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Section 1: 8-K (8-K)

Document
false0000737468 0000737468 2019-10-21 2019-10-21


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): October 21, 2019
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 October 21, 2019, Washington Trust Bancorp, Inc. issued a press release in which it disclosed unaudited financial information related to third quarter 2019 consolidated earnings. A copy of the press release relating to such announcement, dated October 21, 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 October 21, 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:
October 21, 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

400512843_bancorpflatbluehorizontala13.jpg
NASDAQ: WASH
Contact: Elizabeth B. Eckel
Senior Vice President, Marketing
Telephone: (401) 348-1309
E-mail: [email protected]
Date: October 21, 2019
FOR IMMEDIATE RELEASE

Washington Trust Reports Third Quarter 2019 Earnings

WESTERLY, R.I., October 21, 2019 (PR NEWSWIRE)…Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced third quarter 2019 net income of $18.8 million, or $1.08 per diluted share, compared to net income of $17.3 million, or $0.99 per diluted share, reported for the second quarter of 2019.

“Washington Trust’s third quarter results once again reflect our continued success at generating a consistent stream of revenues through our diverse business model,” stated Edward O. Handy III, Chairman and Chief Executive Officer.

Selected highlights for the third quarter of 2019 include:
Returns on average equity and average assets were 15.20% and 1.44%, respectively.
Mortgage banking revenues reached an all-time quarterly high and totaled $4.8 million for the third quarter, up by $1.2 million, or 33%, from the preceding quarter.
As a result of FDIC assessment credits recognized in the third quarter of 2019, which amounted to approximately 4 cents per diluted share, FDIC deposit insurance costs declined by $1.0 million on a linked quarter basis. Excluding the benefit from these credits, net income and diluted earnings per share for the third quarter of 2019 were record quarterly highs for the Corporation.
Total loans amounted to $3.8 billion, up by $48 million from the preceding quarter. Total loans were up by $222 million, or 6%, from the balance at September 30, 2018.
Total deposits amounted to $3.6 billion, up by $82 million from the preceding quarter. Total deposits were up by $172 million, or 5%, from the balance at September 30, 2018.
In September, Washington Trust declared a quarterly dividend of 51 cents per share. Year-to-date 2019 dividends declared amounted to $1.49 per share, representing an increase of 20 cents per share, or 16%, from the same period a year ago.
Net Interest Income
Net interest income was $33.0 million for the third quarter of 2019, down by $880 thousand, or 3%, from the second quarter of 2019. The net interest margin was 2.72% for the third quarter, down by 9 basis points from 2.81% reported in the preceding quarter. Prepayment penalty income associated with loan payoffs, which is included in net interest income, was $130 thousand in the third quarter, compared to $37 thousand in the preceding quarter. Excluding the impact of prepayment penalty income associated with loan payoffs from both periods, the net interest margin for the third quarter of 2019 was 2.71%, down by 10 basis points from 2.81% in the preceding quarter.

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Washington Trust
October 21, 2019


Significant linked quarter changes included:
Average interest-earning assets decreased by $22 million, driven by a $76 million decline in the average balance of the securities portfolio, which was partially offset by increases of $21 million in the average balance of loans and $23 million in the average balance of cash and due from banks. Given limited securities-related reinvestment opportunities, pay-downs received on the securities portfolio are being used to reduce wholesale funding balances. The yield on interest-earning assets for the third quarter was 4.07%, down by 11 basis points from the preceding quarter. The yield was negatively impacted by lower market interest rates.
Average interest-bearing liabilities decreased by $45 million, including a decrease of $103 million in average wholesale funding balances (wholesale brokered time deposits and Federal Home Loan Bank advances), partially offset by a $58 million increase in average in-market deposits. The cost of interest-bearing liabilities for the third quarter was 1.66%, down by 2 basis points from the preceding quarter.

