• Washington Trust Bancorp, Inc.
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  • Washington Trust Reports Record Quarterly Earnings
    Company Release - 10/24/2016 16:05

    WESTERLY, R.I., Oct. 24, 2016 (GLOBE NEWSWIRE) -- Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced net income of $12.3 million, or $0.72 per diluted share, for the third quarter of 2016, up from net income of $11.1 million, or $0.64 per diluted share, reported for the second quarter of 2016.

    "Our third quarter results reflect the strength and diversity of our business model, as we generated key revenues from our core business lines,” stated Joseph J. MarcAurele, Washington Trust Chairman and Chief Executive Officer.  “We also posted record earnings and surpassed $4 billion in total assets for the first time in our 216-year history."

    Selected highlights for the third quarter of 2016 include:

    • Returns on average equity and average assets were strong at 12.57% and 1.21%, respectively.  Comparable amounts for the second quarter of 2016 were 11.50% and 1.14%, respectively.

    • The latest quarter results included a $939 thousand, or 5 cent per diluted share, benefit resulting from the reduction of a contingent consideration liability.  Additional information is presented below under the heading Noninterest Expenses.

    • Total loans stood at $3.2 billion at September 30, 2016, up by 3% in the quarter and up by 8% from a year ago.

    • Total deposits grew by 9% in the third quarter and amounted to $3.0 billion at September 30, 2016.  Deposits were up by 7% from a year ago.

    • Wealth management assets at the end of quarter stood in excess of $6 billion and third quarter revenues totaled $9.6 million.  These were record highs for Washington Trust.

    • Mortgage banking revenues amounted to $3.7 million, up by 38% on a linked quarter basis.  Mortgage loans sold to the secondary market totaled $164 million, the highest quarterly volume in our history.

    • In September, Washington Trust declared a quarterly dividend of 37 cents per share, representing a 1 cent per share increase over the previous quarter and the second dividend increase in 2016.

    Net Interest Income
    Net interest income totaled $27.4 million for the third quarter of 2016, up by $603 thousand on a linked quarter basis.  The net interest margin was 2.94% for the third quarter of 2016, down by 11 basis points from the previous quarter.  The reduction in the net interest margin was primarily due to lower yields on interest-earning assets, resulting from additions to the investment securities portfolio and to a lesser extent, a reduction in the yield on the loan portfolio.  Significant linked quarter changes included:

    • Average interest-earning assets increased by $178 million from the prior quarter, reflecting a $95 million increase in the average balance of investment securities and a $58 million increase in the average balance of loans.  The yield on interest-earning assets was 3.55%, down by 10 basis points.

    • Average interest-bearing liabilities increased by $131 million from the prior quarter, reflecting an increase of $111 million in the average balance of wholesale funding balances and an increase of $19 million in average interest-bearing deposits.  The cost of interest-bearing funds was 0.76%, up by 2 basis points from the prior quarter.

    Noninterest Income
    Noninterest income totaled $17.3 million for the third quarter of 2016, up by $1.3 million, or 8%, from the second quarter of 2016.  Significant linked quarter changes included:

    • Wealth management revenues, our largest source of noninterest income, totaled $9.6 million for the third quarter, up by $142 thousand, or 1%, from the prior quarter.  The linked quarter change was affected by the second quarter recognition of $344 thousand in tax preparation fee income, which is typically concentrated in that quarter.  Wealth management assets under administration amounted to $6.1 billion at September 30, 2016, up by $152 million on a linked quarter basis.  Managed assets continue to represent over 90% of total wealth management assets at September 30, 2016.

    • Mortgage banking revenues totaled $3.7 million in the third quarter, up by $1.0 million, or 38%, from the previous quarter, reflecting both a higher volume of and yield on loans sold to the secondary market.  Residential mortgage loans sold to the secondary market amounted to $164 million in the third quarter, compared to $139 million in the previous quarter.

    • Income from bank-owned life insurance ("BOLI") amounted to $521 thousand in the third quarter, down by $569 thousand on a linked quarter basis.  This decrease was due to a $589 thousand non-taxable gain recognized in the second quarter due to the receipt of life insurance proceeds.

    • Loan related derivative income amounted to $1.2 million in the third quarter, up by $670 thousand from the prior quarter.

    Noninterest Expenses
    Noninterest expenses totaled $24.7 million for the third quarter of 2016, down by $1.4 million, or 5%, from the prior quarter.  The largest reason for the decline was a $939 thousand reduction in noninterest expenses resulting from a downward adjustment in the fair value of the contingent consideration liability previously recognized upon the completion of the acquisition of Halsey Associates, Inc. in 2015.  The remaining linked quarter decrease in noninterest expenses was due to a $497 thousand decline in salaries and employee benefit costs.  In the previous quarter, costs of $425 thousand were recognized for various employee severance matters.

