• Washington Trust Bancorp, Inc.
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  • Washington Trust Reports First Quarter 2017 Earnings
    Company Release - 04/24/2017 07:30

    WESTERLY, R.I., April 24, 2017 (GLOBE NEWSWIRE) -- Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced net income of $11.8 million, or $0.68 per diluted share, for the first quarter of 2017, compared to net income of $12.2 million, or $0.70 per diluted share, reported for the fourth quarter of 2016.

    “Washington Trust posted solid first quarter results with very good contributions from our core business lines,” stated Joseph J. MarcAurele, Washington Trust Chairman and Chief Executive Officer.  “We continue to benefit from a solid level of business activity and production throughout our market area.”

    Selected highlights for the first quarter of 2017 include:

    • Returns on average equity and average assets were 11.87% and 1.08%, respectively.  Comparable amounts for the fourth quarter of 2016 were 12.26% and 1.14%, respectively.
    • Wealth management revenues amounted to $9.5 million for the first quarter of 2017, up by 2% on a linked quarter basis.  Wealth management assets of $6.2 billion reached an all-time high for the Corporation at March 31, 2017.
    • Total loans amounted to $3.2 billion at March 31, 2017, down slightly from the preceding quarter and up by 6% from a year ago.
    • Deposit balances experienced good growth, rising by 2% in the quarter and have increased by 8% from a year ago.
    • In March, Washington Trust declared a quarterly dividend of 38 cents per share, a 1 cent per share increase over the preceding quarter; representing the seventh consecutive year of dividend increases.

    Net Interest Income
    Net interest income totaled $28.7 million for the first quarter of 2017, up modestly from the fourth quarter.  Included in net interest income was loan prepayment fee income of $135 thousand for the first quarter, compared to $816 thousand in the fourth quarter.  Excluding the impact of loan prepayment fee income in both periods, net interest income was up by $727 thousand, or 3%, on a linked quarter basis.  The net interest margin was 2.87% for the first quarter of 2017, down by 2 basis points from the preceding quarter.  Excluding the impact of the loan prepayment fee income in each period, the net interest margin was 2.86%, up by 5 basis points from the fourth quarter of 2016.  Significant linked quarter changes included:

    • Average interest-earning assets increased by $112 million from the preceding quarter, due to an increase in the average balance of investment securities, which was largely due to portfolio purchases during the fourth quarter of 2016.  The yield on interest-earning assets was 3.56%, up by 3 basis points from the preceding quarter.  Excluding the impact of loan prepayment fee income in each period, the yield on interest-earning assets was 3.54% for the first quarter of 2017, compared to 3.45% in the preceding quarter, due in part to the increase in the Federal Reserve target interest rate in December 2016.
    • Average interest-bearing liabilities increased by $132 million from the fourth quarter, reflecting increases of $114 million in the average balance of wholesale funding balances (FHLBB advances and wholesale brokered time deposits).  The cost of interest-bearing funds was 0.83%, up by 4 basis points from the preceding quarter.

    Loans
    Total loans amounted to $3.2 billion at March 31, 2017, down by $10 million from the balance at the end of the fourth quarter.  Residential loan portfolio balances increased by $8 million, or 1%.  The commercial loan portfolio decreased by $9 million, or 0.5%.  Among the reasons for the decline were a lower line of credit utilization in the commercial and industrial portfolio and payoffs in the commercial real estate portfolio.  The consumer loan portfolio decreased by $9 million, or 3%, largely due to a reduction in home equity line and home equity loan balances.

    Investment Securities
    The investment securities portfolio amounted to $769 million at March 31, 2017, up by $14 million, or 2%, from the balance at December 31, 2016.  During the quarter, government agency mortgage-backed securities and agency debt securities totaling $40 million and with a weighted average rate of 2.40% were purchased.  These purchases were partially offset by calls, maturities and routine principal pay-downs.  Investment securities represented 18% of total assets as of March 31, 2017.

    Deposits and Borrowings
    Total deposits amounted to $3.1 billion at March 31, 2017, up by $52 million, or 2%, from the balance at December 31, 2016.  Included in total deposits were wholesale brokered time deposit balances of $382 million, which decreased by $30 million from the balance at December 31, 2016.  Excluding wholesale brokered time deposits, in-market deposits increased by $82 million, or 3%, in the quarter, reflecting growth in both new and existing depositor relationships.

    FHLBB advances amounted to $799 million at March 31, 2017, down by $50 million from the balance at December 31, 2016.