Noninterest Income
Noninterest income totaled $18.3 million for the third quarter of 2019, up by $1.6 million, or 9%, from the second quarter of 2019. Significant linked quarter changes included:
Wealth management revenues amounted to $9.2 million for the third quarter of 2019, down by $396 thousand, or 4%, on a linked quarter basis. This consisted of decreases of $128 thousand, or 1%, in asset-based revenues and $268 thousand, or 66%, in transaction-based revenues. The linked quarter decrease in transaction-based revenues was largely due to tax reporting and preparation fees, which are generally concentrated in the first half of the year.
Wealth management assets under administration were $6.1 billion at September 30, 2019, down by $353 million, or 5%, from the balance at June 30, 2019. The average balance of assets under administration for the third quarter decreased by approximately $13 million, or 0.2%, from the average balance for the preceding quarter. The decline in assets under administration reflected approximately $450 million of client outflows associated with lost client accounts due to the departure of two senior counselors at the end of the preceding quarter. The impact of these lost accounts was a reduction of revenues of approximately $290 thousand during the third quarter and is estimated to be a reduction of $620 thousand during the fourth quarter of 2019.
Mortgage banking revenues totaled $4.8 million for the third quarter of 2019, up by $1.2 million, or 33%, from the second quarter of 2019. Mortgage loans sold in the secondary market amounted to $185 million for the third quarter of 2019, an increase of $48 million, or 35%, compared to the preceding quarter.
Loan related derivative income was $1.4 million for the third quarter of 2019, up by $661 thousand, or 89% from the preceding quarter, due to higher volume of commercial borrower interest rate swap transactions.

Noninterest Expenses
Noninterest expenses totaled $26.9 million for the third quarter of 2019, down by $1.3 million, or 5%, from the second quarter of 2019. Included in this linked quarter change was a $1.0 million reduction in FDIC deposit insurance costs due to FDIC assessment credits recognized in the third quarter of 2019. Excluding the reduction in FDIC deposit insurance costs, noninterest expenses were down by $281 thousand, or 1%, from the preceding quarter. Significant linked quarter changes included:
Salaries and benefits totaled $18.3 million for the third quarter of 2019, down by $104 thousand on a linked quarter basis.

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Washington Trust
October 21, 2019


Lower wealth management compensation costs associated with the departure of the two senior counselors discussed above were partially offset by increased volume-related compensation costs in our mortgage banking area.
Outsourced services expense for third quarter of 2019 were up by $204 thousand from the preceding quarter, reflecting volume-related increases in third party processing costs.
Advertising and promotion expenses for third quarter of 2019 decreased by $157 thousand from the second quarter, largely due to timing of promotional activities.
Other noninterest expenses for third quarter of 2019 declined by $249 thousand on a linked quarter basis, reflecting modest decreases in a variety of expense categories.

Income tax expense totaled $5.2 million for the third quarter of 2019, up by $574 thousand from the preceding quarter. The effective tax rate for the third quarter of 2019 was 21.8%, compared to 21.3% 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 21.5%.

Investment Securities
The securities portfolio totaled $887 million at September 30, 2019, down by $82 million from the balance at June 30, 2019. The decrease was primarily due to routine principal pay-downs on mortgage-backed securities and calls of debt securities. Investment securities represented 17% of total assets at September 30, 2019, compared to 19% of total assets at June 30, 2019.

Loans
Total loans amounted to $3.8 billion at September 30, 2019, up by $48 million from the end of the preceding quarter. Total commercial loans grew by $17 million, with a net increase of $34 million in the commercial real estate portfolio partially offset by a $17 million net decline in the commercial and industrial portfolio. In the third quarter of 2019, commercial loan originations and advances totaled approximately $93 million and were concentrated in the commercial real estate portfolio. The residential real estate loan portfolio increased by $26 million from the end of the second quarter, reflecting increased mortgage origination activity. In the third quarter of 2019, residential mortgage loan originations for portfolio amounted to $105 million. The consumer loan portfolio increased by $4 million from the balance at June 30, 2019.

Deposits and Borrowings
Total deposits amounted to $3.6 billion at September 30, 2019, up by $82 million, or 2%, from the end of the preceding quarter. Included in total deposits were out-of-market wholesale brokered time deposits, which decreased by $52 million from the balance at June 30, 2019. Excluding wholesale brokered time deposits, total in-market deposits were up by $134 million, reflecting seasonal inflows of various institutional and governmental depositors based on their underlying business cycles. Federal Home Loan Bank advances amounted to $957 million at September 30, 2019, down by $104 million from the balance at June 30, 2019.

