• Washington Trust Bancorp, Inc.
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  • Washington Trust Announces Third Quarter 2013 Earnings
    Company Release - 10/21/2013 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 net income of $10.0 million, or 59 cents per diluted share, for the third quarter 2013. These results compared favorably to second quarter of 2013 net income of $9.0 million, or 54 cents per diluted share, and third quarter of 2012 net income of $8.9 million, or 54 cents per diluted share.

    "Washington Trust's third quarter results mark our highest quarterly earnings in 213 years," stated Joseph J. MarcAurele, Washington Trust Chairman, President & CEO. "We also continued to lay the foundation for future growth, naming Edward "Ned" Handy, III as President and Chief Operating Officer, breaking ground for our new Johnston branch, and announcing a second 2013 dividend increase."

    Highlights for the quarter include:

    • Third quarter net income and earnings per share results were record quarterly highs for Washington Trust.
    • The returns on average equity and average assets for the third quarter of 2013 were 12.82% and 1.29%, respectively. Comparable amounts for the second quarter of 2013 were 11.84% and 1.18%, respectively.
    • Deposits totaled $2.45 billion at September 30, 2013, up by $150.2 million from June 30, 2013, with continued growth in money market and demand accounts. Total deposits were up by $220.2 million, or 9.9%, in the last twelve months.

    Third quarter results also included the following balance sheet management transactions, which were conducted near the end of September:

    • Residential mortgage portfolio loans totaling $48.7 million were sold at a gain of $977 thousand, including $456 thousand attributable to mortgage servicing rights retained. This gain was included in net gains on loan sales and commission on loans originated for others.
    • $24.5 million of Federal Home Loan Bank of Boston ("FHLBB") advances were prepaid, resulting in debt prepayment penalty expense of $1.1 million.

    Net Interest Income

    Net interest income totaled $23.4 million for the third quarter of 2013, up by $1.0 million from the second quarter of 2013. The net interest margin for the third quarter of 2013 was 3.29%, compared to 3.26% for the second quarter of 2013. Included in net interest income were:

    • A relatively large level of commercial loan prepayment penalty fee income of $457 thousand received in the third quarter of 2013, which had a 6 basis point impact on the net interest margin and a 7 basis point impact on the yield on interest-earning assets.
    • As a result of the second quarter 2013 redemption of certain junior subordinated debentures, unamortized debt issuance costs of $244 thousand were expensed and classified as interest expense in that quarter. This had a 4 basis point impact on both the net interest margin and the cost of funds for the second quarter.

    Excluding these items, the net interest margin declined from 3.30% for the second quarter of 2013 to 3.23% for the third quarter of 2013. Significant linked quarter changes, on this basis, included the following:

    • Average interest-earning assets for the third quarter of 2013 increased by $67.0 million, reflecting an increase of $42.4 million in average interest-bearing cash and short-term investments largely resulting from seasonal deposit inflows and growth of $22.3 million in average loan balances, primarily concentrated in the residential loan portfolio.
    • Average interest-bearing liabilities for the third quarter of 2013 increased by $46.8 million, excluding the impact of the second quarter redemption of junior subordinated debentures, reflecting a $44.7 million increase in average interest-bearing deposits. Average demand balances for the third quarter of 2013 rose by $18.9 million.
    • The yield on interest-earning assets declined by 12 basis points from the previous quarter, while the cost of funds improved by 6 basis points.

    Noninterest Income

    Noninterest income totaled $17.4 million for the third quarter of 2013, compared to $16.4 million for the previous quarter. Excluding the third quarter gains of $977 thousand related to the residential mortgage portfolio loan sale, noninterest income for the third quarter of 2013 was essentially flat compared to the previous quarter. Other significant linked quarter changes included the following:

    • Wealth management revenues were down by $283 thousand, or 4%, due to a decline of $290 thousand in tax preparation fees, which are typically concentrated in the second quarter.
    • Net gains on loan sales and commission on loans originated for others, excluding the portfolio loan sale gain described above, decreased by $579 thousand, or 17%, on a linked quarter basis, reflecting a lower level of mortgage loan refinancing activity due to rising market interest rates. Residential mortgage loans sold to the secondary market, excluding the $48.7 million sold from portfolio, amounted to $114 million, compared to $132 million in the previous quarter.
    • Merchant processing fee revenue rose by $746 thousand, or 29%, on a linked quarter basis, reflecting an increase in the volume of transactions processed for customers. See discussion regarding a corresponding increase in merchant processing costs described below.

    Noninterest Expenses

    Noninterest expenses totaled $25.5 million for the third quarter of 2013, compared to $25.0 million for the previous quarter. Included in noninterest expenses were:

    • Debt prepayment penalties of $1.1 million recognized in the third quarter of 2013. There were no debt prepayment penalties in the previous quarter.
    • A pension plan expense decrease of $124 thousand in the third quarter of 2013 due to the pension plan amendment and remeasurement described under the caption "Other Liabilities."

    Excluding these items, noninterest expenses for the third quarter of 2013 decreased by $458 thousand, or 2%, compared to the previous quarter. Other significant linked quarter changes included the following:

    • Salaries and employee benefits expense, excluding the impact of the pension plan amendment and remeasurement, decreased by $778 thousand on a linked quarter basis largely due to decreases in business development-based compensation in the mortgage banking area.
    • Merchant processing expenses rose by $651 thousand, or 29%, on a linked quarter basis. See the discussion above regarding the corresponding increase in merchant processing fee income.

