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 MARCH 31, 2000 or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934
Commission file number: 000-13091
-------------------------------------
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)
(401) 348-1200
(Registrant's telephone number, including area code)
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 April
30, 2000 was 10,975,055.
Page 1
<PAGE>
FORM 10-Q
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARY
For The Quarter Ended March 31, 2000
TABLE OF CONTENTS
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 2000 and December 31, 1999
Consolidated Statements of Income
Three Months Ended March 31, 2000 and 1999
Consolidated Statements of Changes in Shareholders' Equity
Three Months Ended March 31, 2000 and 1999
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2000 and 1999
Condensed Notes to Consolidated Financial Statements
Independent Auditors' Review Report
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
PART II. Other Information
Signatures
This report contains certain statements that may be considered forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The
Corporation's actual results could differ materially from those projected in the
forward-looking statements as a result, among other factors, of changes in
general national or regional economic conditions, changes in interest rates,
reductions in deposit levels necessitating increased borrowing to fund loans and
investments, changes in the size and nature of the Corporation's competition,
changes in loan default and charge-off rates, and changes in the assumptions
used in making such forward-looking statements.
<PAGE>
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARY (Dollars in thousands)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
2000 1999
- --------------------------------------------------------------------------------
Assets:
Cash and due from banks $17,208 $26,960
Federal funds sold and other short-term investments 15,900 17,300
Mortgage loans held for sale 175 1,647
Securities:
Available for sale, at fair value 368,519 330,431
Held to maturity, at cost; fair value $117,019
in 2000 and $112,868 in 1999 121,096 116,372
- --------------------------------------------------------------------------------
Total securities 489,615 446,803
Federal Home Loan Bank stock, at cost 18,671 17,627
Loans 555,017 549,025
Less allowance for loan losses 12,540 12,349
- --------------------------------------------------------------------------------
Net loans 542,477 536,676
Premises and equipment, net 23,149 23,409
Accrued interest receivable 7,007 6,010
Other assets 28,453 28,232
- --------------------------------------------------------------------------------
Total assets $1,142,655 $1,104,664
- --------------------------------------------------------------------------------
Liabilities:
Deposits:
Demand $99,952 $102,384
Savings 231,779 235,395
Time 346,179 322,974
- --------------------------------------------------------------------------------
Total deposits 677,910 660,753
Dividends payable 1,315 1,202
Short-term borrowings 1,642 4,209
Federal Home Loan Bank advances 373,423 352,548
Accrued expenses and other liabilities 9,938 8,705
- --------------------------------------------------------------------------------
Total liabilities 1,064,228 1,027,417
- --------------------------------------------------------------------------------
Shareholders' Equity:
Common stock of $.0625 par value; authorized
30 million shares; issued 10,939,557 shares
in 2000 and 10,914,763 shares in 1999 684 682
Paid-in capital 9,988 9,990
Retained earnings 68,376 66,766
Accumulated other comprehensive income (621) (191)
- --------------------------------------------------------------------------------
Total shareholders' equity 78,427 77,247
- --------------------------------------------------------------------------------
Total liabilities and shareholders' equity $1,142,655 $1,104,664
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARY (Dollars in thousands,
CONSOLIDATED STATEMENTS OF INCOME except per share data)
(Unaudited)
Three months ended March 31, 2000 1999
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest income:
Interest and fees on loans $11,649 $10,809
Interest on securities 7,407 6,109
Dividends on corporate stock and Federal Home Loan Bank stock 672 534
Interest on federal funds sold and other short-term investments 158 160
- ------------------------------------------------------------------------------------------------
Total interest income 19,886 17,612
- ------------------------------------------------------------------------------------------------
Interest expense:
Savings deposits 997 947
Time deposits 4,448 3,888
Federal Home Loan Bank advances 5,252 3,845
Other 23 220
- ------------------------------------------------------------------------------------------------
Total interest expense 10,720 8,900
- ------------------------------------------------------------------------------------------------
Net interest income 9,166 8,712
Provision for loan losses 350 482
- ------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 8,816 8,230
- ------------------------------------------------------------------------------------------------
Noninterest income:
Trust revenue 1,629 1,419
Service charges on deposit accounts 796 758
Merchant processing fees 271 249
Mortgage banking activities 122 498
Income from bank-owned life insurance 242 -
Net gains (losses) on sales of securities 384 262
Other income 433 360
- ------------------------------------------------------------------------------------------------
Total noninterest income 3,877 3,546
- ------------------------------------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits 4,676 4,138
Net occupancy 607 566
Equipment 773 717
Legal, audit and professional fees 455 209
Advertising and promotion 356 192
Merchant processing costs 225 159
Office supplies 168 168
Other 1,272 1,677
- ------------------------------------------------------------------------------------------------
Total noninterest expense 8,532 7,826
- ------------------------------------------------------------------------------------------------
Income before income taxes 4,161 3,950
Income tax expense 1,238 1,206
- ------------------------------------------------------------------------------------------------
Net income $2,923 $2,744
- ------------------------------------------------------------------------------------------------
Per share information:
Basic earnings per share $.27 $.25
Diluted earnings per share $.26 $.25
Cash dividends declared per share $.12 $.11
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARY (Dollars in thousands)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
Accumulated
Other
Common Paid-in Retained Comprehensive Treasury
Three months ended March 31, Stock Capital Earnings Income Stock Total
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 2000 $682 $9,990 $66,766 $(191) $- $77,247
Net income 2,923 2,923
Other comprehensive income net of tax:
Net unrealized losses on securities,
net of reclassification adjustment (430) (430)
-------------
Comprehensive income 2,493
Cash dividends declared (1,313) (1,313)
Shares issued 2 (2) -
- ----------------------------------------------------------------------------------------------------------------------
Balance at March 31, 2000 $684 $9,988 $68,376 $(621) $- $78,427
- ----------------------------------------------------------------------------------------------------------------------
Balance at January 1, 1999 $674 $9,050 $60,803 $7,400 $(354) $77,573
Net income 2,744 2,744
Other comprehensive income net of tax:
Net unrealized gains on securities,
net of reclassification adjustment (1,336) (1,336)
------------
Comprehensive income 1,408
Cash dividends declared (1,113) (1,113)
Shares issued 7 759 766
Shares repurchased (24) (24)
- ----------------------------------------------------------------------------------------------------------------------
Balance at March 31, 1999 $681 $9,809 $62,434 $6,064 $(378) $78,610
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARY (Dollars in thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended March 31, 2000 1999
- --------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $2,923 $2,744
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 350 482
Depreciation of premises and equipment 740 726
Amortization of premium in excess of accretion of
discount on debt securities (25) 103
Net gains on sales of securities (384) (262)
Net gains on loan sales (56) (288)
Proceeds from sales of loans 3,271 19,527
Loans originated for sale (1,742) (17,676)
Increase in accrued interest receivable (997) (604)
Decrease (increase) in other assets 89 (615)
Increase in accrued expenses and other liabilities 1,245 620
Other, net 89 (15)
- --------------------------------------------------------------------------------
Net cash provided by operating activities 5,503 4,742
- --------------------------------------------------------------------------------
Cash flows from investing activities:
Securities available for sale:
Purchases (49,263) (56,594)
Proceeds from sales 3,412 12,890
Maturities and principal repayments 7,508 14,052
Securities held to maturity:
Purchases (8,963) (7,043)
Maturities and principal repayments 4,243 5,967
Purchase of Federal Home Loan Bank stock (1,044) (58)
Principal collected on loans under loan originations (6,282) (14,348)
Proceeds from sales of other real estate owned 8 154
Purchases of premises and equipment (539) (1,280)
- --------------------------------------------------------------------------------
Net cash used in investing activities (50,920) (46,260)
- --------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase (decrease) in deposits 17,157 (8,945)
Net (decrease) increase in other short-term borrowings (2,567) 4,164
Proceeds from Federal Home Loan Bank advances 117,000 151,836
Repayment of Federal Home Loan Bank advances (96,125) (109,987)
Purchase of treasury stock - (24)
Proceeds from issuance of common stock - 766
Cash dividends paid (1,200) (1,005)
- --------------------------------------------------------------------------------
Net cash provided by financing activities 34,265 36,805
- --------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (11,152) (4,713)
Cash and cash equivalents at beginning of year 44,260 34,477
- --------------------------------------------------------------------------------
Cash and cash equivalents at end of period $33,108 $29,764
- --------------------------------------------------------------------------------
(Continued)
<PAGE>
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Three months ended March 31, 2000 1999
- --------------------------------------------------------------------------------
Noncash Investing and Financing Activities:
Net transfers from loans to other real estate owned $106 $243
Loans charged off 237 394
Decrease in net unrealized gain on
securities available for sale (430) (1,336)
Supplemental Disclosures:
Interest payments $10,178 $8,689
Income tax payments 53 154
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARY (Dollars in thousands)
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The accounting and reporting policies of Washington Trust Bancorp, Inc. and
subsidiary (the "Corporation") are in accordance with generally accepted
accounting principles and conform to general practices of the banking industry.