Asset Quality
Total nonaccrual loans amounted to $14.9 million, or 0.39% of total loans, at September 30, 2019, compared to $12.9 million, or 0.34% of total loans, at June 30, 2019, reflecting a net increase in nonaccrual residential real estate loans. Total past due loans amounted to $14.4 million, or 0.38% of total loans, at September 30, 2019, compared to $17.9 million, or 0.48% of total loans, at June 30, 2019. The decline in past due loans was largely attributable to one past due commercial real estate loan that was placed

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Washington Trust
October 21, 2019


on nonaccrual status, partially charged-off and transferred to other real estate owned in the third quarter.

A loan loss provision totaling $400 thousand was recognized in the third quarter of 2019, compared to a loan loss provision of $525 thousand recognized in the preceding quarter. These provisions were based on management's assessment of loss exposure, as well as loan loss allocations commensurate with growth and changes in the loan portfolio. Net charge-offs totaled $801 thousand in the third quarter and were largely attributable to the one commercial real estate relationship discussed above. Net charge-offs were $771 thousand in the preceding quarter and were largely attributable to one residential real estate relationship.

The allowance for loan losses amounted to $27.0 million, or 0.71% of total loans, at September 30, 2019, compared to $27.4 million, or 0.73% of total loans, at June 30, 2019.

Capital and Dividends
Total shareholders' equity was $498 million at September 30, 2019, up by $13.6 million from June 30, 2019. This increase included net income of $18.8 million and an increase of $2.9 million in the accumulated other comprehensive income component of shareholders' equity reflecting an increase in the fair value of available for sale debt securities, partially offset by $8.9 million in dividend declarations in the third quarter. The Board of Directors declared a quarterly dividend of 51 cents per share for the quarter ended September 30, 2019. The dividend was paid on October 11, 2019 to shareholders of record on October 1, 2019.

Capital levels at September 30, 2019 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.94% at September 30, 2019, compared to 12.80% at June 30, 2019. Book value per share amounted to $28.71 at September 30, 2019, compared to $27.93 at June 30, 2019.

Conference Call
Washington Trust will host a conference call to discuss its third quarter results, business highlights and outlook on Tuesday, October 22, 2019 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 10135833; the audio replay will be available through November 5, 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 December 31, 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

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Washington Trust
October 21, 2019


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)
 
 
 
 
 
 
 
Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Sep 30,
2018
Assets:
 
 
 
 
 
Cash and due from banks

$141,768


$115,904


$88,242


$89,923


$72,934

Short-term investments
4,336

3,910

3,317

3,552

2,917

Mortgage loans held for sale, at fair value
44,657

39,996

14,608

20,996

22,571

Securities:
 
 
 
 
 
Available for sale debt securities, at fair value
887,020

969,168

994,881

927,810

812,647

Held to maturity debt securities, at amortized cost



10,415

10,863

Total securities
887,020

969,168

994,881

938,225

823,510

Federal Home Loan Bank stock, at cost
45,030

49,759

48,025

46,068

44,525

Loans:
 
 
 
 
 
Total loans
3,778,106

3,730,339

3,738,469

3,680,360

3,556,203

Less allowance for loan losses
26,997

27,398

27,644

27,072

26,509

Net loans
3,751,109

3,702,941

3,710,825

3,653,288

3,529,694

Premises and equipment, net
29,293

29,302

29,822

29,005

28,195

Operating lease right-of-use assets
27,500

28,174

28,249



Investment in bank-owned life insurance
81,920

81,351

80,786

80,463

79,891

Goodwill
63,909

63,909

63,909

63,909

63,909

Identifiable intangible assets, net
7,448

7,684

7,923

8,162

8,400

Other assets
114,888

97,574

84,142

77,175

94,126

Total assets

$5,198,878


$5,189,672


$5,154,729


$5,010,766


$4,770,672

Liabilities:
 
 
 
 
 
Deposits:
 
 
 
 
 
