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Section 1: 8-K (8-K)

Document
false0000737468 0000737468 2020-01-27 2020-01-27


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 27, 2020
WASHINGTON TRUST BANCORP, INC.
(Exact Name of Registrant as Specified in Charter)
Rhode Island
 
001-32991
 
05-0404671
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
 
 
 
 
 

23 Broad Street
 
 
Westerly,
Rhode Island
 
02891
(Address of principal executive offices)
 
(Zip Code)

(401)
348-1200
(Registrant's telephone number, including area code)

N/A
(Former name or address, if changed from last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act.






Item 2.02 Results of Operations and Financial Condition.

On January 27, 2020, Washington Trust Bancorp, Inc. issued a press release in which it disclosed unaudited financial information related to fourth quarter 2019 consolidated earnings. A copy of the press release relating to such announcement, dated January 27, 2020, is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Pursuant to General Instructions B.2 of Form 8-K, this information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

 
(d)
Exhibits.
 
 
 
 
 
 
 
 
 
Exhibit No.
 
Exhibit
 
 
 
 
 
 
 
 
Press release dated January 27, 2020*
 
 
 
 
 
 
 
 
 
 
 
 
*Filed herewith
 
 





SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



 
 
 
WASHINGTON TRUST BANCORP, INC.
Date:
January 27, 2020
 
By:
/s/ Ronald S. Ohsberg
 
 
 
 
Ronald S. Ohsberg
 
 
 
 
Senior Executive Vice President, Chief Financial Officer and Treasurer



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1

402456136_bancorpflatbluehorizontala15.jpg
NASDAQ: WASH
Contact: Elizabeth B. Eckel
Senior Vice President, Marketing
Telephone: (401) 348-1309
E-mail: [email protected]
Date: January 27, 2020
FOR IMMEDIATE RELEASE

Washington Trust Reports Fourth Quarter and Full-Year 2019 Earnings

WESTERLY, R.I., January 27, 2020 (PR NEWSWIRE)…Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced fourth quarter 2019 net income of $15.5 million, or $0.89 per diluted share, compared to net income of $18.8 million, or $1.08 per diluted share, reported for the third quarter of 2019. Net income for the year ended December 31, 2019 totaled $69.1 million, or $3.96 per diluted share, compared to $68.4 million, or $3.93 per diluted share, reported for the prior year.

“Washington Trust reported record full-year 2019 earnings,” stated Edward O. Handy III, Washington Trust Chairman and Chief Executive Officer.  “Our results reflect the strength and stability of our core business model, which enabled us to generate growth and revenues from key business lines.  As we enter our 220th year of service, Washington Trust remains committed to providing enhanced value to those who have contributed to our success over time:  our employees, our customers, our communities and our shareholders.”

Selected highlights for the fourth quarter and full-year 2019 include:
Returns on average equity and average assets for the fourth quarter 2019 were 12.24% and 1.18%, respectively. Full-year returns on average equity and average assets were 14.34% and 1.34%, respectively.
Total loans amounted to $3.9 billion at December 31, 2019, up by $115 million, or 3%, from the end of the preceding quarter. Total loans were up by $213 million, or 6%, from December 31, 2018.
In-market deposits (total deposits less out-of-market wholesale brokered time deposits) amounted to $3.2 billion at December 31, 2019, up by $59 million, or 2%, from the end of the preceding quarter. Total in-market deposits were up by $167 million, or 5%, from December 31, 2018.
In December, Washington Trust declared a quarterly dividend of 51 cents per share. Full-year 2019 dividends declared amounted to $2.00 per share, an increase of 24 cents per share, or 14%, over last year.
Net Interest Income
Net interest income was $32.0 million for the fourth quarter of 2019, down by $984 thousand, or 3%, from the third quarter of 2019. The net interest margin was 2.61% for the fourth quarter, down by 11 basis points from 2.72% for the preceding quarter. The declines in net interest income and the net interest margin reflect the impact of the Federal Reserve rate cuts in the second half of 2019.

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Washington Trust
January 27, 2020


Significant linked quarter changes included:
Average interest-earning assets increased by $42 million, primarily due to a $72 million increase in the average balance of loans, partially offset by a $46 million decline in the average balance of the securities portfolio. The yield on interest-earning assets for the fourth quarter was 3.86%, down by 21 basis points from the preceding quarter, reflecting the impact of lower market interest rates.
Average interest-bearing liabilities increased by $33 million, with an increase of $90 million in average in-market deposits, partially offset by a decrease of $57 million in average wholesale funding balances (wholesale brokered time deposits and Federal Home Loan Bank advances). The cost of interest-bearing liabilities for the fourth quarter was 1.53%, down by 13 basis points from the preceding quarter, reflecting lower market interest rates.