    Income tax expense amounted to $5.9 million for the third quarter of 2016, up by $710 thousand from the prior quarter.  The effective tax rate for the third quarter of 2016 was 32.2%, compared to 31.8% for the second quarter of 2016.  The effective tax rate in the prior quarter was lower due to the impact of the non-taxable gain related to the receipt of BOLI proceeds.  Based on the current federal and applicable state income tax statutes, the Corporation currently expects the effective tax rate for the fourth quarter of 2016 will be approximately 32.5%.

    Loans
    Total loans amounted to $3.2 billion at September 30, 2016, up by $100 million, or 3%, from the balance at the end of the second quarter.  Residential loan portfolio balances increased by $75 million, or 7%.  During the quarter, $59 million of residential mortgages were purchased.  These purchased loans were individually evaluated to our underwriting standards and are predominantly secured by properties in Massachusetts.  The commercial loan portfolio increased by $25 million, or 1.4%, during the quarter, reflecting growth in the commercial mortgage and commercial construction portfolios.

    Investment Securities
    The investment securities portfolio amounted to $581 million at September 30, 2016, up by $161 million, or 38.5%, from the balance at June 30, 2016.  During the quarter, government agency mortgage-backed debt securities and agency debt securities totaling $216 million and with a weighted average yield of 2.48% were purchased.  The purchases were partially offset by calls of agency debt securities and obligations of state and political subdivisions, as well as routine principal pay-downs on mortgage-backed securities.  Investment securities represented 14% of total assets as of September 30, 2016.

    Deposits and Borrowings
    Total deposits amounted to $3.0 billion at September 30, 2016, up by $248 million, or 8.9%, in the third quarter.  Included in total deposits were wholesale brokered time deposit balances of $359 million, which increased by $65 million from the balance at the end of the second quarter.  Excluding wholesale brokered time deposits, in-market deposits increased by $183 million, or 7.3%, in the quarter.  This reflects increases in money market deposits and noninterest-bearing demand deposits, including inflows associated with the business cycles of various institutional and governmental depositors.

    FHLBB advances amounted to $672 million at September 30, 2016, up by $32 million, or 4.9%, from June 30, 2016.

    Asset Quality
    Total past due loans amounted to $21.3 million, or 0.67% of total loans, at September 30, 2016, compared to $17.1 million, or 0.56% of total loans, at June 30, 2016.  Total nonaccrual loans amounted to $24.0 million, or 0.75% of total loans, at September 30, 2016, compared to $17.2 million, or 0.56% of total loans, at June 30, 2016.  The increase in both past due loans and nonaccrual loans was due to one commercial real estate relationship, previously modified in a troubled debt restructuring, with a carrying value of $6.3 million as of September 30, 2016.  During the third quarter, a $1.9 million charge-off was recognized on this relationship.

    A loan loss provision totaling $1.8 million was charged to earnings in the third quarter of 2016, compared to a loan loss provision of $450 thousand recognized in the second quarter of 2016.  The increase in loan loss provision was primarily due to the additional loss exposure allocated to the commercial real estate relationship noted above.  The allowance for loan losses was $25.6 million, or 0.81% of total loans, at September 30, 2016, compared to $25.8 million, or 0.84% of total loans, at June 30, 2016.

    Capital and Dividends
    Total shareholders' equity was $395 million at September 30, 2016, up by $7 million from June 30, 2016.  Capital levels at September 30, 2016 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.31% at September 30, 2016, compared to 12.43% at June 30, 2016.  At September 30, 2016, book value per share amounted to $23.11, up from $22.73 in the prior quarter.

    The Board of Directors declared a quarterly dividend of 37 cents per share for the quarter ended September 30, 2016.  The dividend was paid on October 14, 2016 to shareholders of record on October 3, 2016.

    Conference Call
    Washington Trust will host a conference call to discuss its third quarter results, business highlights and outlook on Tuesday, October 25, 2016 at 8:30 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 1-877-870-5176 and entering the Replay PIN Number 13646314; the audio replay will be available through November 4, 2016.  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 December 31, 2016.

    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; 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 the our 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, 2015, 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)
          
     Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Dec 31,
     2015
    Sep 30,
     2015
    Assets:     
    Cash and due from banks$126,752  $116,658  $89,966  $93,222  $106,445  
    Short-term investments 2,420   3,255   4,931   4,409   3,629  
    Mortgage loans held for sale 45,162   38,554   22,895   38,554   31,805  
    Securities:     
    Available for sale, at fair value 564,256   401,749   411,352   375,044   323,795  
    Held to maturity, at amortized cost 16,848   17,917   19,040   20,023   21,140  
    Total securities 581,104   419,666   430,392   395,067   344,935  
    Federal Home Loan Bank stock, at cost 37,249   34,303   26,515   24,316   37,730  
    Loans:     
    Commercial 1,757,215   1,732,220   1,698,811   1,654,547   1,579,854  
    Residential real estate 1,079,887   1,005,036   1,004,349   1,013,555   1,024,214  
    Consumer 344,253   343,628   343,833   345,025   345,850  
    Total loans 3,181,355   3,080,884   3,046,993   3,013,127   2,949,918  
    Less allowance for loan losses 25,649   25,826   26,137   27,069   27,161  
    Net loans 3,155,706   3,055,058   3,020,856   2,986,058   2,922,757  
    Premises and equipment, net 29,433   29,590   29,882   29,593   28,180  
    Investment in bank-owned life insurance 70,557   65,036   66,000   65,501   65,000  
    Goodwill 64,059   64,059   64,059   64,059   64,196  
    Identifiable intangible assets, net 10,493   10,814   11,137   11,460   11,793  
    Other assets 81,099   80,088   71,577   59,365   58,366  
    Total assets$4,204,034  $3,917,081  $3,838,210  $3,771,604  $3,674,836  
    Liabilities:     
    Deposits:     
    Demand deposits$566,027  $512,307  $539,119  $537,298  $513,856  
    NOW accounts 404,827   414,532   394,873   412,602   358,973  
    Money market accounts 794,905   675,896   763,565   823,490   855,858  
    Savings accounts 357,966   342,579   331,800   326,967   305,775  
    Time deposits 913,649   844,036   850,294   833,898   801,818  
    Total deposits 3,037,374   2,789,350   2,879,651   2,934,255   2,836,280  
    Federal Home Loan Bank advances 671,615   640,010   487,189   378,973   381,649  
    Junior subordinated debentures 22,681   22,681   22,681   22,681   22,681  
    Other liabilities 77,037   76,708   67,409   60,307   63,699  
    Total liabilities 3,808,707   3,528,749   3,456,930   3,396,216   3,304,309  
    Shareholders’ Equity:     
    Common stock 1,069   1,068   1,064   1,064   1,062  
    Paid-in capital 113,290   112,314   111,641   110,949   109,724  
    Retained earnings 288,613   282,666   277,810   273,074   268,166  
    Accumulated other comprehensive loss (7,645)  (7,716)  (9,235)  (9,699)  (8,425) 
    Total shareholders’ equity 395,327   388,332   381,280   375,388   370,527  
    Total liabilities and shareholders’ equity$4,204,034  $3,917,081  $3,838,210  $3,771,604  $3,674,836  
                         


     
    CONSOLIDATED STATEMENTS OF INCOME
    (Unaudited; Dollars in thousands, except per share amounts)
           For the Nine Months Ended
     For the Three Months Ended 
     Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Dec 31,
     2015
    Sep 30,
     2015
     Sep 30,
     2016
    Sep 30,
     2015
    Interest income:        
    Interest and fees on loans$29,633  $29,122  $29,998  $28,511  $28,626   $88,753  $85,718  
    Taxable interest on securities 3,024   2,487   2,370   2,262   2,178    7,881   6,613  
    Nontaxable interest on securities 218   280   327   352   366    825   1,203  
    Dividends on Federal Home Loan Bank stock 288   231   210   315   309    729   638  
    Other interest income 93   70   64   37   47    227   101  
    Total interest and dividend income 33,256   32,190   32,969   31,477   31,526    98,415   94,273  
    Interest expense:        
    Deposits 3,110   2,981   2,968   3,097   3,308    9,059   10,045  
    Federal Home Loan Bank advances 2,641   2,313   2,152   1,966   1,987    7,106   5,780  
    Junior subordinated debentures 125   119   112   157   232    356   714  
    Other interest expense 1   1   2   2   2    4   7  
    Total interest expense 5,877   5,414   5,234   5,222   5,529    16,525   16,546  
    Net interest income 27,379   26,776   27,735   26,255   25,997    81,890   77,727  
    Provision for loan losses 1,800   450   500   750   200    2,750   300  
    Net interest income after provision for loan losses 25,579   26,326   27,235   25,505   25,797    79,140   77,427  
    Noninterest income:        
    Wealth management revenues 9,623   9,481   9,174   9,167   8,902    28,278   26,249  
    Mortgage banking revenues 3,734   2,710   2,198   2,582   1,990    8,642   7,319  
    Service charges on deposit accounts 915   935   907   971   986    2,757   2,894  
    Card interchange fees 870   860   797   810   849    2,527   2,389  
    Income from bank-owned life insurance 521   1,090   499   502   498    2,110   1,480  
    Loan related derivative income 1,178   508   645   752   327    2,331   1,689  
    Equity in losses of unconsolidated subsidiaries (88  (89)  (88)  (69)  (69)   (265)  (224) 
    Other income 508   419   502   431   430    1,429   1,398  
    Total noninterest income 17,261   15,914   14,634   15,146   13,913    47,809   43,194  
    Noninterest expense:        
    Salaries and employee benefits 16,908   17,405   16,380   16,053   15,971    50,693   46,971  
    Net occupancy 1,766   1,803   1,807   1,724   1,721    5,376   5,276  
    Equipment 1,648   1,503   1,501   1,393   1,424    4,652   4,140  
    Outsourced services 1,254   1,294   1,363   1,337   1,250    3,911   3,774  
    Legal, audit and professional fees 691   662   629   825   630    1,982   1,916  
    FDIC deposit insurance costs 504   491   493   470   467    1,488   1,376  
    Advertising and promotion 370   420   265   325   356    1,055   1,201  
    Amortization of intangibles 321   322   323   333   260    966   571  
    Debt prepayment penalties                 431            431      
    Acquisition related expenses                     52   504          937  
    Change in fair value of contingent consideration (939)                   (939)     
    Other expenses 2,127   2,130   2,258   2,049   1,955    6,515   6,206  
    Total noninterest expense 24,650   26,030   25,450   24,561   24,538    76,130   72,368  
    Income before income taxes 18,190   16,210   16,419   16,090   15,172    50,819   48,253  
    Income tax expense 5,863   5,153   5,484   5,346   4,964    16,500   15,532  
    Net income$12,327  $11,057  $10,935  $10,744  $10,208   $34,319  $32,721  
             