    Noninterest Income
    Noninterest income totaled $14.5 million for the first quarter of 2017, down by $2.8 million from the preceding quarter.  Significant linked quarter changes included:

    • Wealth management revenues totaled $9.5 million for the first quarter, up by $186 thousand, or 2%, on a linked quarter basis, driven by an increase of $193 thousand in asset-based revenues.  Wealth management assets under administration amounted to $6.2 billion at March 31, 2017, up by $180 million on a linked quarter basis, reflecting financial market appreciation in the first quarter of 2017.  Managed assets represented 93% of total wealth management assets at March 31, 2017.
    • Mortgage banking revenues totaled $2.3 million for the first quarter, down by $2.2 million, or 48%, from the very strong results in the fourth quarter of 2016.  These results reflect a decrease in the volume of residential mortgage loans sold and a lower overall yield on sales in the secondary market.  Residential mortgage loans sold to the secondary market amounted to $107 million in the first quarter, compared to $200 million in the preceding quarter.
    • Loan related derivative income amounted to $148 thousand in the first quarter, down by $764 thousand from the preceding quarter.  The number of commercial borrower loan related derivative transactions occurring in the quarter were relatively modest compared to activity in recent quarters.

    Noninterest Expenses
    Noninterest expenses totaled $25.3 million for the first quarter of 2017, up by $313 thousand, or 1%, from the fourth quarter.  Included in the first quarter was a $310 thousand reduction in noninterest expenses, resulting from a downward adjustment in the fair value of the contingent consideration liability recognized upon the completion of a 2015 acquisition.  Excluding this adjustment, noninterest expenses were up by $623 thousand, or 2%, on a linked quarter basis, with the largest increase in salaries and benefit costs.  Salaries and benefits cost increased by $267 thousand, or 2%, from the preceding quarter.  This increase reflected an increase in payroll taxes associated with the start of the new calendar year and the impact of merit increases, net of a decline in commissions expense due to a decrease in mortgage banking activities.

    Income tax expense amounted to $5.7 million for the first quarter of 2017, down by $152 thousand from the preceding quarter.  The effective tax rate for the first quarter of 2017 was 32.7%, compared to 32.6% for the fourth quarter of 2016.  During the first quarter of 2017, the Corporation recognized excess tax benefits on the settlement of share-based awards totaling $195 thousand, which were recorded as a reduction to income tax expense.  Excluding the impact of the excess tax benefits recognized, the effective tax rate for the first quarter of 2017 was 33.8%.  Effective January 1, 2017, Washington Trust adopted Accounting Standards Update No. 2016-09, "Improvements to Employee Share-Based Payment Accounting" ("ASU").  Under this ASU, excess tax benefits and tax deficiencies on the settlement of share-based awards are recognized as income tax benefit or expense in the period that they occur.  Prior to 2017, excess tax benefits on the settlement of share-based awards were recognized as additional paid in capital in shareholders' equity and did not impact income tax expense or the effective tax rate.  Average annual excess tax benefits recognized as additional paid in capital in the 3-year period from 2014 through 2016 amounted to approximately $760 thousand.

    Asset Quality
    Total past due loans amounted to $20.9 million, or 0.65% of total loans, at March 31, 2017, down from $24.4 million, or 0.76% of total loans, at December 31, 2016.  Total nonaccrual loans amounted to $22.1 million, or 0.69% of total loans, at March 31, 2017, compared to $22.1 million, or 0.68% of total loans, at December 31, 2016.

    Based on the assessment of loss exposure, including loan loss allocations commensurate with changes in the loan portfolio during the quarter, a loan loss provision totaling $400 thousand was charged to earnings in the first quarter of 2017.  In the fourth quarter of 2016, a loan loss provision of $2.9 million was charged to earnings, a substantial portion of which was due to loss exposure recognized on one nonaccrual commercial real estate relationship.  The allowance for loan losses was $26.4 million, or 0.82% of total loans, at March 31, 2017, compared to $26.0 million, or 0.80% of total loans, at December 31, 2016.

    Capital and Dividends
    Total shareholders' equity was $398 million at March 31, 2017, up by $7 million from December 31, 2016.  Capital levels at March 31, 2017 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.38% at March 31, 2017, compared to 12.26% at December 31, 2016.  Book value per share amounted to $23.14 at March 31, 2017, up from $22.76 at December 31, 2016.

    The Board of Directors declared a quarterly dividend of 38 cents per share for the quarter ended March 31, 2017.  The dividend was paid on April 13, 2017 to shareholders of record on April 3, 2017.