    Asset Quality

    Total nonaccrual loans totaled $19.5 million, or 0.83% of total loans, at September 30, 2013, compared to $20.0 million, or 0.84%, at June 30, 2013. Total past due loans amounted to $24.0 million, or 1.02% of total loans, at September 30, 2013, compared to $26.1 million, or 1.09%, at June 30, 2013.

    The loan loss provision charged to earnings in the third quarter of 2013 remained unchanged from the previous quarter level of $700 thousand. Net charge-offs amounted to $576 thousand in the third quarter of 2013, compared to $4.0 million in the second quarter of 2013, which was comprised primarily of a $4.0 million charge-off on one commercial mortgage loan. The allowance for loan losses was $28.0 million, or 1.19% of total loans, at September 30, 2013, compared to $27.9 million, or 1.17% of total loans, at June 30, 2013.

    Loans

    Total loans declined by $31.2 million from June 30, 2013. This decline was largely due to the sale of residential mortgage portfolio loans totaling $48.7 million with a weighted average interest rate of 3.94% and a weighted average remaining maturity of 24 years. This sale resulted in a gain of $977 thousand, which was included in net gains on sales of loans and commissions on loans originated for others in the third quarter of 2013. The purpose of this sale was primarily to reduce the interest rate risk exposure associated with holding longer term fixed rate assets in a rising rate environment. Total loans were up by $59.8 million, or 3%, from December 31, 2012.

    Investment Securities

    The investment securities portfolio increased by $68.8 million from June 30, 2013. During the third quarter of 2013, $90.5 million of mortgage-backed securities and U.S. government agency debt securities with a weighted average yield of 2.80% were purchased to redeploy excess liquidity from deposit growth, add to on-balance sheet liquidity and to provide a source of collateralization for public and institutional deposits. The investment securities portfolio increased by $3.5 million from December 31, 2012.

    Deposits and Borrowings

    Total deposits grew by $150.2 million, or 7%, from June 30, 2013, including an increase of $61.4 million, or 9%, in demand deposits and NOW account balances. Total deposits were up by $142.2 million, or 6%, from December 31, 2012.

    FHLBB advances decreased by $84.9 million, or 23%, from June 30, 2013 and by $72.7 million, or 20%, from December 31, 2012. In the third quarter of 2013, $24.5 million of FHLBB advances with a weighted average interest rate of 2.48% and a weighted average remaining maturity of 42 months were prepaid and as a result, debt prepayment penalty expense of $1.1 million was recognized.

    Junior subordinated debentures declined by $10.3 million from the balance of $33.0 million at December 31, 2012, reflecting the June 2013 redemption of certain junior subordinated debentures.

    Other Liabilities

    Other liabilities decreased by $15.5 million from June 30, 2013 and by $26.6 million from December 31, 2012, reflecting a decline in pension plan liabilities. Effective September 19, 2013, the Corporation amended its defined benefit pension plan to freeze benefit accruals after a ten-year transition period ending in December 2023. Due to the amendment, a remeasurement of the value of pension plan liabilities was conducted and as a result:

    • Pension plan liabilities were reduced by $17.5 million and the accumulated other comprehensive income component of shareholders' equity was increased by $11.2 million, after tax. The remeasurement impact also reflected an increase in the discount rates used to measure the present value of pension plan liabilities as a result of an increase in market rates of interest.
    • Pension plan expense in the third quarter was reduced by $124 thousand.
    • Fourth quarter 2013 pension plan expense is expected to be approximately $500 thousand lower than pre-amendment quarterly expense levels.

    Capital Management

    Capital levels continued to exceed the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 13.44% at September 30, 2013, compared to 13.06% at June 30, 2013 and 13.26% at December 31, 2012.

    Total shareholder's equity was $323.6 million at September 30, 2013, up by $20.2 million from June 30, 2013, including $10.0 million of earnings retention, the $11.2 million after tax beneficial impact of the change in pension plan liabilities described above and a reduction of $4.3 million for the quarterly dividend declaration. Total shareholder's equity increased by $27.9 million from the balance at December 31, 2012.

    Dividends Declared

    The Board of Directors declared a quarterly dividend of 26 cents per share for the quarter ended September 30, 2013. This represents a one cent increase over the dividend paid last quarter and is the Corporation’s second dividend increase in the past year. The dividend was paid on October 11, 2013 to shareholders of record on September 30, 2013.

    Conference Call

    Washington Trust will host a conference call to discuss third quarter results, business highlights and outlook on Tuesday, October 22, 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 10034144; the audio replay will be available until 9:00 a.m. on November 6, 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 December 31, 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, additional 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)         Sep 30,
    2013
            Dec 31,
    2012
     