Noninterest-bearing deposits

$619,839


$587,326


$577,319


$603,216


$611,829

Interest-bearing deposits
2,966,314

2,917,296

2,926,941

2,920,832

2,802,519

Total deposits
3,586,153

3,504,622

3,504,260

3,524,048

3,414,348

Federal Home Loan Bank advances
956,786

1,060,960

1,056,129

950,722

828,392

Junior subordinated debentures
22,681

22,681

22,681

22,681

22,681

Operating lease liabilities
29,541

30,210

30,187



Other liabilities
105,892

86,994

71,629

65,131

77,342

Total liabilities
4,701,053

4,705,467

4,684,886

4,562,582

4,342,763

Shareholders’ Equity:
 
 
 
 
 
Common stock
1,084

1,083

1,082

1,081

1,081

Paid-in capital
121,900

121,115

120,743

119,888

119,220

Retained earnings
383,765

373,873

365,521

355,524

346,685

Accumulated other comprehensive loss
(8,924
)
(11,866
)
(17,503
)
(28,309
)
(39,077
)
Total shareholders’ equity
497,825

484,205

469,843

448,184

427,909

Total liabilities and shareholders’ equity

$5,198,878


$5,189,672


$5,154,729


$5,010,766


$4,770,672




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

$41,558


$42,138


$41,744


$40,299


$38,493

 

$125,440


$109,633

Interest on mortgage loans held for sale
410

288

180

289

384

 
878

923

Taxable interest on debt securities
6,318

7,006

7,226

5,957

5,383

 
20,550

15,859

Nontaxable interest on debt securities
1

8

9

9

9

 
18

52

Dividends on Federal Home Loan Bank stock
747

720

695

669

634

 
2,162

1,700

Other interest income
493

399

340

294

261

 
1,232

723

Total interest and dividend income
49,527

50,559

50,194

47,517

45,164

 
150,280

128,890

Interest expense:


 
 
 
 
 
 
 
Deposits
9,792

9,469

8,696

7,953

6,546

 
27,957

16,222

Federal Home Loan Bank advances
6,512

6,980

6,661

5,446

4,937

 
20,153

13,627

Junior subordinated debentures
245

252

253

240

232

 
750

629

Total interest expense
16,549

16,701

15,610

13,639

11,715

 
48,860

30,478

Net interest income
32,978

33,858

34,584

33,878

33,449

 
101,420

98,412

Provision for loan losses
400

525

650

800

350

 
1,575

750

Net interest income after provision for loan losses
32,578

33,333

33,934

33,078

33,099

 
99,845

97,662

Noninterest income:


 






 
 
 
Wealth management revenues
9,153

9,549

9,252

9,012

9,454

 
27,954

29,329

Mortgage banking revenues
4,840

3,640

2,646

1,978

2,624

 
11,126

8,403

Card interchange fees
1,099

1,018

997

977

983

 
3,114

2,791

Service charges on deposit accounts
939

929

875

977

885

 
2,743

2,651

Loan related derivative income
1,407

746

724

1,374

278

 
2,877

1,087

Income from bank-owned life insurance
569

566

649

572

572

 
1,784

1,624

Net realized losses on securities

(80
)



 
(80
)

Other income
335

385

224

273

419

 
944

1,066

Total noninterest income
18,342

16,753

15,367

15,163

15,215

 
50,462

46,951

Noninterest expense:


 






 
 
 
Salaries and employee benefits
18,332

18,436

17,619

16,918

17,283

 
54,387

52,359

Outsourced services
2,722

2,518

2,606

2,510

1,951

 
7,846

6,174

Net occupancy
1,933

1,904

1,998

1,946

2,013

 
5,835

5,945

Equipment
1,046

1,028

1,011

983

1,080

 
3,085

3,329

Legal, audit and professional fees
645

664

534

587

559

 
1,843

1,840

FDIC deposit insurance costs
(460
)
540

429

376

410

 
509

1,236

Advertising and promotion
368

525

239

460

440

 
1,132

946

Amortization of intangibles
236

239

239

239

245

 
714

740

Change in fair value of contingent consideration



(187
)

 


Other expenses
2,048

2,297

2,289

2,850

2,081

 
6,634

6,911

Total noninterest expense
26,870

28,151

26,964

26,682

26,062

 
81,985

79,480

Income before income taxes
24,050

21,935

22,337

21,559

22,252

 
68,322

65,133

Income tax expense
5,236

4,662

4,842

4,523

4,741

 
14,740

13,737

Net income

$18,814


$17,273


$17,495


$17,036


$17,511

 

