding Corporation Common
Stock immediately prior to such reorganization, merger or consolidation,
following such reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than 40% but less than 50% of the then outstanding
shares of common stock of the corporation resulting from such a reorganization,
merger or consolidation, (B) at least a majority of the directors then
constituting the Incumbent Board do not approve the transaction and do not
designate the transaction as not constituting a Change in Control, and (C)
following the transaction members of the then Incumbent Board do not continue to
comprise at least a majority of the Board; or (iii) the sale or other
disposition of all or substantially all of the assets of the Corporation,
excluding a sale or other disposition of assets to a subsidiary of the
Corporation; or
d) Consummation by the Bank of (i) a reorganization, merger or
consolidation, in each case, with respect to which, following such
reorganization, merger or consolidation, the Corporation does not beneficially
own, directly or indirectly, more than 50% of the then outstanding shares of
common stock of the corporation or bank resulting from such a reorganization,
merger or consolidation or (ii) the sale or other disposition of all or
substantially all of the assets of the Bank, excluding a sale or other
disposition of assets to the Corporation or a subsidiary of the Corporation.
3. Continuing Employment. You agree that you shall remain in the employ
of the Corporation and the Bank for a term of year(s) following any Change in
Control of the Company, unless there is an event of Termination, as defined
below, or you die or become unable to perform your duties by reason of
disability.
4. Event of Termination. For purposes of this Agreement, the term
"Event of Termination" shall mean:
a) The involuntary termination of your employment with the Corporation
and/or the Bank, other than for cause. The term "for cause" shall mean on
account of (i) conviction of a crime involving moral turpitude, (ii) willful and
inexcusable failure to perform the duties of your position with the Corporation
and/or the Bank, and (iii) conduct that is clearly and patently detrimental to
the best interests of the Corporation and/or the Bank. In any proceeding,
judicial or otherwise, the Corporation and/or the Bank shall have the burden
proving by clear and convincing evidence that a termination of your employment
following a change in control was for cause. Termination of employment due to
your death or disability shall not be deemed a termination for cause;
b) A reduction in your salary, title, benefits, staff, perquisites, or
duties unless you agree in writing, but only if such event occurs within year(s)
after a Change in Control.
5. Entitlements Upon an Event of Termination
a) Unless otherwise provided herein, within 30 days after an Event of
Termination, the Bank shall pay you that amount that equals ______ times your
base amount as of the date of the Event of Termination;
b) Your entitlements under this Agreement and under any other plans or
agreements of the Corporation and/or the Bank that constitute "parachute
payments" shall never exceed that amount that is 2.99 times your "base amount."
For purposes of this Agreement, the term "parachute payment" shall have the
meaning ascribed to it by Section 280G(b)(2)(A) of the Internal Revenue Code of
1986, as amended and in effect on the date hereof (the "Code"), including the
flush language, but without regard to clause (ii) thereof, and the term "base
amount" shall have the meaning ascribed to it by Section 280G(b)(3) of the Code;
c) In the event that your entitlements to parachute payments under this
or any other agreement or plan of the Corporation and/or the Bank exceed 2.99
times your base amount, you agree that your total benefits shall be reduced to
2.99 times your base amount in such manner as you shall designate to the Bank in
writing. In default of such designation, such benefits shall be reduced in
proportion to their relative present values as determined by the Bank's
certified public accountants using the discount rate prescribed by Section
280G(d)(4) of the Code;
d) The Bank shall pay all legal fees and expenses that you incur
seeking to obtain or enforce any right or benefit provided by this Agreement;
e) You shall not be required to mitigate the amount of any payment
provided for in this Section 5 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Agreement be
reduced by any compensation you may earn as a result of employment by another
employer or by reason of retirement benefits after the date of this Agreement or
otherwise.
6. Successors; Binding Agreement.
a) The Corporation and the Bank will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation and/or the
Bank to assume expressly and perform this Agreement. Failure of the Corporation
and/or the Bank to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle you to compensation from the Bank in the same amount and on the
same terms as you would be entitled to hereunder following an Event of
Termination, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the date on which
you become entitled to such compensation from the Bank. As used in the
agreement, "Corporation" and "Bank" shall mean the Corporation and the Bank,
respectively, as hereinbefore defined and any successor to its respective
business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
b) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees, and legatees. If you should die while any amount
would still be payable to you hereunder if you had continued to live, unless
otherwise provided herein, such amount shall be paid in accordance with the
terms of this Agreement to your devisee, legatee or other designee or, if there
is no such designee, to your estate.
7. Notice. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified/registered mail, return receipt requested, postage prepaid, addressed
to the respective addresses set forth on the first page of this Agreement,
provided that all notices to the Corporation and/or the Bank shall be directed
to the attention of the Board with a copy to the Secretary of the Corporation
and/or the Bank, or to such other address as either party may have furnished to
the other in writing in accordance herewith, except that notice of a change of
address shall be effective only upon receipt.
8. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification, or discharge is agreed to
in writing and signed by you and such officer as may be specifically designated
by the Board. No waiver by either party hereto at any time of any breach of the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions as the same or at any prior or
subsequent time. No agreements or representations, oral, or otherwise, express
or implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Rhode Island.
9. Not Employment Agreement. No provision of this Agreement shall be
deemed to provide for a continuing right to employment with the Corporation or
the Bank.
10. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
11. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
12. Arbitration. Any controversy or claim arising out of or relating to
this contract, or the breach thereof, shall be settled by arbitration
administered by the American Arbitration Association in accordance with its
applicable rules and judgment and the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof.
13. Term of Agreement. This Agreement shall remain in effect so long as
you are employed by the Corporation and/or the Bank unless terminated in writing
upon 30 days notice by either party; provided, however, following a Change in
Control, that the Corporation and the Bank shall have no right to terminate this
agreement for year(s).
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return the enclosed copy of this letter which will then
constitute our agreement on this subject.
Sincerely,
WASHINGTON TRUST BANCORP, INC.
THE WASHINGTON TRUST COMPANY
By:_________________________________________
Name:
Title:
AGREED to this ____ day of _________, 1997.
- -----------------------------
[Name of Executive]
<PAGE>
APPENDIX 1
List of Appendices (not included as part of this exhibit)
Copies of the following laws, rules and regulations referenced in the
agreement to which this Appendix is a part are attached hereto and incorporated
therein by reference:
Appendix 1A -- Section 13d(3) and Section 14(d)(2) of the Exchange Act
Appendix 1B -- Rule 13d-3 promulgated under the Exchange Act
Appendix 1C -- Rule 14a-11 of Regulation 14A promulgated under the Exchange Act
Appendix 1D -- Section 280G of the Code
<PAGE>
<TABLE>
EXHIBIT 11
Washington Trust Bancorp, Inc.
Computation of Per Share Earnings
For the Six Months Ended June 30, 1997 and 1996
<CAPTION>
Three Months Six Months
----------------- --------- ----------------- ----------
Periods ended June 30, 1997 1996 1997 1996
- ------------------------------------------------- ----------------- --------- ----------------- ----------
(In thousands, except per share amounts)
Primary:
<S> <C> <C> <C> <C>
Weighted average shares 4,386.6 4,340.9 4,376.5 4,299.9
Common stock equivalents 153.3 138.6 165.0 138.7
------------- ------------- -------------- -------------
Primary weighted average shares 4,539.9 4,479.5 4,541.5 4,438.6
------------- ------------- -------------- --------------
Fully diluted:
Weighted average shares 4,386.6 4,340.9 4,376.5 4,299.9
Common stock equivalents 164.9 152.5 170.4 160.4
------------- ------------- ------------- --------------
Fully diluted weighted average shares 4,551.5 4,493.4 4,546.9 4,460.3
------------- ------------- ------------- --------------
Net income $2,261 $2,027 $4,412 $4,036
------------- ------------- ------------- --------------
Primary earnings per share $.50 $.45 $.97 $.91
------------- ------------- ------------- --------------
Fully diluted earnings per share $.50 $.45 $.97 $.90
------------- ------------- ------------- --------------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE CONSOLIDATED
FINANCIAL STATEMENTS AND NOTES THERETO OF WASHINGTON TRUST BANCORP, INC. AS
OF JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 20,489
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 8,200
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 235,806
<INVESTMENTS-CARRYING> 49,246
<INVESTMENTS-MARKET> 49,631
<LOANS> 440,150
<ALLOWANCE> 8,411
<TOTAL-ASSETS> 793,168
<DEPOSITS> 514,390
<SHORT-TERM> 15,753
<LIABILITIES-OTHER> 199,551
<LONG-TERM> 0
0
0
<COMMON> 275
<OTHER-SE> 63,199
<TOTAL-LIABILITIES-AND-EQUITY> 793,168
<INTEREST-LOAN> 18,986
<INTEREST-INVEST> 8,876
<INTEREST-OTHER> 132
<INTEREST-TOTAL> 27,994
<INTEREST-DEPOSIT> 8,489
<INTEREST-EXPENSE> 14,188
<INTEREST-INCOME-NET> 13,806
<LOAN-LOSSES> 600
<SECURITIES-GAINS> 627
<EXPENSE-OTHER> 11,643
<INCOME-PRETAX> 6,597
<INCOME-PRE-EXTRAORDINARY> 6,597
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,412
<EPS-PRIMARY> .97
<EPS-DILUTED> .97
<YIELD-ACTUAL> 8.14
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 8,495
<CHARGE-OFFS> 828
<RECOVERIES> 144
<ALLOWANCE-CLOSE> 8,411
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