    Assets:              
    Cash and due from banks $136,724$73,474
    Short-term investments 3,204 19,176
    Mortgage loans held for sale, at fair value; amortized cost $12,772 in 2013 and $48,370 in 2012 13,105 50,056
    Securities:
    Available for sale, at fair value; amortized cost $380,994 in 2013 and $363,408 in 2012 388,085 375,498
    Held to maturity, at cost; fair value $31,962 in 2013 and $41,420 in 2012         31,264         40,381  
    Total securities 419,349 415,879
    Federal Home Loan Bank stock, at cost 37,730 40,418
    Loans:
    Commercial 1,297,892 1,252,419
    Residential real estate 731,692 717,681
    Consumer         324,182         323,903  
    Total loans 2,353,766 2,294,003
    Less allowance for loan losses         28,008         30,873  
    Net loans 2,325,758 2,263,130
    Premises and equipment, net 25,921 27,232
    Investment in bank-owned life insurance 56,214 54,823
    Goodwill 58,114 58,114
    Identifiable intangible assets, net 5,657 6,173
    Other assets         50,182         63,409  
    Total assets         $3,131,958         $3,071,884  
    Liabilities:
    Deposits:
    Demand deposits $420,075$379,889
    NOW accounts 301,250 291,174
    Money market accounts 623,631 496,402
    Savings accounts 292,765 274,934
    Time deposits         817,110         870,232  
    Total deposits 2,454,831 2,312,631
    Federal Home Loan Bank advances 288,485 361,172
    Junior subordinated debentures 22,681 32,991
    Other borrowings 797 1,212
    Other liabilities         41,579         68,226  
    Total liabilities         2,808,373         2,776,232  
    Shareholders’ Equity:
    Common stock of $.0625 par value; authorized 30,000,000 shares; issued and outstanding 16,589,472 shares in 2013 and 16,379,771 shares in 2012 1,037 1,024
    Paid-in capital 96,536 91,453
    Retained earnings 227,352 213,674
    Accumulated other comprehensive loss         (1,340 )       (10,499 )
    Total shareholders’ equity         323,585         295,652  
    Total liabilities and shareholders’ equity         $3,131,958         $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         Nine Months
    Periods Ended September 30,       2013       2012         2013       2012  
    Interest income:                
    Interest and fees on loans     $26,096$25,840$76,832$76,547
    Interest on securities: Taxable 2,582 3,672 8,003 12,118
    Nontaxable 629 660 1,935 2,035
    Dividends on corporate stock and Federal Home Loan Bank stock 36 52 113 207
    Other interest income       47       27         99       64  
    Total interest income       29,390       30,251         86,982       90,971  
    Interest expense:
    Deposits 3,064 3,391 9,354 10,210
    Federal Home Loan Bank advances 2,693 3,726 8,109 11,809
    Junior subordinated debentures 241 393 1,243 1,176
    Other interest expense       4       5         12       244  
    Total interest expense       6,002       7,515         18,718       23,439  
    Net interest income 23,388 22,736 68,264 67,532
    Provision for loan losses       700       600         2,000       2,100  
    Net interest income after provision for loan losses       22,688       22,136         66,264       65,432  
    Noninterest income:
    Wealth management services:
    Trust and investment advisory fees 6,291 5,877 18,587 17,474
    Mutual fund fees 1,075 1,024 3,174 3,051
    Financial planning, commissions and other service fees       263       292         1,254       1,326  
    Wealth management services 7,629 7,193 23,015 21,851
    Service charges on deposit accounts 855 833 2,436 2,356
    Merchant processing fees 3,359 3,207 7,949 7,927
    Card interchange fees 731 675 2,013 1,844
    Income from bank-owned life insurance 464 1,006 1,392 1,969
    Net gains on loan sales and commissions on loans originated for others 3,883 3,504 11,534 9,616
    Net realized gains on securities 299
    Net gains on interest rate swap contracts 54 63 225 87
    Equity in earnings (losses) of unconsolidated subsidiaries (47 ) 27 (65 ) 114
    Other income       472       413         1,233       1,473  
    Noninterest income, excluding other-than-temporary impairment losses 17,400 16,921 49,732 47,536
    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       17,400       16,921         46,960       47,327  
    Noninterest expense:
    Salaries and employee benefits 14,640 15,214 45,624 44,125
    Net occupancy 1,404 1,468 4,282 4,521
    Equipment 1,222 1,168 3,658 3,418
    Merchant processing costs 2,862 2,707 6,746 6,690
    Outsourced services 878 845 2,590 2,660
    FDIC deposit insurance costs 448 427 1,330 1,311
    Legal, audit and professional fees 529 598 1,691 1,599
    Advertising and promotion 312 445 1,143 1,295
    Amortization of intangibles 170 182 516 555
    Foreclosed property costs 38 136 222 604
    Debt prepayment penalties 1,125 1,173 1,125 2,134
    Other expenses       1,920       1,927         5,810       6,005  
    Total noninterest expense       25,548       26,290         74,737       74,917  
    Income before income taxes 14,540 12,767 38,487 37,842
    Income tax expense       4,580       3,867         12,123       11,791  
    Net income       $9,960       $8,900         $26,364       $26,051  
     
    Weighted average common shares outstanding - basic 16,563 16,366 16,473 16,351
    Weighted average common shares outstanding - diluted 16,696 16,414 16,600 16,392
    Per share information: Basic earnings per common share $0.60$0.54$1.59$1.59
    Diluted earnings per common share $0.59$0.54$1.58$1.58
    Cash dividends declared per share $0.26$0.24$0.76$0.70
     
     
    Washington Trust Bancorp, Inc. and Subsidiaries
    SELECTED FINANCIAL HIGHLIGHTS (unaudited)
          At or for the Quarters Ended
    (Dollars and shares in thousands, except per share amounts)       Sep 30,
    2013
        Jun 30,
    2013
        Mar 31,
    2013
        Dec 31,
    2012
        Sep 30,
    2012
     
    Financial Data:        
    Total assets $3,131,958$3,061,307$3,051,848$3,071,884$3,048,868
    Total loans 2,353,766 2,384,980 2,325,045 2,294,003 2,256,697
    Total securities 419,349 350,517 387,102 415,879 483,858
    Total deposits 2,454,831 2,304,609 2,319,641 2,312,631 2,234,659
    Total shareholders' equity 323,585 303,370 301,291 295,652 298,394
    Net interest income 23,388 22,409 22,467 23,164 22,736
    Provision for loan losses 700 700 600 600 600
    Noninterest income, excluding OTTI losses 17,400 16,394 15,938 17,899 16,921
    Net OTTI losses recognized in earnings (2,772 ) (12 )
    Noninterest expenses 25,548 25,005 24,184 27,421 26,290
    Income tax expense 4,580 4,115 3,428 4,007 3,867
    Net income 9,960 8,983 7,421 9,023 8,900
     