In the opinion of management, the accompanying consolidated financial statements
present fairly the Corporation's financial position as of March 31, 2000 and
December 31, 1999 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. The Corporation has not changed its accounting and
reporting policies from those disclosed in the Corporation's Annual Report on
Form 10-K for the year ended December 31, 1999.
(2) Securities Available for Sale
<TABLE>
<CAPTION>
Securities available for sale are summarized as follows:
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
March 31, 2000
U.S. Treasury obligations and obligations
of U.S. government-sponsored agencies $103,441 $288 $(1,467) $102,262
Mortgage-backed securities 212,305 392 (3,093) 209,604
Corporate bonds 38,221 11 (869) 37,363
Corporate stocks 14,470 5,873 (1,053) 19,290
- ---------------------------------------------------------------------------------------------------------------------
Total 368,437 6,564 (6,482) 368,519
- ---------------------------------------------------------------------------------------------------------------------
December 31, 1999
U.S. Treasury obligations and obligations
of U.S. government-sponsored agencies 87,558 347 (1,595) 86,310
Mortgage-backed securities 191,934 70 (2,918) 189,086
Corporate bonds 34,364 31 (711) 33,684
Corporate stocks 15,833 6,582 (1,064) 21,351
- ---------------------------------------------------------------------------------------------------------------------
Total $329,689 $7,030 $(6,288) $330,431
- ---------------------------------------------------------------------------------------------------------------------
<FN>
Securities available for sale with a fair value of $64,720 and $47,152 were
pledged to secure Treasury Tax and Loan deposits, borrowings and public deposits
at March 31, 2000 and December 31, 1999, respectively.
For the three months ended March 31, 2000, proceeds from sales of securities
available for sale amounted to $3,412 while net realized gains on these sales
amounted to $384.
</FN>
</TABLE>
<PAGE>
(3) Securities Held to Maturity
<TABLE>
<CAPTION>
The amortized cost and fair value of securities held to maturity are summarized
as follows:
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
March 31, 2000
U.S. Treasury obligations and obligations
of U.S. government-sponsored agencies $31,817 $- $(990) $30,827
Mortgage-backed securities 63,358 29 (2,571) 60,816
States and political subdivisions 25,921 10 (555) 25,376
- ---------------------------------------------------------------------------------------------------------------------
Total 121,096 39 (4,116) 117,019
- ---------------------------------------------------------------------------------------------------------------------
December 31, 1999
U.S. Treasury obligations and obligations
of U.S. government-sponsored agencies 28,231 - (895) 27,336
Mortgage-backed securities 62,209 54 (2,189) 60,074
States and political subdivisions 25,932 23 (497) 25,458
- ---------------------------------------------------------------------------------------------------------------------
Total $116,372 $77 $(3,581) $112,868
- ---------------------------------------------------------------------------------------------------------------------
<FN>
There were no sales or transfers of securities held to maturity during the three
months ended March 31, 2000.
</FN>
</TABLE>
(4) Loan Portfolio
The following is a summary of loans:
March 31, December 31,
2000 1999
- --------------------------------------------------------------------------------
Commercial:
Mortgages $116,498 $113,719
Construction and development 2,142 2,902
Other (1) 110,082 115,739
- --------------------------------------------------------------------------------
Total commercial 228,722 232,360
Residential real estate:
Mortgages 220,008 212,719
Homeowner construction 12,498 12,995
- --------------------------------------------------------------------------------
Total residential real estate 232,506 225,714
Consumer 93,789 90,951
- --------------------------------------------------------------------------------
Total loans $555,017 $549,025
- --------------------------------------------------------------------------------
(1) Loans to businesses and individuals, a substantial portion of which is fully
or partially collateralized by real estate
(5) Allowance For Loan Losses
The following is an analysis of the allowance for loan losses:
Three months ended March 31, 2000 1999
- --------------------------------------------------------------------------------
Balance at beginning of period $12,349 $10,966
Provision charged to expense 350 482
Recoveries 78 45
Loans charged off (237) (160)
- --------------------------------------------------------------------------------
Balance at end of period $12,540 $11,333
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REVIEW REPORT
The Board of Directors and Shareholders
Washington Trust Bancorp, Inc.:
We have reviewed the consolidated balance sheet of Washington Trust Bancorp,
Inc. and subsidiary (the "Corporation") as of March 31, 2000, and the related
consolidated statements of income, changes in shareholders' equity and cash
flows for the three-month periods ended March 31, 2000 and 1999. These
consolidated financial statements are the responsibility of the Corporation's
management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Washington Trust Bancorp, Inc. and
subsidiary as of December 31, 1999, and the related consolidated statements of
income, changes in stockholders' equity and cash flows for the year then ended
(not presented herein); and in our report dated January 17, 2000, we expressed
an unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the consolidated balance sheet as of
December 31, 1999, is fairly stated, in all material respects.
KPMG LLP
Providence, Rhode Island
April 20, 2000
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The Corporation reported net income of $2.9 million, or $.26 per diluted share,
for the three months ended March 31, 2000. Net income for the first quarter of
2000 was 6.5% higher than the $2.7 million, or $.25 per diluted share, earned in
the first quarter of 1999.
The Corporation's rates of return on average assets and average equity for the
three months ended March 31, 2000 were 1.05% and 15.01%, respectively.
Comparable amounts for the first quarter of 1999 were 1.09% and 14.01%.
For the three months ended March 31, 2000, net interest income (the difference
between interest earned on loans and investments and interest paid on deposits
and other borrowings) amounted to $9.2 million, an increase of 5.2% from the
$8.7 million reported for the three months ended March 31, 1999. This increase
was primarily attributable to growth in interest-earning assets. (See additional
discussion under the caption "Net Interest Income".)
The Corporation's provision for loan losses was $350 thousand and $482 thousand
in the first quarter of 2000 and 1999, respectively.
