• Washington Trust Bancorp, Inc.
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  • Washington Trust Announces Second Quarter 2013 Earnings
    Company Release - 07/22/2013 16:03

    WESTERLY, R.I.--(BUSINESS WIRE)-- Washington Trust Bancorp, Inc. (NASDAQ Global Select; symbol: WASH), parent company of The Washington Trust Company, today announced second quarter 2013 net income of $9.0 million, or 54 cents per diluted share. These results compare to first quarter of 2013 net income of $7.4 million, or 45 cents per diluted share, and second quarter of 2012 net income of $8.7 million, or 53 cents per diluted share.

    “Washington Trust posted another quarter of solid operating results, with a continuation of strong commercial loan growth and healthy mortgage banking activity,” stated Joseph J. MarcAurele, Chairman, President and CEO. “We continue to attract and build customer relationships across all business lines, reinforcing our position as Rhode Island’s Bank of Choice.”

    Highlights for the quarter or at June 30th include:

    • Total loans were $2.38 billion at June 30, 2013, up by $59.9 million, or 3%, in the second quarter of 2013, led by growth of $33.7 million, or 4%, in the commercial real estate portfolio.
    • Deposits totaled $2.30 billion at June 30, 2013, down slightly from March 31, 2013, reflecting seasonal outflow. Total deposits were up by $174.2 million, or 8%, in the last twelve months.
    • The returns on average equity and average assets for the second quarter of 2013 were 11.84% and 1.18%, respectively. Comparable amounts for the first quarter of 2013 were 9.91% and 0.98%, respectively.

    2013 results also included the following transactions:

    • During the second quarter of 2013, certain junior subordinated debentures were redeemed and as a result, unamortized debt issuance costs of $244 thousand were expensed and classified as interest expense in the quarter. The after-tax impact of this was 1 cent per diluted share.
    • Included in salaries and employee benefits expense in the second quarter of 2013 was $270 thousand for severance related matters. The after-tax impact of this was 1 cent per diluted share.
    • In the first quarter of 2013, the Corporation had recognized an other-than-temporary impairment ("OTTI") charge to earnings on a trust preferred collateralized debt obligation investment security of $2.8 million (or 11 cents per diluted share). There were no such charges in the second quarter of 2013.

    Net Interest Income

    Net interest income totaled $22.4 million for the second quarter of 2013, essentially flat compared to the first quarter of 2013. The net interest margin for the second quarter of 2013 was 3.26%, compared to 3.32% for the first quarter of 2013.

    In connection with the June 2013 redemption of $10.3 million of junior subordinated debentures, unamortized debt issuance costs of $244 thousand were expensed and classified as interest expense in the quarter. The impact of this item was an increase of 4 basis points on the cost of funds and a reduction of 4 basis points on the net interest margin for the second quarter 2013. The rate on this debt was approximately 5.69% at the time of redemption, which included the cost of a related interest rate swap that matured upon the redemption event.

    Average interest-earning assets for the second quarter of 2013 increased by $14.4 million, while the yield on interest-earning assets declined by 7 basis points from the previous quarter. Average loan balances grew by $57 million, which were partially offset by payments received on mortgage-backed securities in the investment security portfolio.

    Noninterest Income

    Noninterest income totaled $16.4 million for the second quarter of 2013, compared to $13.2 million for the previous quarter. In the first quarter 2013, OTTI charges of $2.8 million were recognized. Excluding this item, noninterest income increased by $456 thousand, or 3%, on a linked quarter basis. Other significant linked quarter changes included the following:

    • Wealth management revenues were up by $438 thousand, or 6%, including a $344 thousand increase in tax preparation fees, which are typically concentrated in the second quarter.
    • Mortgage banking revenues decreased by $681 thousand, or 16%, reflecting a lower level of mortgage loan refinancing activity due to rising market interest rates. In the second quarter of 2013, residential loans sold to the secondary market amounted to $132 million, compared to $153 million in the previous quarter.
    • Merchant processing fee revenue rose by $636 thousand, or 32%, on a linked quarter basis, reflecting an increase in the volume of transactions processed for customers. See discussion regarding corresponding increase in merchant processing costs described below.

    Noninterest Expenses

    Noninterest expenses totaled $25.0 million for the second quarter of 2013, compared to $24.2 million for the previous quarter. Included in salaries and employee benefits expense in the second quarter of 2013 was $270 thousand for severance related matters. Excluding this item, noninterest expenses increased by $551 thousand, or 2%, on a linked quarter basis, largely due to a $538 thousand, or 32%, increase in merchant processing costs. See the discussion above regarding the corresponding increase in merchant processing fee income.

    Asset Quality

    Total nonaccrual loans decreased by $5.6 million to $20.0 million, or 0.84% of total loans, at June 30, 2013, from $25.7 million, or 1.10%, at March 31, 2013, largely reflecting charge-offs and payoffs on commercial loans. Total past due loans amounted to $26.1 million, or 1.09% of total loans, at June 30, 2013, compared to $26.2 million, or 1.13%, at March 31, 2013.

    The loan loss provision charged to earnings amounted to $700 thousand for the second quarter of 2013, compared to $600 thousand for the first quarter of 2013. Net charge-offs amounted to $4.0 million in the second quarter of 2013 and was comprised primarily of a $4.0 million charge-off on one commercial mortgage loan. The remaining carrying value of this loan was $1.0 million at June 30, 2013. Net charge-offs totaled $334 thousand in the first quarter of 2013.