Noninterest Income
Noninterest income totaled $16.6 million for the fourth quarter of 2019, down by $1.7 million, or 9%, from the third quarter of 2019. Significant linked quarter changes included:
Wealth management revenues amounted to $8.9 million for the fourth quarter of 2019, down by $259 thousand, or 3%, on a linked quarter basis, due to a decline in asset-based revenues.
Wealth management assets under administration benefited from financial market appreciation in the fourth quarter of 2019 and totaled $6.2 billion at December 31, 2019, up by $109 million, or 2%, from September 30, 2019. The average balance of assets under administration for the fourth quarter decreased by approximately $209 million, or 3%, from the average balance for the preceding quarter.
Assets under administration have been negatively impacted by approximately $650 million in lost client accounts associated with the departure of two senior counselors at the end of the second quarter of 2019. The impact of these lost accounts was a reduction of revenues of approximately $290 thousand during the third quarter and $775 thousand in the fourth quarter.
Mortgage banking revenues totaled $3.7 million for the fourth quarter of 2019, down by $1.2 million, or 24%, from the third quarter of 2019. This reflected a linked quarter decline in the mortgage pipeline and corresponding fair value of mortgage loan commitments and loans held for sale as of December 31, 2019. Mortgage loans sold to the secondary market totaled $176 million in the fourth quarter, compared to $185 million in the preceding quarter.
Loan related derivative income was $1.1 million for the fourth quarter of 2019, down by $291 thousand, or 21%, reflecting lower volume of commercial borrower interest rate swap transactions.

Noninterest Expenses
Noninterest expenses totaled $28.8 million for the fourth quarter of 2019, up by $1.9 million, or 7%, from the third quarter of 2019. The linked quarter comparison of noninterest expenses was impacted by the following:
In the fourth quarter of 2019, a write-down valuation adjustment of $1.0 million on other real estate owned ("OREO") was recognized and included in other noninterest expenses. There were no such adjustments in the third quarter of 2019.
FDIC assessment credits of $235 thousand were recognized in the fourth quarter of 2019, compared to credits of $895 thousand in the third quarter of 2019. No additional FDIC assessment credits remain available, as the credits were

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Washington Trust
January 27, 2020


fully utilized in the fourth quarter of 2019.
Excluding the impact of the aforementioned items, noninterest expenses for the fourth quarter of 2019 increased by $192 thousand, or 1%, on a linked quarter basis, reflecting modest increases across various noninterest expense categories.

Income tax expense totaled $4.3 million for the fourth quarter of 2019, down by $915 thousand from the preceding quarter. The effective tax rate for the fourth quarter of 2019 was 21.8%, unchanged from the preceding quarter.

Investment Securities
The securities portfolio totaled $899 million at December 31, 2019, up by $12 million, or 1%, from September 30, 2019, reflecting purchases of U.S. government agency and U.S. government-sponsored debt securities, including mortgage-backed securities, that were largely offset by routine pay-downs on mortgage-backed securities and calls of debt securities. Fourth quarter 2019 purchases were concentrated in December and totaled $123 million, with a weighted average yield of 2.79%.

Securities represented 17% of total assets at both December 31, 2019 and September 30, 2019.

Loans
Total loans amounted to $3.9 billion at December 31, 2019, up by $115 million, or 3%, from the end of the preceding quarter. Linked quarter changes included:
Residential real estate loans increased by $71 million, or 5%, from September 30, 2019 and included purchases of $53 million of residential mortgage loans with a weighted average rate of 3.36%. The purchased loans were individually evaluated to our underwriting standards and are predominantly secured by properties in Massachusetts.
Commercial loans grew by $49 million, or 2%, with net increases of $30 million in the commercial real estate portfolio and $19 million in the commercial and industrial portfolio. In the fourth quarter, commercial loan originations and construction advances totaled approximately $111 million and were partially offset by payoffs and paydowns.
The consumer loan portfolio decreased by $5 million from the balance at September 30, 2019.

From the end of 2018, total loans increased by $213 million, or 6%, with growth of $120 million, or 6%, in commercial loans, $89 million, or 7%, in residential real estate loans and $4 million, or 1%, in consumer loans.

Deposits and Borrowings
Total deposits amounted to $3.5 billion at December 31, 2019, down by $87 million, or 2%, from the end of the preceding quarter and $25 million, or 1%, from the end of 2018. Included in total deposits are out-of-market wholesale brokered time deposits, which decreased by $146 million from September 30, 2019 and by $192 million from the end of 2018.

Excluding wholesale brokered time deposits, in-market deposits at December 31, 2019 were up by $59 million, or 2%, from the end of the preceding quarter and by $167 million, or 5%, from the end of 2018, reflecting growth in money market and NOW account balances.

Federal Home Loan Bank advances amounted to $1.1 billion at December 31, 2019, up by $185 million from September 30, 2019 and $191 million from the end of 2018.

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Washington Trust
January 27, 2020



Asset Quality
Nonperforming assets amounted to $18.5 million at December 31, 2019, down by $527 thousand from the end of the preceding quarter. This decline included a $3.0 million decrease in OREO and a $2.5 million increase in nonaccrual loans. The decrease in OREO reflected the sale of a foreclosed commercial property, with a carrying value of $2.0 million at September 30, 2019, at no gain or loss and a $1.0 valuation write-down adjustment on the remaining foreclosed commercial property in OREO at the end of 2019.

