• Washington Trust Bancorp, Inc.
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  • Washington Trust Announces First Quarter 2013 Results
    Company Release - 04/22/2013 07:30

    WESTERLY, R.I.--(BUSINESS WIRE)-- Washington Trust Bancorp, Inc. (NASDAQ Global Select; symbol: WASH), parent company of The Washington Trust Company, today announced first quarter 2013 net income of $7.4 million, or 45 cents per diluted share. These results compare to fourth quarter 2012 net income of $9.0 million, or 55 cents per diluted share, and first quarter 2012 net income of $8.4 million, or 51 cents per diluted share.

    Included in first quarter 2013 results was the recognition of a $2.8 million impairment charge to earnings on a trust preferred collateralized debt obligation investment security. The net after-tax impact of this was $1.9 million, or 11 cents per diluted share. Further information on this matter is provided later in this press release.

    “Washington Trust achieved solid commercial loan growth and strong mortgage production in the first quarter of 2013,” stated Joseph J. MarcAurele, Washington Trust Chairman, President, and Chief Executive Officer. “We are continuing to focus on strategies that create business line growth, generate revenues, and enhance company value.”

    Selected financial highlights for the first quarter of 2013 included:

    • Residential mortgage origination volume and mortgage banking revenues remain strong. Net gains on loan sales and commissions on loans originated for others totaled $4.2 million for the quarter, down by 7% from the record high level in fourth quarter 2012, but up by 35% over the first quarter in 2012.
    • Loans totaled $2.33 billion at March 31, 2013, up by $31.0 million from December 31, 2012, primarily due to growth in the commercial real estate loan portfolio of $25.5 million.
    • Total deposits amounted to $2.32 billion at March 31, 2013, up by $7.0 million from December 31, 2012, with growth in lower-cost deposits.

    Net Interest Income

    First quarter 2013 net interest income totaled $22.5 million, a decrease of $697 thousand from the fourth quarter of 2012. Included in fourth quarter 2012 results was a large prepayment penalty fee income item of $357 thousand. Excluding this item, net interest income declined by $340 thousand, or 1%, on a linked quarter basis.

    The net interest margin for the first quarter of 2013 was 3.32%, compared to 3.33% for the fourth quarter of 2012 and 3.27% for the first quarter of 2012. Excluding the prepayment penalty fee income item, the fourth quarter 2012 net interest margin was 3.28%. On this basis, the linked quarter increase in net interest margin reflects a reduction in the cost of funds, offset to a lesser extent by a decline of yield on loans.

    Average interest-earning assets for the first quarter of 2013 decreased by $20.5 million from the previous quarter and decreased by $9.2 million from the first quarter of 2012, reflecting payments received on mortgage-backed securities in the securities portfolio, offset, in part, by loan growth.

    An other-than-temporary-impairment charge to earnings of $2.8 million was recognized in the first quarter of 2013 on a trust preferred collateralized debt obligation (“CDO”) investment security holding. On March 22, 2013, the trustee for the CDO entity issued a notice that a liquidation of the CDO entity, Tropic CDO I, Ltd., will take place at the direction of holders of the CDO tranches that are senior to certain subordinate tranches, of which Washington Trust is a note holder. The estimated proceeds from the liquidation event are expected to be insufficient to satisfy the amount owed to the note holders of the CDO's subordinate tranches. The Corporation had recognized other-than-temporary impairment charges amounting to $2.1 million on this security in years prior to 2013; however, prior to the March 2013 announcement of the liquidation event, the expected future cash flows through the maturity of the CDO in the year 2033 were considered to be sufficient to recover the Corporation's remaining $2.8 million amortized cost. The first quarter impairment loss reduces the Corporation's carrying value in the holding to zero. The security had been classified in nonaccruing status with no interest recognition since 2009. The recognition of the first quarter impairment charge and related reduction of fair value to zero resulted in a modest reduction to equity capital of approximately $400 thousand, which is a reduction of 2 cents in book value per share.