    Share Data:
    Basic earnings per common share $0.60$0.54$0.45$0.55$0.54
    Diluted earnings per common share $0.59$0.54$0.45$0.55$0.54
    Dividends declared per share $0.26$0.25$0.25$0.24$0.24
    Book value per share $19.51$18.40$18.34$18.05$18.23
    Tangible book value per share - Non-GAAP (1) $15.66$14.52$14.44$14.13$14.29
    Market value per share $31.43$28.52$27.38$26.31$26.27
    Shares outstanding at end of period 16,589 16,487 16,425 16,380 16,371
    Weighted average common shares outstanding - basic 16,563 16,454 16,401 16,376 16,366
    Weighted average common shares outstanding - diluted 16,696 16,581 16,449 16,425 16,414
     
    Key Ratios:
    Return on average assets 1.29 % 1.18 % 0.98 % 1.19 % 1.17 %
    Return on average tangible assets - Non-GAAP (1) 1.31 % 1.21 % 1.01 % 1.21 % 1.19 %
    Return on average equity 12.82 % 11.84 % 9.91 % 12.01 % 12.02 %
    Return on average tangible equity - Non-GAAP (1) 16.13 % 15.01 % 12.62 % 15.29 % 15.37 %
     
    Capital Ratios:
    Tier 1 risk-based capital 12.23% (i) 11.85 % 12.25 % 12.01 % 11.93 %
    Total risk-based capital 13.44% (i) 13.06 % 13.50 % 13.26 % 13.18 %
    Tier 1 leverage ratio 9.41% (i) 9.32 % 9.53 % 9.30 % 9.11 %
    Equity to assets 10.33 % 9.91 % 9.87 % 9.62 % 9.79 %
    Tangible equity to tangible assets - Non-GAAP (1) 8.47 % 7.99 % 7.94 % 7.69 % 7.84 %

    (i) - estimated

     
    Wealth Management Assets under Administration:
    Balance at beginning of period $4,433,574$4,420,076$4,199,640$4,242,520$4,079,913
    Net investment (depreciation) appreciation & income 190,931 (20,956 ) 213,979 (5,887 ) 155,427
    Net client cash flows       (28,911 )   34,454     6,457     (36,993 )   7,180  
    Balance at end of period       $4,595,594     $4,433,574     $4,420,076     $4,199,640     $4,242,520  

    (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)
             
    Nine Months Ended
    (Dollars and shares in thousands, except per share amounts)       Sep 30,
    2013
          Sep 30,
    2012
     
    Financial Data:
    Net interest income $68,264$67,532
    Provision for loan losses 2,000 2,100
    Noninterest income, excluding OTTI losses 49,732 47,536
    Net OTTI losses recognized in earnings (2,772 ) (209 )
    Noninterest expenses 74,737 74,917
    Income tax expense 12,123 11,791
    Net income 26,364 26,051
     
    Share Data:
    Basic earnings per common share $1.59$1.59
    Diluted earnings per common share $1.58$1.58
    Dividends declared per share $0.76$0.70
     
    Weighted average common shares outstanding - basic 16,473 16,351
    Weighted average common shares outstanding - diluted 16,600 16,392
     
    Key Ratios:
    Return on average assets 1.15 % 1.15 %
    Return on average tangible assets - Non-GAAP (1) 1.18 % 1.17 %
    Return on average equity 11.54 % 11.95 %
    Return on average tangible equity - Non-GAAP (1) 14.61 % 15.38 %
     
    Asset Quality Data:
    Allowance for Loan Losses:
    Balance at beginning of period $30,873$29,802
    Provision charged to earnings 2,000 2,100
    Charge-offs (5,319 ) (1,801 )
    Recoveries       454       651  
    Balance at end of period       $28,008       $30,752  
     
    Net Loan Charge-Offs (Recoveries):
    Commercial mortgages $4,524 ($169 )
    Other commercial 132 851
    Residential real estate mortgages 45 218
    Consumer       164       250  
    Total       $4,865       $1,150  
     
    Net charge-offs to average loans (annualized) 0.27 % 0.07 %
     
    Wealth Management Assets Under Administration:
    Balance at beginning of period $4,199,640$3,900,061
    Net investment appreciation & income 383,954 321,686
    Net client cash flows       12,000       20,773  
    Balance at end of period       $4,595,594       $4,242,520  

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

     
     
    Washington Trust Bancorp, Inc. and Subsidiaries
    SELECTED FINANCIAL HIGHLIGHTS (unaudited)
          For the Quarters Ended
            Sep 30,
    2013
          Jun 30,
    2013
          Mar 31,
    2013
          Dec 31,
    2012
          Sep 30,
    2012
     
