A restatement of prior years’ results hasn’t stopped Somerset-based Slade’s Ferry Bank from reporting increased earnings this year.

The results are in and several Massachusetts community banks experienced a good first half in 2005. Second-quarter earnings were strong, as many banks continued to implement particular strategies to support loan and deposit growth.

Boston-based Wainwright Bank & Trust Co. reported 2005 second-quarter consolidated net income of $1.85 million and basic earnings per share of 24 cents. That compares to consolidated net income of $1.68 million and basic earnings per share of 24 cents for the quarter ended June 30, 2004.

The bank also saw a record in its consolidated net income for the six months ended June 30. Consolidated net income was almost $3.4 million, compared to a little more than $3 million for the same time last year.

“We are very pleased with our performance in the first two quarters of 2005,” said Jan A. Miller, Wainwright’s president and chief executive officer. “The $3.4 million in net income represents a record level for Wainwright in the first six months of the year. The loan portfolio has continued its solid growth in a highly competitive market. Deposit growth, coupled with the prudent use of borrowed funds, has helped to maintain our margins in a rate environment that is steadily moving higher. We are excited about new growth opportunities, which should be facilitated by our entrance in the Brookline and Newton markets with new branch locations scheduled to open in July and September, respectively.”

The bank’s net-interest income also saw a bump, totaling almost $7 million in the second quarter of this year, compared to slightly over $6 million in the second quarter of last year.

Wainwright spokesman Steve Young said the bank was pleased with the results for the first half of 2005. He said there was strong loan growth, as well as another factor that contributed to the bank’s record earnings.

“[We are] watching our margin – how pricing was on our loans,” said Young, adding that the bank kept the cost of funds down, as well.

More customers have come to the bank because it is socially responsible, Young added. Customers do business with Wainwright because they know their money will be put back into the community, he said.

‘The Right Direction’

Reading-based Massbank Corp., the holding company for Massbank, reported a strong second quarter, as well. The bank reported a 7.7 percent increase in earnings per share. Net income was almost $1.9 million or 42 cents in basic and diluted earnings per share compared with the net income of $1.7 million or 39 cents in basic and diluted earnings per share last year.

Like Wainwright Bank, Massbank had good news related to net-interest income. It totaled $5.4 million for the second quarter of 2005, up $370,000, or 7.4 percent, from the same quarter last year. According to the bank, this is the third consecutive quarter that the company has reported a year-over-year improvement in net-interest income.

Although the bank experienced strong growth in earnings, there were a few areas that were weaker. The company’s total assets decreased $47.4 million to $933.1 million at June 30 from $980.5 million at June 30, 2004. Deposits also decreased $43 million, or 5 percent, year-over-year from $860.2 million at June 30, 2004, to $817.2 million this year.

For Slade’s Ferry Bank, based in Somerset, a restatement of prior years’ results hasn’t stopped the institution from reporting increased earnings. The bank had a net income for the second quarter of $848,000, an increase of 35.7 percent over net income for the quarter ended June 30, 2004, which totaled $625,000. For the six months ended June 30, the net income was $1.9 million, an increase of 61 percent over net income for the six months ended June 30, 2004, which totaled $1.2 million.

“We think it’s going in the right direction,” said Deborah McLaughlin, chief financial officer at Slade’s Ferry.

She said loans are growing and assets quality is “pristine.”

The primary reason for the bank’s increase in earnings is the deployment of the deposit growth realized in 2004 and early 2005 into loans and investments. According to Slade’s Ferry, the bank initiated its deposit growth measures in early 2004. The deposit growth, as well as an increase in the level of Federal Home Loan Bank advances, has generated an increase in average earnings assets from $458.7 million for six months ended June 30, 2004, to $523.3 million for the six months ended June 30. The bank also attributes the increase in earnings to a reduced provision for loan losses totaling $15,000 in the second quarter of this year compared to $130,000 in the second quarter of 2004.

McLaughlin said the reason for the bank’s success has been its ability to “stick to the basics” and employees who understand its sales culture. Internet banking and a new teller system have also pushed the bank further.

“There is more technology in place to help with efficiency,” McLaughlin said.

The bank did see an increase in operating expenses attributed to marketing costs and implementing provisions of particular bank regulations.

“We’re pleased that our employees’ collective efforts are paying off for Slade’s Ferry Bank shareholders,” said Mary Lynn D. Lenz, president and chief executive officer. “We laid out ambitious earnings goals in our strategic plan and have met each milestone. Moving forward, Slade’s Ferry Bank will continue to seek operational efficiencies, create products that anticipate customer needs and motivate our sales force while helping to improve the community in which we live and work.”

Along with the earnings, the bank also announced that some of the company’s financial statements would be restated due to the discovery of financial reporting errors relating to its defined benefit pension plan that affects its previously filed financial statements. The reporting errors involve the overstatement of the company’s prepaid benefit cost and the understatement of the company’s defined benefit pension plan expense since the fiscal year ended Dec. 31, 1996, due to the failure to use settlement accounting for significant lump sum distributions and the understatement of the company’s projected benefit obligation prior to 2003.

The cumulative effect of the error on the bank’s retained earnings as of March 2005 was a reduction of $399,000, or 2.3 percent.

“Our board and management team are wholly committed to ensuring that this error is corrected so that present and future shareholders can have an accurate picture of the robust financial health of this institution,” Lenz said.