    Conference Call
    Washington Trust will host a conference call to discuss its first quarter results, business highlights and outlook on Monday, April 24, 2017 at 10:00 a.m. (Eastern Time).  Individuals may dial in to the call at 1-877-407-0784.  An audio replay of the call will be available, shortly after the conclusion of the call, by dialing 1-844-512-2921 and entering the Replay PIN Number 13658778; the audio replay will be available through May 5, 2017.  Also, a webcast of the call will be posted in the Investor Relations section of Washington Trust's web site, www.washtrustbancorp.com, and will be available through June 30, 2017.

    Background
    Washington Trust Bancorp, Inc. is the parent of The Washington Trust Company.  Founded in 1800, Washington Trust is the oldest community bank in the nation, the largest state-chartered bank headquartered in Rhode Island and one of the Northeast's premier financial services companies.  Washington Trust offers a full range of financial services, including commercial banking, mortgage banking, personal banking and wealth management and trust services through its offices located in Rhode Island, Connecticut and Massachusetts.  The Corporation’s common stock trades on NASDAQ under the symbol WASH.  Investor information is available on the Corporation’s web site at www.washtrustbancorp.com.

    Forward-Looking Statements
    This press release contains statements that are “forward-looking statements”.  We may also make forward-looking statements in other documents we file with the SEC, in 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: weakness in national, regional or international economic conditions or conditions affecting the banking or financial services industries or financial capital markets; volatility in national and international financial markets; reductions in net interest income resulting from interest rate volatility as well as changes in the balance and mix of loans and deposits; reductions in the market value 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 the our competition; changes in legislation or regulation and accounting principles, policies and guidelines; increasing occurrences of cyberattacks, hacking and identity theft; 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, 2016, as updated by our Quarterly Reports on Form 10-Q and other filings submitted to the SEC, may result in these differences. You should carefully review all of these factors and you should be aware that there may be other factors that could cause these differences. These forward-looking statements were based on information, plans and estimates at the date of this report, and we assume no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

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


    Washington Trust Bancorp, Inc. and Subsidiaries
    CONSOLIDATED BALANCE SHEETS
    (Unaudited; Dollars in thousands)
          
     Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Assets:     
    Cash and due from banks$111,941 $106,185 $126,752 $116,658 $89,966 
    Short-term investments 2,039  1,612  2,420  3,255  4,931 
    Mortgage loans held for sale 25,414  29,434  45,162  38,554  22,895 
    Securities:     
    Available for sale, at fair value 754,720  739,912  564,256  401,749  411,352 
    Held to maturity, at amortized cost 14,721  15,633  16,848  17,917  19,040 
    Total securities 769,441  755,545  581,104  419,666  430,392 
    Federal Home Loan Bank stock, at cost 43,714  43,129  37,249  34,303  26,515 
    Loans:     
    Commercial 1,762,499  1,771,666  1,757,215  1,732,220  1,698,811 
    Residential real estate 1,131,210  1,122,748  1,079,887  1,005,036  1,004,349 
    Consumer 331,151  339,957  344,253  343,628  343,833 
    Total loans 3,224,860  3,234,371  3,181,355  3,080,884  3,046,993 
    Less allowance for loan losses 26,446  26,004  25,649  25,826  26,137 
    Net loans 3,198,414  3,208,367  3,155,706  3,055,058  3,020,856 
    Premises and equipment, net 28,853  29,020  29,433  29,590  29,882 
    Investment in bank-owned life insurance 71,642  71,105  70,557  65,036  66,000 
    Goodwill 64,059  64,059  64,059  64,059  64,059 
    Identifiable intangible assets, net 9,898  10,175  10,493  10,814  11,137 
    Other assets 63,348  62,484  81,099  80,088  71,577 
    Total assets$4,388,763 $4,381,115 $4,204,034 $3,917,081 $3,838,210 
    Liabilities:     
    Deposits:     
    Demand deposits$596,974 $585,960 $566,027 $512,307 $539,119 
    NOW accounts 454,344  427,707  404,827  414,532  394,873 
    Money market accounts 762,233  730,075  794,905  675,896  763,565 
    Savings accounts 362,281  358,397  357,966  342,579  331,800 
    Time deposits 939,739  961,613  913,649  844,036  850,294 
    Total deposits 3,115,571  3,063,752  3,037,374  2,789,350  2,879,651 
    Federal Home Loan Bank advances 798,741  848,930  671,615  640,010  487,189 
    Junior subordinated debentures 22,681  22,681  22,681  22,681  22,681 
    Other liabilities 53,985  54,948  77,037  76,708  67,409 
    Total liabilities 3,990,978  3,990,311  3,808,707  3,528,749  3,456,930 
    Shareholders’ Equity:     
    Common stock 1,075  1,073  1,069  1,068  1,064 
    Paid-in capital 116,200  115,123  113,290  112,314  111,641 
    Retained earnings 299,555  294,365  288,613  282,666  277,810 
    Accumulated other comprehensive loss (19,045) (19,757) (7,645) (7,716) (9,235)
    Total shareholders’ equity 397,785  390,804  395,327  388,332  381,280 
    Total liabilities and shareholders’ equity$4,388,763 $4,381,115 $4,204,034 $3,917,081 $3,838,210 