    Average Yield / Rate (taxable equivalent basis):                
    Assets:
    Commercial loans 4.67 % 4.58 % 4.70 % 4.90 % 4.94 %
    Residential real estate loans, including mortgage loans held for sale 4.06 % 4.14 % 4.26 % 4.23 % 4.32 %
    Consumer loans 3.78 % 3.81 % 3.84 % 3.86 % 3.89 %
    Total loans 4.35 % 4.34 % 4.44 % 4.53 % 4.59 %
    Cash, federal funds sold and other short-term investments 0.21 % 0.22 % 0.21 % 0.26 % 0.26 %
    FHLBB stock 0.38 % 0.42 % 0.39 % 0.48 % 0.51 %
    Taxable debt securities 3.44 % 3.52 % 3.56 % 3.49 % 3.50 %
    Nontaxable debt securities 5.87 % 5.94 % 5.98 % 5.89 % 5.83 %
    Corporate stocks % % % % %
    Total securities 3.88 % 3.97 % 3.98 % 3.86 % 3.83 %
    Total interest-earning assets 4.12 % 4.17 % 4.24 % 4.31 % 4.34 %
    Liabilities:
    Interest-bearing demand deposits % % % % %
    NOW accounts 0.06 % 0.06 % 0.06 % 0.07 % 0.06 %
    Money market accounts 0.31 % 0.29 % 0.29 % 0.28 % 0.26 %
    Savings accounts 0.06 % 0.07 % 0.07 % 0.09 % 0.11 %
    Time deposits 1.23 % 1.25 % 1.28 % 1.32 % 1.33 %
    FHLBB advances 3.25 % 3.29 % 3.21 % 3.27 % 3.18 %
    Junior subordinated debentures 4.22 % 7.82 % 4.79 % 4.75 % 4.74 %
    Other 4.50 % 5.87 % 1.77 % 5.51 % 6.33 %
    Total interest-bearing liabilities 1.01 % 1.11 % 1.11 % 1.19 % 1.27 %
     
    Interest rate spread (taxable equivalent basis) 3.11 % 3.06 % 3.13 % 3.12 % 3.07 %
    Net interest margin (taxable equivalent basis) 3.29 % 3.26 % 3.32 % 3.33 % 3.28 %
     
     
          At September 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 $54,461$1,208 $— $55,669
    Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises 218,598 9,943 (36 ) 228,505
    States and political subdivisions 64,833 2,507 67,340
    Trust preferred securities:
    Individual name issuers 30,705 (5,930 ) 24,775
    Collateralized debt obligations 1,264 (839 ) 425
    Corporate bonds       11,133     254     (16 )     11,371
    Total securities available for sale       380,994     13,912     (6,821 )     388,085
    Held to Maturity:
    Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises       31,264     698           31,962
    Total securities held to maturity       31,264     698           31,962
    Total securities       $412,258     $14,610     ($6,821 )     $420,047

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

     
     
    Washington Trust Bancorp, Inc. and Subsidiaries
    SELECTED FINANCIAL HIGHLIGHTS (unaudited)
          Period End Balances At
    (Dollars in thousands)       Sep 30,
    2013
        Jun 30,
    2013
        Mar 31,
    2013
        Dec 31,
    2012
        Sep 30,
    2012
    Loans:                
    Commercial:     Mortgages $727,375$758,437$729,968$710,813$693,221
    Construction & development 51,951 39,449 34,179 27,842 25,132
          Other       518,566     512,228     513,000     513,764     500,974
    Total commercial 1,297,892 1,310,114 1,277,147 1,252,419 1,219,327
    Residential real estate: Mortgages 711,427 728,158 702,418 692,798 692,659
          Homeowner construction       20,265     20,713     21,943     24,883     22,753
    Total residential real estate 731,692 748,871 724,361 717,681 715,412
    Consumer: Home equity lines 227,063 228,367 226,640 226,861 227,549
    Home equity loans 41,158 41,312 40,134 39,329 39,452
          Other       55,961     56,316     56,763     57,713     54,957
          Total consumer       324,182     325,995     323,537     323,903     321,958
          Total loans       $2,353,766     $2,384,980     $2,325,045     $2,294,003     $2,256,697
     
     
          At September 30, 2013
    (Dollars in thousands)       Balance     % of Total  
    Commercial Real Estate Loans by Property Location:    
    Rhode Island, Connecticut, Massachusetts$748,013 96.0 %
    New York 22,533 2.9 %
    New Hampshire       8,780     1.1 %
    Total commercial real estate loans (1)       $779,326     100.0 %

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

         
     
    At September 30, 2013
    (Dollars in thousands)       Balance     % of Total
    Residential Mortgages by Property Location:    
    Rhode Island, Connecticut, Massachusetts$709,595 96.9 %
    New York, Virginia, New Jersey, Maryland, Pennsylvania, District of Columbia 9,371 1.3 %
    New Hampshire 6,750 0.9 %
    Ohio 2,600 0.4 %
    Washington, Oregon 1,362 0.2 %
    Georgia 1,088 0.1 %
    New Mexico 470 0.1 %
    Other       456     0.1 %
    Total residential mortgages       $731,692     100.0 %
     
     
          Period End Balances At
    (Dollars in thousands)       Sep 30,
    2013
        Jun 30,
    2013
        Mar 31,
    2013
        Dec 31,
    2012
        Sep 30,
    2012
    Deposits:                
    Demand deposits $420,075$358,797$375,156$379,889$352,330
    NOW accounts 301,250 301,096 294,136 291,174 267,495
    Money market accounts 623,631 540,012 503,414 496,402 459,671
    Savings accounts 292,765 293,405 284,983 274,934 268,191
    Time deposits       817,110     811,299     861,952     870,232     886,972
    Total deposits       $2,454,831     $2,304,609     $2,319,641     $2,312,631     $2,234,659
     
    Out-of-market brokered certificates of deposits included in time deposits $106,231$96,177$103,045$102,636$98,603
    In-market deposits, excluding out-of-market brokered certificates of deposit $2,348,600$2,208,432$2,216,596$2,209,995$2,136,056
     