Other noninterest income (noninterest income excluding net gains on sales of
securities) amounted to $3.5 million for the three months ended March 31, 2000,
up 6.4% from the corresponding 1999 period. The increase was primarily due to
growth in revenues for trust services and income from bank-owned life insurance
("BOLI"), offset in part by a decline in revenue from mortgage banking
activities. Trust revenue totaled $1.6 million for the first quarter of 2000, up
14.8% from the first quarter of 1999 due primarily to an increase in assets
under management. During the second quarter of 1999, the Corporation purchased
BOLI as a financing tool for employee benefits. Revenue from mortgage banking
activities associated with the originations of loans for the secondary market
amounted to $122 thousand for the first quarter of 2000, down $376 thousand from
the same 1999 period. Due to rising interest rates, mortgage refinancing
activity has decreased, resulting in a decline of loans sold in the secondary
market.
Net realized securities gains totaled $384 thousand for the three months ended
March 31, 2000. In the first quarter of 1999, net realized securities gains
amounted to $270 thousand, including $262 thousand related to a contribution of
appreciated equity securities to the Corporation's charitable foundation. The
cost of this contribution amounted to approximately $270 thousand and was
included in noninterest expenses in the first quarter of 1999.
For the quarter ended March 31, 2000, total noninterest expense amounted to $8.5
million, an increase of 9.0% from the comparable 1999 amount. The increase was
primarily attributable to higher salaries and benefits expense, increases in
legal, audit and professional fees, and increases in advertising and promotion
costs. For the three months ended March 31, 2000, legal, audit and professional
fees totaled $455 thousand, up $246 thousand from the corresponding 1999 period.
The increase was primarily due to legal costs associated with an ongoing
litigation matter. These costs are expected to continue through the second
quarter of 2000. At this time, management of the Corporation is not able to
determine whether such costs will continue beyond the second quarter. As
mentioned above, included in other noninterest expense for the first quarter of
1999 was the cost of a charitable contribution to the Corporation's charitable
foundation.
<PAGE>
Net Interest Income
(The accompanying schedule entitled "Average Balances / Net Interest Margin -
Fully Taxable Equivalent Basis (FTE)" should be read in conjunction with this
discussion.)
FTE net interest income for the three months ended March 31, 2000 amounted to
$9.5 million, up 5.0% over the same 1999 period due primarily to growth in
interest-earning assets. For the three months ended March 31, 2000, average
interest-earning assets amounted to $1.053 billion, up $96.4 million, or 10.1%,
over the comparable 1999 amount due to growth in both the securities portfolio
and in total loans. This growth in securities and loans was funded by Federal
Home Loan Bank ("FHLB") advances and to a lesser extent, deposit growth. The net
interest margins (FTE net interest income as a percentage of average
interest-earning assets) for the three months ended March 31, 2000 and 1999 were
3.61% and 3.81%, respectively. The interest rate spread declined 21 basis points
to 3.08% for the first quarter of 2000. Earning asset yields rose 11 basis
points, while the cost of interest-bearing liabilities increased 32 basis
points, thereby narrowing the net interest spread. Higher funding costs
associated with time deposits and FHLB advances were primarily responsible for
the decrease in the net interest margin.
Total average securities rose $48.6 million, or 10.7%, over the comparable prior
year period, mainly due to purchases of taxable debt securities. The FTE rate of
return on securities was 6.79% for the three months ended March 31, 2000, up
from 6.25% for the same 1999 period. The increase in yields reflects higher
marginal rates on investment purchases.
The yield on average total loans amounted to 8.54% for the three months ended
March 31, 2000, down from 8.75% in the comparable 1999 period. The decrease in
yield on loans was primarily attributable to new loan originations, after the
first quarter of 1999, at relatively lower rates. Average loans for the three
months ended March 31, 2000 rose $47.9 million, or 9.5%, over the prior year and
amounted to $550.4 million. Average commercial loans rose 11.0% to $230.3
million. The yield on commercial loans amounted to 9.28%, down from the prior
year yield of 9.56%. Average residential real estate loans amounted to $228.4
million, up 9.5% from the prior year level. The yield on residential real estate
loans declined 23 basis points from the prior year, amounting to 7.73%. Average
consumer loans rose 6.0% over the prior year. The yield on consumer loans
amounted to 8.68%, compared to the prior year yield of 8.71%.
As a result of higher levels of FHLB advances and increases in time and savings
deposits, average interest-bearing liabilities increased 11.2% to $932.9 million
at March 31, 2000. Due to higher rates paid on both borrowed funds and time
deposits, the Corporation's total cost of funds on interest-bearing liabilities
amounted to 4.62% for the three months ended March 31, 2000, up from 4.30% for
the comparable 1999 period. Average FHLB advances for the three months ended
March 31, 2000 amounted to $362.3 million, up 24.9% from the $290.0 million
average balance for the same 1999 period. The average rate paid on FHLB advances
for the three months ended March 31, 2000 was 5.83%, an increase of 45 basis
points from the prior year rate. Average time deposits increased $24.6 million
to $338.9 million with an increase of 26 basis points in the rate paid. Average
savings deposits for the three months ended March 31, 2000 increased 6.0% from
the comparable 1999 amount to $216.9 million. The rate paid on these deposits
was 1.74% for the first three months of 2000, compared to 1.77% for the same
1999 period. For the three months ended March 31, 2000, average demand deposits,
an interest-free funding source, were up by $11.2 million, or 13.1%, from the
same prior year period.
<PAGE>
Average Balances / Net Interest Margin - Fully Taxable Equivalent Basis
The following table sets forth average balance and interest rate information.
Income is presented on a fully taxable equivalent basis (FTE). For dividends on
corporate stocks, the 70% federal dividends received deduction is also used in
the calculation of tax equivalency. Loans held for sale, 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. Customer overdrafts are excluded from amounts presented for
loans. Average balances for securities are presented at cost, with any
unrealized gains and losses of securities available for sale included in
noninterest-earning assets.
<TABLE>
<CAPTION>
Three months ended March 31, 2000 1999
- ---------------------------------------- ------------------------------------- -------------------------------------
Average Yield/ Average Yield/
(Dollars in thousands) Balance Interest Rate Balance Interest Rate
- ---------------------------------------- ------------- ----------- ----------- -------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Residential real estate loans $228,363 $4,388 7.73% $208,537 $4,095 7.96%
Commercial and other loans 230,326 5,313 9.28% 207,439 4,889 9.56%
Consumer loans 91,667 1,979 8.68% 86,517 1,857 8.71%
- --------------------------------------------------------------------------------------------------------------------
Total loans 550,356 11,680 8.54% 502,493 10,841 8.75%
Federal funds sold and other
short-term investments 10,968 158 5.81% 13,867 160 4.67%
Taxable debt securities 432,870 7,128 6.62% 382,522 5,794 6.14%
Nontaxable debt securities 25,928 428 6.64% 27,178 476 7.11%
Corporate stocks and FHLB stock 33,332 778 8.55% 30,950 631 8.27%
- --------------------------------------------------------------------------------------------------------------------
Total securities 503,098 8,492 6.79% 454,517 7,061 6.25%
- --------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 1,053,454 20,172 7.70% 957,010 17,902 7.59%
- --------------------------------------------------------------------------------------------------------------------
Non interest-earning assets 59,687 52,838
- --------------------------------------------------------------------------------------------------------------------
Total assets $1,113,141 $1,009,848
- --------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity:
Savings deposits $229,856 $997 1.74% $216,857 $947 1.77%
Time deposits 338,894 4,448 5.28% 314,318 3,888 5.02%
FHLB advances 362,327 5,252 5.83% 290,031 3,845 5.38%
Other 1,821 23 5.10% 17,490 220 5.11%
- --------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 932,898 10,720 4.62% 838,696 8,900 4.30%
Demand deposits 96,158 85,003
Non interest-bearing liabilities 6,198 7,803
- --------------------------------------------------------------------------------------------------------------------
Total liabilities 1,035,254 931,502
Total shareholders' equity 77,887 78,346
- --------------------------------------------------------------------------------------------------------------------
Total liabilities and
shareholders' equity $1,113,141 $1,009,848
- --------------------------------------------------------------------------------------------------------------------
Net interest income $9,452 $9,001
- --------------------------------------------------------------------------------------------------------------------
Net interest spread 3.08% 3.29%
- --------------------------------------------------------------------------------------------------------------------
Net interest margin 3.61% 3.81%
- --------------------------------------------------------------------------------------------------------------------
<FN>
Interest income amounts presented in the table above include the following
adjustments for taxable equivalency:
(Dollars in thousands)
Three months ended March 31, 2000 1999
- --------------------------------------------------------------------------------
Commercial and other loans $30 $32
Nontaxable debt securities 149 161
Corporate stocks 107 96
</FN>
</TABLE>
<PAGE>
Financial Condition and Liquidity
Total assets rose 3.4% from $1.105 billion at December 31, 1999 to $1.143
billion at March 31, 2000. Average assets totaled $1.113 billion for the three
months ended March 31, 2000, up 10.2% over the comparable 1999 period.
