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Section 1: 8-K (8-K)

Document


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): April 22, 2019
WASHINGTON TRUST BANCORP, INC.
(Exact Name of Registrant as Specified in Charter)
Rhode Island
 
001-32991
 
05-0404671
(State or other jurisdiction of
 
(Commission File Number)
 
(IRS Employer Identification No.)
incorporation)
 
 
 
 

 
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:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
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 o
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. o






Item 2.02 Results of Operations and Financial Condition.

On April 22, 2019, Washington Trust Bancorp, Inc. issued a press release in which it disclosed unaudited financial information related to first quarter 2019 consolidated earnings. A copy of the press release relating to such announcement, dated April 22, 2019, 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 April 22, 2019*
 
 
 
 
 
 
 
 
 
 
 
 
*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:
April 22, 2019
 
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

397595251_bancorpflatbluehorizontala12.jpg
NASDAQ: WASH
Contact: Elizabeth B. Eckel
Senior Vice President, Marketing
Telephone: (401) 348-1309
E-mail: [email protected]
Date: April 22, 2019
FOR IMMEDIATE RELEASE

Washington Trust Reports First Quarter 2019 Earnings

WESTERLY, R.I., April 22, 2019 (GLOBE NEWSWIRE)…Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced first quarter 2019 net income of $17.5 million, or $1.00 per diluted share, compared to net income of $17.0 million, or $0.98 per diluted share, reported for the fourth quarter of 2018.

Washington Trust posted solid first quarter earnings and earnings per share,” stated Edward O. Handy III, Chairman and Chief Executive Officer.  “We had good activity across all business lines resulting from favorable market conditions, recent branch expansion, and continued marketing and business development efforts.”

Selected highlights for the first quarter of 2019 include:
Profitability ratios remain strong with returns on average equity and average assets of 15.52% and 1.39%, respectively.
Total revenues amounted to $50 million, up by 2% on a linked quarter basis.
Wealth management assets under administration were $6.4 billion at March 31, 2019, up by $439 million, or 7%, from the balance at December 31, 2018, reflecting financial market appreciation during the quarter.
Total loans were up by $58 million, or 2%, from the end of the prior quarter and up by $351 million, or 10%, from a year ago.
Net Interest Income
Net interest income was $34.6 million for the first quarter of 2019, up by $706 thousand, or 2%, from the fourth quarter of 2018. The net interest margin was 2.93% for the first quarter, down by 2 basis points from 2.95% reported in the preceding quarter. Excluding income associated with loan payoffs and prepayment penalties of $49 thousand in the first quarter and $144 thousand in the preceding quarter, the net interest margin was 2.93% for the first quarter, compared to 2.94% reported in the preceding quarter.

-1-

Washington Trust
April 22, 2019


Significant linked quarter changes included:
Average interest-earning assets increased by $227 million, including increases of $124 million in average investment securities and $97 million in average commercial loans. The yield on interest-earning assets for the first quarter was 4.24%, up by 11 basis points from the preceding quarter. Excluding the impact of income associated with loan payoffs and prepayment penalties, the yield on interest-earning assets was 4.24%, up by 13 basis points from the preceding quarter. The yield benefited from increased market interest rates.
Average interest-bearing liabilities increased by $226 million, including increases of $172 million in average wholesale funding balances (wholesale brokered time deposits and Federal Home Loan Bank advances) and $53 million in average in-market deposits. The cost of interest-bearing liabilities for the first quarter was 1.60%, up by 15 basis points from the preceding quarter. This increase largely reflected higher rates paid on wholesale funding sources and promotional certificates of deposit.

