BOSTON, July 16 /PRNewswire-FirstCall/ -- Wainwright Bank & Trust Company (NASDAQ:WAIN) reported 2008 second quarter consolidated net income of $1,152,000 and diluted earnings per share of $.14 ($.15 per basic share). This compares to consolidated net income of $1,718,000 and diluted earnings per share of $.20 ($.22 per basic share) for the quarter ended June 30, 2007. Consolidated net income for the six months ended June 30, 2008 is $2,336,000, down from the previous six month record earnings of $3,557,000 for the same prior year period. Diluted earnings per share were $.28 for the six months ended June 30, 2008 ($.30 per basic share) compared to $.41 for the six months ended June 30, 2007 ($.45 per basic share). Primarily as a result of significant loan growth, the Bank recorded a loan loss provision of $1 million in the first two quarters of 2008 compared to $250,000 in the first two quarters of 2007. In addition, in the first quarter 2007, the Bank recorded an $850,000 gain on the sale of one property held for investment purposes. For the first time, the Bank's total assets attained the $1 billion mark. The Bank's average outstanding loan balances grew $91 million, or 14%, from the second quarter of 2007 to $754 million in the second quarter of 2008. An increase of $87 million, or 32%, in residential real estate loans is the primary reason for the significant growth during the period. The Bank also saw increases in its commercial and commercial real estate loans in the amounts of $19 million and $17 million, respectively, which were partially offset by net payoffs of $32 million in the commercial construction portfolio. Jan A. Miller, President and CEO stated, "We have been able to continue to achieve solid loan growth while maintaining high credit standards in today's challenging financial market. The turmoil in the financial markets has continued to create opportunities for Wainwright to capture additional market share in our residential real estate products. We are please that there continues to be a market for conservatively underwritten residential mortgages. Commercial loan growth was also strong, particularly community development and non-profit lending, while our portfolio of construction loans continues to see net payoffs. In addition, our deposit base has also seen some recent growth in core transaction accounts. Margin compression, however, continues to impede our net interest income, despite the success we have had in growing the balance sheet." Average deposits increased $31 million, or 5%, from the second quarter of 2007 to $656 million in the second quarter of 2008. Money market products increased $26 million, or 16%, to an average of $189 million in the second quarter of 2008. Demand deposits and certificates of deposit increased $7 million and $6 million, respectively, while the Bank saw a decline of $8 million in NOW accounts. The Bank used advances from the Federal Home Loan Bank as a component of its balance sheet management to help fund the growth in earning assets. Borrowed funds increased $61 million, or 36%, from the second quarter of 2007. Net interest income was $7.2 million for the three months ended June 30, 2008 compared to $6.6 million in the same period of 2007, an increase of $600,000, or 9%. Continuing margin compression, however, has reduced the Bank's net interest yield to 3.14% in the second quarter of 2008 compared to 3.19% in the second quarter of 2007. Despite the year-to-year decline in the second quarter, the net interest yield increased twelve basis points in the second quarter 2008 compared to the first quarter 2008, up from 3.02%. The provision for credit losses was $1,000,000 and $250,000 for the six months ended June 30, 2008 and 2007, respectively. A provision is made based on management's assessment of the adequacy of the allowance for credit losses after considering historical experience, current economic conditions, changes in the composition of the loan portfolio, and the level of non-accrual and other nonperforming loans. The provision in the current period is primarily attributable to the growth in the loan portfolio, although economic conditions have clearly weakened. The reserve for credit losses was $8,449,000, $7,638,000, and $7,237,000 representing 1.09%, 1.07%, and 1.07% of total loans at June 30, 2008, December 31, 2007, and June 30, 2007, respectively. The Bank had net charge-offs of $189,000 in the first two quarters of 2008 compared to net recoveries of $3,000 in the first two quarters of 2007. The Bank had nonaccrual loans of $973,000 and $50,000 at June 30, 2008 and December 31, 2007, respectively. The nonaccrual loans as of June 30, 2008 consisted of one mortgage in the process of foreclosure and three commercial relationships. There were no nonaccrual loans at June 30, 2007. At June 30, 2008, loans 30 days or more past due represented only .54% of the portfolio. This compares to .74% at March 31, 2008 and .45% at December 31, 2007. Total noninterest income was $2.2 million and $3.2 million for the six months ended June 30, 2008 and 2007, respectively, a decline of $1 million, or 32%. The primary reason for the decline was an $850,000 gain on the sale of one property held for investment purposes recorded in the first quarter 2007. In addition, investment management and deposit service charges decreased $122,000 and $59,000, respectively, while net security losses increased $24,000. Bank owned life insurance income and loan fees increased $18,000 and $14,000, respectively, the latter a result of increased origination fees due to the residential loan production. Total operating expenses were $12.3 million and $11.5 million for the six months ended June 30, 2008 and 2007, respectively, an increase of $846,000, or 7%. Salaries and employee benefits increased $641,000, a result of normal merit increases, an increased head count, and increased medical costs. Professional fees increased $143,000 due to consultants hired to complete projects related to various regulatory standards as well as costs for the Bank's Strategic Planning. Occupancy and equipment costs increased $113,000 due to increased rent and utility costs for the branches offset by a decline in depreciation on furniture and equipment. Advertising and marketing costs increased $80,000 as a result of promotional costs for various product specials. Debit and ATM card expenses decreased $179,000, the result of savings realized from a systems conversion completed in 2007. The Bank recorded non-cash charges of $117,000 in the first two quarters of 2008 compared to $237,000 in the first two quarter of 2007 related to equity investments in affordable housing projects. These pretax charges will be more than offset by tax credits available to the Bank. These community development investments are part of the Bank's nationally recognized commitment to community development activities. The Bank's current CRA rating is "Outstanding." With Boston branches in the Financial District, Back Bay/South End, Jamaica Plain, Cambridge branches within Harvard Square, Kendall Square, Central Square and the Fresh Pond Mall, its Watertown, Somerville, Newton, and Brookline branches, Wainwright is strategically positioned to provide consumer and commercial mortgages, loans, and deposit services to individuals, families, businesses, and non-profit organizations. This Press Release contains statements relating to future results of the Bank (including certain projections and business trends) that are considered "forward-looking statements" as defined in the Private Securities Legislation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to changes in political and economic conditions, interest rate fluctuations, competitive product and pricing pressures within the Bank's market, bond market fluctuations, personal and corporate customers' bankruptcies, and inflation, as well as other risks and uncertainties. James J. Barrett Senior VP and Chief Financial Officer Tel: (617) 478-4000 Fax: (617) 439-4854 Website: http://www.wainwrightbank.com/ FINANCIAL HIGHLIGHTS (dollars in thousands) For the three months ended June 30, 2008 2007 Net interest income $7,171 $6,578 Provision for credit losses 750 - Noninterest income 1,012 1,292 Other noninterest expense 6,039 5,668 Income before taxes 1,394 2,202 Income tax provision 242 484 Net income 1,152 1,718 Net income available to common shareholders 1,077 1,643 Earnings per share: Basic $0.15 $0.22 Diluted $0.14 $0.20 Return on average shareholders' equity 6.68% 9.84% Return on average assets .48% .80% Net interest margin 3.14% 3.19% Weighted average common shares outstanding: Basic 7,294,024 7,576,788 Diluted 8,267,763 8,574,251 FINANCIAL HIGHLIGHTS: (dollars in thousands) For the six months ended June 30, 2008 2007 Net interest income $13,923 $13,207 Provision for credit losses 1,000 250 Noninterest income 2,192 3,211 Other noninterest expense 12,327 11,481 Income before taxes 2,788 4,687 Income tax provision 452 1,130 Net income 2,336 3,557 Net income available to common shareholders 2,186 3,407 Earnings per share: Basic $0.30 $0.45 Diluted $0.28 $0.41 Net interest margin 3.08% 3.30% Return on average assets .50% .85% Return on average shareholders' equity 6.67% 10.28% Weighted average common shares outstanding: Basic 7,386,327 7,584,899 Diluted 8,370,069 8,581,051 at June 30, 2008 and 2007, respectively Total Assets $1,002,495 $882,736 Total Loans 774,320 678,156 Total Investments 143,235 137,992 Total Deposits 708,810 621,264 Total Borrowed Funds 222,679 187,781 Shareholders' Equity 67,355 69,399 Book Value Per Common Share $8.20 $8.18 DATASOURCE: Wainwright Bank & Trust Company CONTACT: James J. Barrett, Senior VP and Chief Financial Officer of Wainwright Bank & Trust Company, +1-617-478-4000, Fax, +1-617-439-4854 Web site: http://www.wainwrightbank.com/

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