Nonperforming assets (nonaccrual loans and property acquired through
foreclosure) amounted to $3.9 million, or .34% of total assets, at March 31,
2000 compared to $3.8 million, or .35% of total assets, at December 31, 1999.
The allowance for loan losses amounted to $12.5 million, or 2.26% of total
loans, at March 31, 2000, compared to $12.3 million, or 2.25%, at December 31,
1999.
Securities Available for Sale - The carrying value of securities available for
sale at March 31, 2000 amounted to $368.5 million, an increase of 11.8% over the
December 31, 1999 amount of $329.7 million. This increase was attributable to
purchases of debt securities. The net unrealized gain on securities available
for sale amounted to $82 thousand, down from the December 31, 1999 balance of
$742 thousand. This decrease was attributable to the effects of higher interest
rates.
Securities Held to Maturity - The carrying value of securities held to maturity
amounted to $121.1 million at March 31, 2000, up from $116.4 million at December
31, 1999. This increase was due to purchases of obligations of U.S.
government-sponsored agencies and mortgage-backed securities. The net unrealized
loss on securities held to maturity amounted to approximately $4.1 million at
March 31, 2000, compared to $3.5 million at December 31, 1999. This decrease was
attributable to the effects of higher interest rates.
Loans - Total loans amounted to $555.0 million at March 31, 2000. During the
first three months of 2000, total loans increased $6.0 million, with increases
in the residential real estate and consumer loan portfolios. Total residential
real estate loans amounted to $232.5 million, an increase of $6.8 million, or
3.01%, from the December 31, 1999 balance of $225.7. Total consumer loans
increased $2.8 million, or 3.1%, from December 31, 1999 and amounted to $93.8
million. Commercial loans decreased $3.6 million, or 1.6%, to $228.7 million at
March 31, 2000.
Deposits - Total deposits amounted to $677.9 million at March 31, 2000, up $17.2
million from $660.8 million at December 31, 1999. In the first quarter of 2000,
time deposits increased $23.2 million and amounted to $346.2 million at March
31, 2000. Savings deposits declined $3.6 million from the December 31, 1999
balance to $231.8 million at March 31, 2000. Demand deposits totaled $100.0
million at March 31, 2000, compared to $102.4 million at December 31, 1999.
Borrowings - The Corporation utilizes advances from the Federal Home Loan Bank
as well as other short-term borrowings as part of its overall funding strategy.
In addition to deposit growth, additional FHLB advances were used to meet
short-term liquidity needs, to fund loan growth and to purchase securities. FHLB
advances amounted to $373.4 million at March 31, 2000, up $20.9 million from the
December 31, 1999 amount. In addition, short-term borrowings outstanding at
March 31, 2000 amounted to $1.6 million.
For the three months ended March 31, 2000, net cash provided by operations
amounted to $5.5 million, the majority of which was generated by net income. Net
cash used in investing activities amounted to $50.9 million and was primarily
used to purchase securities. Net cash provided by financing activities of $34.3
million was generated mainly by a net increase in FHLB advances and by an
increase in total deposits. (See Consolidated Statements of Cash Flows for
additional information.)
<PAGE>
Nonperforming Assets
Nonperforming assets are summarized in the following table:
March 31, December 31,
(Dollars in thousands) 2000 1999
- --------------------------------------------------------------------------------
Nonaccrual loans 90 days or more past due $1,889 $1,902
Nonaccrual loans less than 90 days past due 1,828 1,896
- --------------------------------------------------------------------------------
Total nonaccrual loans 3,717 3,798
Other real estate owned 142 49
- --------------------------------------------------------------------------------
Total nonperforming assets $3,859 $3,847
- --------------------------------------------------------------------------------
Nonaccrual loans as a percentage of total loans .67% .69%
Nonperforming assets as a percentage of total assets .34% .35%
Allowance for loan losses to nonaccrual loans 337.36% 325.15%
Allowance for loan losses to total loans 2.26% 2.25%
Not included in the analysis of nonperforming assets at March 31, 2000 and
December 31, 1999 above are approximately $179 thousand and $120 thousand,
respectively, of loans greater than 90 days past due and still accruing. These
loans consist primarily of residential mortgages that are considered
well-collateralized and in the process of collection and therefore are deemed to
have no loss exposure.
Impaired loans consist of all nonaccrual commercial loans. At March 31, 2000,
the recorded investment in impaired loans was $2.0 million, which had a related
allowance amounting to $341 thousand. During the three months ended March 31,
2000, the average recorded investment in impaired loans was $2.1 million. Also
during this period, interest income recognized on impaired loans amounted to
approximately $55 thousand. Interest income on impaired loans is recognized on a
cash basis only.
The following is an analysis of nonaccrual loans by loan category:
March 31, December 31,
(Dollars in thousands) 2000 1999
- --------------------------------------------------------------------------------
Residential mortgages $1,103 $1,015
Commercial:
Mortgages 719 797
Other (1) 1,203 1,242
Consumer 692 744
- --------------------------------------------------------------------------------
Total nonaccrual loans $3,717 $3,798
- --------------------------------------------------------------------------------
(1) Loans to businesses and individuals, a substantial portion of which is fully
or partially collateralized by real estate.
Capital Resources
Total equity capital amounted to $78.4 million, or 6.9% of total assets, at
March 31, 2000. This compares to $77.2 million, or 7.0%, at December 31, 1999.
Total equity increased by approximately $1.2 million from December 31, 1999. The
increase in equity resulting from earnings retention was reduced by $430
thousand decline in net unrealized gains on securities. (See the Consolidated
Statements of Changes in Shareholders' Equity for additional information.)
At March 31, 2000, the Corporation's Tier 1 capital ratio was 12.46% and the
total risk-adjusted capital ratio was 14.07%. These ratios were both above the
ratios required to be categorized as well-capitalized.
Dividends payable at March 31, 2000 amounted to approximately $1.3 million,
representing $.12 per share payable on April 14, 2000, an increase of 9% over
the $.11 per share declared in the fourth quarter of 1999. Dividends declared
per share represent historical per share dividends declared by the Corporation
and have not been restated as a result of the acquisition of Pier Bank. 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.
Book value per share as of March 31, 2000 and December 31, 1999 amounted to
$7.17 and $7.08, respectively.