Noninterest Income
Noninterest income totaled $15.4 million for the first quarter of 2019, up by $204 thousand, or 1%, from the fourth quarter of 2018. Significant linked quarter changes included:
Wealth management revenues were $9.3 million for the first quarter of 2019, up by $240 thousand, or 3%, on a linked quarter basis, reflecting an increase in transaction-based revenues, largely due to tax reporting and preparation fees, which are generally concentrated in the first half of the year. Asset-based revenues were down modestly by $9 thousand, or 0.1%, on a linked quarter basis. While the March 31, 2019 end of period balances of wealth management assets under administration increased from the balance at December 31, 2018, the average balance of wealth management assets for the first quarter of 2019 was down slightly by $5 million, or 0.1%, from the fourth quarter of 2018.
Mortgage banking revenues were $2.6 million for the first quarter of 2019, up by $668 thousand, or 34%, from the preceding quarter. First quarter results benefited from an increase in fair value adjustments on mortgage loan commitments and loans held for sale, as well as a relatively higher sales yield on mortgage loans sold in the secondary market. The increase in the fair value adjustments reflected an increase in the mortgage pipeline and corresponding loan commitment balances as of March 31, 2019.
Loan related derivative income was $724 thousand for the first quarter of 2019, down by $650 thousand from the preceding quarter's above-average level of commercial borrower loan related derivative transaction volume.
Income from bank-owned life insurance amounted to $649 thousand in the first quarter of 2019, up by $77 thousand, from the preceding quarter. Included in the first quarter was $91 thousand gain due to the receipt of tax-exempt life insurance proceeds.

Noninterest Expenses
Noninterest expenses totaled $27.0 million for the first quarter of 2019, up by $282 thousand, or 1%, from the fourth quarter of 2018. The linked quarter comparison of noninterest expenses was impacted by the following:
In the fourth quarter of 2018, write-down valuation adjustments on other real estate owned amounting to $833 thousand were recognized and classified in other expenses. There were no such write-downs in the first quarter of 2019.

-2-

Washington Trust
April 22, 2019


In the fourth quarter of 2018, a reduction to noninterest expenses of $187 thousand was recognized, resulting from a nontaxable adjustment in the fair value of a contingent consideration liability that was initially recorded upon the completion of a 2015 acquisition. There was no such reduction in the first quarter of 2019.
Excluding the impact of the aforementioned items, noninterest expenses for the first quarter of 2019 increased by $928 thousand, or 4%, on a linked quarter basis, primarily due to increased salaries and employee benefits expense, which largely reflected a routine increase in payroll taxes associated with the start of the new calendar year.

Income tax expense totaled $4.8 million for the first quarter of 2019, up by $319 thousand from the preceding quarter. The effective tax rate for the first quarter of 2019 was 21.7%, compared to 21.0% for the preceding quarter. Based on current federal and applicable state income tax statutes, the Corporation currently expects its 2019 effective tax rate to be approximately 21.5%.

Investment Securities
The securities portfolio totaled $995 million at March 31, 2019, up by $57 million from the balance at December 31, 2018. The increase reflected first quarter purchases of $73 million in debt securities, with a weighted average yield of 3.69%, as well as an increase in the fair value of available for sale debt securities. These increases were partially offset by routine principal pay-downs on mortgage-backed securities and a called debt security. Investment securities represented 19% of total assets at both March 31, 2019 and December 31, 2018.

Loans
Total loans amounted to $3.7 billion at March 31, 2019, up by $58 million, or 2%, from the end of the preceding quarter, reflecting net growth in the commercial real estate portfolio. The residential real estate loan portfolio decreased by $1 million from the end of the fourth quarter of 2018 and consumer loan portfolio declined by $2 million from the balance at December 31, 2018. Total loans were up by $351 million, or 10%, from the balance a year ago.

Deposits and Borrowings
Total deposits amounted to $3.5 billion at March 31, 2019, down by $20 million, or 1%, from the end of the preceding quarter. Excluding the balances of wholesale brokered time deposits, total in-market deposits were down by $27 million, or 1%, reflecting a decline in demand account balances partially offset by growth in promotional certificates of deposit. Total deposits were up by $248 million, or 8%, from the balance a year ago.

Federal Home Loan Bank advances amounted to $1.1 billion at March 31, 2019, up by $105 million from the balance at December 31, 2018, to fund purchases of investment securities and loan growth.

Asset Quality
Total nonaccrual loans amounted to $12.4 million, or 0.33% of total loans, at March 31, 2019, compared to $11.7 million, or 0.32% of total loans, at December 31, 2018. Total past due loans amounted to $14.7 million, or 0.39% of total loans, at March 31, 2019, compared to $13.6 million, or 0.37% of total loans, at December 31, 2018.

