WAIN Wainwright Bank & Trust Company (MM)

BOSTON, Oct. 23 /PRNewswire-FirstCall/ -- Wainwright Bank & Trust Company (NASDAQ:WAIN) reported a 2008 third quarter consolidated net loss of $220,000, a loss of $0.04 per share. This compares to consolidated net income of $1,314,000 and diluted earnings per share of $.15 ($.16 per basic share) for the quarter ended September 30, 2007. Consolidated net income for the nine months ended September 30, 2008 is $2,116,000, down from the previous nine-month earnings of $4,871,000 for the same prior year period. Diluted earnings per share were $.25 for the nine months ended September 30, 2008 ($.26 per basic share) compared to $.57 ($.61 per basic share) for the same prior year period. The Bank recognized a non-cash pre-tax impairment charge of $1,900,000 related to certain investments in Lehman Brothers and one other preferred stock in the third quarter of 2008. Without the impairment charge, the Bank's net income for the third quarter of 2008 would have been approximately $1.2 million, or $.15 per basic share. In addition, the Bank recorded a provision for credit losses of $1,400,000 in the first three quarters of 2008 compared to $500,000 in the first three quarters of 2007, primarily as a result of significant loan growth. Furthermore, in the first quarter 2007, the Bank recorded an $850,000 gain on the sale of one property held for investment purposes. The Bank's average assets increased $87 million, or 10%, to $988 million from $901 million the third quarter of 2008 compared to 2007. The average outstanding loan balances grew $102 million, or 15%, from the third quarter of 2007 to $796 million in the third quarter of 2008. Residential real estate loans (primarily first mortgages) increased $90 million, or 31% during the period and accounted for the majority of the increase. The Bank also saw increases in its commercial real estate and commercial loans in the amounts of $22 million and $20 million, respectively, which were partially offset by net payoffs of $30 million in the commercial construction portfolio. Jan A. Miller, President and CEO stated, "Capital growth, liquidity, and earnings are a major focus for the Bank during these uncertain economic times. We have been able to continue to achieve solid loan growth while maintaining high credit standards in today's challenging economy. 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 pleased 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. The Bank recently issued $5 million of subordinated debt with warrants to purchase 500,000 shares of its common stock ($4.35 million of which closed on September 30th). The Bank remains well capitalized and in fact, this additional regulatory capital increased our risk based capital ratio to 10.8% as of September 30, 2008. "Our deposit base has also seen some recent growth in core transaction accounts. We are pleased to open our new 'Banking Cafe' at Ashmont Station, Dorchester, featuring an in-lobby espresso bar and cafe run by Flat Black, a local fair trade coffee merchant. As we have with our prior three new branches, we are seeking LEED certification from the U.S. Green Building Council. We have also recently learned that Wainwright has been awarded a 2008 Bank Enterprise Award of $300,000 from the U.S Treasury's Community Development Financial Institutions Fund in recognition of providing financial services and support within distressed communities. Wainwright was one of only two New England banks to receive the award." Average deposits increased $55 million, or 9%, from the third quarter of 2007 to $684 million in the third quarter of 2008. Certificate of deposit products increased $37 million, or 16%, to an average of $273 million in the third quarter of 2008. Money market and demand deposit products increased $23 million and $5 million, respectively, while the Bank saw a decline of $11 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 $35 million, or 18%, from the third quarter of 2007. Net interest income was $21.3 million for the nine months ended September 30, 2008 compared to $19.7 million in the same period of 2007, an increase of $1.6 million, or 8%. The Bank's net interest yield rose to 3.09% in the three months ended September 30, 2008 compared to 3.00% for the same three-month period in 2007. However, the Bank's net interest yield for the nine months ended September 30, 2008 is 3.08%, a decline of 11 basis points, from 3.19% for the same nine-month period in 2007. The provision for credit losses was $1,400,000 and $500,000 for the nine months ended September 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 non-performing loans. The provision in the current period is primarily attributable to the growth in the loan portfolio, although economic conditions have clearly weakened and the Bank has absorbed higher charge-offs in 2008. The reserve for credit losses was $8,370,000, $7,638,000, and $7,482,000 representing 1.04%, 1.07%, and 1.06% of total loans at September 30, 2008, December 31, 2007, and September 30, 2007, respectively. The Bank had net charge-offs of $668,000 and $2,000 in the first three quarters of 2008 and 2007, respectively. Nonaccrual loans amounted to $847,000 and $50,000 at September 30, 