Subsequent Event
On April 25, 2000, the Corporation announced that it had signed a definitive
agreement to acquire Phoenix Investment Management Company of Providence, Rhode
Island. Phoenix is an independent investment advisory firm, with assets under
management in excess of $1 billion. Pursuant to the terms of the Agreement and
Plan of Merger, dated April 24, 2000, the acquisition will be effected by means
of the merger of Phoenix with and into The Washington Trust Company, the
wholly-owned subsidiary of the Corporation. Under the terms of the agreement,
the Corporation will acquire 100% of Phoenix for 1,150,000 shares of Washington
Trust Bancorp, Inc.'s common stock. Based on the Corporation's closing stock
price on April 24, 2000, the transaction would be valued at approximately
$17,250,000. The transaction, which is subject to regulatory approval, is
expected to be a tax-free reorganization and accounted for as a pooling of
interests.
Litigation
The Bank is party to a lawsuit filed by a former corporate customer and the
customer's shareholders for damages which the plaintiffs allegedly incurred as a
result of an embezzlement by an officer of the customer. Management believes,
based on its review with counsel of the development of this mater to date that
the Bank has asserted meritorious defenses in this litigation. Additionally,
the Bank has filed counterclaims against the customer and its principal
shareholder, as well as claims against the officer allegedly responsible for the
embezzlement. The Bank is vigorously asserting its defenses and affirmative
claims. The discovery phase of the case has been completed and the case is
currently scheduled for trial on May 30, 2000. During discovery, the plaintiffs
have acknowledged that their total asserted damages are no more than $5.0 to
$5.5 million, plus an unspecified amount of interest thereon. Because of the
numerous uncertainties that surround the litigation, management and legal
counsel are unable to estimate the amount of loss, if any, that the Bank may
incur with respect to this litigation. Consequently, no loss provision for this
lawsuit has been recorded.
Year 2000
The statements in the following section include "Year 2000 readiness disclosure"
within the meaning of the Year 2000 Information and Readiness Disclosure Act.
During 1999, the Corporation completed a detailed assessment of all its
information technology (IT) and non-information technology (non-IT) systems with
respect to the century date change (the transition from the year 1999 to 2000),
with special emphasis on mission-critical systems. IT and non-IT hardware and
software were inventoried and those not Year 2000 ready were identified,
remediated and tested. While the Corporation's assessment of Year 2000 issues
was ongoing and subject to on-going regulatory mandated verification and review
through March 31, 2000, the Corporation did not experience any effects from Year
2000 issues.
Total costs associated with the project will amount to approximately $526
thousand. The Corporation has accounted for most of these costs as expense
items. In some cases, acquired hardware and software items were capitalized and
amortized in accordance with the Corporation's existing accounting policy. Total
costs incurred through March 31, 2000 amounted to approximately $513 thousand.
These costs consisted primarily of system testing and modification, internal
staffing and consulting, and were primarily recorded in noninterest expenses.
The remaining project costs will be incurred in the second quarter of 2000.
There can be no guarantee that the systems of other companies, or outside
vendors, on which the Corporation's systems rely, have been fully remedied.
Therefore, the Corporation could possibly experience a negative impact to the
extent other entities not affiliated with the Corporation are not Year 2000
compliant.
Recent Accounting Developments
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities" establishes accounting and
reporting standards for derivative instruments and for hedging activities. SFAS
No. 133 requires a corporation to recognize all derivatives as either assets or
liabilities in the balance sheet and to measure those instruments at fair value.
This Statement defines conditions and criteria to be used in designating a
derivative as a specific type of hedging instrument. SFAS No. 133 also explains
the accounting for changes in the fair value of a derivative, which depends on
the intended use and the resulting designation. Under this Statement, a
corporation is required to establish at the inception of the hedge the method to
be used for assessing the effectiveness of the hedging derivative and the
measurement approach for determining the ineffective aspect of the hedge. Those
methods must be consistent with the corporation's approach to managing risk. In
June 1999, the Financial Accounting Standards Board (FASB) issued SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of FASB Statement No. 133". SFAS No. 133 is effective for all
fiscal quarters of all fiscal years beginning after June 15, 2000 and is not to
be applied retroactively to the financial statements of prior periods. The
Corporation has not yet determined what the effect of the adoption of this
pronouncement will have on the financial position and earnings of the
Corporation.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Sensitivity and Liquidity
Interest rate risk is one of the major market risks faced by the Corporation.
The Corporation's objective is to manage assets and funding sources to produce
results which are consistent with its liquidity, capital adequacy, growth, risk
and profitability goals.
The Corporation manages interest rate risk using income simulation to measure
interest rate risk inherent in its on-balance sheet and off-balance sheet
financial instruments at a given point in time by showing the effect of interest
rate shifts on net interest income over a 60 month period. The simulation
results are reviewed to determine whether the negative exposure of net interest
income to changes in interest rates remains within established tolerance levels
over a 24-month horizon, and to develop appropriate strategies to manage this
exposure. In addition, the ALCO reviews 60-month horizon results to assess
longer-term risk inherent in the balance sheet, although no 60-month horizon
tolerance levels are specified. As of March 31, 2000, the Corporation's
estimated exposure as a percentage of net interest income for the next 12 month
period and the subsequent 12 month period thereafter (months 13 - 24),
respectively, is as follows:
Months 1 - 12 Months 13 - 24
- ---------------------------------- ------------------- --------------------
200 basis point increase in rates -1.7% -6.3%
200 basis point decrease in rates +0.8% +0.9%
Since this simulation assumes the Corporation's balance sheet will remain static
over the 24-month simulation horizon, the results do not reflect adjustments in
strategy that the Corporation could implement in response to rate shifts, and
should therefore not be relied upon as a projection of net interest income.
For a complete discussion of interest rate sensitivity and liquidity, including
simulation assumptions, see the Corporation's Annual Report on Form 10-K for the
year ended December 31, 1999.
The Corporation also monitors the potential change in market value of its
available for sale debt securities using both parallel rate shifts of up to 200
basis points and "value at risk" analysis. The purpose is to determine market
value exposure which may not be captured by income simulation, but which might
result in changes to the Corporation's capital position. Results are calculated
using industry-standard modeling analytics and securities data. The Corporation
uses the results to manage the effect of market value changes on the
Corporation's capital position. As of March 31, 2000, an immediate 200 basis
point rise in rates would result in a 4.2% decline in the value of the
Corporation's available for sale debt securities. Conversely, a 200 basis point
fall in rates would result in a 2.4% increase in the value of the Corporation's
available for sale debt securities. "Value at risk" analysis measures the
theoretical maximum market value loss over a given time period based on recent
historical price activity of different classes of securities. The anticipated
maximum market value reduction for the bank's available for sale securities
portfolio at March 31, 2000, including both debt and equity securities, was
3.9%, assuming a one-year time horizon and a 5% probability of occurrence for
"value at risk" analysis.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
On January 28, 1997, a suit was filed against the Bank in the
Superior Court of Washington County, Rhode Island by Maxson
Automatic Machinery Company ("Maxson"), a former corporate
customer, and Maxson's shareholders for damages which the
plaintiffs allegedly incurred as a result of an embezzlement by
Maxson's former president and treasurer. The suit alleges that the
Bank wrongly permitted this individual, while an officer of
Maxson, to divert funds from Maxson's account at the Bank for his
personal benefit. The claims against the Bank are based upon
theories of breach of fiduciary duty, negligence, breach of
contract, unjust enrichment, conversion, failure to act in a
commercially reasonable manner, and constructive fraud.
Management believes, based on its review with counsel of the
development of this matter to date, that the Bank has asserted
meritorious affirmative defenses in this litigation. Additionally,
the Bank has filed counterclaims against Maxson and its principal
shareholder as well as claims against the officer allegedly
responsible for the embezzlement. The Bank is vigorously asserting
its defenses and affirmative claims. The discovery phase of the
case has been completed and the case is currently scheduled for
trial on May 30, 2000. During discovery, the plaintiffs have
acknowledged that their total asserted damages are no more than
$5.0 to $5.5 million, plus an unspecified amount of interest
thereon. Because of the numerous uncertainties that surround the
litigation, management and legal counsel are unable to estimate
the amount of loss, if any, that the Bank may incur with respect
to this litigation. Consequently, no loss provision has been
recorded.