A loan loss provision totaling $650 thousand was recognized in the first quarter of 2019, compared to a loan loss provision of $800 thousand recognized in the preceding quarter. These provisions were based on management's assessment of loss exposure,

-3-

Washington Trust
April 22, 2019


as well as loan loss allocations commensurate with growth and changes in the loan portfolio. Net charge-offs totaled $78 thousand in the first quarter compared to $237 thousand in the preceding quarter. The allowance for loan losses amounted to $27.6 million, or 0.74% of total loans, at March 31, 2019, compared to $27.1 million, or 0.74% of total loans, at December 31, 2018.

Capital and Dividends
Total shareholders' equity was $470 million at March 31, 2019, up by $21.7 million from December 31, 2018. This increase included net income of $17.5 million and an increase of $10.8 million in the accumulated other comprehensive income component of shareholders' equity primarily due to an increase in the fair value of available for sale debt securities, partially offset by $8.2 million in dividend declarations in the first quarter. The Board of Directors declared a quarterly dividend of 47 cents per share for the quarter ended March 31, 2019. The dividend was paid on April 12, 2019 to shareholders of record on April 1, 2019.

Capital levels at March 31, 2019 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.59% at March 31, 2019, compared to 12.56% at December 31, 2018. Book value per share amounted to $27.15 at March 31, 2019, compared to $25.90 at December 31, 2018.

Conference Call
Washington Trust will host a conference call to discuss its first quarter results, business highlights and outlook on Monday, April 22, 2019 at 8:30 a.m. (Eastern Time). Individuals may dial in to the call at 1-877-407-9208. An audio replay of the call will be available, shortly after the conclusion of the call, by dialing 1-844-512-2921 and entering the Replay PIN Number 13689272; the audio replay will be available through May 13, 2019. 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 June 30, 2019.


-4-

Washington Trust
April 22, 2019


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; occurrences of cyberattacks, hacking and identity theft; 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.

-5-




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

$88,242


$89,923


$72,934


$132,068


$85,680

Short-term investments
3,317

3,552

2,917

2,624

2,322

Mortgage loans held for sale, at fair value
14,608

20,996

22,571

35,207

19,269

Securities:
 
 
 
 
 
Available for sale debt securities, at fair value
994,881

927,810

812,647

776,693

787,842

Held to maturity debt securities, at amortized cost

10,415

10,863

11,412

11,973

Total securities
994,881

938,225

823,510

788,105

799,815

Federal Home Loan Bank stock, at cost
48,025

46,068

44,525

46,281

41,127

Loans:
 
 
 
 
 
Total loans
3,738,469

3,680,360

3,556,203

3,490,230

3,387,406

Less allowance for loan losses
27,644

27,072

26,509

26,174

25,864

Net loans
3,710,825

3,653,288

3,529,694

3,464,056

3,361,542

Premises and equipment, net
29,822

29,005

28,195

28,377

28,316

Operating lease right-of-use assets
28,249





Investment in bank-owned life insurance
80,786

80,463

79,891

79,319

73,782

Goodwill
63,909

63,909

63,909

63,909

63,909

Identifiable intangible assets, net
7,923

8,162

8,400

8,645

8,893

Other assets
84,142

77,175

94,126

88,651

81,671

Total assets

$5,154,729


$5,010,766


$4,770,672


$4,737,242


$4,566,326

Liabilities:
 
 
 
 
 
Deposits:
 
 
 
 
 
Noninterest-bearing deposits

$577,319


$603,216


$611,829


$577,656


$601,478

Interest-bearing deposits
2,926,941

2,920,832

2,802,519

2,743,955

2,654,956

Total deposits
3,504,260

3,524,048

3,414,348

3,321,611

3,256,434

Federal Home Loan Bank advances
1,056,129

950,722

828,392

901,053

808,677

Junior subordinated debentures
22,681

22,681

22,681

22,681

22,681

Operating lease liabilities
30,187





Other liabilities
71,629

65,131

77,342

70,326

65,453

Total liabilities
4,684,886

4,562,582

4,342,763

4,315,671

4,153,245

Shareholders’ Equity:
 
 
 
 
 
Common stock
1,082

1,081

1,081

1,080

1,079

Paid-in capital
120,743

119,888

119,220

118,883

118,172

Retained earnings
365,521

355,524

346,685

336,670

326,505

Accumulated other comprehensive loss
(17,503
)
(28,309
)
(39,077
)
(35,062
)
(32,675
)
Total shareholders’ equity
469,843

