• Washington Trust Bancorp, Inc.
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  • Washington Trust Announces Record Earnings for Third Quarter 2012
    Company Release - 10/22/2012 17:03

    Diluted Earnings Per Share up 17% over Third Quarter 2011

    WESTERLY, R.I.--(BUSINESS WIRE)-- Washington Trust Bancorp, Inc. (NASDAQ Global Select; symbol: WASH), parent company of The Washington Trust Company, today announced third quarter 2012 net income of $8.9 million, or 54 cents per diluted share. On a diluted earnings per share basis, third quarter 2012 results were up by 1 cent, or 2%, from second quarter 2012 and by 8 cents, or 17%, from third quarter 2011. The returns on average equity and average assets for the third quarter of 2012 were 12.02% and 1.17%, respectively, compared to 11.89% and 1.16%, respectively, for the second quarter of 2012.

    “Washington Trust’s strong operating performance led to another quarter of record earnings,” stated Joseph J. MarcAurele, Washington Trust Chairman, President and CEO. “While all of our business lines performed well, total deposits and total loans reached the highest levels in our 212 year history. These results reflect our success at expanding our branch and mortgage banking footprint, generating new commercial banking and wealth management business, and continuing to build our reputation as one of the premier financial institutions in New England.”

    Selected financial highlights for the third quarter of 2012 included:

    • Loans totaled $2.3 billion at September 30, 2012, up by $42.9 million, or 2%, from June 30, 2012, led by growth in the commercial loan portfolio.
    • Total deposits amounted to $2.2 billion at September 30, 2012, up $104.2 million, or 5%, from June 30, 2012, with growth in lower cost deposits.
    • Net interest margin was 3.28%, a modest 2 basis point decrease from the previous quarter, reflecting the impact of a sustained low interest rate environment on earning asset yields, which declined at a slightly higher rate than funding costs during the quarter.
    • Due to continued strong mortgage origination volume, mortgage banking revenues (net gains on loan sales and commissions on loans originated for others) totaled $3.5 million for the quarter, a 16% increase over the prior quarter.
    • Nonperforming assets (nonaccrual loans, nonaccrual investment securities and property acquired through foreclosure or repossession) amounted to $21.1 million, or 0.69% of total assets, at September 30, 2012, compared to $18.8 million, or 0.62% of total assets, at June 30, 2012.

    Third quarter 2012 results also included the following transactions:

    • A non-taxable gain of $528 thousand was recognized in the quarter resulting from the receipt of bank owned life insurance (“BOLI”) proceeds.
    • Balance sheet management transactions, which are expected to result in net interest income enhancement of approximately $319 thousand for the remainder of 2012 with continuing benefits in future years, were conducted in the latter portion of the quarter, including:
      • Federal Home Loan Bank of Boston (“FHLBB”) advances totaling $32.4 million were prepaid, which resulted in third quarter 2012 debt prepayment penalty expense of $1.2 million.
      • The terms of $13.0 million of FHLBB advances with original maturity dates in 2014 and 2015 were modified into longer terms maturing in 2017.
    • The net impact of these transactions was a reduction in earnings of 1 cent per diluted share in the third quarter of 2012.

    Net Interest Income

    The net interest margin for the third quarter of 2012 was 3.28%, down from 3.30% in the second quarter of 2012, reflecting a 7 basis point decline in the yield on interest-earning assets, partially offset by a 6 basis point decline in cost of funds. Third quarter 2012 net interest margin was up by 6 basis points from 3.22% in the third quarter of 2011, largely reflecting a reduction in the cost of funds.

    Average interest-earning assets for the third quarter of 2012 increased by $25.8 million, or 1%, from the previous quarter and grew by $103.3 million, or 4%, from the third quarter of 2011, primarily reflecting loan growth.

    As a result, third quarter 2012 net interest income of $22.7 million was up by $325 thousand, or 1%, compared to the previous quarter and up by $1.2 million, or 6%, compared to the third quarter of 2011.

    Noninterest Income

    Third quarter 2012 noninterest income totaled $16.9 million, up by $747 thousand, or 5%, from the previous quarter and up by $4.0 million, or 31%, from the third quarter of 2011. As mentioned above, third quarter 2012 results included a $528 thousand non-taxable gain related to the receipt of BOLI proceeds. There were no sales of securities or other-than-temporary impairment ("OTTI") losses on securities in the third quarter of 2012. Previous quarter noninterest income included net realized gains on securities of $299 thousand, as well as a $348 thousand gain on the sale of bank property. In the third quarter 2011, OTTI losses on securities of $158 thousand were recognized. Excluding these items, noninterest income for the third quarter of 2012 was up by $866 thousand, or 6%, from the previous quarter and up by $3.3 million, or 25%, from the third quarter of 2011.

    Significant changes in noninterest income included the following:

    • Mortgage banking revenues increased by $489 thousand from the second quarter of 2012 and by $2.4 million from the third quarter of 2011, due to another strong quarter of mortgage origination activity.
    • Third quarter 2012 wealth management revenues were $7.2 million, down by $280 thousand on a linked quarter basis and up by $402 thousand compared to the third quarter of 2011. The decline on a linked quarter basis reflects a decrease in tax preparation fees, which are typically concentrated in the second quarter. Wealth management assets under administration totaled $4.2 billion at September 30, 2012, up by $162.6 million, or 4%, from June 30, 2012.
    • Merchant processing fees totaled $3.2 million for the third quarter of 2012, up by $475 thousand on a linked quarter basis and comparable with the third quarter of 2011. On a linked quarter basis, the increase reflects a seasonal increase in the volume of transactions processed for customers. See discussion on the corresponding increase in merchant processing costs under the caption “Noninterest Expenses.”

    Noninterest Expenses

    Noninterest expenses totaled $26.3 million for the third quarter of 2012, up by $1.1 million, or 4%, from the previous quarter and up by $3.7 million, or 16%, from the third quarter of 2011. Included in noninterest expenses in the second and third quarters of 2012 were debt prepayment penalties of $961 thousand and $1.2 million, respectively. Also included in second quarter 2012 noninterest expenses was a charge of $131 thousand for the termination of an operating lease, classified in net occupancy expense. Excluding the debt prepayment charges and the operating lease termination charge, noninterest expenses for the third quarter of 2012 increased by $981 thousand, or 4%, from the previous quarter and up by $2.5 million, or 11%, from the third quarter of 2011.