    Noninterest Income

    Noninterest income totaled $13.2 million, compared to $17.9 million in the previous quarter and $14.2 million in the first quarter of 2012. The fourth quarter 2012 results included net realized gains on sales of securities of $924 thousand and two significant insurance commissions totaling $462 thousand. Excluding the other-than-temporary impairment charges and the fourth quarter 2012 net gains on sales of securities and the insurance commissions, noninterest income declined by 3% on a linked quarter basis. Significant changes in noninterest income included the following:

    • Mortgage banking revenues decreased by $310 thousand, or 7%, from the fourth quarter of 2012 and up by $1.1 million, or 35%, from the first quarter of 2012.
    • Wealth management revenues were $7.5 million in the first quarter of 2013. Excluding the recognition of the two significant insurance commission items from the fourth quarter, wealth management revenues were up by $146 thousand, or 2%, on a linked quarter basis and up by $289 thousand, or 4%, compared to the first quarter of 2012.
    • Merchant processing fees totaled $2.0 million for the first quarter of 2013, down by $255 thousand, or 11%, on a linked quarter basis and remained relatively flat compared to the first quarter of 2012. The decline reflects a seasonal decrease in the volume of transactions processed for customers. See discussion on the corresponding linked quarter decrease in merchant processing costs under the caption “Noninterest Expenses.”

    Noninterest Expenses

    Noninterest expenses totaled $24.2 million for the first quarter of 2013, down by $3.2 million, or 12%, from the previous quarter and up by $785 thousand, or 3%, from the first quarter of 2012. Included in noninterest expenses in the fourth quarter were debt prepayment penalties of $1.8 million and charitable contribution expense of $400 thousand. Excluding these items, noninterest expenses for the first quarter of 2013 decreased by $1.1 million, or 4%, from the fourth quarter of 2012. Significant changes in noninterest income included the following:

    • Salaries and employee benefit costs amounted to $15.4 million in the first quarter of 2013, down by $219 thousand on a linked quarter basis and up by $1.0 million, or 7%, from the first quarter of 2012. The year over year increase reflects higher staffing levels to support growth and higher levels of business development based compensation in mortgage banking and other areas.
    • Merchant processing costs totaled $1.7 million in the first quarter of 2013, a decline of $230 thousand, or 12%, on a linked quarter basis but remained relatively flat compared to the first quarter of 2012. See the discussion above regarding the corresponding linked quarter decrease in merchant processing fee income.

    Income tax expense amounted to $3.4 million for the first quarter of 2013, compared to $4.0 million for the fourth quarter of 2012 and $3.9 million for the first quarter of 2012. The effective tax rate for the first quarter of 2013 was 31.6%, compared to the overall effective income tax rate for the year 2012 of 31.1%.

    Asset Quality

    Total nonaccrual loans amounted to $25.7 million, or 1.10% of total loans, at March 31, 2013, up by $3.1 million from December 31, 2012. The increase in nonaccrual loans during the first quarter was principally due to the classification of one commercial real estate loan with a carrying value of $5.1 million into nonaccrual status. This loan was current with respect to contractual payment terms at March 31, 2013. Total past due loans amounted to $26.2 million, or 1.13% of total loans, at March 31, 2013, down by $1.9 million from December 31, 2012.

    The loan loss provision charged to earnings amounted to $600 thousand for the first quarter of 2013, level with the fourth quarter of 2012 and down by $300 thousand from the first quarter of 2012. Net charge-offs amounted to $334 thousand in the first quarter of 2013, compared to net charge-offs of $479 thousand in the fourth quarter of 2012 and $657 thousand in the first quarter of 2012.

    The allowance for loan losses was $31.1 million, or 1.34% of total loans, at March 31, 2013 compared to $30.9 million, or 1.35% of total loans, at December 31, 2012.

    Loans

    Total loans rose by $31.0 million in the first quarter of 2013, with increases in commercial loans of $24.7 million, or 2%, and residential loans of $6.7 million, or 1%. Total loans were up by $169.7 million, or 8%, from March 31, 2012, including a 12% increase in commercial loans.

    Investment Securities

    The investment securities portfolio amounted to $387.1 million at March 31, 2013, down by $28.8 million from December 31, 2012, primarily due to principal payments received on mortgage-backed securities which were not reinvested in the securities portfolio.

    Deposits and Borrowings

    Total deposits increased by $7.0 million in the first quarter of 2013, reflecting growth in lower-cost non-time categories of deposits. In the last twelve months, total deposits grew by $174.1 million, or 8%. FHLBB advances totaled $341.2 million at March 31, 2013, down by $20.0 million from December 31, 2012. This decline reflects less demand for wholesale funding due to paydowns on mortgage-backed securities, which have not been reinvested into the securities portfolio and the deposit growth during this period.

    Capital Management

    Capital levels continued to exceed the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 13.50% at March 31, 2013, compared to 13.26% at December 31, 2012. Total shareholder's equity was $301.3 million at March 31, 2013, up by $5.6 million from the balance at December 31, 2012.

