Rhode Island’s Washington Trust raises profile as regional wealth player. Holding company Washington Trust Bancorp has agreed to buy Weston Financial Group, which it plans to merge with its Westerly, R.I.-based Washington Trust Company unit. The acquisition increases Washington Trust’s assets under administration by more than half to about $3.1 billion. It also gives the trust company a toehold in the lucrative Boston wealth market.

“This is a major acquisition for us,” says John Warren, Washington Trust's chairman and CEO. “It significantly increases the size and capabilities of our wealth management group, and expands our presence in the New England marketplace.” A state-chartered commercial bank, Washington Trust has 17 banking offices in Rhode Island and southeastern Connecticut.

Publicly traded Washington Trust will acquire all outstanding shares of Weston's capital stock for $20.0 million in cash. The transaction also guarantees a contingency payment to Weston’s principals of at least $6 million in cash over a three-year period that ends on New Year’s Eve 2008. The contingency tab could go higher, based on operating results through that period. Washington Trust says it plans to foot the bill by issuing trust preferred stock.

Wellesley, Mass.-based Weston is a registered investment advisor with more that $1.2 billion in assets under advisory. It provides financial planning and investment counseling services to high-net-worth clients through third-party products. It does most of its business in metropolitan Boston, though it has clients in the rest of New England and throughout the U.S.

Weston will become a subsidiary of Washington Trust under the direction of its pre-merger management team. Weston has six principals and 27 staffers. The firm has expertise in retirement planning, estate planning, investment management, tax planning and preparation, stock option planning, and insurance analysis. Of particular note on the investment side, Weston runs New Century Portfolios, a family of actively managed funds of funds.

Weston principal Wayne Grzecki says he and his partners are “extremely enthusiastic” about the “strategic alliance” with Washington Trust. “Washington Trust is a well-managed and solid financial institution,” he says. “We are particularly impressed by Washington Trust's culture and its approach to business, both of which are completely compatible with our own.”

Washington Trust sees a number of “strategic advantages” in the acquisition. Along with the asset boost and a projected 39% annualized increase in non-interest income, the trust company is keen to raise its profile as a regional wealth manager. “Washington Trust, which [now] operates wealth management offices in Providence, Narragansett and Westerly, R.I., will also have a presence in the Boston metropolitan area,” the company says in a press release. “The Bank's wealth management team will benefit from the addition of an experienced team of investment advisory experts and a broader line of financial planning products and services.”

Sandler O'Neill & Partners and Goodwin Procter advised Washington Trust. Weston retained Berkshire Capital Securities and Nixon Peabody. –FWR