    CONSOLIDATED STATEMENTS OF INCOME
    (Unaudited; Dollars in thousands, except per share amounts)
          
    For the Three Months EndedMar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Interest income:     
    Interest and fees on loans$30,352 $30,738 $29,633 $29,122 $29,998 
    Taxable interest on securities 4,709  3,703  3,024  2,487  2,370 
    Nontaxable interest on securities 112  157  218  280  327 
    Dividends on Federal Home Loan Bank stock 387  362  288  231  210 
    Other interest income 104  95  93  70  64 
    Total interest and dividend income 35,664  35,055  33,256  32,190  32,969 
    Interest expense:     
    Deposits 3,502  3,445  3,110  2,981  2,968 
    Federal Home Loan Bank advances 3,344  2,886  2,641  2,313  2,152 
    Junior subordinated debentures 138  135  125  119  112 
    Other interest expense 1  1  1  1  2 
    Total interest expense 6,985  6,467  5,877  5,414  5,234 
    Net interest income 28,679  28,588  27,379  26,776  27,735 
    Provision for loan losses 400  2,900  1,800  450  500 
    Net interest income after provision for loan losses 28,279  25,688  25,579  26,326  27,235 
    Noninterest income:     
    Wealth management revenues 9,477  9,291  9,623  9,481  9,174 
    Mortgage banking revenues 2,340  4,541  3,734  2,710  2,198 
    Service charges on deposit accounts 883  945  915  935  907 
    Card interchange fees 802  858  870  860  797 
    Income from bank-owned life insurance 536  549  521  1,090  499 
    Loan related derivative income 148  912  1,178  508  645 
    Equity in losses of unconsolidated subsidiaries (88) (89) (88) (89) (88)
    Other income 412  313  508  419  502 
    Total noninterest income 14,510  17,320  17,261  15,914  14,634 
    Noninterest expense:     
    Salaries and employee benefits 16,795  16,528  16,908  17,405  16,380 
    Net occupancy 1,967  1,775  1,766  1,803  1,807 
    Equipment 1,467  1,556  1,648  1,503  1,501 
    Outsourced services 1,457  1,311  1,254  1,294  1,363 
    Legal, audit and professional fees 616  597  691  662  629 
    FDIC deposit insurance costs 481  390  504  491  493 
    Advertising and promotion 237  403  370  420  265 
    Amortization of intangibles 277  318  321  322  323 
    Debt prepayment penalties         431 
    Change in fair value of contingent consideration (310)   (939) 16  25 
    Other expenses 2,299  2,095  2,127  2,114  2,233 
    Total noninterest expense 25,286  24,973  24,650  26,030  25,450 
    Income before income taxes 17,503  18,035  18,190  16,210  16,419 
    Income tax expense 5,721  5,873  5,863  5,153  5,484 
    Net income$11,782 $12,162 $12,327 $11,057 $10,935 
          
    Net income available to common shareholders:     
    Basic$11,755 $12,137 $12,302 $11,035 $10,910 
    Diluted$11,755 $12,137 $12,302 $11,035 $10,910 
    Weighted average common shares outstanding:     
    Basic 17,186  17,142  17,090  17,067  17,023 
    Diluted 17,293  17,245  17,203  17,194  17,157 
    Earnings per common share:     
    Basic$0.68 $0.71 $0.72 $0.65 $0.64 
    Diluted$0.68 $0.70 $0.72 $0.64 $0.64 
          
    Cash dividends declared per share$0.38 $0.37 $0.37 $0.36 $0.36 


    SELECTED FINANCIAL HIGHLIGHTS
    (Unaudited; Dollars in thousands, except per share amounts)
      