    The allowance for loan losses was $27.9 million, or 1.17% of total loans, at June 30, 2013 compared to $31.1 million, or 1.34% of total loans, at March 31, 2013. The decline in the ratio of the allowance for loan losses to total loans reflects charge-offs and a decrease in specific reserves on impaired loans.

    Loans

    Total loans rose by $59.9 million in the second quarter of 2013, with increases in commercial loans of $33.0 million, or 3%, and residential loans of $24.5 million, or 3%. Total loans were up by $91.0 million, or 4%, from December 31, 2012 and by $171.1 million, or 8%, from June 30, 2012.

    Investment Securities

    The investment securities portfolio declined by $36.6 million from March 31, 2013 and by $65.4 million from December 31, 2012, largely due to principal payments received on mortgage-backed securities which were not reinvested in the securities portfolio.

    Deposits and Borrowings

    Total deposits decreased by $15.0 million from March 31, 2013 and by $8.0 million from December 31, 2012. In the last twelve months, total deposits grew by $174.2 million, or 8%, including an increase of $75.3 million, or 13%, in demand deposits and NOW account balances.

    FHLBB advances increased by $32.1 million from March 31, 2013 and by $12.2 million from December 31, 2012. Junior subordinated debentures declined by $10.3 million from both March 31, 2013 and December 31, 2012, reflecting the June 2013 redemption of the junior subordinated debentures issued to and held by Washington Preferred Capital Trust.

    Capital Management

    Capital levels continued to exceed the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.93% at June 30, 2013, compared to 13.26% at December 31, 2012. Total shareholder's equity was $303.4 million at June 30, 2013, up by $7.7 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 June 30, 2013. The dividend was paid on July 12, 2013 to shareholders of record on July 1, 2013.

    Conference Call

    Washington Trust will host a conference call to discuss second quarter results on Tuesday, July 23, 2013 at 8:30 am (Eastern Time). Individuals may dial in to the call at 1-888-317-6016. An audio replay of the call will be available by dialing 1-877-344-7529 and entering Conference Number 10030244; the audio replay will be available until 9:00 a.m. on August 7, 2013. A webcast of the call will be posted in the Investor Relations section of Washington Trust's web site, www.washtrust.com, shortly after the conclusion of the call and will be available through September 30, 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)         Jun 30,
    2013
        Dec 31,
    2012
    Assets:            
    Cash and due from banks $ 79,903 $ 73,474
    Short-term investments 3,764 19,176
    Mortgage loans held for sale, at fair value; amortized cost $29,163 in 2013 and $48,370 in 2012 28,889 50,056
    Securities:
    Available for sale, at fair value; amortized cost $309,421 in 2013 and $363,408 in 2012 316,714 375,498
    Held to maturity, at cost; fair value $33,762 in 2013 and $41,420 in 2012           33,803         40,381  
    Total securities 350,517 415,879
    Federal Home Loan Bank stock, at cost 37,730 40,418
    Loans:
    Commercial 1,310,114 1,252,419
    Residential real estate 748,871 717,681
    Consumer           325,995         323,903  
    Total loans 2,384,980 2,294,003
    Less allowance for loan losses           27,884         30,873  
    Net loans 2,357,096 2,263,130
    Premises and equipment, net 26,392 27,232
    Investment in bank-owned life insurance 55,750 54,823
    Goodwill 58,114 58,114
    Identifiable intangible assets, net 5,827 6,173
    Other assets           57,325         63,409  
    Total assets         $ 3,061,307       $ 3,071,884  
    Liabilities:
    Deposits:
    Demand deposits $ 358,797 $ 379,889
    NOW accounts 301,096 291,174
    Money market accounts 540,012 496,402
    Savings accounts 293,405 274,934
    Time deposits           811,299         870,232  
    Total deposits 2,304,609 2,312,631
    Federal Home Loan Bank advances 373,341 361,172
    Junior subordinated debentures 22,681 32,991
    Other borrowings 199 1,212
    Other liabilities           57,107         68,226  
    Total liabilities           2,757,937         2,776,232  
    Shareholders’ Equity:
    Common stock of $.0625 par value; authorized 30,000,000 shares; issued and outstanding 16,487,305 shares in 2013 and 16,379,771 shares in 2012 1,030 1,024
    Paid-in capital 93,274 91,453
    Retained earnings 221,761 213,674
    Accumulated other comprehensive loss           (12,695 )       (10,499 )
    Total shareholders’ equity           303,370         295,652  
    Total liabilities and shareholders’ equity         $ 3,061,307       $ 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         Six Months  
    Periods Ended June 30,       2013   2012       2013   2012
    Interest income:          
    Interest and fees on loans $ 25,513 $ 25,344 $ 50,736 $ 50,707
    Interest on securities: Taxable 2,576 4,069 5,421 8,446
    Nontaxable 647 682 1,306 1,375
    Dividends on corporate stock and Federal Home Loan Bank stock 39 78 77 155
    Other interest income         24       17           52       37  
    Total interest income         28,799       30,190           57,592       60,720  
    Interest expense:
    Deposits 3,096 3,385 6,290 6,819
    Federal Home Loan Bank advances 2,679 3,998 5,416 8,083
    Junior subordinated debentures 612 391 1,002 783
    Other interest expense         3       5           8       239  
    Total interest expense         6,390       7,779           12,716       15,924  
    Net interest income 22,409 22,411 44,876 44,796
    Provision for loan losses         700       600           1,300       1,500  
    Net interest income after provision for loan losses         21,709       21,811           43,576       43,296  
    Noninterest income:
    Wealth management services:
    Trust and investment advisory fees 6,230 5,819 12,296 11,597
    Mutual fund fees 1,077 1,002 2,099 2,027
    Financial planning, commissions and other service fees         605       652           991       1,034  
    Wealth management services 7,912 7,473 15,386 14,658
    Service charges on deposit accounts 790 764 1,581 1,523
    Merchant processing fees 2,613 2,732 4,590 4,720
    Card interchange fees 683 626 1,282 1,169
    Income from bank-owned life insurance 461 477 928 963
    Net gains on loan sales and commissions on loans originated for others 3,485 3,015 7,651 6,112
    Net realized gains on securities 299 299
    Net gains (losses) on interest rate swap contracts 152 (4 ) 171 24
    Equity in earnings (losses) of unconsolidated subsidiaries (57 ) 124 (18 ) 87
    Other income         355       668           761       1,060  
    Noninterest income, excluding other-than-temporary impairment losses 16,394 16,174 32,332 30,615
    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         16,394       16,174           29,560       30,406  
    Noninterest expense:
    Salaries and employee benefits 15,542 14,451 30,984 28,911
    Net occupancy 1,364 1,527 2,878 3,053
    Equipment 1,192 1,143 2,436 2,250
    Merchant processing costs 2,211 2,320 3,884 3,983
    Outsourced services 871 895 1,712 1,815
    FDIC deposit insurance costs 451 426 882 884
    Legal, audit and professional fees 554 519 1,162 1,001
    Advertising and promotion 476 478 831 850
    Amortization of intangibles 173 186 346 373
    Foreclosed property costs 137 170 184 468
    Debt prepayment penalties 961 961
    Other expenses         2,034       2,152           3,890       4,078  
    Total noninterest expense         25,005       25,228           49,189       48,627  
    Income before income taxes 13,098 12,757 23,947 25,075
    Income tax expense         4,115       4,044           7,543       7,924  
    Net income       $ 8,983     $ 8,713         $ 16,404     $ 17,151  
     