$53,582


$51,396

 
 
 
 
 
 
 
 
 
Net income available to common shareholders

$18,778


$17,238


$17,461


$17,004


$17,475

 

$53,477


$51,284

 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
  Basic
17,338

17,330

17,304

17,297

17,283

 
17,324

17,263

  Diluted
17,414

17,405

17,401

17,385

17,382

 
17,406

17,392

Earnings per common share:
 
 
 
 
 
 
 
 
  Basic

$1.08


$0.99


$1.01


$0.98


$1.01

 

$3.09


$2.97

  Diluted

$1.08


$0.99


$1.00


$0.98


$1.01

 

$3.07


$2.95

 
 
 
 
 
 
 
 
 
Cash dividends declared per share

$0.51


$0.51


$0.47


$0.47


$0.43

 

$1.49


$1.29


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

$28.71


$27.93


$27.15


$25.90


$24.75

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

$24.60


$23.80


$23.00


$21.74


$20.57

Market value per share

$48.31


$52.18


$48.15


$47.53


$55.30

Shares issued and outstanding at end of period
17,338

17,336

17,305

17,302

17,290

 
 
 
 
 
 
Capital Ratios (2):
 
 
 
 
 
Tier 1 risk-based capital
12.21
%
12.06
%
11.84
%
11.81
%
12.00
%
Total risk-based capital
12.94
%
12.80
%
12.59
%
12.56
%
12.77
%
Tier 1 leverage ratio
8.97
%
8.76
%
8.69
%
8.89
%
8.91
%
Common equity tier 1
11.62
%
11.46
%
11.25
%
11.20
%
11.37
%
 
 
 
 
 
 
Balance Sheet Ratios:
 
 
 
 
 
Equity to assets
9.58
%
9.33
%
9.11
%
8.94
%
8.97
%
Tangible equity to tangible assets - Non-GAAP (1)
8.32
%
8.06
%
7.83
%
7.62
%
7.57
%
Loans to deposits (3)
105.8
%
106.8
%
106.3
%
104.3
%
104.0
%

 
 
 
For the Nine Months Ended
 
For the Three Months Ended
 
 
Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Sep 30,
2018
 
Sep 30,
2019
Sep 30,
2018
Performance Ratios (4):
 
 
 
 
 
 
 
 
Net interest margin (5)
2.72
%
2.81
%
2.93
%
2.95
%
2.99
%
 
2.82
%
3.03
%
Return on average assets (net income divided by average assets)
1.44
%
1.34
%
1.39
%
1.40
%
1.47
%
 
1.39
%
1.48
%
Return on average tangible assets - Non-GAAP (1)
1.46
%
1.36
%
1.41
%
1.42
%
1.49
%
 
1.41
%
1.51
%
Return on average equity (net income available for common shareholders divided by average equity)
15.20
%
14.58
%
15.52
%
15.61
%
16.26
%
 
15.09
%
16.41
%
Return on average tangible equity - Non-GAAP (1)
17.79
%
17.17
%
18.43
%
18.75
%
19.59
%
 
17.79
%
19.86
%
Efficiency ratio (6)
52.4
%
55.6
%
54.0
%
54.4
%
53.6
%
 
54.0
%
54.7
%
(1)
See the section labeled “SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures” at the end of this document.
(2)
Estimated for September 30, 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 Nine Months Ended
 
Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Sep 30,
2018
 
Sep 30,
2019
Sep 30,
2018
Wealth Management Results
 
 
 
 
 
 
 
 
Wealth Management Revenues:
 
 
 
 
 
 
 
 
Asset-based revenues

$9,013


$9,141


$8,921


$8,930


$9,322

 

$27,075


$28,413

Transaction-based revenues
140

408

331

82

132

 
879

916

Total wealth management revenues

$9,153


$9,549


$9,252


$9,012


$9,454

 

$27,954


$29,329

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

$6,478,890


$6,350,128


$5,910,814


$6,462,340


$6,220,155

 

$5,910,814


$6,714,637

Net investment appreciation (depreciation) & income
66,514

222,489

520,057

(534,847
)
232,245

 
809,060

333,671

Net client asset flows
(419,077
)
(93,727
)
(80,743
)
(16,679
)
9,940

 
(593,547
)
(585,968
)
Balance at end of period

$6,126,327


$6,478,890


$6,350,128


$5,910,814


$6,462,340

 