    Significant changes in noninterest expense included the following:

    • Salaries and employee benefit costs amounted to $15.2 million in the third quarter of 2012, an increase of $763 thousand, or 5%, from the previous quarter and up by $2.3 million, or 18%, from the third quarter of 2011. These increases reflect higher amounts of commissions paid to mortgage originators, higher staffing levels in support of mortgage origination and other business lines and higher incentive accruals. The increase from 2011 also reflected higher defined benefit plan cost primarily due to a lower discount rate.
    • Merchant processing costs totaled $2.7 million in the third quarter of 2012, up by $387 thousand on a linked quarter basis and comparable with the third quarter of 2011. See the discussion above regarding the corresponding increase in merchant processing fee income.

    Income tax expense amounted to $3.9 million for the third quarter of 2012, compared to $4.0 million for the second quarter of 2012 and $3.3 million for the third quarter of 2011. The effective tax rate for the third quarter of 2012 was reduced to 30.3% from 31.7% in the previous quarter, as a result of the non-taxable gain related to the receipt of BOLI proceeds in the quarter.

    Asset Quality

    Total nonaccrual loans amounted to $17.7 million, or 0.79% of total loans, at September, 30, 2012, up by $2.0 million from June 30, 2012. At September 30, 2012, total past due loans amounted to $23.6 million, or 1.05% of total loans, up by $3.3 million from June 30, 2012. Loans classified as troubled debt restructurings ("TDRs") totaled $20.6 million at September 30, 2012, up by $7.3 million from June 30, 2012. These changes in nonaccrual loans, past due loans and TDRs are largely associated with a small number of larger commercial relationships.

    The loan loss provision charged to earnings amounted to $600 thousand for the third quarter of 2012, level with the second quarter of 2012 and down by $400 thousand from the third quarter of 2011. Net charge-offs amounted to $296 thousand in the third quarter of 2012, compared to net charge-offs of $197 thousand in the second quarter of 2012 and $712 thousand in the third quarter of 2011.

    The allowance for loan losses was $30.8 million, or 1.36% of total loans, at September 30, 2012 compared to $30.4 million, or 1.38% of total loans, at June 30, 2012.

    Loans

    Total loans rose by $42.9 million, or 2%, in the third quarter of 2012, with increases in commercial loans of $27.3 million and residential loans of $13.4 million. Total loans are up by $109.5 million, or 5%, from December 31, 2011, including a $94.7 million, or 8%, increase in total commercial loans.

    Investment Securities

    The investment securities portfolio amounted to $483.9 million at September 30, 2012, down by $32.3 million from June 30, 2012 and down by $109.5 million from December 31, 2011, primarily due to principal payments received on mortgage-backed securities not being reinvested.

    Deposits and Borrowings

    Total deposits increased by $104.2 million, or 5%, in the third quarter of 2012 and by $108.3 million, or 5%, since December 31, 2011, reflecting growth in lower cost non-time categories of deposits.

    FHLBB advances totaled $417.7 million at September 30, 2012, down by $106.3 million from June 30, 2012 and down by $122.8 million from December 31, 2011. In addition to balance sheet management transactions, this decline reflects less demand for wholesale funding due to the strong deposit growth.

    Other borrowings were $229 thousand at September 30, 2012, compared to $481 thousand at June 30, 2012 and $19.8 million at December 31, 2011. The $19.5 million decline in other borrowings from the balance at December 31, 2011, was primarily due to the maturity of securities sold under repurchase agreements.

    Capital Management

    Capital levels continued to exceed the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 13.18% at September 30, 2012, compared to 12.86% at December 31, 2011. Total shareholder's equity was $298.4 million at September 30, 2012, up by $17.0 million from the balance at December 31, 2011.

    Dividends Declared

    The Board of Directors declared a quarterly dividend of 24 cents per share for the quarter ended September 30, 2012. The dividend is a one cent increase over the amount paid in the previous quarter and is the Corporation’s second dividend increase in 2012. The dividend was paid on October 12, 2012 to shareholders of record on October 1, 2012.

    Conference Call

    Washington Trust will host a conference call on Tuesday, October 23, 2012 at 8:30 a.m. Eastern Time to discuss third quarter results and business outlook. This call is being webcast and can be accessed through the Investor Relations section of the Washington Trust web site, www.washtrust.com. Individuals may dial in to the call at 1-877-317-6789. The international dial-in number is 1-412-317-6789 and the Canada dial-in number is 1-866-605-3852. A replay of the call will be posted in this same location on the web site shortly after the conclusion of the call. To listen to the replay, dial 1-877-344-7529. For international access, dial 1-412-317-0088. The Conference Number for replay is 10018650. The replay will be available until 9:00 a.m. on November 7, 2012.

    Background

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

    Forward-Looking Statements

    This press release contains certain statements that are “forward-looking statements”. We may also make written or oral 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 the control of Washington Trust. These risks, uncertainties and other factors may cause the actual results, performance or achievements of Washington Trust to be materially different from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements.

