Washington Trust Co., which agreed this week to buy a Boston-area registered investment adviser, says it may consider more deals, particularly in Florida.
John C. Warren, the Westerly, R.I., bank’s chairman and chief executive officer, said its agreement to buy Weston Financial Group Inc., a Wellesley, Mass., investment adviser with $1.2 billion of managed assets, is intended to add scale to a business line that would grow by more than 50%, “to over $3 billion in assets under management.”
The $26 million Weston Financial deal is the second for Washington Trust on the asset management side, Mr. Warren said, and he did not rule out further purchases.
Washington Trust considers scale, geography, and the management team when weighing acquisitions, Mr. Warren said. “To be successful, it really comes down to the people, the investment team,” he said.
For the future, he said, Washington Trust will pay particular attention to asset management deal opportunities in Florida. He declined to specify a time for a deal there, saying, “We have to see if it makes sense.” A number of the bank’s New England clients retire to Florida, so doing a deal there could work for both it and its clients.
Other banking companies have been stepping up wealth management activity in Florida.
The U.S. Trust Corp. unit of Charles Schwab Corp. opened its fifth Florida office in January. The Sarasota office supplies investment management and financial planning services to wealthy people and their families.
U.S. Trust, which had $104 billion of assets under management at Sept. 30, entered Florida in 1982 with an office in Palm Beach. Since then, it has opened offices in Naples in 1993, Boca Raton in 1994, and Vero Beach in 2000.
And Trustmark Corp. recently bought a Pensacola, Fla., insurance agency in a move to further diversify its revenue and target wealthy clients.
Richard G. Hickson, the chairman and CEO of the Jackson, Miss., banking company, said in an interview last fall, “We want to bring wealth management and insurance up to a more significant part of the overall business.”
In its latest deal, Washington Trust decided to buy Weston because it is “a business we know well and have been a part of for a long time,” Mr. Warren said. “Weston Financial enhances the financial planning side of the business.”
Weston Financial specializes in financial planning and investment counseling services for high-net-worth investors. It has clients in the Boston area and throughout New England.
The deal would add about 1,000 high-net-worth clients to the Washington Trust roster, Mr. Warren said. He declined to discuss revenue expectations or goals. He did say, however, that the deal would be accretive to earnings from the start.
Noninterest income would be about 39% of the bank’s annual revenues once Weston Financial is added, the company said. The deal is expected to close in the third quarter. Washington Trust, which operates wealth management offices in Providence, Narragansett, and Westerly, R.I., would gain direct access to the Boston market through the Weston deal, Mr. Warren said.
The bank plans to pay $20 million in cash for all the outstanding shares of Weston’s capital stock, subject to customary adjustments for the percentage of investment accounts transferred and other matters. And the agreement guarantees a minimum of $6 million of payments during a three-year earn-out period ending Dec. 31, 2008.
Weston Financial is to become a subsidiary of Washington Trust operating under its current management team. The Massachusetts company has expertise in retirement planning, estate planning, investment management, tax planning and preparation, stock option planning, and insurance analysis.
Washington Trust Bancorp Inc. is the $2.3 billion-asset parent of Washington Trust Co., a state-chartered bank. It offers financial services, including trust and investment management, through offices in Rhode Island and southeastern Connecticut.
Washington Trust bought First Financial Corp., which operates First Bank and Trust, a Rhode Island-chartered bank with assets of $174.1 million, in the second quarter of 2002.
First Financial was headquartered in Providence and had offices there and in suburban Cranston.