    Dividends Declared

    The Board of Directors declared a quarterly dividend of 25 cents per share for the quarter ended March 31, 2013. The dividend was paid on April 12, 2013 to shareholders of record on April 1, 2013. This represented a one cent increase over the dividend paid last quarter and was the Corporation’s third dividend increase since March 2012.

    Conference Call

    Washington Trust will host a conference call on Monday, April 22, 2013 at 10:30 am Eastern Time to discuss first 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 1-866-250-8117. The international dial-in number is 1-412-317-6011 and the Canada dial-in number is 1-855-669-9657. 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 10027102. The replay will be available until 9:00 a.m. on May 7, 2013.

    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 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, 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, 2012, 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)   Mar 31,
    2013
      Dec 31,
    2012
    Assets:    
    Cash and due from banks $80,616$73,474
    Short-term investments 18,418 19,176
    Mortgage loans held for sale, at fair value; amortized cost $27,274 in 2013 and $48,370 in 2012 27,899 50,056
    Securities:
    Available for sale, at fair value; amortized cost $336,954 in 2013 and $363,408 in 2012 350,205 375,498
    Held to maturity, at cost; fair value $37,804 in 2013 and $41,420 in 2012   36,897     40,381  

    Total securities

    387,102 415,879
    Federal Home Loan Bank stock, at cost 37,730 40,418
    Loans:
    Commercial and other 1,277,147 1,252,419
    Residential real estate 724,361 717,681
    Consumer   323,537     323,903  
    Total loans 2,325,045 2,294,003
    Less allowance for loan losses   31,139     30,873  
    Net loans 2,293,906 2,263,130
    Premises and equipment, net 26,812 27,232
    Investment in bank-owned life insurance 55,290 54,823
    Goodwill 58,114 58,114
    Identifiable intangible assets, net 6,000 6,173
    Other assets   59,961     63,409  
    Total assets   $3,051,848     $3,071,884  
    Liabilities:
    Deposits:
    Demand deposits $375,156$379,889
    NOW accounts 294,136 291,174
    Money market accounts 503,414 496,402
    Savings accounts 284,983 274,934
    Time deposits   861,952     870,232  
    Total deposits 2,319,641 2,312,631
    Federal Home Loan Bank advances 341,218 361,172
    Junior subordinated debentures 32,991 32,991
    Other borrowings 209 1,212
    Other liabilities   56,498     68,226  
    Total liabilities   2,750,557     2,776,232  
    Shareholders’ Equity:

    Common stock of $.0625 par value; authorized 30,000,000 shares; issued and outstanding
    16,425,442 shares in 2013 and 16,379,771 shares in 2012

    1,027 1,024
    Paid-in capital 92,662 91,453
    Retained earnings 216,920 213,674
    Accumulated other comprehensive loss   (9,318 )   (10,499 )
    Total shareholders’ equity   301,291     295,652  
    Total liabilities and shareholders’ equity   $3,051,848     $3,071,884  
    Washington Trust Bancorp, Inc. and Subsidiaries
    CONSOLIDATED STATEMENTS OF INCOME (unaudited)
     
    (Dollars and shares in thousands, except per share amounts) Three Months
    Periods ended March 31, 2013   2012
    Interest income:  
    Interest and fees on loans $25,223$25,363
    Interest on securities: Taxable 2,845 4,377
    Nontaxable 659 693
    Dividends on corporate stock and Federal Home Loan Bank stock 38 77
    Other interest income 28     20  
    Total interest income 28,793     30,530  
    Interest expense:
    Deposits 3,194 3,434
    Federal Home Loan Bank advances 2,737 4,085
    Junior subordinated debentures 390 392
    Other interest expense 5     234  
    Total interest expense 6,326     8,145  
    Net interest income 22,467 22,385
    Provision for loan losses 600     900  
    Net interest income after provision for loan losses 21,867     21,485  
    Noninterest income:
    Wealth management services:
    Trust and investment advisory fees 6,066 5,778
    Mutual fund fees 1,022 1,025
    Financial planning, commissions and other service fees 386     382  
    Wealth management services 7,474 7,185
    Service charges on deposit accounts 791 759
    Merchant processing fees 1,977 1,988
    Card interchange fees 599 543
    Income from bank-owned life insurance 467 486
    Net gains on loan sales and commissions on loans originated for others 4,166 3,097
    Net gains on interest rate swap contracts 19 28
    Equity in earnings (losses) of unconsolidated subsidiaries 39 (37 )
    Other income 406     392  
    Noninterest income, excluding other-than-temporary impairment losses 15,938 14,441
    Total other-than-temporary impairment losses on securities (613 ) (85 )
    Portion of loss recognized in other comprehensive income (before tax) (2,159 )   (124 )
    Net impairment losses recognized in earnings (2,772 )   (209 )
    Total noninterest income 13,166     14,232  
    Noninterest expense:
    Salaries and employee benefits 15,442 14,460
    Net occupancy 1,514 1,526
    Equipment 1,244 1,107
    Merchant processing costs 1,673 1,663
    Outsourced services 841 920
    FDIC deposit insurance costs 431 458
    Legal, audit and professional fees 608 482
    Advertising and promotion 355 372
    Amortization of intangibles 173 187
    Foreclosed property costs 47 298
    Other expenses 1,856     1,926  
    Total noninterest expense 24,184     23,399  
    Income before income taxes 10,849 12,318
    Income tax expense 3,428     3,880  
    Net income $7,421     $8,438  
     
