WESTERLY, R.I., Oct. 19, 2015 (GLOBE NEWSWIRE) -- Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced net income of $10.2 million, or 60 cents per diluted share, for the third quarter of 2015, compared to net income of $11.5 million, or 68 cents per diluted share, reported for the second quarter of 2015.  The decrease in earnings was largely reflective of conditions affecting revenues in several business lines, including mortgage banking, commercial banking and wealth management.

Earnings on a year-to-date basis are up 10% over the same period in 2014.  Returns on average equity and average assets were 12.17% and 1.20%, respectively, for the nine months ended September 30, 2015, compared to 11.60% and 1.21%, respectively, for the same period in 2014.

"Washington Trust's third quarter results reflect our continued efforts to compete and grow in a challenging environment," stated Joseph J. MarcAurele, Chairman and Chief Executive Officer.  "During the quarter we completed the acquisition of Halsey Associates, Inc., providing a wealth management presence and client base in Connecticut.  While loan growth was affected by strong competition and other factors, asset quality remained very satisfactory and we had solid deposit growth in the quarter."

Acquisition of Halsey Associates, Inc.

The acquisition of Halsey Associates, Inc. ("Halsey"), a registered investment adviser firm located in New Haven, CT, was completed on August 1, 2015.  The cost to acquire Halsey was $10.0 million, including approximately $1.7 million in cash, $5.4 million in the form of 136,543 shares of Washington Trust common stock and $2.9 million for the estimated present value of future earn-outs to be paid.  As of the date of acquisition, Halsey's assets under administration amounted to approximately $840 million.  The transaction resulted in the recognition of intangible assets and goodwill of approximately $6.6 million and $6.7 million, respectively.  Acquisition related expenses amounted to $504 thousand in the third quarter and $433 thousand in the second quarter.  On an after-tax basis, these acquisition related expenses resulted in a charge of 3 cents per diluted share in the third quarter of 2015 and 2 cents per diluted share in the second quarter of 2015.  A small amount of acquisition related expenses is expected to be recognized in the fourth quarter of 2015.

Net Interest Income

Net interest income totaled $26.0 million for the third quarter of 2015, a slight decrease from the second quarter of 2015. This reflects continued pressure on net interest margin, a lower level of prepayment fee income and a modest increase of average interest‑earning assets of $46.1 million, or 1%.

The net interest margin was 3.07% for the third quarter of 2015, down 8 basis points from the previous quarter.  Commercial loan prepayment fee income, which is included in net interest income, amounted to $169 thousand in the third quarter of 2015, compared to $519 thousand in the prior quarter.  Excluding the loan prepayment fee income in each period, the third quarter net interest margin was 3.05%, down by 4 basis points on a linked quarter basis.  This decline in the net interest margin reflects continued pressure on asset yields resulting from a sustained low interest rate environment.

Noninterest Income

Noninterest income totaled $13.9 million for the third quarter of 2015, down by $1.3 million, or 9%, from the second quarter of 2015.  Significant linked quarter changes included:

  • Wealth management revenues totaled $8.9 million for the third quarter, down slightly by $10 thousand, or 0.1%, from the previous quarter.  While total wealth management revenues were essentially unchanged, included in these results were $662 thousand of revenues generated by Halsey since the August 1 acquisition date.  Overall wealth management revenues were affected by equity market declines in the quarter and also included a $344 thousand decline in tax preparation fees, which are typically concentrated in the second quarter.

    Wealth management assets under administration amounted to $5.7 billion at September 30, 2015, up by $503 million, or 9.6%, in the quarter.  While the net increase reflects the addition of assets under administration attributable to Halsey, total wealth management assets under administration were impacted by financial market declines. 

  • Mortgage banking revenues (net gains on loan sales and commissions on loans originated for others) totaled $2.0 million for the third quarter, down by $785 thousand, or 29%, on a linked quarter basis.  The decline largely reflects a lower yield on loan sales and a decrease in loan sales volume.  Residential mortgage loans sold to the secondary market amounted to $132.4 million in the third quarter, down by $10.8 million, compared to the second quarter.
  • Loan related derivative income amounted to $327 thousand in the third quarter, down by $390 thousand from the prior quarter.
  • Other income totaled $457 thousand for the third quarter, down by $205 thousand on a linked quarter basis.  The decrease was largely due to a $250 thousand settlement payment received in the second quarter on a trust preferred debt obligation previously held by the Corporation.  On an after-tax basis, this second quarter transaction amounted to 1 cent per diluted share. 

Noninterest Expenses

Noninterest expenses totaled $24.5 million for the third quarter of 2015, up by $239 thousand, or 1%, from the second quarter of 2015.  The increase in noninterest expenses was largely attributable to the addition of Halsey for the two-month period since the date of acquisition, offset, in part, by a decline in advertising and promotion expenses due to the timing of promotional activities.  Halsey noninterest expenses since the date of acquisition totaled $447 thousand, including $289 thousand of salaries and benefits expense and $110 thousand of amortization of intangible assets.

Income tax expense amounted to $5.0 million for the third quarter of 2015, down by $423 thousand, or 8%, from the amount recognized in the previous quarter.  The effective tax rate for the third quarter of 2015 was 32.7%, compared to 31.9% for the second quarter of 2015.  The effective tax rate for the remainder of 2015 will be approximately 32.5%.