    Some of the factors that might cause these differences include the following: continued weakness in general national, regional or international economic conditions or conditions affecting the banking or financial services industries or financial capital markets, volatility and disruption in national and international financial markets, government intervention in the U.S. financial system, reductions in net interest income resulting from interest rate volatility as well as changes in the balance and mix of loans and deposits, reductions in the market value of wealth management assets under administration, changes in the value of securities and other assets, reductions in loan demand, changes in loan collectibility, default and charge-off rates, changes in the size and nature of Washington Trust's competition, changes in legislation or regulation and accounting principles, policies and guidelines such as the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, 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, 2011, as filed with the Securities and Exchange Commission and as updated by our Quarterly Reports on Form 10-Q, 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 press release, and Washington Trust assumes no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

    Supplemental Information - Explanation of Non-GAAP Financial Measures

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

     
    Washington Trust Bancorp, Inc. and Subsidiaries
    CONSOLIDATED BALANCE SHEETS (unaudited)
       
    (Dollars in thousands, except par value)  

    Sep 30,
    2012

      Dec 31,
    2011
    Assets:
    Cash and due from banks $49,935$82,238
    Short-term investments 3,599 4,782
    Mortgage loans held for sale, at fair value; amortized cost $33,737 in 2012 and $19,624 in 2011 35,409 20,340
    Securities:
    Available for sale, at fair value; amortized cost $424,194 in 2012 and $524,036 in 2011 440,289 541,253
    Held to maturity, at cost; fair value $45,031 in 2012 and $52,499 in 2011   43,569     52,139  
    Total securities 483,858 593,392
    Federal Home Loan Bank stock, at cost 40,418 42,008
    Loans:
    Commercial and other 1,219,327 1,124,628
    Residential real estate 715,412 700,414
    Consumer   321,958     322,117  
    Total loans 2,256,697 2,147,159
    Less allowance for loan losses   30,752     29,802  
    Net loans 2,225,945 2,117,357
    Premises and equipment, net 27,482 26,028
    Investment in bank-owned life insurance 54,344 53,783
    Goodwill 58,114 58,114
    Identifiable intangible assets, net 6,346 6,901
    Other assets   63,418     59,155  
    Total assets   $3,048,868     $3,064,098  
    Liabilities:
    Deposits:
    Demand deposits $352,330$339,809
    NOW accounts 267,495 257,031
    Money market accounts 459,671 406,777
    Savings accounts 268,191 243,904
    Time deposits   886,972     878,794  
    Total deposits 2,234,659 2,126,315
    Federal Home Loan Bank advances 417,675 540,450
    Junior subordinated debentures 32,991 32,991
    Other borrowings 229 19,758
    Other liabilities   64,920     63,233  
    Total liabilities   2,750,474     2,782,747  
    Shareholders’ Equity:
    Common stock of $.0625 par value; authorized 30,000,000 shares; issued and outstanding 16,371,272 shares in 2012 and 16,292,471 shares in 2011 1,023 1,018
    Paid-in capital 90,829 88,030
    Retained earnings 208,639 194,198
    Accumulated other comprehensive loss   (2,097 )   (1,895 )
    Total shareholders’ equity   298,394     281,351  
    Total liabilities and shareholders’ equity   $3,048,868     $3,064,098  
     
     
    Washington Trust Bancorp, Inc. and Subsidiaries
    CONSOLIDATED STATEMENTS OF INCOME (unaudited)
           
    (Dollars and shares in thousands, except per share amounts) Three Months   Nine Months
    Periods ended September 30,   2012   2011   2012   2011
    Interest income:
    Interest and fees on loans $25,840$25,069$76,547$74,035
    Interest on securities: Taxable 3,672 4,640 12,118 14,282
    Nontaxable 660 746 2,035 2,273
    Dividends on corporate stock and Federal Home Loan Bank stock 52 64 207 197
    Other interest income   27     15     64     52  
    Total interest income   30,251     30,534     90,971     90,839  
    Interest expense:
    Deposits 3,391 3,808 10,210 12,040
    Federal Home Loan Bank advances 3,726 4,539 11,809 13,956
    Junior subordinated debentures 393 393 1,176 1,175
    Other interest expense   5     245     244     728  
    Total interest expense   7,515     8,985     23,439     27,899  
    Net interest income 22,736 21,549 67,532 62,940
    Provision for loan losses   600     1,000     2,100     3,700  
    Net interest income after provision for loan losses   22,136     20,549     65,432     59,240  
    Noninterest income:
    Wealth management services:
    Trust and investment advisory fees 5,877 5,547 17,474 17,045
    Mutual fund fees 1,024 1,035 3,051 3,293
    Financial planning, commissions and other service fees   292     209     1,326     1,043  
    Wealth management services 7,193 6,791 21,851 21,381
    Service charges on deposit accounts 833 821 2,356 2,662
    Merchant processing fees 3,207 3,223 7,927 7,849
    Card interchange fees 675 597 1,844 1,665
    Income from bank-owned life insurance 1,006 488 1,969 1,446
    Net gains on loan sales and commissions on loans originated for others 3,504 1,077 9,616 2,139
    Net realized gains on securities 299 197
    Net gains (losses) on interest rate swap contracts 63 (47 ) 87 (6 )
    Equity in earnings (losses) of unconsolidated subsidiaries 27 (144 ) 114 (433 )
    Other income   413     308     1,473     1,229  
    Noninterest income, excluding other-than-temporary impairment losses 16,921 13,114 47,536 38,129
    Total other-than-temporary impairment losses on securities (85 ) (54 )
    Portion of loss recognized in other comprehensive income (before tax)       (158 )   (124 )   (137 )
    Net impairment losses recognized in earnings       (158 )   (209 )   (191 )
    Total noninterest income   16,921     12,956     47,327     37,938  
    Noninterest expense:
    Salaries and employee benefits 15,214 12,912 44,125 37,138
    Net occupancy 1,468 1,362 4,521 3,919
    Equipment 1,168 1,092 3,418 3,211
    Merchant processing costs 2,707 2,781 6,690 6,795
    Outsourced services 845 863 2,660 2,610
    FDIC deposit insurance costs 427 427 1,311 1,614
    Legal, audit and professional fees 598 430 1,599 1,389
    Advertising and promotion 445 561 1,295 1,341
    Amortization of intangibles 182 230 555 705
    Foreclosed property costs 136 45 604 549
    Debt prepayment penalties 1,173 2,134 221
    Other expenses   1,927     1,892     6,005     6,107  
    Total noninterest expense   26,290     22,595     74,917     65,599  
    Income before income taxes 12,767 10,910 37,842 31,579
    Income tax expense   3,867     3,328     11,791     9,632  
    Net income   $8,900     $7,582     $26,051     $21,947  
     