$6,126,327


$6,462,340

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

$4,752


$3,523


$2,474


$1,798


$2,485

 

$10,749


$7,950

Loan servicing fee income, net (2)
88

117

172

180

139

 
377

453

Total mortgage banking revenues

$4,840


$3,640


$2,646


$1,978


$2,624

 

$11,126


$8,403

 
 
 
 
 
 
 
 
 
Residential Mortgage Loan Originations:
 
 
 
 
 
 
 
 
Originations for retention in portfolio

$105,075


$69,736


$51,697


$58,515


$80,751

 

$226,508


$277,070

Originations for sale to secondary market (3)
189,979

162,123

85,826

96,792

119,832

 
437,928

330,245

Total mortgage loan originations

$295,054


$231,859


$137,523


$155,307


$200,583

 

$664,436


$607,315

 
 
 
 
 
 
 
 
 
Residential Mortgage Loans Sold:
 
 
 
 
 
 
 
 
Sold with servicing rights retained

$25,766


$18,292


$9,490


$16,577


$24,422

 

$53,548


$82,634

Sold with servicing rights released (3)
159,210

119,122

82,589

81,985

107,694

 
360,921

252,043

Total mortgage loans sold

$184,976


$137,414


$92,079


$98,562


$132,116

 

$414,469


$334,677

(1)
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.
(2)
Represents loan servicing fee income, net of servicing right amortization and valuation adjustments.
(3)
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)
 
 
 
Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Sep 30,
2018
Loans:
 
 
 
 
 
Commercial real estate (1)

$1,517,320


$1,482,836


$1,463,682


$1,392,408


$1,240,350

Commercial & industrial
566,426

583,873

610,608

620,704

656,882

Total commercial
2,083,746

2,066,709

2,074,290

2,013,112

1,897,232

 
 
 
 
 
 
Residential real estate (2)
1,378,518

1,352,113

1,359,072

1,360,387

1,349,340

 
 
 
 
 
 
Home equity
294,250

288,078

279,938

280,626

282,331

Other
21,592

23,439

25,169

26,235

27,300

Total consumer
315,842

311,517

305,107

306,861

309,631

Total loans

$3,778,106


$3,730,339


$3,738,469


$3,680,360


$3,556,203

(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.

 
September 30, 2019
 
December 31, 2018
 
Balance

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

$378,337

25
%
 

$377,249

27
%
Connecticut
618,262

41

 
570,116

41

Massachusetts
432,424

28

 
356,615

26

Subtotal
1,429,023

94

 
1,303,980

94

All other states
88,297

6

 
88,428

6

Total commercial real estate loans

$1,517,320

100
%
 

$1,392,408

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

$347,847

25
%


$352,141

26
%
Connecticut
142,744

11


141,775

10

Massachusetts
871,309

63


849,435

63

Subtotal
1,361,900

99


1,343,351

99

All other states
16,618

1


17,036

1

Total residential real estate loans

$1,378,518

100
%


$1,360,387

100
%

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

$619,839


$587,326


$577,319


$603,216


$611,829

Interest-bearing demand deposits
152,200

128,355

162,598

178,733

151,322

NOW accounts
478,462

484,615

471,682

466,568

468,578

Money market accounts
749,122

654,719

644,949

646,878

650,976

Savings accounts
362,868

365,069

371,248

373,545

372,425

Time deposits (in-market)
792,941

801,501

792,470

778,105

715,635

In-market deposits
3,155,432

3,021,585

3,020,266

3,047,045

2,970,765

Wholesale brokered time deposits
430,721

483,037

483,994

477,003

443,583

Total deposits

$3,586,153


$3,504,622


$3,504,260


$3,524,048


$3,414,348


-10-



Washington Trust Bancorp, Inc. and Subsidiaries
CREDIT & ASSET QUALITY DATA
(Unaudited; Dollars in thousands)
 
 
 
Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Sep 30,
2018
Asset Quality Ratios:
 
 
 
 
 