Total nonaccrual loans amounted to $17.4 million, or 0.45% of total loans, at December 31, 2019, compared to $14.9 million, or 0.39% of total loans, at September 30, 2019, reflecting a net increase in nonaccrual residential real estate loans. Total past due loans amounted to $15.7 million, or 0.40% of total loans, at December 31, 2019, compared to $14.4 million, or 0.38% of total loans, at September 30, 2019.

Based on management's assessment of loss exposure, as well as loan loss allocations commensurate with growth and changes in the loan portfolio and credit quality, management concluded that no loan loss provision was necessary in the fourth quarter of 2019. A loan loss provision of $400 thousand was recognized in the preceding quarter. In the fourth quarter of 2019, net recoveries of $17 thousand were recognized, compared to net charge-offs of $801 thousand in the preceding quarter.

The allowance for loan losses amounted to $27.0 million, or 0.69% of total loans, at December 31, 2019, compared to $27.0 million, or 0.71% of total loans, at September 30, 2019.

Capital and Dividends
Total shareholders' equity was $503.5 million at December 31, 2019, up by $5.7 million from September 30, 2019. This increase included net income of $15.5 million, which was partially offset by $8.9 million in dividend declarations and a charge of $2.8 million to the accumulated other comprehensive income component of shareholders' equity associated with the annual remeasurement of pension plan liabilities. This charge was largely due to a decline in the discount rate used to measure the present value of pension plan liabilities as a result of a reduction in market interest rates in 2019.

Capital levels at December 31, 2019 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.94% at December 31, 2019, unchanged from September 30, 2019. Book value per share amounted to $29.00 at December 31, 2019, compared to $28.71 at September 30, 2019.

The Board of Directors declared a quarterly dividend of 51 cents per share for the quarter ended December 31, 2019. The dividend was paid on January 10, 2020 to shareholders of record on January 2, 2020.

Conference Call
Washington Trust will host a conference call to discuss its fourth quarter results, business highlights and outlook on Tuesday, January 28, 2020 at 8:30 a.m. (Eastern Time). Individuals may dial in to the call at 1-888-317-6016. An audio replay of the call will be available, shortly after the conclusion of the call, by dialing 1-877-344-7529 and entering the Replay PIN Number 10138161;

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Washington Trust
January 27, 2020


the audio replay will be available through February 11, 2020. Also, a webcast of the call will be posted in the Investor Relations section of Washington Trust's web site, http://ir.washtrust.com, and will be available through March 31, 2020.

Background
Washington Trust Bancorp, Inc. is the parent of The Washington Trust Company. Founded in 1800, Washington Trust is the oldest community bank in the nation, the largest state-chartered bank headquartered in Rhode Island and one of the Northeast's premier financial services companies. Washington Trust offers a full range of financial services, including commercial banking, mortgage 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 under the symbol WASH. Investor information is available on the Corporation’s web site at http://ir.washtrust.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 our annual reports to shareholders, 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 our control. These risks, uncertainties and other factors may cause our actual results, performance or achievements 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; 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 or outflows 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 our competition; changes in legislation or regulation and accounting principles, policies and guidelines; operational risks including, but not limited to, cybersecurity breaches, fraud and natural disasters; 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, 2018, 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.

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Washington Trust Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; Dollars in thousands)
 
 
 
 
 
 
 
Dec 31,
2019
Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Assets:
 
 
 
 
 
Cash and due from banks

$132,193


$141,768


$115,904


$88,242


$89,923

Short-term investments
6,262

4,336

3,910

3,317

3,552

Mortgage loans held for sale, at fair value
27,833

44,657

39,996

14,608

20,996

Securities:
 
 
 
 
 
Available for sale debt securities, at fair value
899,490

887,020

969,168

994,881

927,810

Held to maturity debt securities, at amortized cost




10,415

Total securities
899,490

887,020

969,168

994,881

938,225

Federal Home Loan Bank stock, at cost
50,853

45,030

49,759

48,025

46,068

Loans:
 
 
 
 
 
Total loans
3,892,999

3,778,106

3,730,339

3,738,469

3,680,360

Less allowance for loan losses
27,014

26,997

27,398

27,644

27,072

Net loans
3,865,985

3,751,109

3,702,941

3,710,825

3,653,288

Premises and equipment, net
28,700

29,293

29,302

29,822

29,005

Operating lease right-of-use assets
26,792

27,500

28,174

28,249


Investment in bank-owned life insurance
82,490

81,920

81,351

80,786

80,463

Goodwill
63,909

63,909

63,909

63,909

63,909

Identifiable intangible assets, net
7,218

7,448

7,684

7,923

8,162

Other assets
100,934

114,888

97,574

84,142

77,175

Total assets

$5,292,659


$5,198,878


$5,189,672


$5,154,729


$5,010,766

Liabilities:
 
 
 
 
 
Deposits:
 
 
 
 
 