    Weighted average common shares outstanding - basic 16,366 16,278 16,351 16,242
    Weighted average common shares outstanding - diluted 16,414 16,294 16,392 16,269
    Per share information: Basic earnings per common share $0.54$0.46$1.59$1.35
    Diluted earnings per common share $0.54$0.46$1.58$1.34
    Cash dividends declared per share $0.24$0.22$0.70$0.66
     
     
    Washington Trust Bancorp, Inc. and Subsidiaries
    SELECTED FINANCIAL HIGHLIGHTS (unaudited)
      At or for the Quarters Ended
    (Dollars and shares in thousands, except per share amounts)   Sep 30,
    2012
      Jun 30,
    2012
      Mar 31,
    2012
      Dec 31,
    2011
      Sep 30,
    2011
    Financial Data:        
    Total assets $3,048,868$3,041,050$3,028,690$3,064,098$2,969,613
    Total loans 2,256,697 2,213,842 2,155,359 2,147,159 2,087,759
    Total securities 483,858 516,193 558,284 593,392 581,543
    Total deposits 2,234,659 2,130,453 2,145,562 2,126,315 2,086,150
    Total shareholders' equity 298,394 292,734 287,935 281,351 285,494
    Net interest income 22,736 22,411 22,385 22,015 21,549
    Provision for loan losses 600 600 900 1,000 1,000
    Noninterest income, excluding OTTI losses 16,921 16,174 14,441 14,826 13,114
    Net OTTI losses recognized in earnings (209 ) (158 )
    Noninterest expenses 26,290 25,228 23,399 24,774 22,595
    Income tax expense 3,867 4,044 3,880 3,290 3,328
    Net income 8,900 8,713 8,438 7,777 7,582
     
    Share Data:
    Basic earnings per common share $0.54$0.53$0.51$0.48$0.46
    Diluted earnings per common share $0.54$0.53$0.51$0.47$0.46
    Dividends declared per share $0.24$0.23$0.23$0.22$0.22
    Book value per share $18.23$17.89$17.61$17.27$17.54
    Tangible book value per share - Non-GAAP (1) $14.29$13.94$13.64$13.28$13.53
    Market value per share $26.27$24.38$24.14$23.86$19.78
     
    Shares outstanding at end of period 16,371 16,359 16,354 16,292 16,279
    Weighted average common shares outstanding - basic 16,366 16,358 16,330 16,288 16,278
    Weighted average common shares outstanding - diluted 16,414 16,392 16,370 16,327 16,294
     
    Key Ratios:
    Return on average assets 1.17 % 1.16 % 1.11 % 1.04 % 1.03 %
    Return on average tangible assets - Non-GAAP (1) 1.19 % 1.18 % 1.14 % 1.07 % 1.06 %
    Return on average equity 12.02 % 11.98 % 11.85 % 10.89 % 10.67 %
    Return on average tangible equity - Non-GAAP (1) 15.37 % 15.41 % 15.35 % 14.10 % 13.86 %
     
    Capital Ratios:
    Tier 1 risk-based capital 11.93% (i) 11.90 % 11.96 % 11.61 % 11.73 %
    Total risk-based capital 13.18% (i) 13.15 % 13.22 % 12.86 % 12.99 %
    Tier 1 leverage ratio 9.11% (i) 9.00 % 8.75 % 8.70 % 8.69 %
    Equity to assets 9.79 % 9.63 % 9.51 % 9.18 % 9.61 %
    Tangible equity to tangible assets - Non-GAAP (1) 7.84 % 7.66 % 7.53 % 7.21 % 7.58 %
    (i) - estimated
     

    Wealth Management Assets under Administration:

    Balance at beginning of period $4,079,913$4,196,447$3,900,061$3,728,837$4,148,433
    Net investment (depreciation) appreciation & income 155,427 (131,896 ) 298,155 215,449 (374,961 )
    Net client cash flows 7,180 15,362 (1,769 ) (36,815 ) (44,635 )
    Other (2)               (7,410 )    
    Balance at end of period   $4,242,520     $4,079,913     $4,196,447     $3,900,061     $3,728,837  

    (1) See the section labeled “Supplemental Information - Non-GAAP Financial Measures” at the end of this document.
    (2) Represents declassifications of largely low fee-paying assets from assets under administration due to a change in the scope and/or frequency of services provided by Washington Trust. The impact of this change on wealth management revenues was minimal.

     
    Washington Trust Bancorp, Inc. and Subsidiaries
    SELECTED FINANCIAL HIGHLIGHTS (unaudited)
       
    Nine Months Ended
    (Dollars and shares in thousands, except per share amounts)   Sep 30,
    2012
      Sep 30,
    2011
    Financial Data:
    Net interest income $67,532$62,940
    Provision for loan losses 2,100 3,700
    Noninterest income, excluding OTTI losses 47,536 38,129
    Net OTTI losses recognized in earnings (209 ) (191 )
    Noninterest expenses 74,917 65,599
    Income tax expense 11,791 9,632
    Net income 26,051 21,947
     
    Share Data:
    Basic earnings per common share $1.59$1.35
    Diluted earnings per common share $1.58$1.34
    Dividends declared per share $0.70$0.66
     
    Weighted average common shares outstanding - basic 16,351 16,242
    Weighted average common shares outstanding - diluted 16,392 16,269
     
    Key Ratios:
    Return on average assets 1.15 % 1.01 %
    Return on average tangible assets - Non-GAAP (1) 1.17 % 1.03 %
    Return on average equity 11.95 % 10.52 %
    Return on average tangible equity - Non-GAAP (1) 15.38 % 13.76 %
     
    Asset Quality Data:
    Allowance for Loan Losses:
    Balance at beginning of period $29,802$28,583
    Provision charged to earnings 2,100 3,700
    Charge-offs (1,801 ) (2,914 )
    Recoveries   651     272  
    Balance at end of period   $30,752     $29,641  
     
    Net Loan Charge-Offs (Recoveries):
    Commercial mortgages ($169 ) $704
    Other commercial 851 1,335
    Residential real estate mortgages 218 364
    Consumer   250     239  
    Total   $1,150     $2,642  
     
    Net charge-offs to average loans (annualized) 0.07 % 0.17 %
     
    Wealth Management Assets Under Administration:
    Balance at beginning of period $3,900,061$3,967,207
    Net investment appreciation & income 321,686 (227,773 )
    Net client cash flows   20,773     (10,597 )
    Balance at end of period   $4,242,520     $3,728,837  

    (1) See the section labeled “Supplemental Information - Non-GAAP Financial Measures” at the end of this document.