    Net income available to common shareholders:        
    Basic$12,302  $11,035  $10,910  $10,718  $10,181   $34,247  $32,621  
    Diluted$12,302  $11,035  $10,910  $10,718  $10,180   $34,247  $32,621  
    Weighted average common shares outstanding:        
    Basic 17,090   17,067   17,023   17,004   16,939    17,060   16,837  
    Diluted 17,203   17,194   17,157   17,167   17,102    17,198   17,027  
    Earnings per common share:        
    Basic$0.72  $0.65  $0.64  $0.63  $0.60   $2.01  $1.94  
    Diluted$0.72  $0.64  $0.64  $0.62  $0.60   $1.99  $1.92  
             
    Cash dividends declared per share$0.37  $0.36  $0.36  $0.34  $0.34   $1.09  $1.02  
                                  


     
    SELECTED FINANCIAL HIGHLIGHTS
    (Unaudited; Dollars in thousands, except per share amounts)
      
     Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Dec 31,
     2015
    Sep 30,
     2015
    Share and Equity Related Data:     
    Book value per share$23.11  $22.73  $22.40  $22.06  $21.82  
    Tangible book value per share - Non-GAAP (1)$18.75  $18.35  $17.98  $17.62  $17.36  
    Market value per share$40.22  $37.92  $37.32  $39.52  $38.45  
    Shares issued and outstanding at end of period 17,107   17,081   17,024   17,020   16,985  
          
    Capital Ratios:     
    Tier 1 risk-based capital11.48% (i) 11.57 % 11.56 % 11.64 % 11.83 %
    Total risk-based capital12.31% (i) 12.43 % 12.45 % 12.58 % 12.80 %
    Tier 1 leverage ratio8.95% (i) 9.21 % 9.31 % 9.37 % 9.26 %
    Common equity tier 110.77% (i) 10.84 % 10.82 % 10.89 % 11.05 %
    Equity to assets 9.40 % 9.91 % 9.93 % 9.95 % 10.08 %
    Tangible equity to tangible assets - Non-GAAP (1) 7.77 % 8.16 % 8.13 % 8.11 % 8.18 %
    (i) - estimated     
          


       For the Nine Months Ended
     For the Three Months Ended 
     Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Dec 31,
     2015
    Sep 30,
     2015
     Sep 30,
     2016
    Sep 30,
     2015
    Performance Ratios:        
    Net interest margin (FTE)2.94%3.05%3.24%3.08%3.07% 3.07%3.13%
    Return on average assets1.21%1.14%1.16%1.16%1.11% 1.17%1.20%
    Return on average tangible assets - Non-GAAP (1)1.24%1.17%1.18%1.19%1.13% 1.20%1.22%
    Return on average equity12.57%11.50%11.50%11.52%11.13% 11.86%12.17%
    Return on average tangible equity - Non-GAAP (1)15.53%14.28%14.34%14.45%13.82% 14.72%14.90%

    (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 Nine Months Ended
     For the Three Months Ended 
     Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Dec 31,
     2015
    Sep 30,
     2015
     Sep 30,
     2016
    Sep 30,
     2015
    Wealth Management Results        
    Wealth Management Revenues:        
    Trust and investment management fees$8,358  $8,195  $8,065  $8,001  $7,768   $24,618  $22,148  
    Mutual fund fees 812   812   843   952   989    2,467   3,057  
    Asset-based revenues 9,170   9,007   8,908   8,953   8,757    27,085   25,205  
    Transaction-based revenues 453   474   266   214   145    1,193   1,044  
    Total wealth management revenues$9,623  $9,481  $9,174  $9,167  $8,902   $28,278  $26,249  
             