Loans

Total loans amounted to $2.9 billion at September 30, 2015, up by $21.3 million, or 1%, from the balance at June 30, 2015.  Significant linked quarter changes included:

  • Total commercial loans decreased by $3.7 million, or 0.2%, with an $8.0 million increase in commercial real estate and an $11.7 million decline in commercial and industrial.  The $8.0 million increase in the commercial real estate portfolio included a $10.9 million increase in construction and development loans, but was hindered by unscheduled loan payoffs of approximately $36 million in the most recent quarter.  The decline in the commercial and industrial portfolio was primarily due to decreased line utilization by commercial borrowers.
  • The residential real estate loan portfolio grew by $23.0 million, or 2%.
  • Consumer loans increased by $2.1 million, or 1%, with growth in home equity lines of credit. 

Investment Securities

The securities portfolio amounted to $344.9 million at September 30, 2015, down $29.0 million, or 8%, from the balance at June 30, 2015.  The decrease reflects calls of securities and routine principal pay-downs on mortgage backed securities, partially offset by purchases of U.S. government agency securities.

Deposits and Borrowings

Total deposits grew by $97.2 million, or 4%, in the third quarter of 2015 and amounted to $2.8 billion at September 30, 2015.  Wholesale brokered time deposits decreased by $17.0 million from the previous quarter.  Excluding wholesale brokered time deposits, in-market deposits increased by $114.2 million, or 5%.  This increase included a $56.1 million, or 12%, increase in demand deposit accounts.

FHLBB advances amounted to $381.6 million at September 30, 2015, down by $89.7 million, or 19%, from June 30, 2015.

Asset Quality

Asset quality metrics remained at manageable levels in the third quarter of 2015.  Total nonaccrual loans amounted to $16.8 million, or 0.57% of total loans, at September 30, 2015, up from $15.1 million, or 0.52%, at June 30, 2015.  Total past due loans amounted to $21.8 million, or 0.74% of total loans, at September 30, 2015, down from $24.0 million, or 0.82% of total loans, at June 30, 2015.

A loan loss provision totaling $200 thousand was charged to earnings in the third quarter of 2015, compared to a loss provision of $100 thousand recognized in the second quarter of 2015.  The third quarter provision includes loan loss allocations commensurate with growth in loan portfolio balances, offset by reductions in other loan loss exposures based on management's assessment of continued improvement in credit quality conditions.  Net charge-offs amounted to $626 thousand in the third quarter of 2015, compared to $323 thousand in the second quarter of 2015.  The allowance for loan losses was $27.2 million, or 0.92% of total loans, at September 30, 2015, compared to $27.6 million, or 0.94% of total loans, at June 30, 2015.

Capital and Dividends

Total shareholder's equity was $370.5 million at September 30, 2015, up by $11.4 million from June 30, 2015.  Capital levels at September 30, 2015 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk‑based capital ratio of 12.80% at September 30, 2015, compared to 12.78% at June 30, 2015.

The Board of Directors declared a quarterly dividend of 34 cents per share for the quarter ended September 30, 2015.  The dividend was paid on October 14, 2015 to shareholders of record on October 1, 2015.

Conference Call

Washington Trust will host a conference call to discuss third quarter results, business highlights and outlook on Tuesday, October 20, 2015 at 8:30 a.m. (Eastern Time).  Individuals may dial in to the call at 1-877-407-0784.  An audio replay of the call will be available, shortly after the conclusion of the call, by dialing 1-877-870-5176 and entering the Replay PIN Number 13621367; the audio replay will be available through October 30, 2015.  Also, a webcast of the call will be posted in the Investor Relations section of Washington Trust's web site, www.washtrustbancorp.com, and will be available through December 31, 2015.

Background

Washington Trust Bancorp, Inc. is the parent of The Washington Trust Company, a state-chartered bank headquartered in Westerly, Rhode Island. Founded in 1800, Washington Trust is the oldest community bank in the nation and is the largest independent bank headquartered in Rhode Island. Washington Trust offers a full range of financial services, including commercial banking, small business banking, personal banking, and wealth management and trust services through its offices located in Rhode Island, Connecticut and Massachusetts. The Corporation’s common stock trades on NASDAQ OMX® under the symbol WASH. Investor information is available on the Corporation’s web site: www.washtrustbancorp.com.

Forward-Looking Statements

This press release contains statements that are “forward-looking statements”.  We may also make forward-looking statements in other documents we file with the SEC, in press releases and other written materials, and in oral statements made by our officers, directors or employees.  You can identify forward-looking statements by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “outlook,” “will,” “should,” and other expressions that predict or indicate future events and trends and which do not relate to historical matters.  You should not rely on forward-looking statements, because they involve known and unknown risks, uncertainties and other factors, some of which are beyond the control of Washington Trust.  These risks, uncertainties and other factors may cause the actual results, performance or achievements of Washington Trust to be materially different from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements.

Some of the factors that might cause these differences include the following: weakness in national, regional or international economic conditions or conditions affecting the banking or financial services industries or financial capital markets; volatility in national and international financial markets; additional government intervention in the U.S. financial system; reductions in net interest income resulting from interest rate volatility as well as changes in the balance and mix of loans and deposits; reductions in the market value of wealth management assets under administration; changes in the value of securities and other assets; reductions in loan demand; changes in loan collectibility, default and charge-off rates; changes in the size and nature of the our competition; changes in legislation or regulation and accounting principles, policies and guidelines; the ability to fully realize the expected cost savings and revenues from the Halsey acquisition; and changes in the assumptions used in making such forward-looking statements. In addition, the factors described under “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as updated by our Quarterly Reports on Form 10-Q and other filings submitted to the SEC, may result in these differences. You should carefully review all of these factors and you should be aware that there may be other factors that could cause these differences. These forward-looking statements were based on information, plans and estimates at the date of this report, and we assume no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

Supplemental Information - Explanation of Non-GAAP Financial Measures

In addition to results presented in accordance with generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures.  Washington Trust's management believes that the supplemental non-GAAP information, which consists of measurements and ratios based on tangible equity and tangible assets, is utilized by regulators and market analysts to evaluate a company's financial condition and therefore, such information is useful to investors.  These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies.  Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.

Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS (unaudited)
      
    Sep 30,Dec 31,
(Dollars in thousands, except par value) 2015  2014 
Assets:     
Cash and due from banks   $106,445 $76,386 
Short-term investments    3,629  3,964 
Mortgage loans held for sale (including $21,136 at September 30, 2015 and $30,321 at December 31, 2014 measured at fair value) 31,805  45,693 
Securities:     
Available for sale, at fair value    323,795  357,662 
Held to maturity, at amortized cost (fair value $21,820 at September 30, 2015 and $26,008 at December 31, 2014) 21,140  25,222 
Total securities    344,935  382,884 
Federal Home Loan Bank stock, at cost    37,730  37,730 
Loans:     
Commercial    1,579,854  1,535,488 
Residential real estate    1,024,214  985,415 
Consumer
 345,850  338,373 
Total loans    2,949,918  2,859,276 
Less allowance for loan losses
 27,161  28,023 
Net loans    2,922,757  2,831,253 
Premises and equipment, net    28,180  27,495 
Investment in bank-owned life insurance    65,000  63,519 
Goodwill    64,803  58,114 
Identifiable intangible assets, net    10,832  4,849 
Other assets
 58,720  54,987 
Total assets
$3,674,836 $3,586,874 
Liabilities:     
Deposits:     
Demand deposits   $513,856 $459,852 
NOW accounts    358,973  326,375 
Money market accounts    855,858  802,764 
Savings accounts    305,775  291,725 
Time deposits
 801,818  874,102 
Total deposits    2,836,280  2,754,818 
Federal Home Loan Bank advances    381,649  406,297 
Junior subordinated debentures    22,681  22,681 
Other liabilities
 63,699  56,799 
Total liabilities
 3,304,309  3,240,595 
Shareholders’ Equity:     
Common stock of $.0625 par value; authorized 30,000,000 shares; issued and outstanding 16,984,737 shares at September 30, 2015 and 16,746,363 shares at December 31, 2014 1,062  1,047 
Paid-in capital    109,724  101,204 
Retained earnings    268,166  252,837 
Accumulated other comprehensive loss
 (8,425) (8,809)
Total shareholders’ equity
 370,527  346,279 
Total liabilities and shareholders’ equity
$3,674,836 $3,586,874 
      
      
Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
      
(Dollars and shares in thousands, except per share amounts)Three MonthsNine Months
Periods ended September 30, 2015  2014  2015  2014 
Interest income:     
Interest and fees on loans $28,626 $27,239 $85,718 $78,997 
Interest on securities:Taxable 2,178  2,397  6,613  8,038 
 Nontaxable 366  519  1,203  1,658 
Dividends on Federal Home Loan Bank stock  309  140  638  420 
Other interest income
 47  36  101  99 
Total interest and dividend income
 31,526  30,331  94,273  89,212 
Interest expense:     
Deposits  3,308  3,317  10,045  9,406 
Federal Home Loan Bank advances  1,987  1,832  5,780  5,831 
Junior subordinated debentures  232  241  714  723 
Other interest expense
 2  3  7  10 
Total interest expense
 5,529  5,393  16,546  15,970 
Net interest income  25,997  24,938  77,727  73,242 
Provision for loan losses
 200  600  300  1,350 
Net interest income after provision for loan losses 25,797  24,338  77,427  71,892 
Noninterest income:     
Wealth management revenues  8,902  8,374  26,249  24,969 
Merchant processing fees        1,291 
Net gains on loan sales and commissions on loans originated for others 1,963  1,742  7,296  4,688 
Service charges on deposit accounts  986  881  2,894  2,459 
Card interchange fees  849  804  2,389  2,264 
Income from bank-owned life insurance  498  468  1,480  1,354 
Loan related derivative income  327  339  1,689  562 
Equity in earnings (losses) of unconsolidated subsidiaries (69) (63) (224) (213)
Gain on sale of business line        6,265 
Other income
 457  580  1,421  1,670 
Total noninterest income
 13,913  13,125  43,194  45,309 
Noninterest expense:     
Salaries and employee benefits  15,971  14,516  46,971  43,845 
Net occupancy  1,721  1,557  5,276  4,672 
Equipment  1,424  1,211  4,140  3,682 
Merchant processing costs        1,050 
Outsourced services  1,250  1,138  3,774  3,197 
Legal, audit and professional fees  630  494  1,916  1,710 
FDIC deposit insurance costs  467  442  1,376  1,295 
Advertising and promotion  356  368  1,201  1,140 
Amortization of intangibles  260  161  571  489 
Debt prepayment penalties        6,294 
Other expenses
 2,459  2,160  7,143  6,413 
Total noninterest expense
 24,538  22,047  72,368  73,787 
Income before income taxes  15,172  15,416  48,253  43,414 
Income tax expense
 4,964  4,878  15,532  13,781 
Net income
$10,208 $10,538 $32,721 $29,633 
      
Weighted average common shares outstanding - basic 16,939  16,714  16,837  16,673 
Weighted average common shares outstanding - diluted 17,102  16,855  17,027  16,832 
Per share information:Basic earnings per common share$0.60 $0.63 $1.94 $1.77 
 Diluted earnings per common share$0.60 $0.62 $1.92 $1.75 
 Cash dividends declared per share$0.34 $0.32 $1.02 $0.90 


Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
 
 At or for the Quarters Ended
(Dollars and shares in thousands, except per share amounts)Sep 30,
 2015
 Jun 30,
 2015
 Mar 31,
 2015
 Dec 31,
 2014
 Sep 30,
 2014
Financial Data:         
Total assets$3,674,836   $3,644,477   $3,602,514   $3,586,874   $3,415,882  
Total loans 2,949,918    2,928,584    2,880,592    2,859,276    2,674,047  
Total securities 344,935    373,901    364,967    382,884    402,553  
Total deposits 2,836,280    2,739,119    2,783,143    2,754,818    2,738,888  
Total shareholders' equity 370,527    359,167    353,879    346,279    348,562  
Net interest income 25,997    26,028    25,702    26,263    24,938  
Provision for loan losses 200    100      500    600  
Noninterest income 13,913    15,261    14,020    13,706    13,125  
Noninterest expense 24,538    24,299    23,531    23,060    22,047  
Income tax expense 4,964    5,387    5,181    5,218    4,878  
Net income 10,208    11,503    11,010    11,191    10,538  
          
Share Data:         
Basic earnings per common share$0.60   $0.68   $0.65   $0.67   $0.63  
Diluted earnings per common share$0.60   $0.68   $0.65   $0.66   $0.62  
Dividends declared per share$0.34   $0.34   $0.34   $0.32   $0.32  
Book value per share$21.82   $21.34   $21.10   $20.68   $20.85  
Tangible book value per share - Non-GAAP (1)$17.36   $17.61   $17.35   $16.92   $17.07  
Market value per share$38.45   $39.48   $38.19   $40.18   $32.99  
Shares outstanding at end of period 16,985    16,834    16,773    16,746    16,721  
Weighted average common shares outstanding - basic 16,939    16,811    16,759    16,735    16,714  
Weighted average common shares outstanding - diluted 17,102    16,989    16,939    16,911    16,855  
          
Key Ratios:         
Return on average assets 1.11 %  1.27 %  1.23 %  1.27 %  1.25 %
Return on average tangible assets - Non-GAAP (1) 1.13 %  1.29 %  1.25 %  1.29 %  1.27 %
Return on average equity 11.13 %  12.88 %  12.54 %  12.68 %  12.15 %
Return on average tangible equity - Non-GAAP (1) 13.82 %  15.62 %  15.27 %  15.44 %  14.86 %
Tier 1 risk-based capital11.83% (i)  11.79 %  11.78 %  11.52 %  12.15 %
Total risk-based capital12.80% (i)  12.78 %  12.80 %  12.56 %  13.26 %
Tier 1 leverage ratio9.25% (i)  9.31 %  9.21 %  9.14 %  9.35 %
Tier 1 common equity (2)11.05% (i)  11.00 %  10.98 %  N/A    N/A  
Equity to assets 10.08 %  9.86 %  9.82 %  9.65 %  10.20 %
Tangible equity to tangible assets - Non-GAAP (1) 8.19 %  8.28 %  8.22 %  8.04 %  8.51 %
(i) - estimated         
          
Wealth Management Revenues:         
Trust and investment management fees$7,768   $7,238   $7,142   $7,059   $6,982  
Mutual fund fees 989    1,032    1,036    1,068    1,100  
Asset-based revenues 8,757    8,270    8,178    8,127    8,082  
Transaction-based revenues 145    642    257    282    292  
Total wealth management revenues$8,902   $8,912   $8,435   $8,409   $8,374  
          
Wealth Management Assets Under Administration:         
Balance at beginning of period$5,211,548   $5,159,663   $5,069,966   $4,983,464   $5,010,588  
Acquisition of Halsey Associates, Inc. (Aug. 1, 2015) 839,994                  
Net investment appreciation (depreciation) & income (316,121   (13,932)   80,872    111,715    (29,199 
Net client cash flows (21,220)   65,817    8,825    (25,213   2,075  
Balance at end of period$5,714,201   $5,211,548   $5,159,663   $5,069,966   $4,983,464  
 
(1) See the section labeled “Supplemental Information - Non-GAAP Financial Measures” at the end of this document.
(2) New capital ratio effective January 1, 2015 under the Basel III capital requirements.


 
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
      
    Nine Months Ended
    Sep 30,Sep 30,
(Dollars in thousands)    2015  2014 
Key Ratios:     
Return on average assets    1.20% 1.21%
Return on average tangible assets - Non-GAAP (1)    1.22% 1.24%
Return on average equity    12.17% 11.60%
Return on average tangible equity - Non-GAAP (1)    14.90% 14.24%
      
Allowance for Loan Losses:     
Balance at beginning of period   $28,023 $27,886 
Provision charged to earnings    300  1,350 
Charge-offs    (1,401) (1,638)
Recoveries    239  170 
Balance at end of period   $27,161 $27,768 
      
Net Loan Charge-Offs (Recoveries):     
Commercial mortgages   $312 $958 
Commercial & industrial    367  328 
Residential real estate mortgages    62  36 
Consumer    421  146 
Total   $1,162 $1,468 
      
Net charge-offs to average loans (annualized)    0.05% 0.08%
      
Wealth Management Revenues:     
Trust and investment management fees   $22,148 $20,495 
Mutual fund fees    3,057  3,267 
Asset-based revenues    25,205  23,762 
Transaction-based revenues    1,044  1,207 
Total wealth management revenues   $26,249 $24,969 
      
Wealth Management Assets Under Administration:     
Balance at beginning of period   $5,069,966 $4,781,958 
Acquisition of Halsey Associates, Inc. (Aug. 1, 2015)    839,994      
Net investment appreciation & income    (249,181) 146,405 
Net client cash flows    53,422  55,101 
Balance at end of period   $5,714,201 $4,983,464 
 
(1)  See the section labeled “Supplemental Information - Non-GAAP Financial Measures” at the end of this document.
      