    Weighted average common shares outstanding - basic 16,454 16,358 16,428 16,344
    Weighted average common shares outstanding - diluted 16,581 16,392 16,558 16,381
    Per share information: Basic earnings per common share $ 0.54 $ 0.53 $ 0.99 $ 1.04
    Diluted earnings per common share $ 0.54 $ 0.53 $ 0.99 $ 1.04
    Cash dividends declared per share $ 0.25 $ 0.23 $ 0.50 $ 0.46
     
     
    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)       Jun 30,
    2013
      Mar 31,
    2013
      Dec 31,
    2012
      Sep 30,
    2012
      Jun 30,
    2012
    Financial Data:        
    Total assets $3,061,307$3,051,848$3,071,884$3,048,868$3,041,050
    Total loans 2,384,980 2,325,045 2,294,003 2,256,697 2,213,842
    Total securities 350,517 387,102 415,879 483,858 516,193
    Total deposits 2,304,609 2,319,641 2,312,631 2,234,659 2,130,453
    Total shareholders' equity 303,370 301,291 295,652 298,394 292,734
    Net interest income 22,409 22,467 23,164 22,736 22,411
    Provision for loan losses 700 600 600 600 600
    Noninterest income, excluding OTTI losses 16,394 15,938 17,899 16,921 16,174
    Net OTTI losses recognized in earnings (2,772 ) (12 )
    Noninterest expenses 25,005 24,184 27,421 26,290 25,228
    Income tax expense 4,115 3,428 4,007 3,867 4,044
    Net income 8,983 7,421 9,023 8,900 8,713
     
    Share Data:
    Basic earnings per common share $0.54$0.45$0.55$0.54$0.53
    Diluted earnings per common share $0.54$0.45$0.55$0.54$0.53
    Dividends declared per share $0.25$0.25$0.24$0.24$0.23
    Book value per share $18.40$18.34$18.05$18.23$17.89
    Tangible book value per share - Non-GAAP (1) $14.52$14.44$14.13$14.29$13.94
    Market value per share $28.52$27.38$26.31$26.27$24.38
    Shares outstanding at end of period 16,487 16,425 16,380 16,371 16,359
    Weighted average common shares outstanding - basic 16,454 16,401 16,376 16,366 16,358
    Weighted average common shares outstanding - diluted 16,581 16,449 16,425 16,414 16,392
     
    Key Ratios:
    Return on average assets 1.18 % 0.98 % 1.19 % 1.17 % 1.16 %
    Return on average tangible assets - Non-GAAP (1) 1.21 % 1.01 % 1.21 % 1.19 % 1.18 %
    Return on average equity 11.84 % 9.91 % 12.01 % 12.02 % 11.98 %
    Return on average tangible equity - Non-GAAP (1) 15.01 % 12.62 % 15.29 % 15.37 % 15.41 %
     