    Weighted average common shares outstanding - basic 16,401 16,330
    Weighted average common shares outstanding - diluted 16,449 16,370
    Per share information: Basic earnings per common share $0.45$0.51
    Diluted earnings per common share $0.45$0.51
    Cash dividends declared per share $0.25$0.23
    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)   Mar 31,
    2013
    Dec 31,
    2012
    Sep 30,
    2012
    Jun 30,
    2012
    Mar 31,
    2012
    Financial Data:
    Total assets $3,051,848$3,071,884$3,048,868$3,041,050$3,028,690
    Total loans 2,325,045 2,294,003 2,256,697 2,213,842 2,155,359
    Total securities 387,102 415,879 483,858 516,193 558,284
    Total deposits 2,319,641 2,312,631 2,234,659 2,130,453 2,145,562
    Total shareholders' equity 301,291 295,652 298,394 292,734 287,935
    Net interest income 22,467 23,164 22,736 22,411 22,385
    Provision for loan losses 600 600 600 600 900
    Noninterest income, excluding OTTI losses 15,938 17,899 16,921 16,174 14,441
    Net OTTI losses recognized in earnings (2,772 ) (12 ) (209 )
    Noninterest expenses 24,184 27,421 26,290 25,228 23,399
    Income tax expense 3,428 4,007 3,867 4,044 3,880
    Net income 7,421 9,023 8,900 8,713 8,438
     
    Share Data:
    Basic earnings per common share $0.45$0.55$0.54$0.53$0.51
    Diluted earnings per common share $0.45$0.55$0.54$0.53$0.51
    Dividends declared per share $0.25$0.24$0.24$0.23$0.23
    Book value per share $18.34$18.05$18.23$17.89$17.61
    Tangible book value per share - Non-GAAP (1) $14.44$14.13$14.29$13.94$13.64
    Market value per share $27.38$26.31$26.27$24.38$24.14
    Shares outstanding at end of period 16,425 16,380 16,371 16,359 16,354
    Weighted average common shares outstanding - basic 16,401 16,376 16,366 16,358 16,330
    Weighted average common shares outstanding - diluted 16,449 16,425 16,414 16,392 16,370
     
    Key Ratios:
    Return on average assets 0.98 % 1.19 % 1.17 % 1.16 % 1.11 %
    Return on average tangible assets - Non-GAAP (1) 1.01 % 1.21 % 1.19 % 1.18 % 1.14 %
    Return on average equity 9.91 % 12.01 % 12.02 % 11.98 % 11.85 %
    Return on average tangible equity - Non-GAAP (1) 12.62 % 15.29 % 15.37 % 15.41 % 15.35 %
     
    Capital Ratios:
    Tier 1 risk-based capital 12.25% (i) 12.01 % 11.93 % 11.90 % 11.96 %
    Total risk-based capital 13.50% (i) 13.26 % 13.18 % 13.15 % 13.22 %
    Tier 1 leverage ratio 9.53% (i) 9.30 % 9.11 % 9.00 % 8.75 %
    Equity to assets 9.87 % 9.62 % 9.79 % 9.63 % 9.51 %
    Tangible equity to tangible assets - Non-GAAP (1) 7.94 % 7.69 % 7.84 % 7.66 % 7.53 %
    (i) - estimated
     
    Wealth Management Assets under Administration:
    Balance at beginning of period $4,199,640$4,242,520$4,079,913$4,196,447$3,900,061
    Net investment (depreciation) appreciation & income 213,979 (5,887 ) 155,427 (131,896 ) 298,155
    Net client cash flows   6,457   (36,993 ) 7,180   15,362   (1,769 )
    Balance at end of period   $4,420,076   $4,199,640   $4,242,520   $4,079,913   $4,196,447  
     