The Corporation is involved in various other claims and legal
proceedings arising out of the ordinary course of business.
Management is of the opinion, based on its review with counsel of
the development of such matters to date, that the ultimate
disposition of such other matters will not materially affect the
consolidated financial position or results of operations of the
Corporation.
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit index
Exhibit No.
10 Change in Control Agreements (1)
11 Statement re Computation of Per Share Earnings
(b) There were no reports on Form 8-K filed during the quarter ended
March 31, 2000.
(1) Management contract or compensatory plan or arrangement.
<PAGE>
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)
May 12, 2000 By: John C. Warren
-------------------
John C. Warren
Chairman and Chief Executive Officer
(principal executive officer)
May 12, 2000 By: David V. Devault
---------------------
David V. Devault
Executive Vice President, Treasurer
and Chief Financial Officer
(principal financial and accounting officer)
Exhibit 10
Change in Control Agreements with Executive Officers
WASHINGTON TRUST BANCORP, INC.
23 BROAD STREET
WESTERLY, RHODE ISLAND 02891
In the first quarter of 2000, the Registrant revised its Change of Control
Agreement with its executive officers. The form of Agreement contains blanks
where the multiple of the executive's base amount and the term of continued
benefits provided under the Agreement vary for certain executives. The executive
officers who entered into the Agreement, the multiple of the executive's base
amount and the term of continued benefits provided under the Agreement are
listed in the following chart:
<TABLE>
<CAPTION>
Number of Times Term of
Base Amount Continued Benefits
Executive Officer (Section 4 a) (Section 4 b & c)
- ----------------------------------------------------------------------- --------------------- -----------------------
<S> <C> <C>
John C. Warren
Chairman and Chief Executive Officer 3 times 36 months
John F. Treanor
President and Chief Operating Officer 2 times 24 months
David V. Devault
Executive Vice President, Treasurer and Chief Financial Officer 2 times 24 months
Harvey C. Perry II
Senior Vice President and Secretary 2 times 24 months
Stephen M. Bessette
Senior Vice President - Retail Lending 1 time 12 months
Vernon F. Bliven
Senior Vice President - Human Resources 1 time 12 months
William D. Gibson
Senior Vice President - Credit Administration 1 time 12 months
Joseph E. LaPlume (1)
Senior Vice President and Regional Manager 1 time 12 months
Barbara J. Perino
Senior Vice President - Operations and Technology 1 time 12 months
B. Michael Rauh, Jr.
Senior Vice President - Retail Banking 1 time 12 months
James M. Vesey
Senior Vice President - Commercial Lending 1 time 12 months
<FN>
(1) For this executive officer, this agreement supercedes and fully replaces
any previous executive severance agreement (but not the Employment
Agreement between the executive and The Washington Trust Company dated
February 22, 1999).
</FN>
</TABLE>
<PAGE>
Executive Severance Agreement
AGREEMENT made as of this 10th day of February, 2000 by and among
Washington Trust Bancorp, Inc., a Rhode Island corporation with its principal
place of business in Westerly, Rhode Island (the "Corporation"), Washington
Trust Company of Westerly, a Rhode Island banking corporation with its principal
place of business in Westerly, Rhode Island (the "Bank") and
________________________________________ of ___________________ (the
"Executive"), an individual presently employed as an executive of the Bank.
1. Purpose. The Corporation considers it essential to the best
interests of its stockholders to foster the continuous employment of key
management personnel employed by the Bank. The Board of Directors of the
Corporation (the "Board") recognizes, however, that, as is the case with many
publicly held corporations, the possibility of a Change in Control (as defined
in Section 2 hereof) exists and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the departure or
distraction of management personnel to the detriment of the Corporation and its
stockholders. Therefore, 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, including the Executive,
to their assigned duties without distraction in the face of potentially
disturbing circumstances arising from the possibility of a Change in Control.
Nothing in this Agreement shall be construed as creating an express or implied
contract of employment and, except as otherwise agreed in writing between the
Executive and the Corporation and/or the Bank, the Executive shall not have any
right to be retained in the employ of the Corporation and/or the Bank.
2. Change in Control. For purposes of this Plan, a "Change in Control"
shall mean the occurrence of any one of the following events:
(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. Terminating Event. A "Terminating Event" shall mean any of the
events provided in this Section 3 occurring:
(a) within 13 months following a Change in Control,
termination by the Corporation and/or the Bank of the employment of the
Executive with the Corporation and/or the Bank for any reason other
than for Cause or the death or disability (as determined under the
Corporation's and/or the Bank's then existing long-term disability
coverage) of the Executive. "Cause" shall mean, and shall be limited
to, the occurrence of any one or more of the following events:
(i) a willful act of dishonesty by the Executive with
respect to any material matter involving the Corporation
and/or the Bank; or
(ii)conviction of the Executive of a crime involving
moral turpitude;
(iii) the gross or willful failure by the Executive
(other than any such failure after the Executive gives notice
of termination for Good Reason) to substantially perform the
Executive's duties with the Corporation and/or the Bank and
the continuation of such failure for a period of 30 days after
delivery by the Corporation and/or the Bank to the Executive
of written notice specifying the scope and nature of such
failure and their intention to terminate the Executive for
Cause.
A Terminating Event shall not be deemed to have occurred
pursuant to this Section 3(a) solely as a result of the Executive being
an employee of any direct or indirect successor to the business or
assets of the Corporation and/or the Bank, rather than continuing as an
employee of the Corporation and/or the Bank following a Change in
Control. In any proceeding, judicial or otherwise, the Corporation
and/or the Bank shall have the burden of proving by clear and
convincing evidence that the termination of employment was for "Cause."
For purposes of clauses (i) and (iii) of this Section 3(a), no act, or
failure to act, on the Executive's part shall be deemed "willful"
unless done, or omitted to be done, by the Executive without reasonable
belief that the Executive's act, or failure to act, was in the best
interest of the Corporation and/or the Bank; or
(b) within 12 months following a Change in Control,
termination by the Executive of the Executive's employment with the
Corporation and/or the Bank for Good Reason. "Good Reason" shall mean
the occurrence of any of the following events:
(i) a substantial adverse change, not consented to by
the Executive, in the nature or scope of the Executive's
responsibilities, authorities, powers, position, functions, or
duties from the responsibilities, authorities, powers,
position, functions, or duties exercised by the Executive
immediately prior to the Change in Control; or
(ii)a reduction in the Executive's annual base salary
as in effect on the date hereof or as the same may be
increased from time to time except for across-the-board salary
reductions similarly affecting all or substantially all
management employees; or
(iii) the failure by the Corporation and/or the Bank
to pay to the Executive any portion of his compensation or to
pay to the Executive any portion of an installment of deferred
compensation under any deferred compensation program of the
Corporation and/or the Bank within 15 days of the date such
compensation is due without prior written consent of the
Executive; or
(iv) the relocation of the Corporation's and/or the
Bank's offices at which the Executive is principally employed
immediately prior to the date of a Change in Control to a
location more than 50 miles from such offices, or the
requirement by the Corporation and/or the Bank for the
Executive to be based anywhere other than the Corporation's
and/or the Bank's offices at such location, except for
required travel on the Corporation's and/or the Bank's
business to an extent substantially consistent with the
Executive's business travel obligations immediately prior to
the Change in Control;
(v) the failure by the Corporation and/or the Bank to
(A) continue in effect any material compensation or benefit
plan or program (including, without limitation, any life
insurance, medical, health and accident or disability plan and
any vacation program or policy) in which the Executive
participates or which is applicable to the Executive
immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or
alternate plan) has been made with respect to such plan or
program, or (B) continue the Executive's participation therein
(or in such substitute or alternate plan) on a basis not
materially less favorable, both in terms of the amount of
benefits provided and the level of the Executive's
participation relative to other participants, than the basis
existing immediately prior to the Change in Control; or
(vi)the failure by the Corporation and/or the Bank to
obtain an effective agreement from any successor to assume and
agree to perform this Agreement, as required by Section 16; or
(c) after 12 months following a Change in Control but within
13 months following a Change in Control, termination by the Executive
of the Executive's employment with the Corporation and/or the Bank for
any reason or for no reason.