    Capital Ratios:
    Tier 1 risk-based capital 11.74% (i) 12.25 % 12.01 % 11.93 % 11.90 %
    Total risk-based capital 12.93% (i) 13.50 % 13.26 % 13.18 % 13.15 %
    Tier 1 leverage ratio 9.32% (i) 9.53 % 9.30 % 9.11 % 9.00 %
    Equity to assets 9.91 % 9.87 % 9.62 % 9.79 % 9.63 %
    Tangible equity to tangible assets - Non-GAAP (1) 7.99 % 7.94 % 7.69 % 7.84 % 7.66 %
    (i) - estimated
     
    Wealth Management Assets under Administration:
    Balance at beginning of period $4,420,076$4,199,640$4,242,520$4,079,913$4,196,447
    Net investment (depreciation) appreciation & income (20,956 ) 213,979 (5,887 ) 155,427 (131,896 )
    Net client cash flows       34,454     6,457     (36,993 )   7,180     15,362  
    Balance at end of period       $4,433,574     $4,420,076     $4,199,640     $4,242,520     $4,079,913  

    (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)
         
    Six Months Ended
    (Dollars and shares in thousands, except per share amounts)       Jun 30,
    2013
      Jun 30,
    2012
    Financial Data:  
    Net interest income $44,876$44,796
    Provision for loan losses 1,300 1,500
    Noninterest income, excluding OTTI losses 32,332 30,615
    Net OTTI losses recognized in earnings (2,772 ) (209 )
    Noninterest expenses 49,189 48,627
    Income tax expense 7,543 7,924
    Net income 16,404 17,151
     
    Share Data:
    Basic earnings per common share $0.99$1.04
    Diluted earnings per common share $0.99$1.04
    Dividends declared per share $0.50$0.46
     
    Weighted average common shares outstanding - basic 16,428 16,344
    Weighted average common shares outstanding - diluted 16,558 16,381
     
    Key Ratios:
    Return on average assets 1.08 % 1.13 %
    Return on average tangible assets - Non-GAAP (1) 1.11 % 1.16 %
    Return on average equity 10.88 % 11.92 %
    Return on average tangible equity - Non-GAAP (1) 13.82 % 15.38 %
     
    Asset Quality Data:
    Allowance for Loan Losses:
    Balance at beginning of period $30,873$29,802
    Provision charged to earnings 1,300 1,500
    Charge-offs (4,549 ) (1,377 )
    Recoveries       260     523  
    Balance at end of period       $27,884     $30,448  
     
    Net Loan Charge-Offs (Recoveries):
    Commercial mortgages $3,922 ($381 )
    Other commercial 134 873
    Residential real estate mortgages 45 177
    Consumer       188     185  
    Total       $4,289     $854  
     
    Net charge-offs to average loans (annualized) 0.37 % 0.17 %
     
    Wealth Management Assets Under Administration:
    Balance at beginning of period $4,199,640$3,900,061
    Net investment appreciation & income 193,023 166,259
    Net client cash flows       40,911     13,593  
    Balance at end of period       $4,433,574     $4,079,913  

    (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
            Jun 30,
    2013
        Mar 31,
    2013
        Dec 31,
    2012
        Sep 30,
    2012
        Jun 30,
    2012
    Average Yield / Rate (taxable equivalent basis):                
    Assets:
    Commercial loans 4.58 % 4.70 % 4.90 % 4.94 % 5.03 %
    Residential real estate loans, including mortgage loans held for sale 4.14 % 4.26 % 4.23 % 4.32 % 4.40 %
    Consumer loans 3.81 % 3.84 % 3.86 % 3.89 % 3.85 %
    Total loans 4.34 % 4.44 % 4.53 % 4.59 % 4.65 %
    Cash, federal funds sold and other short-term investments 0.22 % 0.21 % 0.26 % 0.26 % 0.23 %
    FHLBB stock 0.42 % 0.39 % 0.48 % 0.51 % 0.54 %
    Taxable debt securities 3.52 % 3.56 % 3.49 % 3.50 % 3.63 %
    Nontaxable debt securities 5.94 % 5.98 % 5.89 % 5.83 % 5.93 %
    Corporate stocks % % % % 7.58 %
    Total securities 3.97 % 3.98 % 3.86 % 3.83 % 3.95 %
    Total interest-earning assets 4.17 % 4.24 % 4.31 % 4.34 % 4.41 %
    Liabilities:
    Interest-bearing demand deposits % % % % %
    NOW accounts 0.06 % 0.06 % 0.07 % 0.06 % 0.06 %
    Money market accounts 0.29 % 0.29 % 0.28 % 0.26 % 0.23 %
    Savings accounts 0.07 % 0.07 % 0.09 % 0.11 % 0.11 %
    Time deposits 1.25 % 1.28 % 1.32 % 1.33 % 1.35 %
    FHLBB advances 3.29 % 3.21 % 3.27 % 3.18 % 3.25 %
    Junior subordinated debentures 7.82 % 4.79 % 4.75 % 4.74 % 4.77 %
    Other 5.87 % 1.77 % 5.51 % 6.33 % 2.07 %
    Total interest-bearing liabilities 1.11 % 1.11 % 1.19 % 1.27 % 1.33 %
     