    (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  
      Mar 31,
    2013
      Dec 31,
    2012
      Sep 30,
    2012
      Jun 30,
    2012
      Mar 31,
    2012
    Average Yield / Rate (taxable equivalent basis):        
    Assets:
    Commercial mortgages and other commercial loans 4.70 % 4.90 % 4.94 % 5.03 % 5.13 %
    Residential real estate loans, including mortgage loans held for sale 4.26 % 4.23 % 4.32 % 4.40 % 4.51 %
    Consumer loans 3.84 % 3.86 % 3.89 % 3.85 % 3.89 %
    Total loans 4.44 % 4.53 % 4.59 % 4.65 % 4.74 %
    Cash, federal funds sold and other short-term investments 0.21 % 0.26 % 0.26 % 0.23 % 0.15 %
    FHLBB stock 0.39 % 0.48 % 0.51 % 0.54 % 0.50 %
    Taxable debt securities 3.56 % 3.49 % 3.50 % 3.63 % 3.62 %
    Nontaxable debt securities 5.98 % 5.89 % 5.83 % 5.93 % 5.92 %
    Corporate stocks % % % 7.58 % 7.16 %
    Total securities 3.98 % 3.86 % 3.83 % 3.95 % 3.93 %
    Total interest-earning assets 4.24 % 4.31 % 4.34 % 4.41 % 4.43 %
    Liabilities:
    NOW accounts 0.06 % 0.07 % 0.06 % 0.06 % 0.08 %
    Money market accounts 0.29 % 0.28 % 0.26 % 0.23 % 0.22 %
    Savings accounts 0.07 % 0.09 % 0.11 % 0.11 % 0.11 %
    Time deposits 1.28 % 1.32 % 1.33 % 1.35 % 1.41 %
    FHLBB advances 3.21 % 3.27 % 3.18 % 3.25 % 3.14 %
    Junior subordinated debentures 4.79 % 4.75 % 4.74 % 4.77 % 4.78 %
    Other 1.77 % 5.51 % 6.33 % 2.07 % 4.98 %
    Total interest-bearing liabilities 1.11 % 1.19 % 1.27 % 1.33 % 1.38 %
     
    Interest rate spread (taxable equivalent basis) 3.13 % 3.12 % 3.07 % 3.08 % 3.05 %
    Net interest margin (taxable equivalent basis) 3.32 % 3.33 % 3.28 % 3.30 % 3.27 %
    At March 31, 2013
    Amortized   Unrealized Unrealized   Fair
    (Dollars in thousands)   Cost (1)   Gains   Losses   Value
    Securities Available for Sale:
    Obligations of U.S. government-sponsored enterprises $29,465$1,855 $— $31,320

    Mortgage-backed securities issued by U.S.
    government agencies and U.S. government-sponsored enterprises

    193,921 12,873 206,794
    States and political subdivisions 67,502 4,081 71,583
    Trust preferred securities:
    Individual name issuers 30,686 (5,112 ) 25,574
    Collateralized debt obligations 1,264 (860 ) 404
    Corporate bonds   14,116     414         14,530
    Total securities available for sale   336,954     19,223     (5,972 )   350,205
    Held to Maturity:

    Mortgage-backed securities issued by U.S. government agencies and U.S.
    government-sponsored enterprises

      36,897     907         37,804
    Total securities held to maturity   36,897     907         37,804
    Total securities   $373,851     $20,130     ($5,972 )   $388,009
     

    (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) Mar 31,
    2013
    Dec 31,
    2012
    Sep 30,
    2012
    Jun 30,
    2012
    Mar 31,
    2012
    Loans:
    Commercial: Mortgages $729,968$710,813$693,221$664,410$642,012
    Construction & development 34,179 27,842 25,132 17,365 11,130
      Other 513,000   513,764   500,974   510,220   486,258
    Total commercial 1,277,147 1,252,419 1,219,327 1,191,995 1,139,400
    Residential real estate: Mortgages 702,418 692,798 692,659 680,772 675,249
      Homeowner construction 21,943   24,883   22,753   21,247   21,708
    Total residential real estate 724,361 717,681 715,412 702,019 696,957
    Consumer: Home equity lines 226,640 226,861 227,549 224,550 223,311
    Home equity loans 40,134 39,329 39,452 40,690 40,793
      Other 56,763   57,713   54,957   54,588   54,898
      Total consumer 323,537   323,903   321,958   319,828   319,002
      Total loans $2,325,045   $2,294,003   $2,256,697   $2,213,842   $2,155,359
     