     
    Washington Trust Bancorp, Inc. and Subsidiaries
    SELECTED FINANCIAL HIGHLIGHTS (unaudited)
             
    For the Quarters Ended
        Sep 30,
    2012
      Jun 30,
    2012
      Mar 31,
    2012
      Dec 31,
    2011
      Sep 30,
    2011
    Average Yield / Rate (taxable equivalent basis):
    Assets:
    Commercial mortgages and other commercial loans 4.94 % 5.03 % 5.13 % 5.19 % 5.22 %
    Residential real estate loans, including mortgage loans held for sale 4.32 % 4.40 % 4.51 % 4.46 % 4.58 %
    Consumer loans 3.89 % 3.85 % 3.89 % 3.87 % 3.90 %
    Total loans 4.59 % 4.65 % 4.74 % 4.74 % 4.80 %
    Cash, federal funds sold and other short-term investments 0.26 % 0.23 % 0.15 % 0.19 % 0.20 %
    FHLBB stock 0.51 % 0.54 % 0.50 % 0.30 % 0.26 %
    Taxable debt securities 3.50 % 3.63 % 3.62 % 3.58 % 3.78 %
    Nontaxable debt securities 5.83 % 5.93 % 5.92 % 5.82 % 5.82 %
    Corporate stocks % 7.58 % 7.16 % 5.89 % 7.58 %
    Total securities 3.83 % 3.95 % 3.93 % 3.88 % 4.07 %
    Total interest-earning assets 4.34 % 4.41 % 4.43 % 4.44 % 4.53 %
    Liabilities:
    NOW accounts 0.06 % 0.06 % 0.08 % 0.10 % 0.10 %
    Money market accounts 0.26 % 0.23 % 0.22 % 0.24 % 0.25 %
    Savings accounts 0.11 % 0.11 % 0.11 % 0.12 % 0.12 %
    Time deposits 1.33 % 1.35 % 1.41 % 1.45 % 1.48 %
    FHLBB advances 3.18 % 3.25 % 3.14 % 3.44 % 3.49 %
    Junior subordinated debentures 4.74 % 4.77 % 4.78 % 4.73 % 4.73 %
    Other 6.33 % 2.07 % 4.98 % 4.59 % 4.50 %
    Total interest-bearing liabilities 1.27 % 1.33 % 1.38 % 1.45 % 1.53 %
     
    Interest rate spread (taxable equivalent basis) 3.07 % 3.08 % 3.05 % 2.99 % 3.00 %
    Net interest margin (taxable equivalent basis) 3.28 % 3.30 % 3.27 % 3.22 % 3.22 %
     
    At September 30, 2012
    Amortized   Unrealized   Unrealized   Fair
    (Dollars in thousands)   Cost (1)   Gains   Losses   Value
    Securities Available for Sale:
    Obligations of U.S. government-sponsored enterprises $29,451$2,584 $— $32,035
    Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises 277,432 18,394 295,826
    States and political subdivisions 68,700 4,913 73,613
    Trust preferred securities:
    Individual name issuers 30,667 (7,231 ) 23,436
    Collateralized debt obligations 4,047 (3,117 ) 930
    Corporate bonds   13,897     585     (33 )   14,449
    Total securities available for sale   424,194     26,476     (10,381 )   440,289
    Held to Maturity:
    Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises   43,569     1,462         45,031
    Total securities held to maturity   43,569     1,462         45,031
    Total securities   $467,763     $27,938     ($10,381 )   $485,320

    (1) Net of other-than-temporary impairment losses recognized in earnings.

     
    Washington Trust Bancorp, Inc. and Subsidiaries
    SELECTED FINANCIAL HIGHLIGHTS (unaudited)
             
    Period End Balances At
    (Dollars in thousands)   Sep 30,
    2012
      Jun 30,
    2012
      Mar 31,
    2012
      Dec 31,
    2011
      Sep 30,
    2011
    Loans:
    Commercial:   Mortgages $693,221$664,410$642,012$624,813$573,355
    Construction & development 25,132 17,365 11,130 10,955 18,518
        Other   500,974   510,220   486,258   488,860   478,652
    Total commercial 1,219,327 1,191,995 1,139,400 1,124,628 1,070,525
    Residential real estate: Mortgages 692,659 680,772 675,249 678,582 674,242
        Homeowner construction   22,753   21,247   21,708   21,832   17,226
    Total residential real estate 715,412 702,019 696,957 700,414 691,468
    Consumer: Home equity lines 227,549 224,550 223,311 223,430 222,886
    Home equity loans 39,452 40,690 40,793 43,121 45,354
        Other   54,957   54,588   54,898   55,566   57,526
        Total consumer   321,958   319,828   319,002   322,117   325,766
        Total loans   $2,256,697   $2,213,842   $2,155,359   $2,147,159   $2,087,759
     
    At September 30, 2012
    (Dollars in thousands)   Balance   % of Total
    Commercial Real Estate Loans by Property Location:  
    Rhode Island, Connecticut, Massachusetts$666,871 92.8 %
    New York, New Jersey, Pennsylvania 37,160 5.2 %
    New Hampshire 12,135 1.7 %
    Other   2,187   0.3 %
    Total commercial real estate loans (1)   $718,353   100.0 %

    (1) Commercial real estate loans consist of commercial mortgages and construction and development loans. Commercial mortgages are loans secured by income producing property.