4. Special Termination Payments. In the event a Terminating Event
occurs,
(a) the Corporation and/or the Bank shall pay to the
Executive an amount equal to the sum of the following:
(i) ________ times the amount of the then current
annual base salary of the Executive, determined prior to any
reductions for pre-tax contributions to a cash or deferred
arrangement, a cafeteria plan, or a deferred compensation
plan; and
(ii)________ times the Executive's highest bonus paid
in the two years prior to the Change in Control.
The foregoing amount shall be paid in one lump sum payment
within thirty days after the Date of Termination; and
(b) the Corporation and/or the Bank shall continue to provide
health, dental and life insurance to the Executive, on the same terms
and conditions as though the Executive had remained an active employee,
for ______ months after the Terminating Event;
(c) the Corporation and/or the Bank shall provide the
Executive with _______ months of additional benefit accrual under the
Bank's supplemental retirement plan, but only to the extent the
Executive was eligible to participate in such plan immediately prior to
the Change in Control; and
(d) the Corporation and/or the Bank shall pay to the Executive
all reasonable legal and arbitration fees and expenses incurred by the
Executive in obtaining or enforcing any right or benefit provided by
this Agreement, except in cases involving frivolous or bad faith
litigation initiated by the Executive.
5. Additional Benefits.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any
compensation, payment or distribution by the Corporation and/or the
Bank to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (the "Severance Payments"), would be subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together
with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled
to receive an additional payment (a "Gross-Up Payment") such that the
net amount retained by the Executive, after deduction of any Excise Tax
on the Severance Payments, any Federal, state, and local income tax,
employment tax and Excise Tax upon the payment provided by this
subsection, and any interest and/or penalties assessed with respect to
such Excise Tax and not after the deduction of any other taxes or
amounts, shall be equal to the Severance Payments. (The Gross-Up
Payment is not intended to compensate the Executive for any income
taxes payable with respect to the Severance Payments.)
(b) Subject to the provisions of Section 5(c), all
determinations required to be made under this Section 5, including
whether a Gross-Up Payment is required and the amount of such Gross-Up
Payment, shall be made by a nationally recognized accounting firm
selected by the Corporation and/or the Bank (the "Accounting Firm"),
which shall provide detailed supporting calculations both to the
Executive and the Corporation and/or the Bank within 15 business days
of the Date of Termination, if applicable, or at such earlier time as
is reasonably requested by the Executive or the Corporation and/or the
Bank. For purposes of determining the amount of the Gross-Up Payment,
the Executive shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation applicable to
individuals for the calendar year in which the Gross-Up Payment is to
be made, and state and local income taxes at the highest marginal rates
of individual taxation in the state and locality of the Executive's
residence on the Date of Termination, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such
state and local taxes. The initial Gross-Up Payment, if any, as
determined pursuant to this Section 5(b), shall be paid to the
Executive within five days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, the Corporation and/or the Bank shall furnish
the Executive with an opinion of counsel that failure to report the
Excise Tax on the Executive's applicable federal income tax return
would not result in the imposition of a negligence or similar penalty.
Any determination by the Accounting Firm shall be binding upon the
Executive and the Corporation and/or the Bank. As a result of the
uncertainty in the application of Section 4999 of the Code at the time
of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the
Corporation and/or the Bank should have been made (an "Underpayment").
In the event that the Corporation and/or the Bank exhaust its remedies
pursuant to Section 5(c) and the Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine
the amount of the Underpayment that has occurred, consistent with the
calculations required to be made hereunder, and any such Underpayment,
and any interest and penalties imposed on the Underpayment and required
to be paid by the Executive in connection with the proceedings
described in Section 5(c), shall be promptly paid by the Corporation
and/or the Bank to or for the benefit of the Executive.
(c) The Executive shall notify the Corporation and/or the Bank
in writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Corporation and/or the
Bank of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than 10 business days after the Executive
knows of such claim and shall apprise the Corporation and/or the Bank
of the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim prior to
the expiration of the 30-day period following the date on which he
gives such notice to the Corporation and/or the Bank (or such shorter
period ending on the date that any payment of taxes with respect to
such claim is due). If the Corporation and/or the Bank notifies the
Executive in writing prior to the expiration of such period that it
desires to contest such claim, provided that the Corporation and/or the
Bank has set aside adequate reserves to cover the Underpayment and any
interest and penalties thereon that may accrue, the Executive shall:
(i) give the Corporation and/or the Bank any
information reasonably requested by the Corporation and/or the
Bank relating to such claim,
(ii) take such action in connection with contesting
such claim as the Corporation and/or the Bank shall reasonably
request in writing from time to time, including, without
limitation, accepting legal representation with respect to
such claim by an attorney selected by the Corporation and/or
the Bank,
(iii) cooperate with the Corporation and/or the Bank
in good faith in order effectively to contest such claim, and
(iv) permit the Corporation and/or the Bank to
participate in any proceedings relating to such claim;
provided, however, that the Corporation and/or the Bank shall
bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with
such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income
tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing
provisions of this Section 5(c), the Corporation and/or the
Bank shall control all proceedings taken in connection with
such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim
and may, at its sole option, either direct the Executive to
pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction
and in one or more appellate courts, as the Corporation and/or
the Bank shall determine; provided, however, that if the
Corporation and/or the Bank directs the Executive to pay such
claim and sue for a refund, the Corporation and/or the Bank
shall advance the amount of such payment to the Executive on
an interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax
or income tax, including interest or penalties with respect
thereto, imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and
further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year
of the Executive with respect to which such contested amount
is claimed to be due is limited solely to such contested
amount. Furthermore, the Corporation's and/or the Bank's
control of the contest shall be limited to issues with respect
to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case
may be, any other issues raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Corporation and/or the Bank pursuant to Section 5(c),
the Executive becomes entitled to receive any refund with respect to
such claim, the Executive shall (subject to the Corporation's and/or
the Bank's complying with the requirements of Section 5(c)) promptly
pay to the Corporation and/or the Bank the amount of such refund
(together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of an
amount advanced by the Corporation and/or the Bank pursuant to Section
5(c), a determination is made that the Executive shall not be entitled
to any refund with respect to such claim and the Corporation and/or the
Bank does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required to be paid.
6. Term. This Agreement shall take effect on the date first set forth
above and shall terminate upon the earliest of (a) the termination by the
Corporation and/or the Bank of the employment of the Executive for Cause; (b)
the resignation or termination of the Executive for any reason prior to a Change
in Control; or (c) the date which is 13 months and 1 day after a Change in
Control.
7. Withholding. All payments made by the Corporation and/or the Bank
under this Agreement shall be net of any tax or other amounts required to be
withheld by the Corporation and/or the Bank under applicable law.