     
    Washington Trust Bancorp, Inc. and Subsidiaries
    SELECTED FINANCIAL HIGHLIGHTS (unaudited)
          Period End Balances At
    (Dollars in thousands)       Sep 30,
    2013
        Jun 30,
    2013
        Mar 31,
    2013
        Dec 31,
    2012
        Sep 30,
    2012
    Asset Quality Data:                
    Nonperforming Assets:
    Commercial mortgages $8,956$9,976$14,953$10,681$5,956
    Commercial construction and development
    Other commercial 1,248 1,400 3,122 4,412 3,201
    Residential real estate mortgages 8,095 7,526 6,699 6,158 7,127
    Consumer       1,204       1,124       901       1,292       1,463  
    Total nonaccrual loans $19,503$20,026$25,675$22,543$17,747
    Nonaccrual investment securities 425 397 404 843 929
    Property acquired through foreclosure or repossession       594       1,230       2,625       2,047       2,447  
    Total nonperforming assets       $20,522       $21,653       $28,704       $25,433       $21,123  
     
    Total past due loans to total loans 1.02 % 1.09 % 1.13 % 1.22 % 1.05 %
    Nonperforming assets to total assets 0.66 % 0.71 % 0.94 % 0.83 % 0.69 %
    Nonaccrual loans to total loans 0.83 % 0.84 % 1.10 % 0.98 % 0.79 %
    Allowance for loan losses to nonaccrual loans 143.61 % 139.24 % 121.28 % 136.95 % 173.28 %
    Allowance for loan losses to total loans 1.19 % 1.17 % 1.34 % 1.35 % 1.36 %
     
    Troubled Debt Restructured Loans:
    Accruing troubled debt restructured loans:
    Commercial mortgages $23,892$19,018$9,600$9,569$9,131
    Other commercial 1,576 2,602 6,554 6,577 6,880
    Residential real estate mortgages 870 876 1,599 1,123 386
    Consumer       239       242       244       154       158  
    Accruing troubled debt restructured loans       26,577       22,738       17,997       17,423       16,555  
    Nonaccrual troubled debt restructured loans:
    Commercial mortgages
    Other commercial 547 590 721 2,063 2,306
    Residential real estate mortgages 144 155 688 1,697
    Consumer       40       42       42       44       46  
    Nonaccrual troubled debt restructured loans       587       776       918       2,795       4,049  
    Total troubled debt restructured loans       $27,164       $23,514       $18,915       $20,218       $20,604  
     
     
    Washington Trust Bancorp, Inc. and Subsidiaries
    SELECTED FINANCIAL HIGHLIGHTS (unaudited)
          Period End Balances At
    (Dollars in thousands)       Sep 30,
    2013
        Jun 30,
    2013
        Mar 31,
    2013
        Dec 31,
    2012
        Sep 30,
    2012
    Past Due Loans:                
    Loans 30-59 Days Past Due:
    Commercial mortgages $— $— $— $373$3,978
    Other commercial loans 2,648 505 689 260 2,719
    Residential real estate mortgages 2,624 4,051 3,891 4,840 2,368
    Consumer loans       1,013     1,588     1,534     1,134     1,876
    Loans 30-59 days past due       $6,285     $6,144     $6,114     $6,607     $10,941
     
    Loans 60-89 Days Past Due:
    Commercial mortgages $730$536$193$408$874
    Other commercial loans 8 34 341 296 1,169
    Residential real estate mortgages 1,960 1,697 1,451 1,951 821
    Consumer loans       328     689     461     385     1,213
    Loans 60-89 days past due       $3,026     $2,956     $2,446     $3,040     $4,077
     
    Loans 90 Days or more Past Due:
    Commercial mortgages $8,226$8,895$9,852$10,300$2,495
    Other commercial loans 929 3,428 2,961 3,647 1,366
    Residential real estate mortgages 4,843 4,266 4,327 3,658 3,924
    Consumer loans       693     415     484     844     811
    Loans 90 days or more past due       $14,691     $17,004     $17,624     $18,449     $8,596
     
    Total Past Due Loans:
    Commercial mortgages $8,956$9,431$10,045$11,081$7,347
    Other commercial loans 3,585 3,967 3,991 4,203 5,254
    Residential real estate mortgages 9,427 10,014 9,669 10,449 7,113
    Consumer loans       2,034     2,692     2,479     2,363     3,900
    Total past due loans       $24,002     $26,104     $26,184     $28,096     $23,614
     
    Accruing loans 90 days or more past due $— $2,431 $— $— $—
    Nonaccrual loans included in past due loans $17,275$17,208$19,000$20,979$14,471
     
     
          For the Quarters Ended
    (Dollars in thousands)       Sep 30,
    2013
          Jun 30,
    2013
          Mar 31,
    2013
          Dec 31,
    2012
          Sep 30,
    2012
    Allowance for Loan Losses:                
    Balance at beginning of period $27,884$31,139$30,873$30,752$30,448
    Provision charged to earnings 700 700 600 600 600
    Charge-offs (770 ) (4,175 ) (374 ) (534 ) (424 )
    Recoveries       194       220       40       55       128  
    Balance at end of period       $28,008       $27,884       $31,139       $30,873       $30,752  
     
    Net Loan Charge-Offs (Recoveries):
    Commercial mortgages $602$3,814$108$212$212
    Other commercial (2 ) 63 71 225 (22 )
    Residential real estate mortgages 36 9 39 41
    Consumer       (24 )     42       146       3       65  
    Total       $576       $3,955       $334       $479       $296  
     
     

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

    Washington Trust Bancorp, Inc. and Subsidiaries
    CONSOLIDATED AVERAGE BALANCE SHEETS (unaudited)
          Three Months Ended  
            September 30, 2013     June 30, 2013     September 30, 2012
    Average Balance   Interest   Yield/

