• Washington Trust Bancorp, Inc.
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  • Washington Trust Reports Record Full-Year 2016 Earnings
    Company Release - 01/25/2017 16:05

    WESTERLY, R.I., Jan. 25, 2017 (GLOBE NEWSWIRE) -- Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced net income of $12.2 million, or $0.70 per diluted share, for the fourth quarter of 2016, compared to net income of $12.3 million, or $0.72 per diluted share, reported for the third quarter of 2016.

    For the year ended December 31, 2016, net income totaled $46.5 million, or $2.70 per diluted share.  Full-year net income increased by 7% from $43.5 million, or $2.54 per diluted share, reported for 2015.  Returns on average equity and average assets in 2016 were 11.96% and 1.16%, respectively, compared to 12.00% and 1.19%, for the same period in 2015.

    “Washington Trust’s solid fourth quarter results contributed to record 2016 net income and earnings per share,” stated Joseph J. MarcAurele, Washington Trust Chairman and Chief Executive Officer.  “We are pleased with our continued success at growing our core business lines, expanding our local and regional footprint, and consistently providing healthy returns to our shareholders.”

    Selected highlights for 2016 include: 

    • Total loans stood at $3.2 billion at December 31, 2016, up by 2% in the quarter and up by 7% from a year ago.

    • Total deposits amounted to $3.1 billion at December 31, 2016, up by 1% from the third quarter.  Total deposits were up by 4% from a year ago.

    • Wealth management revenues of $37.6 million for the year 2016 and wealth management assets of $6.1 billion at December 31, 2016 were all-time highs for the Corporation.

    • Mortgage banking revenues rose by 22% on a linked quarter basis.  Mortgage banking revenues and loans sold during the quarter were record highs for Washington Trust.

    Net Interest Income
    Net interest income totaled $28.6 million for the fourth quarter of 2016, up by $1.2 million from the third quarter.  Included in net interest income was loan prepayment fee income of $816 thousand for the fourth quarter, compared to $365 thousand in the third quarter.  The net interest margin was 2.89% for the fourth quarter of 2016, down by 5 basis points from the preceding quarter.  The reduction in the net interest margin reflects additions of lower-yielding debt securities to the investment portfolio and increases in wholesale funding balances.  Significant linked quarter changes included:

    • Average interest-earning assets increased by $224 million from the third quarter, reflecting a $133 million increase in the average balance of investment securities and a $101 million increase in the average balance of loans.  The yield on interest-earning assets was 3.53%, down by 2 basis points from the preceding quarter.

    • Average interest-bearing liabilities increased by $183 million from the preceding quarter, reflecting increases of $113 million in the average balance of wholesale funding balances (FHLBB advances and wholesale brokered time deposits) and $70 million in the average balance of in-market interest-bearing deposits.  The cost of interest-bearing funds was 0.79%, up by 3 basis points from the third quarter.

    Noninterest Income
    Noninterest income totaled $17.3 million for the fourth quarter of 2016, up modestly from the preceding quarter.  Significant linked quarter changes included: 

    • Wealth management revenues totaled $9.3 million for the fourth quarter, down by $332 thousand, or 3%, from the preceding quarter, largely due to a decline of $216 thousand in transaction-based revenues.  Wealth management assets under administration amounted to $6.1 billion at December 31, 2016, up by $6 million on a linked quarter basis.  Managed assets continue to represent over 90% of total wealth management assets at December 31, 2016.

      Total annual wealth management revenues reached an all-time high of $37.6 million, up by $2.2 million, or 6%, from the preceding year.

    • Mortgage banking revenues totaled $4.5 million for the fourth quarter, up by $807 thousand, or 22%, from the preceding quarter, reflecting both higher volume and yields on loans sold to the secondary market.  Residential mortgage loans sold to the secondary market amounted to $200 million in the fourth quarter, compared to $164 million in the preceding quarter.

      Total full-year 2016 mortgage banking revenues amounted to $13.2 million, up by $3.3 million, or 33%, from the preceding year.

    • Loan related derivative income amounted to $912 thousand in the fourth quarter, down by $266 thousand from the preceding quarter, reflecting a lower volume of commercial borrower interest rate swap transactions.

    Noninterest Expenses
    Noninterest expenses totaled $25.0 million for the fourth quarter of 2016, up by $323 thousand, or 1%, from the third quarter.  Included in the third quarter was a $939 thousand reduction in noninterest expenses, resulting from a downward adjustment in the fair value of the contingent consideration liability recognized in connection with a 2015 acquisition.  Excluding this adjustment, noninterest expenses were down by $616 thousand, or 2%, on a linked quarter basis.  Salaries and benefit costs, the largest component of noninterest expenses, decreased by $380 thousand from the preceding quarter.

    Income tax expense amounted to $5.9 million for the fourth quarter of 2016, up by $10 thousand from the preceding quarter.  The effective tax rate for the fourth quarter of 2016 was 32.6%, compared to 32.2% for the third quarter of 2016.  Based on the current federal and applicable state income tax statutes, the Corporation currently expects the 2017 effective tax rate will be approximately 34.0%.