Noninterest-bearing deposits

$609,924


$619,839


$587,326


$577,319


$603,216

Interest-bearing deposits
2,888,958

2,966,314

2,917,296

2,926,941

2,920,832

Total deposits
3,498,882

3,586,153

3,504,622

3,504,260

3,524,048

Federal Home Loan Bank advances
1,141,464

956,786

1,060,960

1,056,129

950,722

Junior subordinated debentures
22,681

22,681

22,681

22,681

22,681

Operating lease liabilities
28,861

29,541

30,210

30,187


Other liabilities
97,279

105,892

86,994

71,629

65,131

Total liabilities
4,789,167

4,701,053

4,705,467

4,684,886

4,562,582

Shareholders’ Equity:
 
 
 
 
 
Common stock
1,085

1,084

1,083

1,082

1,081

Paid-in capital
123,281

121,900

121,115

120,743

119,888

Retained earnings
390,363

383,765

373,873

365,521

355,524

Accumulated other comprehensive loss
(11,237
)
(8,924
)
(11,866
)
(17,503
)
(28,309
)
Total shareholders’ equity
503,492

497,825

484,205

469,843

448,184

Total liabilities and shareholders’ equity

$5,292,659


$5,198,878


$5,189,672


$5,154,729


$5,010,766




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Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; Dollars and shares in thousands, except per share amounts)
 
For the Three Months Ended
 
For the Twelve Months Ended
 
Dec 31,
2019
Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
 
Dec 31,
2019
Dec 31,
2018
Interest income:
 
 
 
 
 
 
 
 
Interest and fees on loans

$40,079


$41,558


$42,138


$41,744


$40,299

 

$165,519


$149,932

Interest on mortgage loans held for sale
359

410

288

180

289

 
1,237

1,212

Taxable interest on debt securities
5,817

6,318

7,006

7,226

5,957

 
26,367

21,816

Nontaxable interest on debt securities

1

8

9

9

 
18

61

Dividends on Federal Home Loan Bank stock
693

747

720

695

669

 
2,855

2,369

Other interest income
435

493

399

340

294

 
1,667

1,017

Total interest and dividend income
47,383

49,527

50,559

50,194

47,517

 
197,663

176,407

Interest expense:


 
 
 
 
 
 
 
Deposits
9,144

9,792

9,469

8,696

7,953

 
37,101

24,175

Federal Home Loan Bank advances
6,015

6,512

6,980

6,661

5,446

 
26,168

19,073

Junior subordinated debentures
230

245

252

253

240

 
980

869

Total interest expense
15,389

16,549

16,701

15,610

13,639

 
64,249

44,117

Net interest income
31,994

32,978

33,858

34,584

33,878

 
133,414

132,290

Provision for loan losses

400

525

650

800

 
1,575

1,550

Net interest income after provision for loan losses
31,994

32,578

33,333

33,934

33,078

 
131,839

130,740

Noninterest income:


 






 
 
 
Wealth management revenues
8,894

9,153

9,549

9,252

9,012

 
36,848

38,341

Mortgage banking revenues
3,669

4,840

3,640

2,646

1,978

 
14,795

10,381

Card interchange fees
1,100

1,099

1,018

997

977

 
4,214

3,768

Service charges on deposit accounts
941

939

929

875

977

 
3,684

3,628

Loan related derivative income
1,116

1,407

746

724

1,374

 
3,993

2,461

Income from bank-owned life insurance
570

569

566

649

572

 
2,354

2,196

Net realized losses on securities
27


(80
)


 
(53
)

Other income
301

335

385

224

273

 
1,245

1,339

Total noninterest income
16,618

18,342

16,753

15,367

15,163

 
67,080

62,114

Noninterest expense:


 






 
 
 
Salaries and employee benefits
18,374

18,332

18,436

17,619

16,918

 
72,761

69,277

Outsourced services
2,752

2,722

2,518

2,606

2,510

 
10,598

8,684

Net occupancy
1,986

1,933

1,904

1,998

1,946

 
7,821

7,891

Equipment
996

1,046

1,028

1,011

983

 
4,081

4,312

Legal, audit and professional fees
692

645

664

534

587

 
2,535

2,427

FDIC deposit insurance costs
109

(460
)
540

429

376

 
618

1,612

Advertising and promotion
402

368

525

239

460

 
1,534

1,406

Amortization of intangibles
229

236

239

239

239

 
943

979

Change in fair value of contingent consideration




(187
)
 

(187
)
Other expenses
3,215

2,048

2,297

2,289

2,850

 
9,849

9,761

Total noninterest expense
28,755

26,870

28,151

26,964

26,682

 
110,740

106,162

Income before income taxes
19,857

24,050

21,935

22,337

21,559

 
88,179

86,692

Income tax expense
4,321

5,236

4,662

4,842

4,523

 
19,061

18,260

Net income

$15,536


$18,814


$17,273


$17,495


$17,036

 

$69,118


$68,432

 
 
 
 
 
 
 
 
 
Net income available to common shareholders

$15,502


$18,778


$17,238


$17,461


$17,004

 