    Rate

        Average Balance   Interest   Yield/

    Rate

        Average Balance   Interest   Yield/

    Rate

    (Dollars in thousands)                      
    Assets:    
    Commercial loans $1,297,705$15,274   4.67 % $1,291,244$14,747 4.58 % $1,193,006$14,814 4.94 %
    Residential real estate loans, including mortgage loans held for sale 780,323 7,991 4.06 % 762,363 7,877 4.14 % 739,744 8,041 4.32 %
    Consumer loans       323,398     3,083       3.78 %     325,539     3,090     3.81 %     320,431     3,133     3.89 %
    Total loans 2,401,426 26,348 4.35 % 2,379,146 25,714 4.34 % 2,253,181 25,988 4.59 %
    Cash, federal funds sold and short-term investments 87,048 47 0.21 % 44,690 24 0.22 % 40,984 27 0.26 %
    FHLBB stock 37,730 36 0.38 % 37,730 39 0.42 % 40,418 52 0.51 %
     
    Taxable debt securities 297,532 2,582 3.44 % 293,586 2,576 3.52 % 417,525 3,672 3.50 %
    Nontaxable debt securities 64,836 960 5.87 % 66,468 985 5.94 % 68,815 1,008 5.83 %
    Corporate stocks                 %             %             %
    Total securities       362,368     3,542       3.88 %     360,054     3,561     3.97 %     486,340     4,680     3.83 %
    Total interest-earning assets 2,888,572 29,973 4.12 % 2,821,620 29,338 4.17 % 2,820,923 30,747 4.34 %
    Noninterest-earning assets       209,656               213,336               224,280          
    Total assets       $3,098,228               $3,034,956               $3,045,203          
    Liabilities and Shareholders' Equity:
    Interest-bearing demand deposits $6,688 $— % $135 $— % $— $— %
    NOW accounts 293,634 45 0.06 % 289,858 45 0.06 % 260,829 41 0.06 %
    Money market accounts 591,860 456 0.31 % 535,107 381 0.29 % 429,538 283 0.26 %
    Savings accounts 295,821 47 0.06 % 286,547 47 0.07 % 267,614 74 0.11 %
    Time deposits 811,850 2,516 1.23 % 843,462 2,623 1.25 % 896,770 2,993 1.33 %
    FHLBB advances 328,705 2,693 3.25 % 326,839 2,679 3.29 % 466,135 3,726 3.18 %
    Junior subordinated debentures 22,681 241 4.22 % 31,405 612 7.82 % 32,991 393 4.74 %
    Other       353     4       4.50 %     205     3     5.87 %     314     5     6.33 %
    Total interest-bearing liabilities 2,351,592 6,002 1.01 % 2,313,558 6,390 1.11 % 2,354,191 7,515 1.27 %
    Demand deposits 384,665 365,747 337,547
    Other liabilities 51,186 52,249 57,315
    Shareholders' equity       310,785               303,402               296,150          
    Total liabilities and shareholders' equity       $3,098,228               $3,034,956               $3,045,203          
    Net interest income (FTE)           $23,971                 $22,948               $23,232      
    Interest rate spread               3.11 %             3.06 %             3.07 %
    Net interest margin               3.29 %             3.26 %             3.28 %
     
     

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

    (Dollars in thousands)       Three Months Ended
           

    Sep 30,
    2013

       

    Jun 30,
    2013

       

    Sep 30,
    2012

    Commercial loans $252     $201     $148
    Nontaxable debt securities 331 338 348
    Corporate stocks              
    Total       $583     $539     $496
     
     
    Washington Trust Bancorp, Inc. and Subsidiaries
    CONSOLIDATED AVERAGE BALANCE SHEETS (unaudited)
    Nine Months Ended September 30,       2013   2012
         

    Average
    Balance

       

    Interest

       

    Yield/
    Rate

       

    Average
    Balance

        Interest    

    Yield/
    Rate

    (Dollars in thousands)                            
    Assets:
    Commercial loans $1,277,753$44,443 4.65 % $1,160,531$43,702 5.03 %
    Residential real estate loans, including mortgage loans held for sale 766,162 23,805 4.15 % 724,922 23,925 4.41 %
    Consumer loans       323,871     9,226     3.81 %     320,274     9,297     3.88 %
    Total loans 2,367,786 77,474 4.37 % 2,205,727 76,924 4.66 %
    Cash, federal funds sold and short-term investments 61,945 99 0.21 % 41,125 64 0.21 %
    FHLBB stock 38,409 113 0.39 % 40,812 158 0.52 %
     
    Taxable debt securities 304,854 8,003 3.51 % 451,602 12,118 3.58 %
    Nontaxable debt securities 66,444 2,949 5.93 % 70,389 3,107 5.90 %
    Corporate stocks               %     1,215     66     7.26 %
    Total securities       371,298     10,952     3.94 %     523,206     15,291     3.90 %
    Total interest-earning assets 2,839,438 88,638 4.17 % 2,810,870 92,437 4.39 %
    Noninterest-earning assets       211,108                   222,387              
    Total assets       $3,050,546                   $3,033,257              
    Liabilities and Shareholders' Equity:
    Interest-bearing demand deposits $2,299 $— % $— $— %
    NOW accounts 288,871 135 0.06 % 253,895 127 0.07 %
    Money market accounts 541,160 1,189 0.29 % 415,661 740 0.24 %
    Savings accounts 287,360 139 0.06 % 258,464 215 0.11 %
    Time deposits 841,418 7,891 1.25 % 895,864 9,128 1.36 %
    FHLBB advances 333,544 8,109 3.25 % 494,615 11,809 3.19 %
    Junior subordinated debentures 28,988 1,243 5.73 % 32,991 1,176 4.76 %
    Other       565     12     2.84 %     6,706     244     4.86 %
    Total interest-bearing liabilities 2,324,205 18,718 1.08 % 2,358,196 23,439 1.33 %
    Demand deposits 370,508 329,983
    Other liabilities 51,250 54,456
    Shareholders' equity       304,583                   290,622              
    Total liabilities and shareholders' equity       $3,050,546                   $3,033,257              
    Net interest income (FTE)             $69,920                   $68,998        
    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)            
    Nine Months Ended September 30,       2013       2012
    Commercial loans $642$377
    Nontaxable debt securities 1,014 1,072
    Corporate stocks             17
    Total       $1,656       $1,466
     