    At March 31, 2013
    (Dollars in thousands) Balance % of Total
    Commercial Real Estate Loans by Property Location:
    Rhode Island, Connecticut, Massachusetts$728,613 95.4 %
    New York 26,295 3.4 %
    New Hampshire 9,239   1.2 %
    Total commercial real estate loans (1) $764,147   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 March 31, 2013
    (Dollars in thousands) Balance % of Total
    Residential Mortgages by Property Location:
    Rhode Island, Connecticut, Massachusetts$704,162 97.1 %
    New York, Virginia, New Jersey, Maryland, Pennsylvania, District of Columbia 9,519 1.3 %
    New Hampshire 4,429 0.6 %
    Ohio 2,845 0.4 %
    Washington, Oregon 1,373 0.2 %
    Georgia 1,097 0.2 %
    New Mexico 474 0.1 %
    Other 462   0.1 %
    Total residential mortgages $724,361   100.0 %
     
    Period End Balances At
    (Dollars in thousands)   Mar 31,
    2013
    Dec 31,
    2012
    Sep 30,
    2012
    Jun 30,
    2012
    Mar 31,
    2012
    Deposits:
    Demand deposits $375,156$379,889$352,330$321,488$333,833
    NOW accounts 294,136 291,174 267,495 263,124 258,986
    Money market accounts 503,414 496,402 459,671 388,686 400,396
    Savings accounts 284,983 274,934 268,191 264,772 257,495
    Time deposits   861,952   870,232   886,972   892,383   894,852
    Total deposits   $2,319,641   $2,312,631   $2,234,659   $2,130,453   $2,145,562
     

    Out-of-market brokered certificates of deposits included in time
    deposits

    $103,045$102,636$98,603$102,661$95,989

    In-market deposits, excluding out-of-market brokered certificates
    of deposit

    $2,216,596$2,209,995$2,136,056$2,027,792$2,049,573
    Washington Trust Bancorp, Inc. and Subsidiaries
    SELECTED FINANCIAL HIGHLIGHTS (unaudited)
     
    Period End Balances At
    (Dollars in thousands) Mar 31,
    2013
      Dec 31,
    2012
      Sep 30,
    2012
      Jun 30,
    2012
      Mar 31,
    2012
    Asset Quality Data:        
    Nonperforming Assets:
    Commercial mortgages $14,953$10,681$5,956$2,597$5,099
    Commercial construction and development
    Other commercial 3,122 4,412 3,201 3,405 4,200
    Residential real estate mortgages 6,699 6,158 7,127 8,659 9,031
    Consumer 901     1,292     1,463     1,081     1,069  
    Total nonaccrual loans $25,675$22,543$17,747$15,742$19,399
    Nonaccrual investment securities 404 843 929 767 750
    Property acquired through foreclosure or repossession 2,625     2,047     2,447     2,332     3,478  
    Total nonperforming assets $28,704     $25,433     $21,123     $18,841     $23,627  
     
    Total past due loans to total loans 1.13 % 1.22 % 1.05 % 0.92 % 0.98 %
    Nonperforming assets to total assets 0.94 % 0.83 % 0.69 % 0.62 % 0.78 %
    Nonaccrual loans to total loans 1.10 % 0.98 % 0.79 % 0.71 % 0.90 %
    Allowance for loan losses to nonaccrual loans 121.28 % 136.95 % 173.28 % 193.42 % 154.88 %
    Allowance for loan losses to total loans 1.34 % 1.35 % 1.36 % 1.38 % 1.39 %

     

    Troubled Debt Restructured Loans:
    Accruing troubled debt restructured loans:
    Commercial mortgages $9,600$9,569$9,131$1,251$1,059
    Other commercial 6,554 6,577 6,880 6,916 7,329
    Residential real estate mortgages 1,599 1,123 386 570 935
    Consumer 244     154     158     159     174  
    Accruing troubled debt restructured loans 17,997     17,423     16,555     8,896     9,497  
    Nonaccrual troubled debt restructured loans:
    Commercial mortgages 348
    Other commercial 721 2,063 2,306 2,317 2,361
    Residential real estate mortgages 155 688 1,697 2,028 1,904
    Consumer 42     44     46     47     35  
    Nonaccrual troubled debt restructured loans 918     2,795     4,049     4,392     4,648  
    Total troubled debt restructured loans $18,915     $20,218     $20,604     $13,288     $14,145  
    Washington Trust Bancorp, Inc. and Subsidiaries
    SELECTED FINANCIAL HIGHLIGHTS (unaudited)
     