     Mar 31,Dec 31,Sep 30,Jun 30,Mar 31,
    20172016201620162016
    Share and Equity Related Data:     
    Book value per share$23.14 $22.76 $23.11 $22.73 $22.40 
    Tangible book value per share - Non-GAAP (1)$18.83 $18.44 $18.75 $18.35 $17.98 
    Market value per share$49.30 $56.05 $40.22 $37.92 $37.32 
    Shares issued and outstanding at end of period 17,193  17,171  17,107  17,081  17,024 
          
    Capital Ratios:     
    Tier 1 risk-based capital11.54% (i) 11.44% 11.48% 11.57% 11.56%
    Total risk-based capital12.38% (i) 12.26% 12.31% 12.43% 12.45%
    Tier 1 leverage ratio8.58% (i) 8.67% 8.95% 9.21% 9.31%
    Common equity tier 110.86% (i) 10.75% 10.77% 10.84% 10.82%
    Equity to assets 9.06% 8.92% 9.40% 9.91% 9.93%
    Tangible equity to tangible assets - Non-GAAP (1) 7.51% 7.35% 7.77% 8.16% 8.13%
    (i) - estimated               
                    
    For the Three Months EndedMar 31,Dec 31,Sep 30,Jun 30,Mar 31,
    20172016201620162016
    Performance Ratios:     
    Net interest margin (FTE) 2.87% 2.89% 2.94% 3.05% 3.24%
    Return on average assets 1.08% 1.14% 1.21% 1.14% 1.16%
    Return on average tangible assets - Non-GAAP (1) 1.10% 1.16% 1.24% 1.17% 1.18%
    Return on average equity 11.87% 12.26% 12.57% 11.50% 11.50%
    Return on average tangible equity - Non-GAAP (1) 14.59% 15.09% 15.53% 14.28% 14.34%

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


    SELECTED FINANCIAL HIGHLIGHTS
    (Unaudited; Dollars in thousands)
          
    For the Three Months EndedMar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Wealth Management Results     
    Wealth Management Revenues:     
    Trust and investment management fees$8,518 $8,283 $8,358 $8,195 $8,065 
    Mutual fund fees 729  771  812  812  843 
    Asset-based revenues 9,247  9,054  9,170  9,007  8,908 
    Transaction-based revenues 230  237  453  474  266 
    Total wealth management revenues$9,477 $9,291 $9,623 $9,481 $9,174 
          
    Assets Under Administration:     
    Balance at beginning of period$6,063,293 $6,056,859 $5,905,019 $5,878,967 $5,844,636 
    Net investment appreciation (depreciation) & income 220,423  (8,506) 192,518  71,447  22,389 
    Net client asset flows (40,415) 14,940  (40,678) (45,395) 11,942 
    Balance at end of period$6,243,301 $6,063,293 $6,056,859 $5,905,019 $5,878,967 
          
    Mortgage Banking Results     
    Mortgage Banking Revenues:     
    Gains & commissions on loan sales, net$2,268 $4,455 $3,744 $2,804 $2,134 
    Residential mortgage servicing fee income, net 72  86  (10) (94) 64 
    Total mortgage banking revenues$2,340 $4,541 $3,734 $2,710 $2,198 
          
    Residential Mortgage Loan Originations:     
    Originations for retention in portfolio$57,907 $72,533 $90,308 $54,080 $47,545 
    Originations for sale to secondary market (1) 102,441  185,626  170,673  154,043  90,458 
    Total mortgage loan originations$160,348 $258,159 $260,981 $208,123 $138,003 
          
    Residential Mortgage Loans Sold:     
    Sold with servicing rights retained$22,567 $48,545 $44,611 $45,804 $26,454 
    Sold with servicing rights released (1) 84,345  151,506  119,572  93,239  79,507 
    Total mortgage loans sold$106,912 $200,051 $164,183 $139,043 $105,961 

    (1)  Also includes loans originated in a broker capacity.


    END OF PERIOD LOAN AND DEPOSIT COMPOSITION
    (Unaudited; Dollars in thousands)
      
     Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Commercial:     
    Mortgages$1,076,648 $1,074,186 $1,086,175 $1,074,747 $976,931 
    Construction & development 123,841  121,371  98,735  81,812  123,032 
    Commercial & industrial 562,010  576,109  572,305  575,661  598,848 
    Total commercial 1,762,499  1,771,666  1,757,215  1,732,220  1,698,811 
    Residential real estate:     
    Mortgages 1,100,435  1,094,824  1,052,829  978,399  980,274 
    Homeowner construction 30,775  27,924  27,058  26,637  24,075 
    Total residential real estate 1,131,210  1,122,748  1,079,887  1,005,036  1,004,349 
    Consumer:     
    Home equity lines 258,695  264,200  265,238  260,541  258,513 
    Home equity loans 36,050  37,272  38,264  39,572  45,499 
    Other 36,406  38,485  40,751  43,515  39,821 
    Total consumer 331,151  339,957  344,253  343,628  343,833 
    Total loans$3,224,860 $3,234,371 $3,181,355 $3,080,884 $3,046,993 