    Interest rate spread (taxable equivalent basis) 3.06 % 3.13 % 3.12 % 3.07 % 3.08 %
    Net interest margin (taxable equivalent basis) 3.26 % 3.32 % 3.33 % 3.28 % 3.30 %
            At June 30, 2013
    Amortized   Unrealized   Unrealized   Fair
    (Dollars in thousands)         Cost (1)   Gains   Losses   Value
    Securities Available for Sale:
    Obligations of U.S. government-sponsored enterprises $ 29,472 $ 1,466 $ $ 30,938
    Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises 172,014 9,239 (28 ) 181,225
    States and political subdivisions 64,838 2,850 67,688
    Trust preferred securities:
    Individual name issuers 30,696 (5,619 ) 25,077
    Collateralized debt obligations 1,264 (867 ) 397
    Corporate bonds           11,137       269       (17 )     11,389
    Total securities available for sale           309,421       13,824       (6,531 )     316,714
    Held to Maturity:
    Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises           33,803             (41 )     33,762
    Total securities held to maturity           33,803             (41 )     33,762
    Total securities         $ 343,224     $ 13,824       ($6,572 )   $ 350,476

    (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)       Jun 30,
    2013
        Mar 31,
    2013
        Dec 31,
    2012
        Sep 30,
    2012
        Jun 30,
    2012
    Loans:                
    Commercial: Mortgages $ 758,437 $ 729,968 $ 710,813 $ 693,221 $ 664,410
    Construction & development 39,449 34,179 27,842 25,132 17,365
      Other         512,228         513,000         513,764         500,974         510,220
    Total commercial 1,310,114 1,277,147 1,252,419 1,219,327 1,191,995
    Residential real estate: Mortgages 728,158 702,418 692,798 692,659 680,772
      Homeowner construction         20,713         21,943         24,883         22,753         21,247
    Total residential real estate 748,871 724,361 717,681 715,412 702,019
    Consumer: Home equity lines 228,367 226,640 226,861 227,549 224,550
    Home equity loans 41,312 40,134 39,329 39,452 40,690
      Other         56,316         56,763         57,713         54,957         54,588
      Total consumer         325,995         323,537         323,903         321,958         319,828
      Total loans       $ 2,384,980       $ 2,325,045       $ 2,294,003       $ 2,256,697       $ 2,213,842
          At June 30, 2013
    (Dollars in thousands)       Balance     % of Total
    Commercial Real Estate Loans by Property Location:    
    Rhode Island, Connecticut, Massachusetts $ 762,978 95.6 %
    New York 26,080 3.3 %
    New Hampshire         8,828       1.1 %
    Total commercial real estate loans (1)       $ 797,886       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 June 30, 2013
    (Dollars in thousands)       Balance     % of Total
    Residential Mortgages by Property Location:    
    Rhode Island, Connecticut, Massachusetts $ 728,067 97.1 %
    New York, Virginia, New Jersey, Maryland, Pennsylvania, District of Columbia 9,444 1.3 %
    New Hampshire 5,224 0.7 %
    Ohio 2,748 0.4 %
    Washington, Oregon 1,365 0.2 %
    Georgia 1,092 0.1 %
    New Mexico 472 0.1 %
    Other         459       0.1 %
    Total residential mortgages       $ 748,871       100.0 %
         
    Period End Balances At
    (Dollars in thousands)       Jun 30,
    2013
      Mar 31,
    2013
      Dec 31,
    2012
      Sep 30,
    2012
      Jun 30,
    2012
    Deposits:        
    Demand deposits $358,797$375,156$379,889$352,330$321,488
    NOW accounts 301,096 294,136 291,174 267,495 263,124
    Money market accounts 540,012 503,414 496,402 459,671 388,686
    Savings accounts 293,405 284,983 274,934 268,191 264,772
    Time deposits       811,299     861,952     870,232     886,972     892,383
    Total deposits       $2,304,609     $2,319,641     $2,312,631     $2,234,659     $2,130,453
     
    Out-of-market brokered certificates of deposits included in time deposits $96,177$103,045$102,636$98,603$102,661
    In-market deposits, excluding out-of-market brokered certificates of deposit $2,208,432$2,216,596$2,209,995$2,136,056$2,027,792
     
    Washington Trust Bancorp, Inc. and Subsidiaries
    SELECTED FINANCIAL HIGHLIGHTS (unaudited)
     
          Period End Balances At
    (Dollars in thousands)       Jun 30,
    2013
        Mar 31,
    2013
        Dec 31,
    2012
        Sep 30,
    2012
        Jun 30,
    2012
    Asset Quality Data:                
    Nonperforming Assets:
    Commercial mortgages $ 9,976 $ 14,953 $ 10,681 $ 5,956 $ 2,597
    Commercial construction and development
    Other commercial 1,400 3,122 4,412 3,201 3,405
    Residential real estate mortgages 7,526 6,699 6,158 7,127 8,659
    Consumer         1,124         901         1,292         1,463         1,081  
    Total nonaccrual loans $ 20,026 $ 25,675 $ 22,543 $ 17,747 $ 15,742
    Nonaccrual investment securities 397 404 843 929 767
    Property acquired through foreclosure or repossession         1,230         2,625         2,047         2,447         2,332  
    Total nonperforming assets       $ 21,653       $ 28,704       $ 25,433       $ 21,123       $ 18,841  
     