448,184

427,909

421,571

413,081

Total liabilities and shareholders’ equity

$5,154,729


$5,010,766


$4,770,672


$4,737,242


$4,566,326




-6-



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
Mar 31,
2019
Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
Mar 31,
2018
Interest income:
 
 
 
 
 
Interest and fees on loans

$41,744


$40,299


$38,493


$36,788


$34,352

Interest on mortgage loans held for sale
180

289

384

313

226

Taxable interest on debt securities
7,226

5,957

5,383

5,358

5,118

Nontaxable interest on debt securities
9

9

9

20

23

Dividends on Federal Home Loan Bank stock
695

669

634

550

516

Other interest income
340

294

261

257

205

Total interest and dividend income
50,194

47,517

45,164

43,286

40,440

Interest expense:


 
 
 
 
Deposits
8,696

7,953

6,546

5,254

4,422

Federal Home Loan Bank advances
6,661

5,446

4,937

4,707

3,983

Junior subordinated debentures
253

240

232

214

183

Total interest expense
15,610

13,639

11,715

10,175

8,588

Net interest income
34,584

33,878

33,449

33,111

31,852

Provision for loan losses
650

800

350

400


Net interest income after provision for loan losses
33,934

33,078

33,099

32,711

31,852

Noninterest income:


 






Wealth management revenues
9,252

9,012

9,454

9,602

10,273

Mortgage banking revenues
2,646

1,978

2,624

2,941

2,838

Card interchange fees
997

977

983

961

847

Service charges on deposit accounts
875

977

885

903

863

Loan related derivative income
724

1,374

278

668

141

Income from bank-owned life insurance
649

572

572

537

515

Other income
224

273

419

381

266

Total noninterest income
15,367

15,163

15,215

15,993

15,743

Noninterest expense:


 






Salaries and employee benefits
17,619

16,918

17,283

17,304

17,772

Outsourced services
2,606

2,510

1,951

2,350

1,873

Net occupancy
1,998

1,946

2,013

1,930

2,002

Equipment
1,011

983

1,080

1,069

1,180

Legal, audit and professional fees
534

587

559

555

726

FDIC deposit insurance costs
429

376

410

422

404

Advertising and promotion
239

460

440

329

177

Amortization of intangibles
239

239

245

247

248

Change in fair value of contingent consideration

(187
)



Other expenses
2,289

2,850

2,081

2,082

2,748

Total noninterest expense
26,964

26,682

26,062

26,288

27,130

Income before income taxes
22,337

21,559

22,252

22,416

20,465

Income tax expense
4,842

4,523

4,741

4,742

4,254

Net income

$17,495


$17,036


$17,511


$17,674


$16,211

 
 
 
 
 
 
Net income available to common shareholders

$17,461


$17,004


$17,475


$17,636


$16,173

 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
  Basic
17,304

17,297

17,283

17,272

17,234

  Diluted
17,401

17,385

17,382

17,387

17,345

Earnings per common share:
 
 
 
 
 
  Basic

$1.01


$0.98


$1.01


$1.02


$0.94

  Diluted

$1.00


$0.98


$1.01


$1.01


$0.93

 
 
 
 
 
 
Cash dividends declared per share

$0.47


$0.47


$0.43


$0.43


$0.43


-7-



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

$27.15


$25.90


$24.75


$24.40


$23.93

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

$23.00


$21.74


$20.57


$20.20


$19.71

Market value per share

$48.15


$47.53


$55.30


$58.10


$53.75

Shares issued and outstanding at end of period
17,305

17,302

17,290

17,278

17,262

 
 
 
 
 
 
Capital Ratios (2):
 
 
 
 
 
Tier 1 risk-based capital
11.84
%
11.81
%
12.00
%
11.84
%
11.78
%
Total risk-based capital
12.59
%
12.56
%
12.77
%
12.61
%
12.56
%
Tier 1 leverage ratio
8.69
%
8.89
%
8.91
%
8.87
%
8.84
%
Common equity tier 1
11.25
%
11.20
%
11.37
%
11.20
%
11.13
%
 
 
 
 
 
 
Balance Sheet Ratios:
 
 
 
 
 
Equity to assets
9.11
%
8.94
%
8.97
%
8.90
%
9.05
%
Tangible equity to tangible assets - Non-GAAP (1)
7.83
%
7.62
%
7.57
%
7.48
%
7.57
%
Loans to deposits (3)
106.3
%
104.3
%
104.0
%
105.3
%
103.8
%