     
    At September 30, 2012
    (Dollars in thousands)   Balance   % of Total
    Residential Mortgages by Property Location:  
    Rhode Island, Connecticut, Massachusetts$694,274 97.0 %
    New York, Virginia, New Jersey, Maryland, Pennsylvania, District of Columbia 9,658 1.3 %
    New Hampshire 4,342 0.6 %
    Ohio 3,706 0.5 %
    Washington, Oregon 1,385 0.2 %
    Georgia 1,106 0.2 %
    New Mexico 477 0.1 %
    Other   464   0.1 %
    Total residential mortgages   $715,412   100.0 %
     
    Period End Balances At
    (Dollars in thousands)   Sep 30,
    2012
      Jun 30,
    2012
      Mar 31,
    2012
      Dec 31,
    2011
      Sep 30,
    2011
    Deposits:        
    Demand deposits $352,330$321,488$333,833$339,809$319,203
    NOW accounts 267,495 263,124 258,986 257,031 242,372
    Money market accounts 459,671 388,686 400,396 406,777 374,324
    Savings accounts 268,191 264,772 257,495 243,904 239,356
    Time deposits   886,972   892,383   894,852   878,794   910,895
    Total deposits   $2,234,659   $2,130,453   $2,145,562   $2,126,315   $2,086,150
     
    Out-of-market brokered certificates of deposits included in time deposits $98,603$102,661$95,989$90,073$85,250
    In-market deposits, excluding out-of-market brokered certificates of deposit $2,136,056$2,027,792$2,049,573$2,036,242$2,000,900
     
     
    Washington Trust Bancorp, Inc. and Subsidiaries
    SELECTED FINANCIAL HIGHLIGHTS (unaudited)
             
    Period End Balances At
    (Dollars in thousands)   Sep 30,
    2012
      Jun 30,
    2012
      Mar 31,
    2012
      Dec 31,
    2011
      Sep 30,
    2011
    Asset Quality Data:
    Nonperforming Assets:
    Commercial mortgages $5,956$2,597$5,099$5,709$6,367
    Commercial construction and development
    Other commercial 3,201 3,405 4,200 3,708 2,745
    Residential real estate mortgages 7,127 8,659 9,031 10,614 11,352
    Consumer   1,463     1,081     1,069     1,206     1,126  
    Total nonaccrual loans $17,747$15,742$19,399$21,237$21,590
    Nonaccrual investment securities 929 767 750 887 796
    Property acquired through foreclosure or repossession   2,447     2,332     3,478     2,647     2,201  
    Total nonperforming assets   $21,123     $18,841     $23,627     $24,771     $24,587  
     
    Total past due loans to total loans 1.05 % 0.92 % 0.98 % 1.22 % 1.05 %
    Nonperforming assets to total assets 0.69 % 0.62 % 0.78 % 0.81 % 0.83 %
    Nonaccrual loans to total loans 0.79 % 0.71 % 0.90 % 0.99 % 1.03 %
    Allowance for loan losses to nonaccrual loans 173.28 % 193.42 % 154.88 % 140.33 % 137.29 %
    Allowance for loan losses to total loans 1.36 % 1.38 % 1.39 % 1.39 % 1.42 %
     
    Troubled Debt Restructured Loans:
    Accruing troubled debt restructured loans:
    Commercial mortgages $9,131$1,251$1,059$6,389$5,861
    Other commercial 6,880 6,916 7,329 6,625 4,059
    Residential real estate mortgages 386 570 935 1,481 1,158
    Consumer   158     159     174     171     174  
    Accruing troubled debt restructured loans   16,555     8,896     9,497     14,666     11,252  
    Nonaccrual troubled debt restructured loans:
    Commercial mortgages 348 91 1,209
    Other commercial 2,306 2,317 2,361 2,154 292
    Residential real estate mortgages 1,697 2,028 1,904 2,615 2,686
    Consumer   46     47     35     106     129  
    Nonaccrual troubled debt restructured loans   4,049     4,392     4,648     4,966     4,316  
    Total troubled debt restructured loans   $20,604     $13,288     $14,145     $19,632     $15,568  
     
     
    Washington Trust Bancorp, Inc. and Subsidiaries
    SELECTED FINANCIAL HIGHLIGHTS (unaudited)
      Period End Balances At
    (Dollars in thousands)   Sep 30,
    2012
      Jun 30,
    2012
      Mar 31,
    2012
      Dec 31,
    2011
      Sep 30,
    2011
    Past Due Loans:        
    Loans 30-59 Days Past Due:
    Commercial mortgages $3,978$411$104$1,621$874
    Other commercial loans 2,719 849 1,031 3,760 1,629
    Residential real estate mortgages 2,368 4,969 4,468 3,969 2,145
    Consumer loans   1,876     2,660     2,404     1,073     1,100  
    Loans 30-59 days past due   $10,941     $8,889     $8,007     $10,423     $5,748  
    Loans 60-89 Days Past Due:
    Commercial mortgages $874$233 $— $315$328
    Other commercial loans 1,169 434 33 982 103
    Residential real estate mortgages 821 1,600 488 1,505 206
    Consumer loans   1,213     677     219     263     420  
    Loans 60-89 days past due   $4,077     $2,944     $740     $3,065     $1,057  
    Loans 90 Days or more Past Due:
    Commercial mortgages $2,495$2,339$4,676$4,995$5,510
    Other commercial loans 1,366 1,714 2,521 633 1,209
    Residential real estate mortgages 3,924 4,039 4,843 6,283 7,826
    Consumer loans   811     362     326     874     649  
    Loans 90 days or more past due   $8,596     $8,454     $12,366     $12,785     $15,194  
    Total Past Due Loans:
    Commercial mortgages $7,347$2,983$4,780$6,931$6,712
    Other commercial loans 5,254 2,997 3,585 5,375 2,941
    Residential real estate mortgages 7,113 10,608 9,799 11,757 10,177
    Consumer loans   3,900     3,699     2,949     2,210     2,169  
    Total past due loans   $23,614     $20,287     $21,113     $26,273     $21,999  
     