$68,979


$68,288

 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
  Basic
17,351

17,338

17,330

17,304

17,297

 
17,331

17,272

  Diluted
17,436

17,414

17,405

17,401

17,385

 
17,414

17,391

Earnings per common share:
 
 
 
 
 
 
 
 
  Basic

$0.89


$1.08


$0.99


$1.01


$0.98

 

$3.98


$3.95

  Diluted

$0.89


$1.08


$0.99


$1.00


$0.98

 

$3.96


$3.93

 
 
 
 
 
 
 
 
 
Cash dividends declared per share

$0.51


$0.51


$0.51


$0.47


$0.47

 

$2.00


$1.76


-7-



Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited; Dollars and shares in thousands, except per share amounts)
 
 
 
Dec 31,
2019
Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Share and Equity Related Data:
 
 
 
 
 
Book value per share

$29.00


$28.71


$27.93


$27.15


$25.90

Tangible book value per share - Non-GAAP (1)

$24.90


$24.60


$23.80


$23.00


$21.74

Market value per share

$53.79


$48.31


$52.18


$48.15


$47.53

Shares issued and outstanding at end of period
17,363

17,338

17,336

17,305

17,302

 
 
 
 
 
 
Capital Ratios (2):
 
 
 
 
 
Tier 1 risk-based capital
12.23
%
12.21
%
12.06
%
11.84
%
11.81
%
Total risk-based capital
12.94
%
12.94
%
12.80
%
12.59
%
12.56
%
Tier 1 leverage ratio
9.04
%
8.97
%
8.76
%
8.69
%
8.89
%
Common equity tier 1
11.65
%
11.62
%
11.46
%
11.25
%
11.20
%
 
 
 
 
 
 
Balance Sheet Ratios:
 
 
 
 
 
Equity to assets
9.51
%
9.58
%
9.33
%
9.11
%
8.94
%
Tangible equity to tangible assets - Non-GAAP (1)
8.28
%
8.32
%
8.06
%
7.83
%
7.62
%
Loans to deposits (3)
111.3
%
105.8
%
106.8
%
106.3
%
104.3
%

 
 
 
For the Twelve Months Ended
 
For the Three Months Ended
 
 
Dec 31,
2019
Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
 
Dec 31,
2019
Dec 31,
2018
Performance Ratios (4):
 
 
 
 
 
 
 
 
Net interest margin (5)
2.61
%
2.72
%
2.81
%
2.93
%
2.95
%
 
2.77
%
3.01
%
Return on average assets (net income divided by average assets)
1.18
%
1.44
%
1.34
%
1.39
%
1.40
%
 
1.34
%
1.46
%
Return on average tangible assets - Non-GAAP (1)
1.20
%
1.46
%
1.36
%
1.41
%
1.42
%
 
1.36
%
1.48
%
Return on average equity (net income available for common shareholders divided by average equity)
12.24
%
15.20
%
14.58
%
15.52
%
15.61
%
 
14.34
%
16.20
%
Return on average tangible equity - Non-GAAP (1)
14.26
%
17.79
%
17.17
%
18.43
%
18.75
%
 
16.85
%
19.57
%
Efficiency ratio (6)
59.2
%
52.4
%
55.6
%
54.0
%
54.4
%
 
55.2
%
54.6
%

(1)
See the section labeled “SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures” at the end of this document.
(2)
Estimated for December 31, 2019 and actuals for prior periods.
(3)
Period-end balances of net loans and mortgage loans held for sale as a percentage of total deposits.
(4)
Annualized based on the actual number of days in the period.
(5)
Fully taxable equivalent (FTE) net interest income as a percentage of average-earnings assets.
(6)
Total noninterest expense as percentage of total revenues (net interest income and noninterest income).



-8-



Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited; Dollars in thousands)
 
 
 
 
 
 
For the Three Months Ended
 
For the Twelve Months Ended
 
Dec 31,
2019
Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
 
Dec 31,
2019
Dec 31,
2018
Wealth Management Results
 
 
 
 
 
 
 
 
Wealth Management Revenues:
 
 
 
 
 
 
 
 
Asset-based revenues

$8,731


$9,013


$9,141


$8,921


$8,930

 

$35,806


$37,343

Transaction-based revenues
163

140

408

331

82

 
1,042

998

Total wealth management revenues

$8,894


$9,153


$9,549


$9,252


$9,012

 

$36,848


$38,341

 
 
 
 
 
 
 
 
 
Assets Under Administration (AUA):
 
 
 
 
 
 
 
 
Balance at beginning of period

$6,126,327


$6,478,890


$6,350,128


$5,910,814


$6,462,340

 

$5,910,814


$6,714,637

Net investment appreciation (depreciation) & income
310,766

66,514

222,489

520,057

(534,847
)
 
1,119,826

(201,176
)
Net client asset flows
(243,175
)
(419,077
)
(93,727
)
(80,743
)
(16,679
)
 
(836,722
)
(602,647
)
Other (1)
41,883





 
41,883


Balance at end of period

$6,235,801


$6,126,327


$6,478,890


$6,350,128


$5,910,814

 