For the Three Months Ended
Mar 31,
2019
Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
Mar 31,
2018
Performance Ratios (4):
 
 
 
 
 
Net interest margin (5)
2.93
%
2.95
%
2.99
%
3.05
%
3.03
%
Return on average assets (net income divided by average assets)
1.39
%
1.40
%
1.47
%
1.53
%
1.45
%
Return on average tangible assets - Non-GAAP (1)
1.41
%
1.42
%
1.49
%
1.56
%
1.48
%
Return on average equity (net income available for common shareholders divided by average equity)
15.52
%
15.61
%
16.26
%
16.99
%
15.96
%
Return on average tangible equity - Non-GAAP (1)
18.43
%
18.75
%
19.59
%
20.58
%
19.40
%
Efficiency ratio (6)
54.0
%
54.4
%
53.6
%
53.5
%
57.0
%
(1)
See the section labeled “SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures” at the end of this document.
(2)
Estimated for March 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
Mar 31,
2019
Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
Mar 31,
2018
Wealth Management Results
 
 
 
 
 
Wealth Management Revenues:
 
 
 
 
 
Asset-based revenues

$8,921


$8,930


$9,322


$9,136


$9,955

Transaction-based revenues
331

82

132

466

318

Total wealth management revenues

$9,252


$9,012


$9,454


$9,602


$10,273

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

$5,910,814


$6,462,340


$6,220,155


$6,343,720


$6,714,637

Net investment appreciation (depreciation) & income
520,057

(534,847
)
232,245

133,450

(32,024
)
Net client asset flows
(80,743
)
(16,679
)
9,940

(257,015
)
(338,893
)
Balance at end of period

$6,350,128


$5,910,814


$6,462,340


$6,220,155


$6,343,720

 
 
 
 
 
 
Percentage of AUA that are managed assets
91%
90%
91%
92%
92%
 
 
 
 
 
 
Mortgage Banking Results
 
 
 
 
 
Mortgage Banking Revenues:
 
 
 
 
 
Gains & commissions on loan sales, net (1)

$2,474


$1,798


$2,485


$2,786


$2,679

Loan servicing fee income, net (2)
172

180

139

155

159

Total mortgage banking revenues

$2,646


$1,978


$2,624


$2,941


$2,838

 
 
 
 
 
 
Residential Mortgage Loan Originations:
 
 
 
 
 
Originations for retention in portfolio

$51,697


$58,515


$80,751


$128,479


$67,840

Originations for sale to secondary market (3)
85,826

96,792

119,832

122,693

87,720

Total mortgage loan originations

$137,523


$155,307


$200,583


$251,172


$155,560

 
 
 
 
 
 
Residential Mortgage Loans Sold:
 
 
 
 
 
Sold with servicing rights retained

$9,490


$16,577


$24,422


$24,367


$33,575

Sold with servicing rights released (3)
82,589

81,985

107,694

81,054

63,265

Total mortgage loans sold

$92,079


$98,562


$132,116


$105,421


$96,840

(1)
Includes gains on loan sales, commissions 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.
(2)
Represents loan servicing fee income, net of servicing right amortization and valuation adjustments.
(3)
Includes loans originated in a broker capacity.


-9-



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

$1,463,682


$1,392,408


$1,240,350


$1,218,643


$1,217,278

Commercial & industrial
610,608

620,704

656,882

632,029

603,830

Total commercial
2,074,290

2,013,112

1,897,232

1,850,672

1,821,108

 
 
 
 
 
 
Residential real estate (2)
1,359,072

1,360,387

1,349,340

1,327,418

1,249,890

 
 
 
 
 
 
Home equity
279,938

280,626

282,331

283,744

285,723

Other
25,169

26,235

27,300

28,396

30,685

Total consumer
305,107

306,861

309,631

312,140

316,408

Total loans

$3,738,469


$3,680,360


$3,556,203


$3,490,230


$3,387,406

(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.