      Period End Balances At
    (Dollars in thousands)   Mar 31,
    2013
      Dec 31,
    2012
      Sep 30,
    2012
      Jun 30,
    2012
      Mar 31,
    2012
    Past Due Loans:        
    Loans 30-59 Days Past Due:
    Commercial mortgages $— $373$3,978$411$104
    Other commercial loans 689 260 2,719 849 1,031
    Residential real estate mortgages 3,891 4,840 2,368 4,969 4,468
    Consumer loans   1,534     1,134     1,876     2,660     2,404  
    Loans 30-59 days past due   $6,114     $6,607     $10,941     $8,889     $8,007  
     
    Loans 60-89 Days Past Due:
    Commercial mortgages $193$408$874$233 $—
    Other commercial loans 341 296 1,169 434 33
    Residential real estate mortgages 1,451 1,951 821 1,600 488
    Consumer loans   461     385     1,213     677     219  
    Loans 60-89 days past due   $2,446     $3,040     $4,077     $2,944     $740  
     
    Loans 90 Days or more Past Due:
    Commercial mortgages $9,852$10,300$2,495$2,339$4,676
    Other commercial loans 2,961 3,647 1,366 1,714 2,521
    Residential real estate mortgages 4,327 3,658 3,924 4,039 4,843
    Consumer loans   484     844     811     362     326  
    Loans 90 days or more past due   $17,624     $18,449     $8,596     $8,454     $12,366  
     
    Total Past Due Loans:
    Commercial mortgages $10,045$11,081$7,347$2,983$4,780
    Other commercial loans 3,991 4,203 5,254 2,997 3,585
    Residential real estate mortgages 9,669 10,449 7,113 10,608 9,799
    Consumer loans   2,479     2,363     3,900     3,699     2,949  
    Total past due loans   $26,184     $28,096     $23,614     $20,287     $21,113  
     
    Nonaccrual loans included in past due loans $19,000$20,979$14,471$12,719$14,747
     
    For the Quarters Ended  
    (Dollars in thousands)   Mar 31,
    2013
      Dec 31,
    2012
      Sep 30,
    2012
      Jun 30,
    2012
      Mar 31,
    2012
    Allowance for Loan Losses:
    Balance at beginning of period $30,873$30,752$30,448$30,045$29,802
    Provision charged to earnings 600 600 600 600 900
    Charge-offs (374 ) (534 ) (424 ) (696 ) (681 )
    Recoveries   40     55     128     499     24  
    Balance at end of period   $31,139     $30,873     $30,752     $30,448     $30,045  
     
    Net Loan Charge-Offs (Recoveries):
    Commercial mortgages $108$212$212 ($388 ) $7
    Other commercial 71 225 (22 ) 549 324
    Residential real estate mortgages 9 39 41 (47 ) 224
    Consumer   146     3     65     83     102  
    Total   $334     $479     $296     $197     $657  

    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   2013   2012
     

    Average
    Balance

    Interest

    Yield/
    Rate

     

    Average
    Balance

    Interest

    Yield/
    Rate

    (Dollars in thousands)  
    Assets:  
    Commercial mortgages and other commercial loans $1,243,716$14,421 4.70 % $1,121,684$14,298 5.13 %

    Residential real estate loans, including mortgage loans
    held for sale

    755,528 7,937 4.26 % 720,706 8,075 4.51 %
    Consumer loans   322,668   3,053   3.84 %   319,948   3,097   3.89 %
    Total loans 2,321,912 25,411 4.44 % 2,162,338 25,470 4.74 %
    Cash, federal funds sold and short-term investments 53,734 28 0.21 % 52,313 20 0.15 %
    FHLBB stock 39,790 38 0.39 % 41,606 52 0.50 %
     