     
    Washington Trust Bancorp, Inc. and Subsidiaries
    SUPPLEMENTAL INFORMATION - Non-GAAP Financial Measures (unaudited)
          At or for the Quarters Ended
    (Dollars in thousands, except per share amounts)       Sep 30,
    2013
        Jun 30,
    2013
        Mar 31,
    2013
        Dec 31,
    2012
        Sep 30,
    2012
     
    Calculation of Tangible Book Value per Share:        
    Total shareholders' equity at end of period $323,585$303,370$301,291$295,652$298,394
    Less:
    Goodwill 58,114 58,114 58,114 58,114 58,114
    Identifiable intangible assets, net       5,657     5,827     6,000     6,173     6,346  
    Total tangible shareholders' equity at end of period       $259,814     $239,429     $237,177     $231,365     $233,934  
     
    Shares outstanding at end of period       16,589     16,487     16,425     16,380     16,371  
     
    Book value per share - GAAP       $19.51     $18.40     $18.34     $18.05     $18.23  
    Tangible book value per share - Non-GAAP       $15.66     $14.52     $14.44     $14.12     $14.29  
     
    Calculation of Tangible Equity to Tangible Assets:
    Total tangible shareholders' equity at end of period       $259,814     $239,429     $237,177     $231,365     $233,934  
     
    Total assets at end of period $3,131,958$3,061,307$3,051,848$3,071,884$3,048,868
    Less:
    Goodwill 58,114 58,114 58,114 58,114 58,114
    Identifiable intangible assets, net       5,657     5,827     6,000     6,173     6,346  
    Total tangible assets at end of period       $3,068,187     $2,997,366     $2,987,734     $3,007,597     $2,984,408  
     
    Equity to assets - GAAP       10.33 %   9.91 %   9.87 %   9.62 %   9.79 %
    Tangible equity to tangible assets - Non-GAAP       8.47 %   7.99 %   7.94 %   7.69 %   7.84 %
     
    Calculation of Return on Average Tangible Assets:
    Net income       $9,960     $8,983     $7,421     $9,023     $8,900  
     
    Total average assets $3,098,228$3,034,956$3,017,583$3,044,764$3,045,203
    Less:
    Average goodwill 58,114 58,114 58,114 58,114 58,114
    Average identifiable intangible assets, net       5,739     5,912     6,085     6,257     6,434  
    Total average tangible assets       $3,034,375     $2,970,930     $2,953,384     $2,980,393     $2,980,655  
     
    Return on average assets - GAAP       1.29 %   1.18 %   0.98 %   1.19 %   1.17 %
    Return on average tangible assets - Non-GAAP       1.31 %   1.21 %   1.01 %   1.21 %   1.19 %
     
    Calculation of Return on Average Tangible Equity:
    Net income       $9,960     $8,983     $7,421     $9,023     $8,900  
     
    Total average shareholders' equity $310,785$303,402$299,436$300,430$296,150
    Less:
    Average goodwill 58,114 58,114 58,114 58,114 58,114
    Average identifiable intangible assets, net       5,739     5,912     6,085     6,257     6,434  
    Total average tangible shareholders' equity       $246,932     $239,376     $235,237     $236,059     $231,602  
     
    Return on average shareholders' equity - GAAP       12.82 %   11.84 %   9.91 %   12.01 %   12.02 %
    Return on average tangible shareholders' equity - Non-GAAP       16.13 %   15.01 %   12.62 %   15.29 %   15.37 %
     
     
    Washington Trust Bancorp, Inc. and Subsidiaries
    SUPPLEMENTAL INFORMATION - Non-GAAP Financial Measures (unaudited)
             
    Nine Months Ended
    (Dollars in thousands)       Sep 30,
    2013
          Sep 30,
    2012
     
    Calculation of return on average tangible assets:
    Net income       $26,364       $26,051  
     
    Total average assets $3,050,546$3,033,257
    Less:
    Average goodwill 58,114 58,114
    Average identifiable intangible assets, net       5,911       6,619  
    Total average tangible assets       $2,986,521       $2,968,524  
     
    Return on average assets - GAAP       1.15 %     1.15 %
    Return on average tangible assets - Non-GAAP       1.18 %     1.17 %
     
     
    Calculation of return on average tangible equity:
    Net income       $26,364       $26,051  
     
    Total average shareholders' equity $304,583$290,622
    Less:
    Average goodwill 58,114 58,114
    Average identifiable intangible assets, net       5,911       6,619  
    Total average tangible shareholders' equity       $240,558       $225,889  
     
    Return on average shareholders' equity - GAAP       11.54 %     11.95 %
    Return on average tangible shareholders' equity - Non-GAAP       14.61 %     15.38 %

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

    Source: Washington Trust Bancorp, Inc.