    Nonaccrual loans included in past due loans $14,471$12,719$14,747$17,588$16,585
     
    For the Quarters Ended
    (Dollars in thousands)   Sep 30,
    2012
      Jun 30,
    2012
      Mar 31,
    2012
      Dec 31,
    2011
      Sep 30,
    2011
    Allowance for Loan Losses:
    Balance at beginning of period $30,448$30,045$29,802$29,641$29,353
    Provision charged to earnings 600 600 900 1,000 1,000
    Charge-offs (424 ) (696 ) (681 ) (920 ) (818 )
    Recoveries   128     499     24     81     106  
    Balance at end of period   $30,752     $30,448     $30,045     $29,802     $29,641  
    Net Loan Charge-Offs (Recoveries):
    Commercial mortgages $212 ($388 ) $7$249$249
    Other commercial (22 ) 549 324 39 286
    Residential real estate mortgages 41 (47 ) 224 273 100
    Consumer   65     83     102     278     77  
    Total   $296     $197     $657     $839     $712  
     

    The following tables present average balance and interest rate information. Tax-exempt income is converted to a fully taxable equivalent basis using the statutory federal income tax rate adjusted for applicable state income taxes, net of the related federal tax benefit. For dividends on corporate stocks, the 70% federal dividends received deduction is also used in the calculation of tax equivalency. Unrealized gains (losses) on available for sale securities are excluded from the average balance and yield calculations. Nonaccrual and renegotiated loans, as well as interest earned on these loans (to the extent recognized in the Consolidated Statements of Income) are included in amounts presented for loans.

    Washington Trust Bancorp, Inc. and Subsidiaries
    CONSOLIDATED AVERAGE BALANCE SHEETS (unaudited)
    Three months ended September 30,   2012   2011

    (Dollars in thousands)

     

    Average
    Balance

     

    Interest

     

    Yield/
    Rate

     

    Average
    Balance

     

    Interest

     

    Yield/
    Rate

    Assets:  
    Commercial mortgages and other commercial loans $1,193,006$14,814 4.94 % $1,066,916$14,027 5.22 %
    Residential real estate loans, including mortgage loans held for sale 739,744 8,041 4.32 % 688,856 7,950 4.58 %
    Consumer loans   320,431   3,133   3.89 %   323,744   3,184   3.90 %
    Total loans 2,253,181 25,988 4.59 % 2,079,516 25,161 4.80 %
    Cash, federal funds sold and short-term investments 40,984 27 0.26 % 29,123 15 0.20 %
    FHLBB stock 40,418 52 0.51 % 42,008 28 0.26 %
     
    Taxable debt securities 417,525 3,672 3.50 % 487,172 4,640 3.78 %
    Nontaxable debt securities 68,815 1,008 5.83 % 77,333 1,134 5.82 %
    Corporate stocks       %   2,513   48

     

    7.58 %
    Total securities   486,340   4,680   3.83 %   567,018   5,822   4.07 %
    Total interest-earning assets 2,820,923 30,747 4.34 % 2,717,665 31,026 4.53 %
    Noninterest-earning assets   224,280           217,481        
    Total assets   $3,045,203           $2,935,146        
    Liabilities and Shareholders' Equity:
    NOW accounts $260,829$41 0.06 % $232,023$61 0.10 %
    Money market accounts 429,538 283 0.26 % 372,279 234 0.25 %
    Savings accounts 267,614 74 0.11 % 232,432 72 0.12 %
    Time deposits 896,770 2,993 1.33 % 921,056 3,441 1.48 %
    FHLBB advances 466,135 3,726 3.18 % 515,607 4,539 3.49 %
    Junior subordinated debentures 32,991 393 4.74 % 32,991 393 4.73 %
    Other   314   5   6.33 %   21,608   245   4.50 %
    Total interest-bearing liabilities 2,354,191 7,515 1.27 % 2,327,996 8,985 1.53 %
    Demand deposits 337,547 280,453
    Other liabilities 57,315 42,453
    Shareholders' equity   296,150           284,244        
    Total liabilities and shareholders' equity   $3,045,203           $2,935,146        
    Net interest income (FTE)       $23,232           $22,041    
    Interest rate spread 3.07 % 3.00 %
    Net interest margin           3.28 %           3.22 %
     

    Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:

    (Dollars in thousands)    
     
    Three months ended September 30,   2012   2011
    Commercial mortgages and other commercial loans $148$92
    Nontaxable debt securities 348 388
    Corporate stocks       12
    Total   $496     $492
     
     
    Washington Trust Bancorp, Inc. and Subsidiaries
    CONSOLIDATED AVERAGE BALANCE SHEETS (unaudited)
    Nine months ended September 30,   2012   2011
    (Dollars in thousands)

     

    Average
    Balance

     

    Interest

     

    Yield/
    Rate

     

    Average
    Balance

     

    Interest

     

    Yield/
    Rate

    Assets:  
    Commercial mortgages and other commercial loans $1,160,531$43,702 5.03 % $1,056,746$41,433 5.24 %
    Residential real estate loans, including mortgage loans held for sale 724,922 23,925 4.41 % 665,705 23,382 4.70 %
    Consumer loans   320,274   9,297   3.88 %   324,226   9,494   3.91 %
    Total loans 2,205,727 76,924 4.66 % 2,046,677 74,309 4.85 %
    Cash, federal funds sold and short-term investments 41,125 64 0.21 % 35,690 52 0.19 %
    FHLBB stock 40,812 158 0.52 % 42,008 92 0.29 %
     