    Total past due loans to total loans 1.09 % 1.13 % 1.22 % 1.05 % 0.92 %
    Nonperforming assets to total assets 0.71 % 0.94 % 0.83 % 0.69 % 0.62 %
    Nonaccrual loans to total loans 0.84 % 1.10 % 0.98 % 0.79 % 0.71 %
    Allowance for loan losses to nonaccrual loans 139.24 % 121.28 % 136.95 % 173.28 % 193.42 %
    Allowance for loan losses to total loans 1.17 % 1.34 % 1.35 % 1.36 % 1.38 %
     
    Troubled Debt Restructured Loans:
    Accruing troubled debt restructured loans:
    Commercial mortgages $ 19,018 $ 9,600 $ 9,569 $ 9,131 $ 1,251
    Other commercial 2,602 6,554 6,577 6,880 6,916
    Residential real estate mortgages 876 1,599 1,123 386 570
    Consumer         242         244         154         158         159  
    Accruing troubled debt restructured loans         22,738         17,997         17,423         16,555         8,896  
    Nonaccrual troubled debt restructured loans:
    Commercial mortgages
    Other commercial 590 721 2,063 2,306 2,317
    Residential real estate mortgages 144 155 688 1,697 2,028
    Consumer         42         42         44         46         47  
    Nonaccrual troubled debt restructured loans         776         918         2,795         4,049         4,392  
    Total troubled debt restructured loans       $ 23,514       $ 18,915       $ 20,218       $ 20,604       $ 13,288  
     
    Washington Trust Bancorp, Inc. and Subsidiaries
    SELECTED FINANCIAL HIGHLIGHTS (unaudited)
     
          Period End Balances At
    (Dollars in thousands)       Jun 30,
    2013
        Mar 31,
    2013
        Dec 31,
    2012
        Sep 30,
    2012
        Jun 30,
    2012
    Past Due Loans:                
    Loans 30-59 Days Past Due:
    Commercial mortgages $ $ $ 373 $ 3,978 $ 411
    Other commercial loans 505 689 260 2,719 849
    Residential real estate mortgages 4,051 3,891 4,840 2,368 4,969
    Consumer loans         1,588         1,534         1,134         1,876         2,660
    Loans 30-59 days past due       $ 6,144       $ 6,114       $ 6,607       $ 10,941       $ 8,889
     
    Loans 60-89 Days Past Due:
    Commercial mortgages $ 536 $ 193 $ 408 $ 874 $ 233
    Other commercial loans 34 341 296 1,169 434
    Residential real estate mortgages 1,697 1,451 1,951 821 1,600
    Consumer loans         689         461         385         1,213         677
    Loans 60-89 days past due       $ 2,956       $ 2,446       $ 3,040       $ 4,077       $ 2,944
     
    Loans 90 Days or more Past Due:
    Commercial mortgages $ 8,895 $ 9,852 $ 10,300 $ 2,495 $ 2,339
    Other commercial loans 3,428 2,961 3,647 1,366 1,714
    Residential real estate mortgages 4,266 4,327 3,658 3,924 4,039
    Consumer loans         415         484         844         811         362
    Loans 90 days or more past due       $ 17,004       $ 17,624       $ 18,449       $ 8,596       $ 8,454
     
    Total Past Due Loans:
    Commercial mortgages $ 9,431 $ 10,045 $ 11,081 $ 7,347 $ 2,983
    Other commercial loans 3,967 3,991 4,203 5,254 2,997
    Residential real estate mortgages 10,014 9,669 10,449 7,113 10,608
    Consumer loans         2,692         2,479         2,363         3,900         3,699
    Total past due loans       $ 26,104       $ 26,184       $ 28,096       $ 23,614       $ 20,287
     
    Accruing loans 90 days or more past due $ 2.431 $ $ $ $
    Nonaccrual loans included in past due loans $ 17,208 $ 19,000 $ 20,979 $ 14,471 $ 12,719
          For the Quarters Ended
    (Dollars in thousands)       Jun 30,
    2013
        Mar 31,
    2013
        Dec 31,
    2012
        Sep 30,
    2012
        Jun 30,
    2012
    Allowance for Loan Losses:                
    Balance at beginning of period $ 31,139 $ 30,873 $ 30,752 $ 30,448 $ 30,045
    Provision charged to earnings 700 600 600 600 600
    Charge-offs (4,175 ) (374 ) (534 ) (424 ) (696 )
    Recoveries         220         40         55         128         499  
    Balance at end of period       $ 27,884       $ 31,139       $ 30,873       $ 30,752       $ 30,448  
     
    Net Loan Charge-Offs (Recoveries):
    Commercial mortgages $ 3,814 $ 108 $ 212 $ 212 ($388 )
    Other commercial 63 71 225 (22 ) 549
    Residential real estate mortgages 36 9 39 41 (47 )
    Consumer         42         146         3         65         83  
    Total       $ 3,955       $ 334       $ 479       $ 296       $ 197  
     

    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
                  June 30, 2013         March 31, 2013             June 30, 2012  
    Average Balance   Interest   Yield/

    Rate

          Average Balance   Interest   Yield/

    Rate

          Average Balance   Interest   Yield/

    Rate

    (Dollars in thousands)                                
    Assets:    
    Commercial loans $ 1,291,244 $ 14,747 4.58 % $ 1,243,716 $ 14,421 4.70 % $ 1,166,545 $ 14,590 5.03 %