     March 31, 2017 December 31, 2016
     Balance% of Total Balance% of Total
    Commercial Real Estate Loans by Property Location:     
    Rhode Island, Connecticut, Massachusetts$1,110,934 92.5% $1,105,539 92.5%
    New York, New Jersey, Pennsylvania 76,678 6.4%  77,038 6.4%
    New Hampshire 12,877 1.1%  12,980 1.1%
    Total commercial real estate loans (1)$1,200,489 100.0% $1,195,557 100.0%
          
    Residential Mortgages by Property Location:     
    Rhode Island, Connecticut, Massachusetts$1,115,205 98.6% $1,106,366 98.6%
    New Hampshire, Vermont, Maine 11,570 1.0%  11,445 1.0%
    New York, Virginia, New Jersey, Maryland, Pennsylvania 2,228 0.2%  2,648 0.2%
    Ohio 922 0.1%  997 0.1%
    Other 1,285 0.1%  1,292 0.1%
    Total residential mortgages$1,131,210 100.0% $1,122,748 100.0%

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

     Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Deposits:     
    Non-interest bearing demand deposits$534,792 $521,165 $520,860 $476,848 $474,477 
    Interest-bearing demand deposits 62,182  64,795  45,167  35,459  64,642 
    NOW accounts 454,344  427,707  404,827  414,532  394,873 
    Money market accounts 762,233  730,075  794,905  675,896  763,565 
    Savings accounts 362,281  358,397  357,966  342,579  331,800 
    Time deposits (in-market) 557,312  549,376  554,669  549,935  540,815 
    Wholesale brokered time deposits 382,427  412,237  358,980  294,101  309,479 
    Total deposits$3,115,571 $3,063,752 $3,037,374 $2,789,350 $2,879,651 


    CREDIT & ASSET QUALITY DATA
    (Unaudited; Dollars in thousands)
      
     Mar 31,Dec 31,Sep 30,Jun 30,Mar 31,
    20172016201620162016
    Asset Quality Ratios:     
    Nonperforming assets to total assets 0.54% 0.53% 0.59% 0.48% 0.49%
    Nonaccrual loans to total loans 0.69% 0.68% 0.75% 0.56% 0.57%
    Allowance for loan losses to nonaccrual loans 119.52% 117.89% 107.09% 149.73% 150.00%
    Allowance for loan losses to total loans 0.82% 0.80% 0.81% 0.84% 0.86%
          
    Nonperforming Assets:     
    Commercial mortgages$7,809 $7,811 $10,357 $4,054 $4,054 
    Commercial construction & development          
    Commercial & industrial 1,129  1,337  1,744  1,204  2,659 
    Residential real estate mortgages 12,253  11,736  10,140  10,409  9,367 
    Consumer 936  1,174  1,709  1,581  1,345 
    Total nonaccrual loans 22,127  22,058  23,950  17,248  17,425 
    Other real estate owned 1,410  1,075  1,045  1,515  1,326 
    Total nonperforming assets$23,537 $23,133 $24,995 $18,763 $18,751 
          
    Past Due Loans:     
    Commercial mortgages$7,806 $8,708 $10,352 $4,062 $4,564 
    Commercial & industrial 1,046  1,154  1,047  1,978  2,906 
    Residential real estate mortgages 10,533  12,226  8,291  8,893  8,703 
    Consumer loans 1,547  2,334  1,565  2,201  2,122 
    Total past due loans$20,932 $24,422 $21,255 $17,134 $18,295 
          
    Total past due loans to total loans 0.65% 0.76% 0.67% 0.56% 0.60%
    Accruing loans 90 days or more past due$ $ $ $ $ 
    Nonaccrual loans included in past due loans$18,081 $18,602 $18,796 $13,211 $14,030 
      
    For the Three Months EndedMar 31,Dec 31,Sep 30,Jun 30,Mar 31,
    20172016201620162016
    Nonaccrual Loan Activity:     
    Balance at beginning of period$22,058 $23,950 $17,248 $17,425 $21,047 
    Additions to nonaccrual status 2,138  2,105  9,750  2,072  1,352 
    Loans returned to accruing status (547) (718) (592)   (206)
    Loans charged-off (79) (2,622) (2,055) (860) (1,475)
    Loans transferred to other real estate owned (478) (30)   (435) (610)
    Payments, payoffs and other changes (965) (627) (401) (954) (2,683)
    Balance at end of period$22,127 $22,058 $23,950 $17,248 $17,425 
          