Nonperforming assets to total assets
0.37
%
0.29
%
0.28
%
0.28
%
0.29
%
Nonaccrual loans to total loans
0.39
%
0.34
%
0.33
%
0.32
%
0.30
%
Total past due loans to total loans
0.38
%
0.48
%
0.39
%
0.37
%
0.38
%
Allowance for loan losses to nonaccrual loans
181.16
%
212.93
%
223.57
%
231.25
%
245.25
%
Allowance for loan losses to total loans
0.71
%
0.73
%
0.74
%
0.74
%
0.75
%
 
 
 
 
 
 
Nonperforming Assets:
 
 
 
 
 
Commercial real estate

$684


$926


$926


$925


$—

Commercial & industrial




122

Total commercial
684

926

926

925

122

Residential real estate
12,531

10,610

10,032

9,346

9,063

Home equity
1,599

1,243

1,407

1,436

1,624

Other consumer
88

88




Total consumer
1,687

1,331

1,407

1,436

1,624

Total nonaccrual loans
14,902

12,867

12,365

11,707

10,809

Other real estate owned
4,142

2,142

2,142

2,142

2,974

Total nonperforming assets

$19,044


$15,009


$14,507


$13,849


$13,783

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

$684


$3,670


$926


$1,080


$931

Commercial & industrial
1

1

1


142

Total commercial
685

3,671

927

1,080

1,073

Residential real estate
11,599

11,237

10,849

10,520

9,398

Home equity
1,973

2,904

2,911

1,989

2,939

Other consumer
99

102

13

33

109

Total consumer
2,072

3,006

2,924

2,022

3,048

Total past due loans

$14,356


$17,914


$14,700


$13,622


$13,519

 
 
 
 
 
 
Accruing loans 90 days or more past due

$—


$—


$—


$—


$—

Nonaccrual loans included in past due loans

$9,797


$8,581


$8,563


$8,613


$6,425


-11-



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

$12,867


$12,365


$11,707


$10,809


$11,745

 

$11,707


$15,211

Additions to nonaccrual status
5,672

1,620

1,924

2,918

2,179

 
9,216

5,846

Loans returned to accruing status
(597
)
(118
)
(855
)
(1,500
)
(361
)
 
(1,570
)
(1,180
)
Loans charged-off
(966
)
(819
)
(103
)
(298
)
(96
)
 
(1,888
)
(889
)
Loans transferred to other real estate owned
(2,000
)




 
(2,000
)
(3,074
)
Payments, payoffs and other changes
(74
)
(181
)
(308
)
(222
)
(2,658
)
 
(563
)
(5,105
)
Balance at end of period

$14,902


$12,867


$12,365


$11,707


$10,809

 

$14,902


$10,809

 
 
 
 
 
 
 
 
 
Allowance for Loan Losses:
 
 
 
 
 
 
 
 
Balance at beginning of period

$27,398


$27,644


$27,072


$26,509


$26,174

 

$27,072


$26,488

Provision charged to earnings
400

525

650

800

350

 
1,575

750

Charge-offs
(966
)
(819
)
(103
)
(298
)
(96
)
 
(1,888
)
(889
)
Recoveries
165

48

25

61

81

 
238

160

Balance at end of period

$26,997


$27,398


$27,644


$27,072


$26,509

 

$26,997


$26,509

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

$947


$—


$—


$—


$—

 

$947


$602

Commercial & industrial
(122
)
(16
)
6

(13
)
(70
)
 
(132
)
(96
)
Total commercial
825

(16
)
6

(13
)
(70
)
 
815

506

Residential real estate

486


156

68

 
486

73

Home equity
(36
)
289

48

65

(2
)
 
301

99

Other consumer
12

12

24

29

19

 
48

51

Total consumer
(24
)
301

72

94

17

 
349

150

Total

$801


$771


$78


$237


$15

 

$1,650


$729

 
 
 
 
 
 
 
 