    Assets Under Administration:        
    Balance at beginning of period$5,905,019  $5,878,967  $5,844,636  $5,714,201  $5,211,548   $5,844,636  $5,069,966  
    Acquisition of Halsey Associates, Inc.              —     —     —    839,994        —   839,994  
    Net investment appreciation (depreciation)
     & income
     192,518   71,447   22,389   153,953   (316,121   286,354   (249,181 
    Net client asset flows (40,678  (45,395 )  11,942   (23,518  (21,220   (74,131  53,422  
    Balance at end of period$6,056,859  $5,905,019  $5,878,967  $5,844,636  $5,714,201   $6,056,859  $5,714,201  
             
    Mortgage Banking Results        
    Mortgage Banking Revenues:        
    Gains & commissions on loan sales, net$3,744  $2,804  $2,134  $2,528  $1,964   $8,682  $7,297  
    Residential mortgage servicing fee income, net (10  (94  64   54   26    (40  22  
    Total mortgage banking revenues$3,734  $2,710  $2,198  $2,582  $1,990   $8,642  $7,319  
             
    Residential Mortgage Loan Originations:        
    Originations for retention in portfolio$90,308  $54,080  $47,545  $38,080  $76,963   $191,934  $196,772  
    Originations for sale to secondary market (1) 170,673   154,043   90,458   134,125   126,353   $415,174   389,709  
    Total mortgage loan originations$260,981  $208,123  $138,003  $172,205  $203,316   $607,108  $586,481  
             
    Residential Mortgage Loans Sold:        
    Sold with servicing rights retained$44,611  $45,804  $26,454  $44,493  $37,782   $116,869  $117,731  
    Sold with servicing rights released (1) 119,572   93,239   79,507   82,906   94,645   $292,318   285,770  
    Total mortgage loans sold$164,183  $139,043  $105,961  $127,399  $132,427   $409,187  $403,501  

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

    END OF PERIOD LOAN AND DEPOSIT COMPOSITION
    (Unaudited; Dollars in thousands)
      
     Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Dec 31,
     2015
    Sep 30,
     2015
    Commercial:     
    Mortgages$1,086,175  $1,074,747  $976,931  $931,953  $873,767  
    Construction & development 98,735   81,812   123,032   122,297   121,857  
    Commercial & industrial 572,305   575,661   598,848   600,297   584,230  
    Total commercial 1,757,215   1,732,220   1,698,811   1,654,547   1,579,854  
    Residential real estate:     
    Mortgages 1,052,829   978,399   980,274   984,437   994,808  
    Homeowner construction 27,058   26,637   24,075   29,118   29,406  
    Total residential real estate 1,079,887   1,005,036   1,004,349   1,013,555   1,024,214  
    Consumer:     
    Home equity lines 265,238   260,541   258,513   255,565   252,862  
    Home equity loans 38,264   39,572   45,499   46,649   47,610  
    Other 40,751   43,515   39,821   42,811   45,378  
    Total consumer 344,253   343,628   343,833   345,025   345,850  
    Total loans$3,181,355  $3,080,884  $3,046,993  $3,013,127  $2,949,918  


     September 30, 2016 December 31, 2015
     Balance% of Total Balance% of Total
    Commercial Real Estate Loans by Property Location:     
    Rhode Island, Connecticut, Massachusetts$1,097,935  92.7% $959,883  91.0%
    New York, New Jersey, Pennsylvania 73,893  6.2%  80,989  7.7%
    New Hampshire 13,082  1.1%  13,377  1.3%
    Total commercial real estate loans (1)$1,184,910  100.0% $1,054,249  100.0%
          
    Residential Mortgages by Property Location:     
    Rhode Island, Connecticut, Massachusetts$1,062,256  98.3% $995,743  98.2%
    New Hampshire, Vermont, Maine 11,827  1.1%  10,186  1.0%
    New York, Virginia, New Jersey, Maryland, Pennsylvania 2,851  0.3%  4,163  0.4%
    Ohio 1,077  0.1%  1,557  0.2%
    Other 1,876  0.2%  1,906  0.2%
    Total residential mortgages$1,079,887  100.0% $1,013,555  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.

     Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Dec 31,
     2015
    Sep 30,
     2015
    Deposits:     
    Non-interest bearing demand deposits$520,860  $476,848  $474,477  $475,398  $472,349  
    Interest-bearing demand deposits 45,167   35,459   64,642   61,900   41,507  
    NOW accounts 404,827   414,532   394,873   412,602   358,973  
    Money market accounts 794,905   675,896   763,565   823,490   855,858  
    Savings accounts 357,966   342,579   331,800   326,967   305,775  
    Time deposits (in-market) 554,669   549,935   540,815   531,419   534,266  
    Wholesale brokered time deposits 358,980   294,101   309,479   302,479   267,552  
    Total deposits$3,037,374  $2,789,350  $2,879,651  $2,934,255  $2,836,280  


    CREDIT & ASSET QUALITY DATA
    (Unaudited; Dollars in thousands)
      
     Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Dec 31,
     2015
    Sep 30,
     2015
    Asset Quality Ratios:     
    Nonperforming assets to total assets 0.59 % 0.48 % 0.49 % 0.58 % 0.48 %
    Nonaccrual loans to total loans 0.75 % 0.56 % 0.57 % 0.70 % 0.57 %
    Allowance for loan losses to nonaccrual loans 107.09 % 149.73 % 150.00 % 128.61 % 161.25 %
    Allowance for loan losses to total loans 0.81 % 0.84 % 0.86 % 0.90 % 0.92 %
          
    Nonperforming Assets:     
    Commercial mortgages$10,357  $4,054  $4,054  $5,711  $4,915  
    Commercial construction & development     
    Commercial & industrial 1,744   1,204   2,659   3,018   1,137  
    Residential real estate mortgages 10,140   10,409   9,367   10,666   9,472  
    Consumer 1,709   1,581   1,345   1,652   1,320  
    Total nonaccrual loans 23,950   17,248   17,425   21,047   16,844  
    Other real estate owned 1,045   1,515   1,326   716   955  
    Total nonperforming assets$24,995  $18,763  $18,751  $21,763  $17,799  
          
    Past Due Loans:     
    Commercial mortgages$10,352  $4,062  $4,564  $4,555  $5,062  
    Commercial & industrial 1,047   1,978   2,906   462   4,337  
    Residential real estate mortgages 8,291   8,893   8,703   9,286   10,567  
    Consumer loans 1,565   2,201   2,122   3,256   1,845  
    Total past due loans$21,255  $17,134  $18,295  $17,559  $21,811  
          
    Total past due loans to total loans 0.67 % 0.56 % 0.60 % 0.58 % 0.74 %
    Accruing loans 90 days or more past due$— $— $— $— $— 
    Nonaccrual loans included in past due loans$18,796  $13,211  $14,030  $13,635  $13,964  


       For the Nine Months Ended
     For the Three Months Ended 
     Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Dec 31,
     2015
    Sep 30,
     2015
     Sep 30,
     2016
    Sep 30,
     2015
    Nonaccrual Loan Activity:        
    Balance at beginning of period$17,248  $17,425  $21,047  $16,844  $15,131   $21,047  $15,945  
    Additions to nonaccrual status 9,750   2,072   1,352   7,029   3,319    13,174   7,494  
    Loans returned to accruing status (592      (206  (303  (156   (798  (2,278 
    Loans charged-off (2,055  (860  (1,475  (904  (725   (4,390  (1,401 
    Loans transferred to other real estate owned             (435  (610  (716       (1,045  (491 
    Payments, payoffs and other changes (401  (954)  (2,683  (903  (725   (4,038  (2,425 
    Balance at end of period$23,950  $17,248  $17,425  $21,047  $16,844   $23,950  $16,844  
             
    Allowance for Loan Losses:        
    Balance at beginning of period$25,826  $26,137  $27,069  $27,161  $27,587   $27,069  $28,023  
    Provision charged to earnings 1,800   450   500   750   200    2,750   300  
    Charge-offs (2,055)  (860  (1,475  (904  (725   (4,390)  (1,401 
    Recoveries 78   99   43   62   99    220   239  
    Balance at end of period$25,649  $25,826  $26,137  $27,069  $27,161   $25,649  $27,161  
             
    Net Loan Charge-Offs (Recoveries):        
    Commercial mortgages$1,936  $65  $1,249  $405  $(4  $3,250  $312  
    Commercial & industrial (43  684   (18  217   348    623   367  
    Residential real estate mortgages 47   2   134   117   12    183   62  
    Consumer 37   10   67   103   270    114   421  
    Total$1,977  $761  $1,432  $842  $626   $4,170  $1,162  
             
    Net charge-offs to average loans (annualized) 0.25 % 0.10 % 0.19 % 0.11 % 0.08 %  0.18 % 0.05 %
                                  

    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 EndedSeptember 30, 2016 June 30, 2016 September 30, 2015
     Average BalanceInterestYield/
    Rate
     Average BalanceInterestYield/
    Rate
     Average BalanceInterestYield/
     Rate
     