$6,235,801


$5,910,814

 
 
 
 
 
 
 
 
 
Percentage of AUA that are managed assets
90%
90%
91%
91%
90%
 
90%
90%
 
 
 
 
 
 
 
 
 
Mortgage Banking Results
 
 
 
 
 
 
 
 
Mortgage Banking Revenues:
 
 
 
 
 
 
 
 
Gains & commissions on loan sales, net (2)

$3,583


$4,752


$3,523


$2,474


$1,798

 

$14,332


$9,748

Loan servicing fee income, net (3)
86

88

117

172

180

 
463

633

Total mortgage banking revenues

$3,669


$4,840


$3,640


$2,646


$1,978

 

$14,795


$10,381

 
 
 
 
 
 
 
 
 
Residential Mortgage Loan Originations:
 
 
 
 
 
 
 
 
Originations for retention in portfolio

$120,882


$105,075


$69,736


$51,697


$58,515

 

$347,390


$335,585

Originations for sale to secondary market (4)
160,175

189,979

162,123

85,826

96,792

 
598,103

427,037

Total mortgage loan originations

$281,057


$295,054


$231,859


$137,523


$155,307

 

$945,493


$762,622

 
 
 
 
 
 
 
 
 
Residential Mortgage Loans Sold:
 
 
 
 
 
 
 
 
Sold with servicing rights retained

$42,612


$25,766


$18,292


$9,490


$16,577

 

$96,160


$98,941

Sold with servicing rights released (4)
134,091

159,210

119,122

82,589

81,985

 
495,012

333,998

Total mortgage loans sold

$176,703


$184,976


$137,414


$92,079


$98,562

 

$591,172


$432,939


(1)
Represents the classification of certain non-fee generating assets as AUA due to a reporting change in the fourth quarter of 2019.
(2)
Includes gains on loan sales, commission income on loans originated for others, servicing right gains, fair value adjustments on mortgage loans held for sale, and fair value adjustments and gains on forward loan commitments.
(3)
Represents loan servicing fee income, net of servicing right amortization and valuation adjustments.
(4)
Includes brokered loans (loans originated for others).


-9-



Washington Trust Bancorp, Inc. and Subsidiaries
END OF PERIOD LOAN AND DEPOSIT COMPOSITION
(Unaudited; Dollars in thousands)
 
 
 
Dec 31,
2019
Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Loans:
 
 
 
 
 
Commercial real estate (1)

$1,547,572


$1,517,320


$1,482,836


$1,463,682


$1,392,408

Commercial & industrial
585,289

566,426

583,873

610,608

620,704

Total commercial
2,132,861

2,083,746

2,066,709

2,074,290

2,013,112

 
 
 
 
 
 
Residential real estate (2)
1,449,090

1,378,518

1,352,113

1,359,072

1,360,387

 
 
 
 
 
 
Home equity
290,874

294,250

288,078

279,938

280,626

Other
20,174

21,592

23,439

25,169

26,235

Total consumer
311,048

315,842

311,517

305,107

306,861

Total loans

$3,892,999


$3,778,106


$3,730,339


$3,738,469


$3,680,360

(1)
Commercial real estate loans consist of commercial mortgages and construction and development loans. Commercial mortgages are loans secured by income producing property.
(2)
Residential real estate loans consist of mortgage and homeowner construction loans secured by one- to four-family residential properties.

 
December 31, 2019
 
December 31, 2018
 
Balance

% of Total
 
Balance
% of Total
Commercial Real Estate Loans by Property Location:
 
 
 
 
 
Rhode Island

$394,929

25
%
 

$377,249

27
%
Connecticut
616,484

40

 
570,116

41

Massachusetts
458,029

30

 
356,615

26

Subtotal
1,469,442

95

 
1,303,980

94

All other states
78,130

5

 
88,428

6

Total commercial real estate loans

$1,547,572

100
%
 

$1,392,408

100
%
 
 
 
 
 
 
Residential Real Estate Loans by Property Location:
 
 
 
 
 
Rhode Island

$356,392

25
%


$352,141

26
%
Connecticut
140,574

10


141,775

10

Massachusetts
932,726

64


849,435

63

Subtotal
1,429,692

99


1,343,351

99

All other states
19,398

1


17,036

1

Total residential real estate loans

$1,449,090

100
%


$1,360,387

100
%

 
Dec 31,
2019
Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Deposits:
 
 
 
 
 
Noninterest-bearing demand deposits

$609,924


$619,839


$587,326


$577,319


$603,216

Interest-bearing demand deposits
159,938

152,200

128,355

162,598

178,733

NOW accounts
520,295

478,462

484,615

471,682

466,568

Money market accounts
765,899

749,122

654,719

644,949

646,878

Savings accounts
373,503

362,868

365,069

371,248

373,545

Time deposits (in-market)
784,481

792,941

801,501

792,470

778,105

In-market deposits
3,214,040

3,155,432

3,021,585

3,020,266

3,047,045

Wholesale brokered time deposits
284,842

430,721

483,037

483,994

477,003

Total deposits

$3,498,882


$3,586,153


$3,504,622


$3,504,260


$3,524,048


-10-



Washington Trust Bancorp, Inc. and Subsidiaries
CREDIT & ASSET QUALITY DATA
(Unaudited; Dollars in thousands)
 