    Taxable debt securities 451,602 12,118 3.58 % 488,745 14,282 3.91 %
    Nontaxable debt securities 70,389 3,107 5.90 % 78,403 3,450 5.88 %
    Corporate stocks   1,215   66   7.26 %   2,513   143   7.61 %
    Total securities   523,206   15,291   3.90 %   569,661   17,875   4.20 %
    Total interest-earning assets 2,810,870 92,437 4.39 % 2,694,036 92,328 4.58 %
    Noninterest-earning assets   222,387           214,099        
    Total assets   $3,033,257           $2,908,135        
    Liabilities and Shareholders' Equity:
    NOW accounts $253,895$127 0.07 % $228,941$179 0.10 %
    Money market accounts 415,661 740 0.24 % 388,413 806 0.28 %
    Savings accounts 258,464 215 0.11 % 225,835 216 0.13 %
    Time deposits 895,864 9,128 1.36 % 934,340 10,839 1.55 %
    FHLBB advances 494,615 11,809 3.19 % 495,469 13,956 3.77 %
    Junior subordinated debentures 32,991 1,176 4.76 % 32,991 1,175 4.76 %
    Other   6,706   244   4.86 %   22,126   728   4.40 %
    Total interest-bearing liabilities 2,358,196 23,439 1.33 % 2,328,115 27,899 1.60 %
    Demand deposits 329,983 260,627
    Other liabilities 54,456 41,173
    Shareholders' equity   290,622           278,220        
    Total liabilities and shareholders' equity   $3,033,257           $2,908,135        
    Net interest income (FTE)       $68,998           $64,429    
    Interest rate spread 3.06 % 2.98 %
    Net interest margin           3.28 %           3.20 %
     

    Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:

    (Dollars in thousands)    
     
    Nine months ended September 30,   2012   2011
    Commercial mortgages and other commercial loans $377$274
    Nontaxable debt securities 1,072 1,177
    Corporate stocks   17     38
    Total   $1,466     $1,489
     
     
    Washington Trust Bancorp, Inc. and Subsidiaries
    SUPPLEMENTAL INFORMATION - Non-GAAP Financial Measures (unaudited)
      At or for the Quarters Ended
    (Dollars in thousands, except per share amounts)   Sep 30,
    2012
      Jun 30,
    2012
      Mar 31,
    2012
      Dec 31,
    2011
      Sep 30,
    2011
    Calculation of Tangible Book Value per Share:        
    Total shareholders' equity at end of period $298,394$292,734$287,935$281,351$285,494
    Less:
    Goodwill 58,114 58,114 58,114 58,114 58,114
    Identifiable intangible assets, net   6,346     6,528     6,714     6,901     7,147  
    Total tangible shareholders' equity at end of period   $233,934     $228,092     $223,107     $216,336     $220,233  
     
    Shares outstanding at end of period   16,371     16,359     16,354     16,292     16,279  
     
    Book value per share - GAAP   $18.23     $17.89     $17.61     $17.27     $17.54  
    Tangible book value per share - Non-GAAP   $14.29     $13.94     $13.64     $13.28     $13.53  
     
    Calculation of Tangible Equity to Tangible Assets:
    Total tangible shareholders' equity at end of period   $233,934     $228,092     $223,107     $216,336     $220,233  
     
    Total assets at end of period $3,048,868$3,041,050$3,028,690$3,064,098$2,969,613
    Less:
    Goodwill 58,114 58,114 58,114 58,114 58,114
    Identifiable intangible assets, net   6,346     6,528     6,714     6,901     7,147  
    Total tangible assets at end of period   $2,984,408     $2,976,408     $2,963,862     $2,999,083     $2,904,352  
     
    Equity to assets - GAAP   9.79 %   9.63 %   9.51 %   9.18 %   9.61 %
    Tangible equity to tangible assets - Non-GAAP   7.84 %   7.66 %   7.53 %   7.21 %   7.58 %
     
    Calculation of Return on Average Tangible Assets:
    Net income   $8,900     $8,713     $8,438     $7,777     $7,582  
     
    Total average assets $3,045,203$3,017,167$3,037,270$2,983,648$2,935,146
    Less:
    Average goodwill 58,114 58,114 58,114 58,114 58,114
    Average identifiable intangible assets, net   6,434     6,619     6,805     7,025     7,257  
    Total average tangible assets   $2,980,655     $2,952,434     $2,972,351     $2,918,509     $2,869,775  
     
    Return on average assets - GAAP   1.17 %   1.16 %   1.11 %   1.04 %   1.03 %
    Return on average tangible assets - Non-GAAP   1.19 %   1.18 %   1.14 %   1.07 %   1.06 %
     
    Calculation of Return on Average Tangible Equity:
    Net income   $8,900     $8,713     $8,438     $7,777     $7,582  
     
    Total average shareholders' equity $296,150$290,854$284,801$285,707$284,244
    Less:
    Average goodwill 58,114 58,114 58,114 58,114 58,114
    Average identifiable intangible assets, net   6,434     6,619     6,805     7,025     7,257  
    Total average tangible shareholders' equity   $231,602     $226,121     $219,882     $220,568     $218,873  
     
    Return on average shareholders' equity - GAAP   12.02 %   11.98 %   11.85 %   10.89 %   10.67 %
    Return on average tangible shareholders' equity - Non-GAAP   15.37 %   15.41 %   15.35 %   14.10 %   13.86 %
     
     
    Washington Trust Bancorp, Inc. and Subsidiaries
    SUPPLEMENTAL INFORMATION - Non-GAAP Financial Measures (unaudited)
      Nine Months Ended
    (Dollars in thousands)   Sep 30,
    2012
      Sep 30,
    2011
    Calculation of return on average tangible assets:  
    Net income   $26,051     $21,947  
     
    Total average assets $3,033,257$2,908,135
    Less:
    Average goodwill 58,114 58,114
    Average identifiable intangible assets, net   6,619     7,492  
    Total average tangible assets   $2,968,524     $2,842,529  
     
    Return on average assets - GAAP   1.15 %   1.01 %
    Return on average tangible assets - Non-GAAP   1.17 %   1.03 %
     
    Calculation of return on average tangible equity:
    Net income   $26,051     $21,947  
     
    Total average shareholders' equity $290,622$278,220
    Less:
    Average goodwill 58,114 58,114
    Average identifiable intangible assets, net   6,619     7,492  
    Total average tangible shareholders' equity   $225,889     $212,614  
     
    Return on average shareholders' equity - GAAP   11.95 %   10.52 %
    Return on average tangible shareholders' equity - Non-GAAP   15.38 %   13.76 %

    Washington Trust Bancorp, Inc.
    Elizabeth B. Eckel, 401-348-1309
    Senior Vice President, Marketing
    ebeckel@washtrust.com

    Source: Washington Trust Bancorp, Inc.