    Assets:           
    Commercial mortgages$1,079,917  $9,362  3.45  $1,019,290  $8,992  3.55  $869,471  $7,898  3.60 
    Construction & development 86,623   712  3.27   117,204   985  3.38   118,243   897  3.01 
    Commercial & industrial 565,170   6,382  4.49   591,893   6,408  4.35   583,931   6,680  4.54 
    Total commercial loans$1,731,710  $16,456  3.78  $1,728,387  $16,385  3.81  $1,571,645  $15,475  3.91 
    Residential real estate loans, including loans held for sale 1,080,302   10,386  3.82   1,024,653   9,980  3.92   1,050,949   10,329  3.90 
    Consumer loans 341,829   3,340  3.89   342,866   3,311  3.88   343,603   3,283  3.79 
    Total loans 3,153,841   30,182  3.81   3,095,906   29,676  3.86   2,966,197   29,087  3.89 
    Cash, federal funds sold and short-term investments 88,414   93  0.42   69,839   70  0.40   89,280   47  0.21 
    FHLBB stock 37,933   288  3.02   31,723   231  2.93   37,730   309  3.25 
    Taxable debt securities 497,738   3,024  2.42   396,428   2,487  2.52   316,214   2,178  2.73 
    Nontaxable debt securities 22,038   336  6.07   28,531   433  6.10   37,780   567  5.95 
    Total securities 519,776   3,360  2.57   424,959   2,920  2.76   353,994   2,745  3.08 
    Total interest-earning assets 3,799,964   33,923  3.55   3,622,427   32,897  3.65   3,447,201   32,188  3.70 
    Noninterest-earning assets 262,724      247,081      231,286    
    Total assets$4,062,688     $3,869,508     $3,678,487    
    Liabilities and Shareholders' Equity:           
    Interest-bearing demand deposits$39,865  $13  0.13  $42,952  $7  0.07  $30,392  $5  0.07 
    NOW accounts 402,307   51  0.05   403,136   53  0.05   357,128   53  0.06 
    Money market accounts 709,549   487  0.27   710,075   459  0.26   820,597   951  0.46 
    Savings accounts 352,032   52  0.06   338,504   49  0.06   303,587   52  0.07 
    Time deposits (in-market) 552,576   1,408  1.01   542,621   1,345  1.00   541,486   1,338  0.98 
    Wholesale brokered time deposits 310,740   1,099  1.41   302,707   1,068  1.42   279,839   909  1.29 
    FHLBB advances 690,843   2,641  1.52   587,395   2,313  1.58   425,931   1,987  1.85 
    Junior subordinated debentures 22,681   125  2.19   22,681   119  2.11   22,681   232  4.06 
    Other 53   1  7.51   66   1  6.09   104   2  7.63 
    Total interest-bearing liabilities 3,080,646   5,877  0.76   2,950,137   5,414  0.74   2,781,745   5,529  0.79 
    Demand deposits 520,439      473,731      477,393    
    Other liabilities 69,370      60,923      52,625    
    Shareholders' equity 392,233      384,717      366,724    
    Total liabilities and shareholders' equity$4,062,688     $3,869,508     $3,678,487    
    Net interest income (FTE) $28,046     $27,483     $26,659   
    Interest rate spread  2.79    2.91    2.91 
    Net interest margin  2.94    3.05    3.07 

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

    For the Three Months Ended    Sep 30,
    2016    
    Jun 30,
    2016    
    Sep 30,
    2015
    Commercial loans$549  $554  $461  
    Nontaxable debt securities 118   153   201  
    Total$667  $707  $662  


     
    CONSOLIDATED AVERAGE BALANCE SHEETS
    (Unaudited; Dollars in thousands)
      
    For the Nine Months EndedSeptember 30, 2016 September 30, 2015
     Average BalanceInterestYield/
    Rate
     Average BalanceInterestYield/
     Rate
     
    Assets:       
    Commercial mortgages$1,011,327  $26,569  3.51  $864,941  $23,394  3.62 
    Construction & development 110,914   2,806  3.38   100,787   2,336  3.10 
    Commercial & industrial 587,098   20,470  4.66   597,887   20,987  4.69 
    Total commercial loans 1,709,339   49,845  3.90   1,563,615   46,717  3.99 
    Residential real estate loans, including loans held for sale 1,045,532   30,521  3.90   1,035,408   30,745  3.97 
    Consumer loans 342,735   10,044  3.91   339,608   9,634  3.79 
    Total loans 3,097,606   90,410  3.90   2,938,631   87,096  3.96 
    Cash, federal funds sold and short-term investments 75,627   227  0.40   68,205   101  0.20 
    FHLBB stock 31,774   729  3.06   37,730   638  2.26 
    Taxable debt securities 418,034   7,881  2.52   319,786   6,613  2.76 
    Nontaxable debt securities 27,939   1,276  6.10   41,083   1,858  6.05 
    Total securities 445,973   9,157  2.74   360,869   8,471  3.14 
    Total interest-earning assets 3,650,980   100,523  3.68   3,405,435   96,306  3.78 
    Noninterest-earning assets 250,019      224,921    
    Total assets$3,900,999     $3,630,356    
    Liabilities and Shareholders' Equity:       
    Interest-bearing demand deposits$44,490  $34  0.10  $35,430  $17  0.06 
    NOW accounts 397,329   161  0.05   350,151   153  0.06 
    Money market accounts 735,324   1,461  0.27   813,915   2,775  0.46 
    Savings accounts 339,616   148  0.06   298,635   148  0.07 
    Time deposits (in-market) 544,441   4,067  1.00   554,369   4,198  1.01 
    Wholesale brokered time deposits 303,442   3,188  1.40   286,728   2,754  1.28 
    FHLBB advances 577,501   7,106  1.64   407,363   5,780  1.90 
    Junior subordinated debentures 22,681   356  2.10   22,681   714  4.21 
    Other 66   4  8.10   116   7  8.07 
    Total interest-bearing liabilities 2,964,890   16,525  0.74   2,769,388   16,546  0.80 
    Demand deposits 488,767      452,691    
    Other liabilities 61,555      49,786    
    Shareholders' equity 385,787      358,491    
    Total liabilities and shareholders' equity$3,900,999     $3,630,356    
    Net interest income (FTE) $83,998     $79,760   
    Interest rate spread  2.94    2.98 
    Net interest margin  3.07    3.13 