 
Net charge-offs to average loans (annualized)
0.08
%
0.08
%
0.01
%
0.03
%
%
 
0.06
%
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
September 30, 2019
 
June 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

$96,231


$493

2.03
%
 

$72,976


$399

2.19
%
 

$23,255


$94

(0.16
)%
Mortgage loans held for sale
39,771

410

4.09

 
28,532

288

4.05

 
11,239

122

0.04

Taxable debt securities
920,910

6,318

2.72

 
996,590

7,006

2.82

 
(75,680
)
(688
)
(0.10
)
Nontaxable debt securities
75

3

15.87

 
805

11

5.48

 
(730
)
(8
)
10.39

Total securities
920,985

6,321

2.72

 
997,395

7,017

2.82

 
(76,410
)
(696
)
(0.10
)
FHLB stock
47,982

747

6.18

 
49,574

720

5.83

 
(1,592
)
27

0.35

Commercial real estate
1,490,878

17,314

4.61

 
1,468,382

17,509

4.78

 
22,496

(195
)
(0.17
)
Commercial & industrial
584,601

6,946

4.71

 
606,835

7,482

4.95

 
(22,234
)
(536
)
(0.24
)
Total commercial
2,075,479

24,260

4.64

 
2,075,217

24,991

4.83

 
262

(731
)
(0.19
)
Residential real estate
1,367,017

13,728

3.98

 
1,350,865

13,606

4.04

 
16,152

122

(0.06
)
Home equity
291,058

3,615

4.93

 
284,195

3,579

5.05

 
6,863

36

(0.12
)
Other
22,270

278

4.95

 
24,189

292

4.84

 
(1,919
)
(14
)
0.11

Total consumer
313,328

3,893

4.93

 
308,384

3,871

5.03

 
4,944

22

(0.10
)
Total loans
3,755,824

41,881

4.42

 
3,734,466

42,468

4.56

 
21,358

(587
)
(0.14
)
Total interest-earning assets
4,860,793

49,852

4.07

 
4,882,943

50,892

4.18

 
(22,150
)
(1,040
)
(0.11
)
Noninterest-earning assets
320,223

 
 
 
288,619

 
 
 
31,604

 
 
Total assets

$5,181,016

 
 
 

$5,171,562

 
 
 

$9,454

 
 
Liabilities and Shareholders' Equity:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits

$137,980


$649

1.87
%
 

$129,334


$624

1.94
%
 

$8,646


$25

(0.07
)%
NOW accounts
471,302

69

0.06

 
462,217

75

0.07

 
9,085

(6
)
(0.01
)
Money market accounts
699,138

2,094

1.19

 
659,021

1,831

1.11

 
40,117

263

0.08

Savings accounts
362,142

72

0.08

 
366,449

71

0.08

 
(4,307
)
1


Time deposits (in-market)
800,571

4,181

2.07

 
796,606

3,992

2.01

 
3,965

189

0.06

Total interest-bearing in-market deposits
2,471,133

7,065

1.13

 
2,413,627

6,593

1.10

 
57,506

472

0.03

Wholesale brokered time deposits
475,026

2,727

2.28

 
507,376

2,876

2.27

 
(32,350
)
(149
)
0.01

Total interest-bearing deposits
2,946,159

9,792

1.32

 
2,921,003

9,469

1.30

 
25,156

323

0.02

FHLB advances
980,091

6,512

2.64

 
1,050,660

6,980

2.66

 
(70,569
)
(468
)
(0.02
)
Junior subordinated debentures
22,681

245

4.29

 
22,681

252

4.46

 

(7
)
(0.17
)
Total interest-bearing liabilities
3,948,931

16,549

1.66

 
3,994,344

16,701

1.68

 
(45,413
)
(152
)
(0.02
)
Noninterest-bearing demand deposits
626,408

 
 
 
608,099

 
 
 
18,309



Other liabilities
115,480

 
 
 
94,766

 
 
 
20,714



Shareholders' equity
490,197

 
 
 
474,353

 
 
 
15,844

 
 
Total liabilities and shareholders' equity

$5,181,016

 
 
 

$5,171,562

 
 
 

$9,454

 
 
Net interest income (FTE)
 

$33,303

 
 
 

$34,191

 
 
 

($888
)
 
Interest rate spread
 
 
2.41
%
 
 
 
2.50
%
 
 
 
(0.09
)%
Net interest margin
 
 
2.72
%
 
 
 
2.81
%
 
 
 
(0.09
)%
Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:
For the Three Months Ended
Sep 30, 2019
Jun 30, 2019
Quarter Change
Commercial loans

$323