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
      
 For the Quarters Ended
 Sep 30,Jun 30,Mar 31,Dec 31,Sep 30,
  2015  2015  2015  2014  2014 
Average Yield / Rate (taxable equivalent basis):     
Assets:     
Commercial loans 3.91% 4.06% 4.02% 4.23% 4.20%
Residential real estate loans, including mortgage loans held for sale 3.90% 3.95% 4.06% 4.06% 4.06%
Consumer loans 3.79% 3.77% 3.82% 3.79% 3.83%
Total loans 3.89% 3.99% 4.01% 4.12% 4.10%
Cash, federal funds sold and other short-term investments 0.21% 0.18% 0.20% 0.18% 0.19%
FHLBB stock 3.25% 1.74% 1.77% 1.48% 1.47%
Taxable debt securities 2.73% 2.72% 2.84% 2.83% 2.94%
Nontaxable debt securities 5.95% 6.15% 6.03% 5.87% 5.86%
Total securities 3.08% 3.11% 3.23% 3.22% 3.36%
Total interest-earning assets 3.70% 3.80% 3.84% 3.91% 3.89%
Liabilities:     
Interest-bearing demand deposits 0.07% 0.03% 0.09% % %
NOW accounts 0.06% 0.06% 0.06% 0.06% 0.06%
Money market accounts 0.46% 0.46% 0.45% 0.43% 0.41%
Savings accounts 0.07% 0.07% 0.06% 0.06% 0.06%
Time deposits (in-market) 0.98% 1.00% 1.05% 1.14% 1.17%
Wholesale brokered time deposits 1.29% 1.28% 1.29% 1.23% 1.09%
FHLBB advances 1.85% 1.94% 1.91% 2.28% 2.57%
Junior subordinated debentures 4.06% 4.26% 4.31% 4.22% 4.22%
Other 7.63% 6.92% 9.51% 8.50% 7.88%
Total interest-bearing liabilities 0.79% 0.79% 0.82% 0.84% 0.84%
      
Interest rate spread (taxable equivalent basis) 2.91% 3.01% 3.02% 3.07% 3.05%
Net interest margin (taxable equivalent basis) 3.07% 3.15% 3.18% 3.23% 3.21%
      
  At September 30, 2015
  AmortizedUnrealizedUnrealizedFair
(Dollars in thousands) CostGainsLossesValue
Securities Available for Sale:     
Obligations of U.S. government-sponsored enterprises $52,430 $220 $(7)$52,643 
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises  197,790  8,498    206,288 
Obligations of states and political subdivisions  36,775  982    37,757 
Individual name issuer trust preferred debt securities  29,806    (4,123) 25,683 
Corporate bonds  1,418  8  (2) 1,424 
Total securities available for sale  318,219  9,708  (4,132) 323,795 
Held to Maturity:     
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises  21,140  680    21,820 
Total securities held to maturity  21,140  680    21,820 
Total securities $339,359 $10,388 $(4,132)$345,615 


 

Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
 
 Period End Balances At
(Dollars in thousands)Sep 30,
 2015
 Jun 30,
 2015
 Mar 31,
 2015
 Dec 31,
 2014
 Sep 30,
 2014
Loans:         
Commercial:Mortgages$873,767   $876,589   $865,042   $843,978   $766,703  
 Construction & development 121,857    110,989    89,851    79,592    58,750  
 Commercial & industrial 584,230    595,959    604,630    611,918    564,920  
 Total commercial 1,579,854    1,583,537    1,559,523    1,535,488    1,390,373  
Residential real estate:Mortgages 994,808    971,705    954,905    948,731    912,956  
 Homeowner construction 29,406    29,558    32,659    36,684    32,624  
 Total residential real estate 1,024,214    1,001,263    987,564    985,415    945,580  
Consumer:Home equity lines 252,862    249,845    239,537    242,480    240,567  
 Home equity loans 47,610    47,437    46,727    46,967    46,455  
 Other 45,378    46,502    47,241    48,926    51,072  
 Total consumer 345,850    343,784    333,505    338,373    338,094  
 Total loans$2,949,918   $2,928,584   $2,880,592   $2,859,276   $2,674,047  
  
 At September 30, 2015
(Dollars in thousands)Balance % of Total
Commercial Real Estate Loans by Property Location:   
Rhode Island, Connecticut, Massachusetts$919,473   92.4%
New York, New Jersey, Pennsylvania 62,678   6.3%
New Hampshire 13,473   1.3%
Total commercial real estate loans (1)$995,624   100.0%
 
(1) Commercial real estate loans consist of commercial mortgages and construction and development loans.  Commercial mortgages are loans secured by income producing property.  
  
 At September 30, 2015
(Dollars in thousands)Balance % of Total
Residential Mortgages by Property Location:   
Rhode Island, Connecticut, Massachusetts$1,005,610   98.1%
New Hampshire 10,867   1.1%
New York, Virginia, New Jersey, Maryland, Pennsylvania 4,200   0.4%
Ohio 1,622   0.2%
Other 1,915   0.2%
Total residential mortgages$1,024,214   100.0%
   
  Period End Balances At
(Dollars in thousands) Sep 30,
 2015
 Jun 30,
 2015
 Mar 31,
 2015
 Dec 31,
 2014
 Sep 30,
 2014
Deposits:          
Demand deposits $513,856   $457,755   $477,046   $459,852   $476,808  
NOW accounts  358,973    357,922    333,321    326,375    313,391  
Money market accounts  855,858    789,334    821,353    802,764    833,318  
Savings accounts  305,775    300,108    298,802    291,725    290,561  
Time deposits  801,818    834,000    852,621    874,102    824,810  
Total deposits $2,836,280   $2,739,119   $2,783,143   $2,754,818   $2,738,888  
           