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

    For the Nine Months Ended        Sep 30,
    2016
    Sep 30,
    2015
    Commercial loans$1,657  $1,378  
    Nontaxable debt securities 451   655  
    Total$2,108  $2,033  


    SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures
    (Unaudited; Dollars in thousands, except per share amounts)
      
     Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Dec 31,
     2015
    Sep 30,
     2015
    Tangible Book Value per Share:     
    Total shareholders' equity, as reported$395,327  $388,332  $381,280  $375,388  $370,527  
    Less:     
    Goodwill 64,059   64,059   64,059   64,059   64,196  
    Identifiable intangible assets, net 10,493   10,814   11,137   11,460   11,793  
    Total tangible shareholders' equity$320,775  $313,459  $306,084  $299,869  $294,538  
          
    Shares outstanding, as reported 17,107   17,081   17,024   17,020   16,985  
          
    Book value per share - GAAP$23.11  $22.73  $22.40  $22.06  $21.82  
    Tangible book value per share - Non-GAAP$18.75  $18.35  $17.98  $17.62  $17.34  
          
    Tangible Equity to Tangible Assets:     
    Total tangible shareholders' equity$320,775  $313,459  $306,084  $299,869  $294,538  
          
    Total assets, as reported$4,204,034  $3,917,081  $3,838,210  $3,771,604  $3,674,836  
    Less:     
    Goodwill 64,059   64,059   64,059   64,059   64,196  
    Identifiable intangible assets, net 10,493   10,814   11,137   11,460   11,793  
    Total tangible assets$4,129,482  $3,842,208  $3,763,014  $3,696,085  $3,598,847  
          
    Equity to assets - GAAP 9.40 % 9.91 % 9.93 % 9.95 % 10.08 %
    Tangible equity to tangible assets - Non-GAAP 7.77 % 8.16 % 8.13 % 8.11 % 8.18 %


     For the Three Months Ended For the Nine Months Ended
     Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Dec 31,
     2015
    Sep 30,
     2015
     Sep 30,
     2016
    Sep 30,
     2015
    Return on Average Tangible Assets:        
    Net income, as reported$12,327  $11,057  $10,935  $10,744  $10,208   $34,319  $32,721  
             
    Total average assets, as reported$4,062,688  $3,869,508  $3,769,025  $3,700,441  $3,678,487   $3,900,999  $3,630,356  
    Less average balances of:        
    Goodwill 64,059   64,059   64,059   64,194   62,524    64,059   59,465  
    Identifiable intangible assets, net 10,650   10,972   11,294   11,616   8,768    10,971   6,280  
    Total average tangible assets$3,987,979  $3,794,477  $3,693,672  $3,624,631  $3,607,195   $3,825,969  $3,564,611  
             
    Return on average assets - GAAP 1.21 % 1.14 % 1.16 % 1.16 % 1.11 %  1.17 % 1.20 %
    Return on average tangible assets -
      Non-GAAP
     1.24 % 1.17 % 1.18 % 1.19 % 1.13 %  1.20 % 1.22 %
             
    Return on Average Tangible Equity:        
    Net income, as reported$12,327  $11,057  $10,935  $10,744  $10,208   $34,319  $32,721  
             
    Total average equity, as reported$392,233  $384,717  $380,342  $373,197  $366,724   $385,787  $358,491  
    Less average balances of:        
    Goodwill 64,059   64,059   64,059   64,194   62,524    64,059   59,465  
    Identifiable intangible assets, net 10,650   10,972   11,294   11,616   8,768    10,971   6,280  
    Total average tangible equity$317,524  $309,686  $304,989  $297,387  $295,432   $310,757  $292,746  
             
    Return on average equity - GAAP 12.57 % 11.50 % 11.50 % 11.52 % 11.13 %  11.86 % 12.17 %
    Return on average tangible equity -
      Non-GAAP
     15.53 % 14.28 % 14.34 % 14.45 % 13.82 %  14.72 % 14.90 %

     

    Contact:  Elizabeth B. Eckel
    Senior Vice President, Marketing
    Telephone:  (401) 348-1309
    E-mail:  ebeckel@washtrust.com

    Source: Washington Trust Bancorp, Inc.