    Taxable debt securities 323,730 2,845 3.56 % 486,448 4,377 3.62 %
    Nontaxable debt securities 68,064 1,004 5.98 % 71,908 1,059 5.92 %
    Corporate stocks       %   1,854   33   7.16 %
    Total securities   391,794   3,849   3.98 %   560,210   5,469   3.93 %
    Total interest-earning assets 2,807,230 29,326 4.24 % 2,816,467 31,011 4.43 %
    Noninterest-earning assets   210,338         220,803      
    Total assets   $3,017,568         $3,037,270      
    Liabilities and Shareholders' Equity:
    NOW accounts $283,004$45 0.06 % $246,251$46 0.08 %
    Money market accounts 495,453 351 0.29 % 412,053 225 0.22 %
    Savings accounts 279,536 46 0.07 % 248,853 70 0.11 %
    Time deposits 869,576 2,752 1.28 % 885,344 3,093 1.41 %
    FHLBB advances 345,270 2,737 3.21 % 523,766 4,085 3.14 %
    Junior subordinated debentures 32,991 390 4.79 % 32,991 392 4.78 %
    Other   1,146   5   1.77 %   18,903   234   4.98 %
    Total interest-bearing liabilities 2,306,976 6,326 1.11 % 2,368,161 8,145 1.38 %
    Demand deposits 360,851 331,224
    Other liabilities 50,305 53,084
    Shareholders' equity   299,436         284,801      
    Total liabilities and shareholders' equity   $3,017,568         $3,037,270      
    Net interest income (FTE)     $23,000         $22,866    
    Interest rate spread 3.13 % 3.05 %
    Net interest margin       3.32 %       3.27 %
     

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

     
    (Dollars in thousands)  
    Three Months Ended 2013   2012
    Commercial loans $188$107
    Nontaxable debt securities 345 366
    Corporate stocks     8  
    Total $533     $481  
    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) Mar 31,
    2013
    Dec 31,
    2012
    Sep 30,
    2012
    Jun 30,
    2012
    Mar 31,
    2012
    Calculation of Tangible Book Value per Share:
    Total shareholders' equity at end of period $301,291$295,652$298,394$292,734$287,935
    Less:
    Goodwill 58,114 58,114 58,114 58,114 58,114
    Identifiable intangible assets, net 6,000   6,173   6,346   6,528   6,714  
    Total tangible shareholders' equity at end of period $237,177   $231,365   $233,934   $228,092   $223,107  
     
    Shares outstanding at end of period 16,425   16,380   16,371   16,359   16,354  
     
    Book value per share - GAAP $18.34   $18.05   $18.23   $17.89   $17.61  
    Tangible book value per share - Non-GAAP $14.44   $14.13   $14.29   $13.94   $13.64  
     
    Calculation of Tangible Equity to Tangible Assets:
    Total tangible shareholders' equity at end of period $237,177   $231,365   $233,934   $228,092   $223,107  
     
    Total assets at end of period $3,051,848$3,071,884$3,048,868$3,041,050$3,028,690
    Less:
    Goodwill 58,114 58,114 58,114 58,114 58,114
    Identifiable intangible assets, net 6,000   6,173   6,346   6,528   6,714  
    Total tangible assets at end of period $2,987,734   $3,007,597   $2,984,408   $2,976,408   $2,963,862  
     
    Equity to assets - GAAP 9.87 % 9.62 % 9.79 % 9.63 % 9.51 %
    Tangible equity to tangible assets - Non-GAAP 7.94 % 7.69 % 7.84 % 7.66 % 7.53 %
     
    Calculation of Return on Average Tangible Assets:
    Net income $7,421   $9,023   $8,900   $8,713   $8,438  
     
    Total average assets $3,017,568$3,044,764$3,045,203$3,017,167$3,037,270
    Less:
    Average goodwill 58,114 58,114 58,114 58,114 58,114
    Average identifiable intangible assets, net 6,085   6,257   6,434   6,619   6,805  
    Total average tangible assets $2,953,369   $2,980,393   $2,980,655   $2,952,434   $2,972,351  
     
    Return on average assets - GAAP 0.98 % 1.19 % 1.17 % 1.16 % 1.11 %
    Return on average tangible assets - Non-GAAP 1.01 % 1.21 % 1.19 % 1.18 % 1.14 %
     
    Calculation of Return on Average Tangible Equity:
    Net income $7,421   $9,023   $8,900   $8,713   $8,438  
     
    Total average shareholders' equity $299,436$300,430$296,150$290,854$284,801
    Less:
    Average goodwill 58,114 58,114 58,114 58,114 58,114
    Average identifiable intangible assets, net 6,085   6,257   6,434   6,619   6,805  
    Total average tangible shareholders' equity $235,237   $236,059   $231,602   $226,121   $219,882  
     
    Return on average shareholders' equity - GAAP 9.91 % 12.01 % 12.02 % 11.98 % 11.85 %
    Return on average tangible shareholders' equity - Non-GAAP 12.62 % 15.29 % 15.37 % 15.41 % 15.35 %

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

    Source: Washington Trust Bancorp