 
 
Dec 31,
2019
Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Asset Quality Ratios:
 
 
 
 
 
Nonperforming assets to total assets
0.35
%
0.37
%
0.29
%
0.28
%
0.28
%
Nonaccrual loans to total loans
0.45
%
0.39
%
0.34
%
0.33
%
0.32
%
Total past due loans to total loans
0.40
%
0.38
%
0.48
%
0.39
%
0.37
%
Allowance for loan losses to nonaccrual loans
155.18
%
181.16
%
212.93
%
223.57
%
231.25
%
Allowance for loan losses to total loans
0.69
%
0.71
%
0.73
%
0.74
%
0.74
%
 
 
 
 
 
 
Nonperforming Assets:
 
 
 
 
 
Commercial real estate

$603


$684


$926


$926


$925

Commercial & industrial
657





Total commercial
1,260

684

926

926

925

Residential real estate
14,297

12,531

10,610

10,032

9,346

Home equity
1,763

1,599

1,243

1,407

1,436

Other consumer
88

88

88



Total consumer
1,851

1,687

1,331

1,407

1,436

Total nonaccrual loans
17,408

14,902

12,867

12,365

11,707

Other real estate owned
1,109

4,142

2,142

2,142

2,142

Total nonperforming assets

$18,517


$19,044


$15,009


$14,507


$13,849

 
 
 
 
 
 
Past Due Loans (30 days or more past due):
 
 
 
 
 
Commercial real estate

$1,433


$684


$3,670


$926


$1,080

Commercial & industrial
1

1

1

1


Total commercial
1,434

685

3,671

927

1,080

Residential real estate
11,429

11,599

11,237

10,849

10,520

Home equity
2,696

1,973

2,904

2,911

1,989

Other consumer
130

99

102

13

33

Total consumer
2,826

2,072

3,006

2,924

2,022

Total past due loans

$15,689


$14,356


$17,914


$14,700


$13,622

 
 
 
 
 
 
Accruing loans 90 days or more past due

$—


$—


$—


$—


$—

Nonaccrual loans included in past due loans

$11,477


$9,797


$8,581


$8,563


$8,613


-11-



Washington Trust Bancorp, Inc. and Subsidiaries
CREDIT & ASSET QUALITY DATA
(Unaudited; Dollars in thousands)
 
For the Three Months Ended
 
For the Twelve Months Ended
 
Dec 31,
2019
Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
 
Dec 31,
2019
Dec 31,
2018
Nonaccrual Loan Activity:
 
 
 
 
 
 
 
 
Balance at beginning of period

$14,902


$12,867


$12,365


$11,707


$10,809

 

$11,707


$15,211

Additions to nonaccrual status
2,766

5,672

1,620

1,924

2,918

 
11,982

8,764

Loans returned to accruing status

(597
)
(118
)
(855
)
(1,500
)
 
(1,570
)
(2,680
)
Loans charged-off
(132
)
(966
)
(819
)
(103
)
(298
)
 
(2,020
)
(1,187
)
Loans transferred to other real estate owned

(2,000
)



 
(2,000
)
(3,074
)
Payments, payoffs and other changes
(128
)
(74
)
(181
)
(308
)
(222
)
 
(691
)
(5,327
)
Balance at end of period

$17,408


$14,902


$12,867


$12,365


$11,707

 

$17,408


$11,707

 
 
 
 
 
 
 
 
 
Allowance for Loan Losses:
 
 
 
 
 
 
 
 
Balance at beginning of period

$26,997


$27,398


$27,644


$27,072


$26,509

 

$27,072


$26,488

Provision charged to earnings

400

525

650

800

 
1,575

1,550

Charge-offs
(132
)
(966
)
(819
)
(103
)
(298
)
 
(2,020
)
(1,187
)
Recoveries
149

165

48

25

61

 
387

221

Balance at end of period

$27,014


$26,997


$27,398


$27,644


$27,072

 

$27,014


$27,072

 
 
 
 
 
 
 
 
 
Net Loan Charge-Offs (Recoveries):
 
 
 
 
 
 
 
 
Commercial real estate

($44
)

$947


$—


$—


$—

 

$903


$602

Commercial & industrial
(15
)
(122
)
(16
)
6

(13
)
 
(147
)
(109
)
Total commercial
(59
)
825

(16
)
6

(13
)
 
756

493

Residential real estate


486


156

 
486

229

Home equity
17

(36
)
289

48

65

 
318

164

Other consumer
25

12

12

24

29

 
73

80

Total consumer
42

(24
)
301

72

94

 
391

244

Total

($17
)

$801


$771


$78


$237

 

$1,633


$966

 
 
 
 
 
 
 
 