Out-of-market brokered certificates of deposits included in time deposits $267,552   $284,590   $290,863   $299,129   $211,222  
In-market deposits, excluding out-of-market brokered certificates of deposit $2,568,728   $2,454,529   $2,492,280   $2,455,689   $2,527,666  


Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
 
 Period End Balances At
 Sep 30,Jun 30,Mar 31,Dec 31,Sep 30,
(Dollars in thousands) 2015  2015  2015  2014  2014 
Asset Quality Ratios:     
Total past due loans to total loans 0.74% 0.82% 0.66% 0.63% 0.75%
Nonperforming assets to total assets 0.48% 0.45% 0.48% 0.48% 0.53%
Nonaccrual loans to total loans 0.57% 0.52% 0.55% 0.56% 0.63%
Allowance for loan losses to nonaccrual loans 161.25% 182.32% 175.29% 175.75% 163.68%
Allowance for loan losses to total loans 0.92% 0.94% 0.97% 0.98% 1.04%
      
Nonperforming Assets:     
Commercial mortgages$4,915 $4,915 $5,115 $5,315 $6,022 
Commercial construction & development          
Commercial & industrial 1,137  1,039  2,193  1,969  1,326 
Residential real estate mortgages 9,472  7,411  6,956  7,124  7,890 
Consumer 1,320  1,766  1,601  1,537  1,727 
Total nonaccrual loans 16,844  15,131  15,865  15,945  16,965 
Nonaccrual investment securities          
Property acquired through foreclosure or repossession 955  1,388  1,398  1,176  988 
Total nonperforming assets$17,799 $16,519 $17,263 $17,121 $17,953 
      
Troubled Debt Restructured Loans:     
Accruing troubled debt restructured loans:     
Commercial mortgages$10,637 $9,448 $9,448 $9,676 $9,677 
Commercial & industrial 2,069  2,209  881  954  1,036 
Residential real estate mortgages 674  679  684  1,252  1,258 
Consumer 232  201  134  135  164 
Accruing troubled debt restructured loans 13,612  12,537  11,147  12,017  12,135 
Nonaccrual troubled debt restructured loans:     
Commercial mortgages 4,498  4,498  4,698  4,898  4,898 
Commercial & industrial 380  381  1,442  1,193  854 
Residential real estate mortgages 613  92  338  248  441 
Consumer   33  34     
Nonaccrual troubled debt restructured loans 5,491  5,004  6,512  6,339  6,193 
Total troubled debt restructured loans$19,103 $17,541 $17,659 $18,356 $18,328 
      
      
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
      
 Period End Balances At
 Sep 30,Jun 30,Mar 31,Dec 31,Sep 30,
(Dollars in thousands) 2015  2015  2015  2014  2014 
Past Due Loans:     
Loans 30-59 Days Past Due:     
Commercial mortgages$147 $14 $497 $ $ 
Commercial & industrial 162  2,581  229  2,136  1,129 
Residential real estate mortgages 3,610  5,120  4,470  2,943  2,582 
Consumer loans 899  1,634  1,512  954  1,677 
Loans 30-59 days past due$4,818 $9,349 $6,708 $6,033 $5,388 
      
Loans 60-89 Days Past Due:     
Commercial mortgages$ $ $61 $ $ 
Commercial & industrial 3,455  2,299  229  1,202  314 
Residential real estate mortgages 2,458  913  1,352  821  2,001 
Consumer loans 338  397  565  345  356 
Loans 60-89 days past due$6,251 $3,609 $2,207 $2,368 $2,671 
      
Loans 90 Days or More Past Due:     
Commercial mortgages$4,915 $4,915 $5,115 $5,315 $5,995 
Commercial & industrial 720  638  721  181  970 
Residential real estate mortgages 4,499  4,871  3,607  3,284  3,922 
Consumer loans 608  647  723  897  989 
Loans 90 days or more past due$10,742 $11,071 $10,166 $9,677 $11,876 
      
Total Past Due Loans:     
Commercial mortgages$5,062 $4,929 $5,673 $5,315 $5,995 
Commercial & industrial 4,337  5,518  1,179  3,519  2,413 
Residential real estate mortgages 10,567  10,904  9,429  7,048  8,505 
Consumer loans 1,845  2,678  2,800  2,196  3,022 
Total past due loans$21,811 $24,029 $19,081 $18,078 $19,935 
      
Accruing loans 90 days or more past due$ $ $ $ $ 
Nonaccrual loans included in past due loans$13,964 $12,397 $12,314 $12,721 $14,364 
      
 For the Quarters Ended
 Sep 30,Jun 30,Mar 31,Dec 31,Sep 30,
(Dollars in thousands) 2015  2015  2015  2014  2014 
Allowance for Loan Losses:     
Balance at beginning of period$27,587 $27,810 $28,023 $27,768 $27,269 
Provision charged to earnings 200  100    500  600 
Charge-offs (725) (355) (321) (311) (148)
Recoveries 99  32  108  66  47 
Balance at end of period$27,161 $27,587 $27,810 $28,023 $27,768 
      
Net Loan Charge-Offs (Recoveries):     
Commercial mortgages$(4)$196 $120 $(5)$(7)
Commercial & industrial 348  26  (7) 144  63 
Residential real estate mortgages 12  4  46  45  (1)
Consumer 270  97  54  61  46 
Total$626 $323 $213 $245 $101 
 
 
 
The following tables present average balance and interest rate information.  Tax-exempt income is converted to a fully taxable equivalent basis using the statutory federal income tax rate adjusted for applicable state income taxes, net of the related federal tax benefit.  For dividends on corporate stocks, the 70% federal dividends received deduction is also used in the calculation of tax equivalency.  Unrealized gains (losses) on available for sale securities are excluded from the average balance and yield calculations.  Nonaccrual and renegotiated loans, as well as interest earned on these loans (to the extent recognized in the Consolidated Statements of Income) are included in amounts presented for loans.


Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS (unaudited)
 
  Three Months Ended
  September 30, 2015 June 30, 2015 September 30, 2014
  Average BalanceInterestYield/
Rate
 Average BalanceInterestYield/
Rate
 Average BalanceInterestYield/
 Rate
(Dollars in thousands) 
Assets:            
Commercial loans $1,571,645  $15,475  3.91% $1,574,183  $15,930  4.06% $1,380,229  $14,624   4.20 %
Residential real estate loans, including loans held for sale  1,050,949   10,329  3.90%  1,025,029   10,102  3.95%  946,738   9,685   4.06 %
Consumer loans  343,603   3,283  3.79%  338,809   3,183  3.77%  337,598   3,259   3.83 %
Total loans  2,966,197   29,087  3.89%  2,938,021   29,215  3.99%  2,664,565   27,568   4.10 %
Cash, federal funds sold and short-term investments  89,280   47  0.21%  63,858   29  0.18%  74,569   36   0.19 %
FHLBB stock  37,730   309  3.25%  37,730   164  1.74%  37,730   140   1.47 %
Taxable debt securities  316,214   2,178  2.73%  320,643   2,176  2.72%  323,140   2,397   2.94 %
Nontaxable debt securities  37,780   567  5.95%  40,886   627  6.15%  53,374   789   5.86 %
Total securities  353,994   2,745  3.08%  361,529   2,803  3.11%  376,514   3,186   3.36 %
Total interest-earning assets  3,447,201   32,188  3.70%  3,401,138   32,211  3.80%  3,153,378   30,930   3.89 %
Noninterest-earning assets  231,286      221,577      216,945    
Total assets $3,678,487     $3,622,715     $3,370,323    
Liabilities and Shareholders' Equity:            
Interest-bearing demand deposits $30,392  $5  0.07% $38,129  $3  0.03% $12,862  $    %
NOW accounts  357,128   53  0.06%  363,434   53  0.06%  311,077   47   0.06 %
Money market accounts  820,597   951  0.46%  820,887   941  0.46%  798,273   830   0.41 %
Savings accounts  303,587   52  0.07%  298,286   50  0.07%  291,386   46   0.06 %
Time deposits (in-market)  541,486   1,338  0.98%  554,839   1,390  1.00%  623,221   1,832   1.17 %
Wholesale brokered time deposits  279,839   909  1.29%  285,844   911  1.28%  204,046   562   1.09 %
FHLBB advances  425,931   1,987  1.85%  391,152   1,891  1.94%  283,219   1,832   2.57 %
Junior subordinated debentures  22,681   232  4.06%  22,681   241  4.26%  22,681   241   4.22 %
Other  104   2  7.63%  116   2  6.92%  151   3   7.88 %
Total interest-bearing liabilities  2,781,745   5,529  0.79%  2,775,368   5,482  0.79%  2,546,916   5,393   0.84 %
Demand deposits  477,393      441,355      439,353    
Other liabilities  52,625      48,627      37,217    
Shareholders' equity  366,724      357,365      346,837    
Total liabilities and shareholders' equity $3,678,487     $3,622,715     $3,370,323    
Net interest income (FTE)  $26,659     $26,729     $25,537   
Interest rate spread   2.91%   3.01%    3.05 %
Net interest margin   3.07%   3.15%    3.21 %
                
Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:
                
(Dollars in thousands)           Three Months Ended 
 Sep 30,
2015
Jun 30, 2015Sep 30, 2014 
Commercial loans           $461 $476 $329 
Nontaxable debt securities            201  225  270 
Total           $662 $701 $599 


 
Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS (unaudited)
 
  Nine Months Ended
  September 30, 2015 September 30, 2014
  Average
Balance
InterestYield/
Rate
 Average
Balance
InterestYield/
 Rate
(Dollars in thousands) 
Assets:        
Commercial loans $1,563,615  $46,717  3.99% $1,352,271  $43,733   4.32 %
Residential real estate loans, including loans held for sale  1,035,408   30,745  3.97%  869,230   26,704   4.11 %
Consumer loans  339,608   9,634  3.79%  333,127   9,527   3.82 %
Total loans  2,938,631   87,096  3.96%  2,554,628   79,964   4.19 %
Cash, federal funds sold and short-term investments  68,205   101  0.20%  65,486   99   0.20 %
FHLBB stock  37,730   638  2.26%  37,730   420   1.49 %
Taxable debt securities  319,786   6,613  2.76%  329,779   8,038   3.26 %
Nontaxable debt securities  41,083   1,858  6.05%  56,894   2,520   5.92 %
Total securities  360,869   8,471  3.14%  386,673   10,558   3.65 %
Total interest-earning assets  3,405,435   96,306  3.78%  3,044,517   91,041   4.00 %
Noninterest-earning assets  224,921      209,286    
Total assets $3,630,356     $3,253,803    
Liabilities and Shareholders' Equity:        
Interest-bearing demand deposits $35,430  $17  0.06% $10,906  $    %
NOW accounts  350,151   153  0.06%  309,101   141   0.06 %
Money market accounts  813,915   2,775  0.46%  748,121   2,152   0.38 %
Savings accounts  298,635   148  0.07%  291,949   136   0.06 %
Time deposits (in-market)  554,369   4,198  1.01%  649,166   5,645   1.16 %
Wholesale brokered time deposits  286,728   2,754  1.28%  163,705   1,332   1.09 %
FHLBB advances  407,363   5,780  1.90%  257,814   5,831   3.02 %
Junior subordinated debentures  22,681   714  4.21%  22,681   723   4.26 %
Other  116   7  8.07%  162   10   8.25 %
Total interest-bearing liabilities  2,769,388   16,546  0.80%  2,453,605   15,970   0.87 %
Demand deposits  452,691      424,120    
Other liabilities  49,786      35,335    
Shareholders' equity  358,491      340,743    
Total liabilities and shareholders' equity $3,630,356     $3,253,803    
Net interest income (FTE)  $79,760     $75,071   
Interest rate spread   2.98%    3.13 %
Net interest margin   3.13%    3.30 %
           