2008 and December 31, 2007, respectively. The nonaccrual loans as of September 30, 2008 consisted of two residential mortgages, one in the process of foreclosure, and three commercial relationships. There were no nonaccrual loans at September 30, 2007. At September 30, 2008, loans 30 days or more past due represented only .62% of the portfolio compared to .45% at December 31, 2007. Total noninterest income was $1.3 million and $4.3 million for the nine months ended September 30, 2008 and 2007, respectively, a decline of $3 million, or 71%. There are two significant reasons for the decline, a current period loss on impairment of securities and a prior period gain on the sale of property that is not present in the current period. As previously noted, the Bank realized a non-cash pre-tax impairment charge of $1,900,000 related to certain investments in Lehman Brothers and one other preferred stock. In the first quarter of 2007, an $850,000 gain on the sale of one property held for investment purposes was recorded. In addition to these significant items, investment management and deposit service charges decreased $197,000 and $101,000, respectively. Bank owned life insurance income and mortgage banking income increased $25,000 and $38,000, respectively, the latter of which is the result of loans sold during the period. Total operating expenses were $18.9 million and $17.2 million for the nine months ended September 30, 2008 and 2007, respectively, an increase of $1.7 million, or 10%. Salaries and employee benefits increased $1.0 million, a result of normal merit increases, an increased head count, commission pay, and increased medical costs. Occupancy and equipment costs increased $242,000 due to increased rent, utility costs, and taxes for the branches. Professional fees increased $232,000 primarily due to consultants hired to complete information technology related projects and legal fees. Regulatory assessment fees increased $276,000 due to FDIC insurance premiums. Advertising and marketing costs increased $134,000 as a result of promotional costs for various product specials. Debit and ATM card expenses decreased $197,000, the result of savings realized from a systems conversion completed in 2007. The Bank recorded non-cash charges of $175,000 in the first three quarters of 2008 compared to $371,000 in the first three quarters 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, Dorchester, Cambridge branches within Harvard Square, Kendall Square, Central Square and the Fresh Pond Mall, its Watertown, Somerville, Newton, and Brookline branches, Wainwright is strategically positioned to provide consumer and commercial mortgages, loans, and deposit services to individuals, families, businesses, and non-profit organizations. This Press Release contains statements relating to future results of the Bank (including certain projections and business trends) that are considered "forward-looking statements" as defined in the Private Securities Legislation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to changes in political and economic conditions, interest rate fluctuations, competitive product and pricing pressures within the Bank's market, bond market fluctuations, personal and corporate customers' bankruptcies, and inflation, as well as other risks and uncertainties. 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) (Unaudited) For the three months ended September 30, 2008 2007 Net interest income $7,382 $6,518 Provision for credit losses 400 250 Noninterest income (937) 1,046 Other noninterest expense 6,549 5,736 Income (loss) before taxes (504) 1,578 Income tax provision (benefit) (284) 264 Net income (loss) (220) 1,314 Net income (loss) available to common shareholders (295) 1,239 Earnings (loss) per share: Basic $(0.04) $0.16 Diluted $(0.04) $0.15 Return on average shareholders' equity (1.30)% 7.43% Return on average assets (0.09)% .58% Net interest margin 3.09% 3.00% Weighted average common shares outstanding: Basic 7,248,130 7,543,338 Diluted 7,248,130 8,546,668 FINANCIAL HIGHLIGHTS: (dollars in thousands) (Unaudited) For the nine months ended September 30, 2008 2007 Net interest income $21,306 $19,725 Provision for credit losses 1,400 500 Noninterest income 1,255 4,257 Other noninterest expense 18,876 17,217 Income before taxes 2,285 6,265 Income tax provision 169 1,394 Net income 2,116 4,871 Net income available to common shareholders 1,891 4,646 Earnings per share: Basic $0.26 $0.61 Diluted $0.25 $0.57 Net interest margin 3.08% 3.19% Return on average assets .29% .75% Return on average shareholders' equity 4.07% 9.31% Weighted average common shares outstanding: Basic 7,339,925 7,570,893 Diluted 8,315,412 8,571,668 at September 30, 2008 and 2007 Total Assets $979,538 $913,006 Total Loans 802,504 703,376 Total Investments 116,029 145,200 Total Deposits 682,522 639,180 Total Borrowed Funds 224,736 199,081 Shareholders' Equity 64,084 70,060 Book Value Per Common Share $7.84 8.29 DATASOURCE: Wainwright Bank & Trust Company CONTACT: James J. Barrett, Senior VP and Chief Financial Officer of Wainwright Bank & Trust Company, +1-617-478-4000, or fax, +1-617-439-4854 Web site: http://www.wainwrightbank.com/

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