 
March 31, 2019
 
December 31, 2018
 
Balance

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

$386,990

26
%
 

$377,249

27
%
Connecticut
582,934

40

 
570,116

41

Massachusetts
402,276

28

 
356,615

26

Subtotal
1,372,200

94

 
1,303,980

94

All other states
91,482

6

 
88,428

6

Total commercial real estate loans

$1,463,682

100
%
 

$1,392,408

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

$349,232

26
%


$352,141

26
%
Connecticut
142,472

10


141,775

10

Massachusetts
850,940

63


849,435

63

Subtotal
1,342,644

99


1,343,351

99

All other states
16,428

1


17,036

1

Total residential real estate loans

$1,359,072

100
%


$1,360,387

100
%

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

$577,319


$603,216


$611,829


$577,656


$601,478

Interest-bearing demand deposits
162,598

178,733

151,322

136,640

83,249

NOW accounts
471,682

466,568

468,578

481,905

470,112

Money market accounts
644,949

646,878

650,976

604,954

693,748

Savings accounts
371,248

373,545

372,425

375,983

376,608

Time deposits (in-market)
792,470

778,105

715,635

698,286

625,965

In-market deposits
3,020,266

3,047,045

2,970,765

2,875,424

2,851,160

Wholesale brokered time deposits
483,994

477,003

443,583

446,187

405,274

Total deposits

$3,504,260


$3,524,048


$3,414,348


$3,321,611


$3,256,434


-10-



Washington Trust Bancorp, Inc. and Subsidiaries
CREDIT & ASSET QUALITY DATA
(Unaudited; Dollars in thousands)
 
 
 
Mar 31,
2019
Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
Mar 31,
2018
Asset Quality Ratios:
 
 
 
 
 
Nonperforming assets to total assets
0.28
%
0.28
%
0.29
%
0.32
%
0.30
%
Nonaccrual loans to total loans
0.33
%
0.32
%
0.30
%
0.34
%
0.31
%
Total past due loans to total loans
0.39
%
0.37
%
0.38
%
0.48
%
0.57
%
Allowance for loan losses to nonaccrual loans
223.57
%
231.25
%
245.25
%
222.85
%
245.83
%
Allowance for loan losses to total loans
0.74
%
0.74
%
0.75
%
0.75
%
0.76
%
 
 
 
 
 
 
Nonperforming Assets:
 
 
 
 
 
Commercial real estate

$926


$925


$—


$—


$—

Commercial & industrial


122

397

397

Total commercial
926

925

122

397

397

Residential real estate
10,032

9,346

9,063

10,206

9,340

Home equity
1,407

1,436

1,624

1,133

771

Other consumer



9

13

Total consumer
1,407

1,436

1,624

1,142

784

Total nonaccrual loans
12,365

11,707

10,809

11,745

10,521

Other real estate owned
2,142

2,142

2,974

3,206

3,206

Total nonperforming assets

$14,507


$13,849


$13,783


$14,951


$13,727

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

$926


$1,080


$931


$—


$—

Commercial & industrial
1


142

2,851

3,295

Total commercial
927

1,080

1,073

2,851

3,295

Residential real estate
10,849

10,520

9,398

11,243

11,806

Home equity
2,911

1,989

2,939

2,585

4,235

Other consumer
13

33

109

16

22

Total consumer
2,924

2,022

3,048

2,601

4,257

Total past due loans

$14,700


$13,622


$13,519


$16,695


$19,358

 
 
 
 
 
 
Accruing loans 90 days or more past due

$—


$—


$—


$—


$—

Nonaccrual loans included in past due loans

$8,563


$8,613


$6,425


$8,575


$7,066


-11-



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

$11,707


$10,809


$11,745


$10,521


$15,211

Additions to nonaccrual status
1,924

2,918

2,179

2,457

1,210

Loans returned to accruing status
(855
)
(1,500
)
(361
)
(475
)
(344
)
Loans charged-off
(103
)
(298
)
(96
)
(103
)
(690
)
Loans transferred to other real estate owned




(3,074
)
Payments, payoffs and other changes
(308
)
(222
)
(2,658
)
(655
)
(1,792
)
Balance at end of period

$12,365


$11,707


$10,809


$11,745


$10,521

 
 
 
 
 
 
Allowance for Loan Losses:
 
 
 
 
 
Balance at beginning of period

$27,072


$26,509


$26,174


$25,864


$26,488

Provision charged to earnings
650

800

350

400


Charge-offs
(103
)
(298
)
(96
)
(103
)
(690
)
Recoveries
25

61

81

13

66

Balance at end of period

$27,644


$27,072


$26,509


$26,174


$25,864

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

$—


$—


$—


$—


$602

Commercial & industrial
6

(13
)
(70
)
(3
)
(23
)
Total commercial
6

(13
)
(70
)
(3
)
579

Residential real estate

156

68

5


Home equity
48

65

(2
)
73

28

Other consumer
24

29

19

15

17

Total consumer
72

94

17

88

45

Total

$78


$237


$15


$90


$624

 
 