    Residential real estate loans, including
    mortgage loans held for sale

    762,363 7,877 4.14 % 755,528 7,937 4.26 % 714,154 7,809 4.40 %
    Consumer loans               325,539       3,090     3.81 %         322,668       3,053     3.84 %         320,442       3,067     3.85 %
    Total loans 2,379,146 25,714 4.34 % 2,321,912 25,411 4.44 % 2,201,141 25,466 4.65 %

    Cash, federal funds sold and short-term
    investments

    44,690 24 0.22 % 53,734 28 0.21 % 30,078 17 0.23 %
    FHLBB stock 37,730 39 0.42 % 39,790 38 0.39 % 40,418 54 0.54 %
     
    Taxable debt securities 293,586 2,576 3.52 % 323,730 2,845 3.56 % 451,207 4,069 3.63 %
    Nontaxable debt securities 66,468 985 5.94 % 68,064 1,004 5.98 % 70,462 1,039 5.93 %
    Corporate stocks                         %                   %         1,804       34     7.58 %
    Total securities               360,054       3,561     3.97 %         391,794       3,849     3.98 %         523,473       5,142     3.95 %
    Total interest-earning assets 2,821,620 29,338 4.17 % 2,807,230 29,326 4.24 % 2,795,110 30,679 4.41 %
    Noninterest-earning assets               213,336                   210,338                   222,057          
    Total assets             $ 3,034,956                 $ 3,017,568                 $ 3,017,167          
    Liabilities and Shareholders' Equity:
    Interest-bearing demand deposits $ 135 $ % $ $ % $ $ %
    NOW accounts 289,858 45 0.06 % 283,004 45 0.06 % 254,528 39 0.06 %
    Money market accounts 535,107 381 0.29 % 495,453 351 0.29 % 405,241 232 0.23 %
    Savings accounts 286,547 47 0.07 % 279,536 46 0.07 % 258,824 72 0.11 %
    Time deposits 843,462 2,623 1.25 % 869,576 2,752 1.28 % 905,466 3,042 1.35 %
    FHLBB advances 326,839 2,679 3.29 % 345,270 2,737 3.21 % 494,257 3,998 3.25 %
    Junior subordinated debentures 31,405 612 7.82 % 32,991 390 4.79 % 32,991 391 4.77 %
    Other               205       3     5.87 %         1,146       5     1.77 %         973       5     2.07 %
    Total interest-bearing liabilities 2,313,558 6,390 1.11 % 2,306,976 6,326 1.11 % 2,352,280 7,779 1.33 %
    Demand deposits 365,747 360,851 321,094
    Other liabilities 52,249 50,305 52,939
    Shareholders' equity               303,402                   299,436                   290,854          
    Total liabilities and shareholders' equity             $ 3,034,956                 $ 3,017,568                 $ 3,017,167          
    Net interest income (FTE)                 $ 22,948                 $ 23,000                 $ 22,900      
    Interest rate spread 3.06 % 3.13 % 3.08 %
    Net interest margin                     3.26 %               3.32 %               3.30 %

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

    (Dollars in thousands)       Three Months Ended
            Jun 30, 2013       Mar 31, 2013       Jun 30, 2012
    Commercial loans $201       $188       $122
    Nontaxable debt securities 338 345 357
    Corporate stocks                   10
    Total       $539       $533       $489
     
    Washington Trust Bancorp, Inc. and Subsidiaries
    CONSOLIDATED AVERAGE BALANCE SHEETS (unaudited)
     
    Six Months Ended June 30,         2013       2012
            Average Balance   Interest   Yield/

    Rate

            Average Balance   Interest   Yield/

    Rate

    (Dollars in thousands)                      
    Assets:
    Commercial loans $ 1,267,612 $ 29,168 4.64 % $ 1,144,114 $ 28,888 5.08 %
    Residential real estate loans, including mortgage loans held for sale 758,964 15,814 4.20 % 717,430 15,884 4.45 %
    Consumer loans           324,111       6,143     3.82 %           320,195       6,164     3.87 %
    Total loans 2,350,687 51,125 4.39 % 2,181,739 50,936 4.69 %
    Cash, federal funds sold and short-term investments 49,186 52 0.21 % 41,196 37 0.18 %
    FHLBB stock 38,755 77 0.40 % 41,012 106 0.52 %
     
    Taxable debt securities 308,576 5,421 3.54 % 468,828 8,446 3.62 %
    Nontaxable debt securities 67,261 1,989 5.96 % 71,185 2,098 5.93 %
    Corporate stocks                     %           1,828       67     7.37 %
    Total securities           375,837       7,410     3.98 %           541,841       10,611     3.94 %
    Total interest-earning assets 2,814,465 58,664 4.20 % 2,805,788 61,690 4.42 %
    Noninterest-earning assets           211,845                     221,430          
    Total assets         $ 3,026,310                   $ 3,027,218          
    Liabilities and Shareholders' Equity:
    Interest-bearing demand deposits $ 68 $ % $ $ %
    NOW accounts 286,450 90 0.06 % 250,390 85 0.07 %
    Money market accounts 515,390 732 0.29 % 408,647 457 0.22 %
    Savings accounts 283,059 93 0.07 % 253,837 142 0.11 %
    Time deposits 856,447 5,375 1.27 % 895,405 6,135 1.38 %
    FHLBB advances 336,004 5,416 3.25 % 509,012 8,083 3.19 %
    Junior subordinated debentures 32,194 1,002 6.28 % 32,991 783 4.77 %
    Other           673       8     2.40 %           9,938       239     4.84 %
    Total interest-bearing liabilities 2,310,285 12,716 1.11 % 2,360,220 15,924 1.36 %
    Demand deposits 363,313 326,159
    Other liabilities 51,282 53,012
    Shareholders' equity           301,430                     287,827          
    Total liabilities and shareholders' equity         $ 3,026,310                   $ 3,027,218          
    Net interest income (FTE)             $ 45,948                   $ 45,766      
    Interest rate spread 3.09 % 3.06 %
    Net interest margin                 3.29 %                 3.28 %