 
Net charge-offs to average loans (annualized)
%
0.08
%
0.08
%
0.01
%
0.03
%
 
0.04
%
0.03
%

-12-



The following table presents 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. Unrealized gains (losses) on available for sale securities and fair value adjustments on mortgage loans held for sale are excluded from the average balance and yield calculations. Nonaccrual loans, as well as interest recognized on these loans, are included in amounts presented for loans.
Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS (FTE Basis)
(Unaudited; Dollars in thousands)
For the Three Months Ended
December 31, 2019
 
September 30, 2019
 
Quarter Change
 
Average Balance
Interest
Yield/
Rate
 
Average Balance
Interest
Yield/
Rate
 
Average Balance
Interest
Yield/
Rate
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash, federal funds sold and short-term investments

$115,458


$435

1.49
%
 

$96,231


$493

2.03
%
 

$19,227


($58
)
(0.54
)%
Mortgage loans held for sale
38,494

359

3.70

 
39,771

410

4.09

 
(1,277
)
(51
)
(0.39
)
Taxable debt securities
874,770

5,817

2.64

 
920,910

6,318

2.72

 
(46,140
)
(501
)
(0.08
)
Nontaxable debt securities



 
75

3

15.87

 
(75
)
(3
)
(15.87
)
Total securities
874,770

5,817

2.64

 
920,985

6,321

2.72

 
(46,215
)
(504
)
(0.08
)
FHLB stock
46,501

693

5.91

 
47,982

747

6.18

 
(1,481
)
(54
)
(0.27
)
Commercial real estate
1,538,627

16,491

4.25

 
1,490,878

17,314

4.61

 
47,749

(823
)
(0.36
)
Commercial & industrial
576,590

6,572

4.52

 
584,601

6,946

4.71

 
(8,011
)
(374
)
(0.19
)
Total commercial
2,115,217

23,063

4.33

 
2,075,479

24,260

4.64

 
39,738

(1,197
)
(0.31
)
Residential real estate
1,399,144

13,833

3.92

 
1,367,017

13,728

3.98

 
32,127

105

(0.06
)
Home equity
293,029

3,254

4.41

 
291,058

3,615

4.93

 
1,971

(361
)
(0.52
)
Other
20,589

250

4.82

 
22,270

278

4.95

 
(1,681
)
(28
)
(0.13
)
Total consumer
313,618

3,504

4.43

 
313,328

3,893

4.93

 
290

(389
)
(0.50
)
Total loans
3,827,979

40,400

4.19

 
3,755,824

41,881

4.42

 
72,155

(1,481
)
(0.23
)
Total interest-earning assets
4,903,202

47,704

3.86

 
4,860,793

49,852

4.07

 
42,409

(2,148
)
(0.21
)
Noninterest-earning assets
323,833

 
 
 
320,223

 
 
 
3,610

 
 
Total assets

$5,227,035

 
 
 

$5,181,016

 
 
 

$46,019

 
 
Liabilities and Shareholders' Equity:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits

$146,408


$578

1.57
%
 

$137,980


$649

1.87
%
 

$8,428


($71
)
(0.30
)%
NOW accounts
489,374

82

0.07

 
471,302

69

0.06

 
18,072

13

0.01

Money market accounts
769,860

2,179

1.12

 
699,138

2,094

1.19

 
70,722

85

(0.07
)
Savings accounts
365,977

68

0.07

 
362,142

72

0.08

 
3,835

(4
)
(0.01
)
Time deposits (in-market)
789,864

4,157

2.09

 
800,571

4,181

2.07

 
(10,707
)
(24
)
0.02

Total interest-bearing in-market deposits
2,561,483

7,064

1.09

 
2,471,133

7,065

1.13

 
90,350

(1
)
(0.04
)
Wholesale brokered time deposits
392,001

2,080

2.11

 
475,026

2,727

2.28

 
(83,025
)
(647
)
(0.17
)
Total interest-bearing deposits
2,953,484

9,144

1.23

 
2,946,159

9,792

1.32

 
7,325

(648
)
(0.09
)
FHLB advances
1,006,246

6,015

2.37

 
980,091

6,512

2.64

 
26,155

(497
)
(0.27
)
Junior subordinated debentures
22,681

230

4.02

 
22,681

245

4.29

 

(15
)
(0.27
)
Total interest-bearing liabilities
3,982,411

15,389

1.53

 
3,948,931

16,549

1.66

 
33,480

(1,160
)
(0.13
)
Noninterest-bearing demand deposits
618,406

 
 
 
626,408

 
 
 
(8,002
)


Other liabilities
123,604

 
 
 
115,480

 
 
 
8,124



Shareholders' equity
502,614

 
 
 
490,197

 
 
 
12,417

 
 
Total liabilities and shareholders' equity

$5,227,035

 
 
 

$5,181,016

 
 
 

$46,019

 
 
Net interest income (FTE)
 

$32,315

 
 
 

$33,303

 
 
 

($988
)
 
Interest rate spread
 
 
2.33
%
 
 
 
2.41
%
 
 
 
(0.08
)%
Net interest margin