 
 
 
 
Net charge-offs to average loans (annualized)
0.01
%
0.03
%
%
0.01
%
0.07
%

-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
March 31, 2019
 
December 31, 2018
 
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

$56,359


$340

2.45
%
 

$51,584


$294

2.26
%
 

$4,775


$46

0.19
 %
Mortgage loans held for sale
16,587

180

4.40

 
24,178

289

4.74

 
(7,591
)
(109
)
(0.34
)
Taxable debt securities
1,000,911

7,226

2.93

 
877,186

5,957

2.69

 
123,725

1,269

0.24

Nontaxable debt securities
935

10

4.34

 
935

12

5.09

 

(2
)
(0.75
)
Total securities
1,001,846

7,236

2.93

 
878,121

5,969

2.70

 
123,725

1,267

0.23

FHLB stock
46,988

695

6.00

 
44,662

669

5.94

 
2,326

26

0.06

Commercial real estate
1,425,225

16,879

4.80

 
1,309,957

15,500

4.69

 
115,268

1,379

0.11

Commercial & industrial
618,364

7,544

4.95

 
636,156

7,732

4.82

 
(17,792
)
(188
)
0.13

Total commercial
2,043,589

24,423

4.85

 
1,946,113

23,232

4.74

 
97,476

1,191

0.11

Residential real estate
1,357,835

13,765

4.11

 
1,348,993

13,516

3.98

 
8,842

249

0.13

Home equity
278,581

3,564

5.19

 
280,085

3,553

5.03

 
(1,504
)
11

0.16

Other
25,629

316

5.00

 
26,679

329

4.89

 
(1,050
)
(13
)
0.11

Total consumer
304,210

3,880

5.17

 
306,764

3,882

5.02

 
(2,554
)
(2
)
0.15

Total loans
3,705,634

42,068

4.60

 
3,601,870

40,630

4.48

 
103,764

1,438

0.12

Total interest-earning assets
4,827,414

50,519

4.24

 
4,600,415

47,851

4.13

 
226,999

2,668

0.11

Noninterest-earning assets
268,689

 
 
 
239,743

 
 
 
28,946

 
 
Total assets

$5,096,103

 
 
 

$4,840,158

 
 
 

$255,945

 
 
Liabilities and Shareholders' Equity:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits

$165,911


$686

1.68
%
 

$148,840


$636

1.70
%
 

$17,071


$50

(0.02
)%
NOW accounts
454,868

84

0.07

 
455,052

207

0.18

 
(184
)
(123
)
(0.11
)
Money market accounts
646,250

1,609

1.01

 
649,535

1,449

0.89

 
(3,285
)
160

0.12

Savings accounts
369,219

61

0.07

 
369,787

60

0.06

 
(568
)
1

0.01

Time deposits (in-market)
789,378

3,727

1.91

 
749,025

3,318

1.76

 
40,353

409

0.15

Total interest-bearing in-market deposits
2,425,626

6,167

1.03

 
2,372,239

5,670

0.95

 
53,387

497

0.08

Wholesale brokered time deposits
473,799

2,529

2.16

 
450,336

2,283

2.01

 
23,463

246

0.15

Total interest-bearing deposits
2,899,425

8,696

1.22

 
2,822,575

7,953

1.12

 
76,850

743

0.10

FHLB advances
1,027,285

6,661

2.63

 
878,250

5,446

2.46

 
149,035

1,215

0.17

Junior subordinated debentures
22,681

253

4.52

 
22,681

240

4.20

 

13

0.32

Total interest-bearing liabilities
3,949,391

15,610

1.60

 
3,723,506

13,639

1.45

 
225,885

1,971

0.15

Noninterest-bearing demand deposits
607,033

 
 
 
615,392

 
 
 
(8,359
)


Other liabilities
83,438

 
 
 
69,217

 
 
 
14,221



Shareholders' equity
456,241

 
 
 
432,043

 
 
 
24,198

 
 
Total liabilities and shareholders' equity

$5,096,103

 
 