    Allowance for Loan Losses:     
    Balance at beginning of period$26,004 $25,649 $25,826 $26,137 $27,069 
    Provision charged to earnings 400  2,900  1,800  450  500 
    Charge-offs (79) (2,622) (2,055) (860) (1,475)
    Recoveries 121  77  78  99  43 
    Balance at end of period$26,446 $26,004 $25,649 $25,826 $26,137 
          
    Net Loan Charge-Offs (Recoveries):     
    Commercial mortgages$ $2,510 $1,936 $65 $1,249 
    Commercial & industrial (105) (20) (43) 684  (18)
    Residential real estate mortgages (4) 6  47  2  134 
    Consumer 67  49  37  10  67 
    Total$(42)$2,545 $1,977 $761 $1,432 
          
    Net charge-offs to average loans (annualized) (0.01%) 0.31% 0.25% 0.10% 0.19%


    The following table presents average balance and interest rate information.  Tax-exempt income is converted to a fully taxable equivalent basis using the statutory federal income tax rate adjusted for applicable state income taxes net of the related federal tax benefit.  Unrealized gains (losses) on available for sale securities and fair value adjustments on mortgage loans held for sale are excluded from the average balance and yield calculations.  Nonaccrual and renegotiated loans, as well as interest recognized on these loans are included in amounts presented for loans.


    CONSOLIDATED AVERAGE BALANCE SHEETS
    (Unaudited; Dollars in thousands)
     
    For the Three Months EndedMarch 31, 2017 December 31, 2016 March 31, 2016
     Average
    Balance
    InterestYield/
    Rate
     Average
    Balance
    InterestYield/
    Rate
     Average
    Balance
    InterestYield/
     Rate
     
    Assets:           
    Commercial mortgages$1,079,171 $9,444 3.55  $1,086,772 $9,520 3.48  $933,939 $8,215 3.54 
    Construction & development 127,861  1,113 3.53   110,342  927 3.34   129,217  1,108 3.45 
    Commercial & industrial 573,801  6,157 4.35   575,983  6,927 4.78   604,519  7,681 5.11 
    Total commercial loans 1,780,833 $16,714 3.81   1,773,097 $17,374 3.90   1,667,675 $17,004 4.10 
    Residential real estate loans, including loans held for sale 1,152,468  10,868 3.82   1,140,492  10,652 3.72   1,031,260  10,155 3.96 
    Consumer loans 335,054  3,323 4.02   341,528  3,284 3.83   343,519  3,393 3.97 
    Total loans 3,268,355  30,905 3.83   3,255,117  31,310 3.83   3,042,454  30,552 4.04 
    Cash, federal funds sold and short-term investments 56,195  104 0.75   77,092  95 0.49   68,488  64 0.38 
    FHLBB stock 43,622  387 3.60   39,212  362 3.67   25,597  210 3.30 
    Taxable debt securities 755,955  4,709 2.53   636,277  3,703 2.32   359,060  2,370 2.65 
    Nontaxable debt securities 11,521  173 6.09   16,003  244 6.07   33,313  507 6.12 
    Total securities 767,476  4,882 2.58   652,280  3,947 2.41   392,373  2,877 2.95 
    Total interest-earning assets 4,135,648  36,278 3.56   4,023,701  35,714 3.53   3,528,912  33,703 3.84 
    Noninterest-earning assets 229,823     249,182     240,113   
    Total assets$4,365,471    $4,272,883    $3,769,025   
    Liabilities and Shareholders' Equity:           
    Interest-bearing demand deposits$56,782 $15 0.11  $46,668 $16 0.14  $50,704 $13 0.10 
    NOW accounts 420,622  50 0.05   408,788  51 0.05   386,488  56 0.06 
    Money market accounts 754,501  599 0.32   761,582  574 0.30   786,633  515 0.26 
    Savings accounts 357,894  51 0.06   356,837  51 0.06   328,174  49 0.06 
    Time deposits (in-market) 554,855  1,418 1.04   552,474  1,419 1.02   538,035  1,315 0.98 
    Wholesale brokered time deposits 397,274  1,369 1.40   382,798  1,334 1.39   296,801  1,020 1.38 
    FHLBB advances 831,614  3,344 1.63   732,269  2,886 1.57   453,019  2,152 1.91 
    Junior subordinated debentures 22,681  138 2.47   22,681  135 2.37   22,681  112 1.99 
    Other 27  1 15.02   40  1 9.95   79  2 10.18 
    Total interest-bearing liabilities 3,396,250  6,985 0.83   3,264,137  6,467 0.79   2,862,614  5,234 0.74 
    Demand deposits 527,215     548,595     471,782   
    Other liabilities 44,889     63,410     54,287   
    Shareholders' equity 397,117     396,741     380,342   
    Total liabilities and shareholders' equity$4,365,471    $4,272,883    $3,769,025   
    Net interest income (FTE) $29,293    $29,247    $28,469  
    Interest rate spread  2.73    2.74    3.10 
    Net interest margin  2.87    2.89    3.24 