8. Notice and Date of Termination; Disputes; Etc.
(a) Notice of Termination. After a Change in Control and
during the term of this Agreement, any purported termination of the
Executive's employment (other than by reason of death) shall be
communicated by written Notice of Termination from one party hereto to
the other party hereto in accordance with this Section 8. For purposes
of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement
relied upon and the Date of Termination. Further, a Notice of
Termination for Cause is required to include a copy of a resolution
duly adopted by the affirmative vote of not less than two-thirds (2/3)
of the entire membership of the Board at a meeting of the Board (after
reasonable notice to the Executive and an opportunity for the
Executive, accompanied by the Executive's counsel, to be heard before
the Board) finding that, in the good faith opinion of the Board, the
termination met the criteria for Cause set forth in Section 3(a)
hereof.
(b) Date of Termination. "Date of Termination," with respect
to any purported termination of the Executive's employment after a
Change in Control and during the term of this Agreement, shall mean the
date specified in the Notice of Termination. In the case of a
termination by the Corporation and/or the Bank other than a termination
for Cause (which may be effective immediately), the Date of Termination
shall not be less than 30 days after the Notice of Termination is
given. In the case of a termination by the Executive, the Date of
Termination shall not be less than 15 days from the date such Notice of
Termination is given. Notwithstanding Section 3(a) of this Agreement,
in the event that the Executive gives a Notice of Termination to the
Corporation and/or the Bank, the Corporation and/or the Bank may
unilaterally accelerate the Date of Termination and such acceleration
shall not result in a second Terminating Event for purposes of Section
3(a) of this Agreement.
(c) No Mitigation. The Corporation and/or the Bank agrees
that, if the Executive's employment by the Corporation and/or the Bank
is terminated during the term of this Agreement, the Executive is not
required to seek other employment or to attempt in any way to reduce
any amounts payable to the Executive by the Corporation and/or the Bank
pursuant to Sections 4 and 5 hereof. Further, the amount of any payment
provided for in this Agreement shall not be reduced by any compensation
earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed
to be owed by the Executive to the Corporation and/or the Bank, or
otherwise.
(d) Settlement and Arbitration of Disputes. Any controversy or
claim arising out of or relating to this Agreement or the breach
thereof shall be settled exclusively by arbitration in accordance with
the laws of the State of Rhode Island by three arbitrators, one of whom
shall be appointed by the Corporation and/or the Bank, one by the
Executive, and the third by the first two arbitrators. If the first two
arbitrators cannot agree on the appointment of a third arbitrator, then
the third arbitrator shall be appointed by the American Arbitration
Association in Boston, Massachusetts. Such arbitration shall be
conducted in Rhode Island in accordance with the rules of the American
Arbitration Association for commercial arbitrations, except with
respect to the selection of arbitrators, which shall be as provided in
this Section 8(d). Judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction thereof.
9. Assignment; Prior Agreements. Neither the Corporation, the Bank, nor
the Executive may make any assignment of this Agreement or any interest herein,
by operation of law or otherwise, without the prior written consent of the other
party, and without such consent any attempted transfer shall be null and void
and of no effect. This Agreement shall inure to the benefit of and be binding
upon the Corporation and the Bank and the Executive, as well as their respective
successors, executors, administrators, heirs and permitted assigns. In the event
of the Executive's death after a Terminating Event but prior to the completion
by the Corporation and/or the Bank of all payments due him under Sections 4 and
5 of this Agreement, the Corporation and/or the Bank shall continue such
payments to the Executive's beneficiary designated in writing to the Corporation
and/or the Bank prior to his death (or to his estate, if the Executive fails to
make such designation).
10. Enforceability. If any portion or provision of this Agreement shall
to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
11. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the Executive and such officer as may be
specifically designated by the Board. The failure of any party to require the
performance of any term or obligation of this Agreement, or the waiver by any
party of any breach of this Agreement, shall not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of any subsequent
breach.
12. Notices. Any notices, requests, demands, and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the
Corporation and/or the Bank, or to the Corporation and/or the Bank at its main
offices, attention of the Board of Directors, 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.
13. Effect on Other Plans. An election by the Executive to resign after
a Change in Control under the provisions of this Agreement shall not be deemed a
voluntary termination of employment by the Executive for purposes of
interpreting the provisions of any of the Corporation's and/or the Bank's
benefit plans, programs or policies. Nothing in this Agreement shall be
construed to limit the rights of the Executive under the Corporation's and/or
the Bank's benefit plans, programs or policies.
14. Amendment. This Agreement may be amended or modified only by
a written instrument signed by the Executive and by a duly authorized
representative of the Corporation and/or the Bank.
15. Governing Law. This contract shall be construed under and be
governed in all respects by the laws of the State of Rhode Island.
16. Obligations of Successors. The Corporation and/or the Bank shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Corporation and/or the Bank to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Corporation and/or the Bank would be required to perform if no such succession
had taken place.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Corporation and the Bank by their duly authorized officers and
by the Executive, as of the date first above written.
WASHINGTON TRUST BANCORP, INC.
By:__________________________________
John C. Warren
Chairman & Chief Executive Officer
WASHINGTON TRUST COMPANY OF WESTERLY
By:__________________________________
John C. Warren
Chairman & Chief Executive Officer
_____________________________________
[Executive]
EXHIBIT 11
Washington Trust Bancorp, Inc.
Computation of Per Share Earnings
For the Periods Ended March 31, 2000 and 1999
<TABLE>
<CAPTION>
Three months ended March 31, 2000 1999
- ------------------------------------------ ----------------------------------- -----------------------------
(In thousands, except per share amounts) Basic Diluted Basic Diluted
----------------- ----------------- ---------------- ------------
<S> <C> <C> <C> <C>
Net income $2,923 $2,923 $2,744 $2,744
Share amounts:
Average outstanding 10,925.4 10,925.4 10,801.1 10,801.1
Common stock equivalents - 158.3 - 274.9
- -------------------------------------- ----------------- ---------------- ----------------- ----------------
Weighted average outstanding 10,925.4 11,083.7 10,801.1 11,076.0
- -------------------------------------- ----------------- ---------------- ----------------- ----------------
Earnings per share $.27 $.26 $.25 $.25
- -------------------------------------- ----------------- ---------------- ----------------- ----------------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL SUMMARY INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO OF WASHINGTON TRUST
BANCORP, INC. AS OF MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 17,208
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 15,900
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 368,519
<INVESTMENTS-CARRYING> 121,096
<INVESTMENTS-MARKET> 117,019
<LOANS> 555,017
<ALLOWANCE> 12,540
<TOTAL-ASSETS> 1,142,655
<DEPOSITS> 677,910
<SHORT-TERM> 1,642
<LIABILITIES-OTHER> 384,676
<LONG-TERM> 0
0
0
<COMMON> 684
<OTHER-SE> 77,743
<TOTAL-LIABILITIES-AND-EQUITY> 1,142,655
<INTEREST-LOAN> 11,649
<INTEREST-INVEST> 8,079
<INTEREST-OTHER> 158
<INTEREST-TOTAL> 19,886
<INTEREST-DEPOSIT> 5,445
<INTEREST-EXPENSE> 10,720
<INTEREST-INCOME-NET> 9,166
<LOAN-LOSSES> 350
<SECURITIES-GAINS> 384
<EXPENSE-OTHER> 8,532
<INCOME-PRETAX> 4,161
<INCOME-PRE-EXTRAORDINARY> 4,161
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,923
<EPS-BASIC> .27
<EPS-DILUTED> .26
<YIELD-ACTUAL> 3.61
<LOANS-NON> 3,717
<LOANS-PAST> 179
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 12,349
<CHARGE-OFFS> 237
<RECOVERIES> 78
<ALLOWANCE-CLOSE> 12,540
<ALLOWANCE-DOMESTIC> 12,540
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