(Dollars in thousands)       Nine Months Ended 
        Sep 30,
2015
Sep 30,
2014 
Commercial loans       $1,378 $967 
Nontaxable debt securities        655  862 
Total       $2,033 $1,829 


Washington Trust Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION - Non-GAAP Financial Measures (unaudited)
      
 At or for the Quarters Ended
 Sep 30,Jun 30,Mar 31,Dec 31,Sep 30,
(Dollars in thousands, except per share amounts) 2015  2015  2015  2014  2014 
Calculation of Tangible Book Value per Share:     
Total shareholders' equity at end of period$370,527 $359,167 $353,879 $346,279 $348,562 
Less:     
Goodwill 64,803  58,114  58,114  58,114  58,114 
Identifiable intangible assets, net 10,832  4,539  4,694  4,849  5,004 
Total tangible shareholders' equity at end of period$294,892 $296,514 $291,071 $283,316 $285,444 
      
Shares outstanding at end of period 16,985  16,834  16,773  16,746  16,721 
      
Book value per share - GAAP$21.82 $21.34 $21.10 $20.68 $20.85 
Tangible book value per share - Non-GAAP$17.36 $17.61 $17.35 $16.92 $17.07 
      
Calculation of Tangible Equity to Tangible Assets:     
Total tangible shareholders' equity at end of period$294,892 $296,514 $291,071 $283,316 $285,444 
      
Total assets at end of period$3,674,836 $3,644,477 $3,602,514 $3,586,874 $3,415,882 
Less:     
Goodwill 64,803  58,114  58,114  58,114  58,114 
Identifiable intangible assets, net 10,832  4,539  4,694  4,849  5,004 
Total tangible assets at end of period$3,599,201 $3,581,824 $3,539,706 $3,523,911 $3,352,764 
      
Equity to assets - GAAP 10.08% 9.86% 9.82% 9.65% 10.20%
Tangible equity to tangible assets - Non-GAAP 8.19% 8.28% 8.22% 8.04% 8.51%
      
Calculation of Return on Average Tangible Assets:     
Net income$10,208 $11,503 $11,010 $11,191 $10,538 
      
Total average assets$3,678,487 $3,622,715 $3,588,881 $3,521,503 $3,370,323 
Less:     
Average goodwill 62,524  58,114  58,114  58,114  58,114 
Average identifiable intangible assets, net 8,768  4,614  4,770  4,924  5,082 
Total average tangible assets$3,607,195 $3,559,987 $3,525,997 $3,458,465 $3,307,127 
      
Return on average assets - GAAP 1.11% 1.27% 1.23% 1.27% 1.25%
Return on average tangible assets - Non-GAAP 1.13% 1.29% 1.25% 1.29% 1.27%
      
Calculation of Return on Average Tangible Equity:     
Net income$10,208 $11,503 $11,010 $11,191 $10,538 
      
Total average shareholders' equity$366,724 $357,365 $351,215 $352,916 $346,837 
Less:     
Average goodwill 62,524  58,114  58,114  58,114  58,114 
Average identifiable intangible assets, net 8,768  4,614  4,770  4,924  5,082 
Total average tangible shareholders' equity$295,432 $294,637 $288,331 $289,878 $283,641 
      
Return on average shareholders' equity - GAAP 11.13% 12.88% 12.54% 12.68% 12.15%
Return on average tangible shareholders' equity - Non-GAAP 13.82% 15.62% 15.27% 15.44% 14.86%
      
 
Washington Trust Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION - Non-GAAP Financial Measures (unaudited)
      
    Nine Months Ended
    Sep 30,Sep 30,
(Dollars in thousands)    2015  2014 
Calculation of Return on Average Tangible Assets:     
Net income $32,721 $29,633 
      
Total average assets   $3,630,356 $3,253,803 
Less:     
Average goodwill    59,600  58,114 
Average identifiable intangible assets, net  6,065  5,244 
Total average tangible assets $3,564,691 $3,190,445 
      
Return on average assets - GAAP  1.20% 1.21%
Return on average tangible assets - Non-GAAP  1.22% 1.24%
      
      
Calculation of Return on Average Tangible Equity:     
Net income $32,721 $29,633 
      
Total average shareholders' equity   $358,491 $340,743 
Less:     
Average goodwill    59,600  58,114 
Average identifiable intangible assets, net  6,065  5,244 
Total average tangible shareholders' equity $292,826 $277,385 
      
Return on average shareholders' equity - GAAP  12.17% 11.60%
Return on average tangible shareholders' equity - Non-GAAP  14.90% 14.24%
       
Contact:  Elizabeth B. Eckel
Senior Vice President, Marketing
Telephone:  (401) 348-1309
E-mail:  ebeckel@washtrust.com