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

    (Dollars in thousands)          
    Six Months Ended June 30,       2013     2012
    Commercial loans $389$229
    Nontaxable debt securities 683 723
    Corporate stocks           18
    Total       $1,072     $970
     
    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)       Jun 30,
    2013
      Mar 31,
    2013
      Dec 31,
    2012
      Sep 30,
    2012
      Jun 30,
    2012
    Calculation of Tangible Book Value per Share:        
    Total shareholders' equity at end of period $303,370$301,291$295,652$298,394$292,734
    Less:
    Goodwill 58,114 58,114 58,114 58,114 58,114
    Identifiable intangible assets, net       5,827     6,000     6,173     6,346     6,528  
    Total tangible shareholders' equity at end of period       $239,429     $237,177     $231,365     $233,934     $228,092  
     
    Shares outstanding at end of period       16,487     16,425     16,380     16,371     16,359  
     
    Book value per share - GAAP       $18.40     $18.34     $18.05     $18.23     $17.89  
    Tangible book value per share - Non-GAAP       $14.52     $14.44     $14.12     $14.29     $13.94  
     
    Calculation of Tangible Equity to Tangible Assets:
    Total tangible shareholders' equity at end of period       $239,429     $237,177     $231,365     $233,934     $228,092  
     
    Total assets at end of period $3,061,307$3,051,848$3,071,884$3,048,868$3,041,050
    Less:
    Goodwill 58,114 58,114 58,114 58,114 58,114
    Identifiable intangible assets, net       5,827     6,000     6,173     6,346     6,528  
    Total tangible assets at end of period       $2,997,366     $2,987,734     $3,007,597     $2,984,408     $2,976,408  
     
    Equity to assets - GAAP       9.91 %   9.87 %   9.62 %   9.79 %   9.63 %
    Tangible equity to tangible assets - Non-GAAP       7.99 %   7.94 %   7.69 %   7.84 %   7.66 %
     
    Calculation of Return on Average Tangible Assets:
    Net income       $8,983     $7,421     $9,023     $8,900     $8,713  
     
    Total average assets $3,034,956$3,017,583$3,044,764$3,045,203$3,017,167
    Less:
    Average goodwill 58,114 58,114 58,114 58,114 58,114
    Average identifiable intangible assets, net       5,912     6,085     6,257     6,434     6,619  
    Total average tangible assets       $2,970,930     $2,953,384     $2,980,393     $2,980,655     $2,952,434  
     
    Return on average assets - GAAP       1.18 %   0.98 %   1.19 %   1.17 %   1.16 %
    Return on average tangible assets - Non-GAAP       1.21 %   1.01 %   1.21 %   1.19 %   1.18 %
     
    Calculation of Return on Average Tangible Equity:
    Net income       $8,983     $7,421     $9,023     $8,900     $8,713  
     
    Total average shareholders' equity $303,402$299,436$300,430$296,150$290,854
    Less:
    Average goodwill 58,114 58,114 58,114 58,114 58,114
    Average identifiable intangible assets, net       5,912     6,085     6,257     6,434     6,619  
    Total average tangible shareholders' equity       $239,376     $235,237     $236,059     $231,602     $226,121  
     
    Return on average shareholders' equity - GAAP       11.84 %   9.91 %   12.01 %   12.02 %   11.98 %
    Return on average tangible shareholders' equity - Non-GAAP       15.01 %   12.62 %   15.29 %   15.37 %   15.41 %
     
    Washington Trust Bancorp, Inc. and Subsidiaries
    SUPPLEMENTAL INFORMATION - Non-GAAP Financial Measures (unaudited)
         
    Six Months Ended
    (Dollars in thousands)       Jun 30,
    2013
      Jun 30,
    2012
    Calculation of return on average tangible assets:  
    Net income       $16,404     $17,151  
     
    Total average assets $3,026,310$3,027,218
    Less:
    Average goodwill 58,114 58,114
    Average identifiable intangible assets, net       5,998     6,712  
    Total average tangible assets       $2,962,198     $2,962,392  
     
    Return on average assets - GAAP       1.08 %   1.13 %
    Return on average tangible assets - Non-GAAP       1.11 %   1.16 %
     
     
    Calculation of return on average tangible equity:
    Net income       $16,404     $17,151  
     
    Total average shareholders' equity $301,430$287,827
    Less:
    Average goodwill 58,114 58,114
    Average identifiable intangible assets, net       5,998     6,712  
    Total average tangible shareholders' equity       $237,318     $223,001  
     
    Return on average shareholders' equity - GAAP       10.88 %   11.92 %
    Return on average tangible shareholders' equity - Non-GAAP       13.82 %   15.38 %

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

    Source: Washington Trust Bancorp, Inc.