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

    For the Three Months EndedMar 31,
    2017
    Dec 31,
    2016
    Mar 31,
    2016
    Commercial loans$553 $572 $554 
    Nontaxable debt securities 61  87  180 
    Total$614 $659 $734 



    SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures
    (Unaudited; Dollars in thousands, except per share amounts)
      
     Mar 31,Dec 31,Sep 30,Jun 30,Mar 31,
    20172016201620162016
    Tangible Book Value per Share:     
    Total shareholders' equity, as reported$397,785 $390,804 $395,327 $388,332 $381,280 
    Less:     
    Goodwill 64,059  64,059  64,059  64,059  64,059 
    Identifiable intangible assets, net 9,898  10,175  10,493  10,814  11,137 
    Total tangible shareholders' equity$323,828 $316,570 $320,775 $313,459 $306,084 
          
    Shares outstanding, as reported 17,193  17,171  17,107  17,081  17,024 
          
    Book value per share - GAAP$23.14 $22.76 $23.11 $22.73 $22.40 
    Tangible book value per share - Non-GAAP$18.83 $18.44 $18.75 $18.35 $17.98 
          
    Tangible Equity to Tangible Assets:     
    Total tangible shareholders' equity$323,828 $316,570 $320,775 $313,459 $306,084 
          
    Total assets, as reported$4,388,763 $4,381,115 $4,204,034 $3,917,081 $3,838,210 
    Less:     
    Goodwill 64,059  64,059  64,059  64,059  64,059 
    Identifiable intangible assets, net 9,898  10,175  10,493  10,814  11,137 
    Total tangible assets$4,314,806 $4,306,881 $4,129,482 $3,842,208 $3,763,014 
          
    Equity to assets - GAAP 9.06% 8.92% 9.40% 9.91% 9.93%
    Tangible equity to tangible assets - Non-GAAP 7.51% 7.35% 7.77% 8.16% 8.13%
      
    For the Three Months EndedMar 31,Dec 31,Sep 30,Jun 30,Mar 31,
    20172016201620162016
    Return on Average Tangible Assets:     
    Net income, as reported$11,782 $12,162 $12,327 $11,057 $10,935 
          
    Total average assets, as reported$4,365,471 $4,272,883 $4,062,688 $3,869,508 $3,769,025 
    Less average balances of:     
    Goodwill 64,059  64,059  64,059  64,059  64,059 
    Identifiable intangible assets, net 10,027  10,330  10,650  10,972  11,294 
    Total average tangible assets$4,291,385 $4,198,494 $3,987,979 $3,794,477 $3,693,672 
          
    Return on average assets - GAAP 1.08% 1.14% 1.21% 1.14% 1.16%
    Return on average tangible assets - Non-GAAP 1.10% 1.16% 1.24% 1.17% 1.18%
          
    Return on Average Tangible Equity:     
    Net income, as reported$11,782 $12,162 $12,327 $11,057 $10,935 
          
    Total average equity, as reported$397,117 $396,741 $392,233 $384,717 $380,342 
    Less average balances of:     
    Goodwill 64,059  64,059  64,059  64,059  64,059 
    Identifiable intangible assets, net 10,027  10,330  10,650  10,972  11,294 
    Total average tangible equity$323,031 $322,352 $317,524 $309,686 $304,989 
          
    Return on average equity - GAAP 11.87% 12.26% 12.57% 11.50% 11.50%
    Return on average tangible equity - Non-GAAP 14.59% 15.09% 15.53% 14.28% 14.34%
     
    Contact:  Elizabeth B. Eckel
    Senior Vice President, Marketing
    Telephone:  (401) 348-1309
    E-mail:  ebeckel@washtrust.com

    Source: Washington Trust Bancorp, Inc.