 

$4,840,158

 
 
 

$255,945

 
 
Net interest income (FTE)
 

$34,909

 
 
 

$34,212

 
 
 

$697

 
Interest rate spread
 
 
2.64
%
 
 
 
2.68
%
 
 
 
(0.04
)%
Net interest margin
 
 
2.93
%
 
 
 
2.95
%
 
 
 
(0.02
)%
Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:
For the Three Months Ended
Mar 31, 2019
Dec 31, 2018
Quarter Change
Commercial loans

$324


$331


($7
)
Nontaxable debt securities
1

3

(2
)
Total

$325


$334


($9
)

-13-



 
 
 
 
 
 
 
 
 
 
 
 
 
 
Washington Trust Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures
(Unaudited; Dollars in thousands, except per share amounts)
 
 
 
Mar 31,
2019
Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
Mar 31,
2018
Tangible Book Value per Share:
 
 
 
 
 
Total shareholders' equity, as reported

$469,843


$448,184


$427,909


$421,571


$413,081

Less:
 
 
 
 
 
Goodwill
63,909

63,909

63,909

63,909

63,909

Identifiable intangible assets, net
7,923

8,162

8,400

8,645

8,893

Total tangible shareholders' equity

$398,011


$376,113


$355,600


$349,017


$340,279

 
 
 
 
 
 
Shares outstanding, as reported
17,305

17,302

17,290

17,278

17,262

 
 
 
 
 
 
Book value per share - GAAP

$27.15


$25.90


$24.75


$24.40


$23.93

Tangible book value per share - Non-GAAP

$23.00


$21.74


$20.57


$20.20


$19.71

 
 
 
 
 
 
Tangible Equity to Tangible Assets:
 
 
 
 
 
Total tangible shareholders' equity

$398,011


$376,113


$355,600


$349,017


$340,279

 
 
 
 
 
 
Total assets, as reported

$5,154,729


$5,010,766


$4,770,672


$4,737,242


$4,566,326

Less:
 
 
 
 
 
Goodwill
63,909

63,909

63,909

63,909

63,909

Identifiable intangible assets, net
7,923

8,162

8,400

8,645

8,893

Total tangible assets

$5,082,897


$4,938,695


$4,698,363


$4,664,688


$4,493,524

 
 
 
 
 
 
Equity to assets - GAAP
9.11
%
8.94
%
8.97
%
8.90
%
9.05
%
Tangible equity to tangible assets - Non-GAAP
7.83
%
7.62
%
7.57
%
7.48
%
7.57
%
For the Three Months Ended
Mar 31,
2019
Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
Mar 31,
2018
Return on Average Tangible Assets:
 
 
 
 
 
Net income, as reported

$17,495


$17,036


$17,511


$17,674


$16,211

 
 
 
 
 
 
Total average assets, as reported

$5,096,103


$4,840,158


$4,724,898


$4,628,816


$4,529,708

Less average balances of:
 
 
 
 
 
Goodwill
63,909

63,909

63,909

63,909

63,909

Identifiable intangible assets, net
8,040

8,278

8,519

8,766

9,014

Total average tangible assets

$5,024,154


$4,767,971


$4,652,470


$4,556,141


$4,456,785

 
 
 
 
 
 
Return on average assets - GAAP
1.39
%
1.40
%
1.47
%
1.53
%
1.45
%
Return on average tangible assets - Non-GAAP
1.41
%
1.42
%
1.49
%
1.56
%
1.48
%
 
 
 
 
 
 
Return on Average Tangible Equity:
 
 
 
 
 
Net income available to common shareholders, as reported

$17,461


$17,004


$17,475


$17,636


$16,173

 
 
 
 
 
 
Total average equity, as reported

$456,241


$432,043


$426,306


$416,433


$410,955

Less average balances of:
 
 
 
 
 
Goodwill
63,909

63,909

63,909

63,909

63,909

Identifiable intangible assets, net
8,040

8,278

8,519

8,766

9,014

Total average tangible equity

$384,292


$359,856


$353,878


$343,758


$338,032

 
 
 
 
 
 
Return on average equity - GAAP
15.52
%
15.61
%
16.26
%
16.99
%
15.96
%
Return on average tangible equity - Non-GAAP
18.43
%
18.75
%
19.59
%
20.58
%
19.40
%

-14-
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