    Loans
    Total loans amounted to $3.2 billion at December 31, 2016, up by $53 million, or 2%, from the balance at the end of the third quarter.  The commercial loan portfolio increased by $14 million, or approximately 1%, during the quarter, reflecting growth in the commercial construction portfolio, partially offset by a reduction in commercial mortgages.  Residential loan portfolio balances increased by $43 million, or 4%.  During the quarter, $36 million of residential mortgages were purchased from another financial institution.  These purchased loans were individually evaluated to our underwriting standards and are predominantly secured by properties in Massachusetts.

    Total loans were up by $221.2 million, or 7%, in the last twelve months.  This included a 7% increase in the commercial portfolio and an 11% increase in the residential real estate portfolio.

    Investment Securities
    The investment securities portfolio amounted to $756 million at December 31, 2016, up by $174 million, or 30%, from the balance at September 30, 2016.  During the quarter, government agency mortgage-backed debt securities and agency debt securities totaling $235 million and with a weighted average yield of 2.55% were purchased.  The purchases were partially offset by calls and maturities 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 17% of total assets as of December 31, 2016.

    Deposits and Borrowings
    Total deposits amounted to $3.1 billion at December 31, 2016, up by $26 million, or 1%, from the preceding quarter end and up by $129.5 million, or 4%, in the last twelve months.  Included in total deposits were wholesale brokered time deposit balances of $412 million, which increased by $53 million in the quarter and by $109.8 million in the last twelve months.  Excluding wholesale brokered time deposits, in-market deposits decreased by $27 million, or 1%, in the quarter and increased by $20 million, or 1%, in the last twelve months.  The balance of demand deposits and NOW accounts were up by 4% in the quarter and 7% in the last twelve months.

    FHLBB advances amounted to $849 million at December 31, 2016, up by $177 million from September 30, 2016 and by $470 million from December 31, 2015.

    Asset Quality
    Total past due loans amounted to $24.4 million, or 0.76% of total loans, at December 31, 2016, compared to $21.3 million, or 0.67% of total loans, at September 30, 2016.  The linked quarter increase in past due loans was largely due to a $3.9 million increase in residential mortgage loans.  Total nonaccrual loans amounted to $22.1 million, or 0.68% of total loans, at December 31, 2016, compared to $24.0 million, or 0.75% of total loans, at September 30, 2016.  The linked quarter decrease in nonaccrual loans was attributable to $2.6 million of charge-offs recognized in the fourth quarter.

    During the fourth quarter of 2016, a charge-off of $2.5 million was recognized on one nonaccrual commercial real estate relationship.  This relationship was placed on nonaccrual status in the third quarter of 2016 and had a carrying value of $3.9 million at December 31, 2016.  A loan loss provision totaling $2.9 million was charged to earnings in the fourth quarter of 2016, compared to a loan loss provision of $1.8 million recognized in the third quarter of 2016.  The increase in loan loss provision was primarily due to additional loss exposure allocated to this commercial real estate relationship.  The allowance for loan losses was $26.0 million, or 0.80% of total loans, at December 31, 2016, compared to $25.6 million, or 0.81% of total loans, at September 30, 2016.

    Capital and Dividends
    Total shareholders' equity was $391 million at December 31, 2016, down by $5 million from September 30, 2016.  This change included $9.5 million of market depreciation on available for sale securities and a charge of $2.6 million associated with the annual measurement of defined benefit pension liabilities, both net of tax and recognized in the accumulated other comprehensive income component of shareholders' equity.  Capital levels at December 31, 2016 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.26% at December 31, 2016, compared to 12.31% at September 30, 2016.  At December 31, 2016, book value per share amounted to $22.76, down from $23.11 in the preceding quarter.

    The Board of Directors declared a quarterly dividend of 37 cents per share for the quarter ended December 31, 2016.  The dividend was paid on January 13, 2017 to shareholders of record on January 2, 2017.

    Conference Call
    Washington Trust will host a conference call to discuss its fourth quarter results, business highlights and outlook on Thursday, January 26, 2017 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 1-844-512-2921 and entering the Replay PIN Number 13652407; the audio replay will be available through February 5, 2017.  Also, a webcast of the call will be posted in the Investor Relations section of Washington Trust's web site, www.washtrustbancorp.com, and will be available through March 31, 2017.

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

    Forward-Looking Statements
    This press release contains statements that are “forward-looking statements”.  We may also make forward-looking statements in other documents we file with the SEC, in press releases and other written materials, and in oral statements made by our officers, directors or employees.  You can identify forward-looking statements by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “outlook,” “will,” “should,” and other expressions that predict or indicate future events and trends and which do not relate to historical matters.  You should not rely on forward-looking statements, because they involve known and unknown risks, uncertainties and other factors, some of which are beyond the control of Washington Trust.  These risks, uncertainties and other factors may cause the actual results, performance or achievements of Washington Trust to be materially different from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements.

    Some of the factors that might cause these differences include the following: weakness in national, regional or international economic conditions or conditions affecting the banking or financial services industries or financial capital markets; volatility in national and international financial markets; reductions in net interest income resulting from interest rate volatility as well as changes in the balance and mix of loans and deposits; reductions in the market value of wealth management assets under administration; changes in the value of securities and other assets; reductions in loan demand; changes in loan collectibility, default and charge-off rates; changes in the size and nature of the our competition; changes in legislation or regulation and accounting principles, policies and guidelines; 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)
          
     Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Dec 31,
     2015
    Assets:     
    Cash and due from banks$106,185 $126,752 $116,658 $89,966 $93,222 
    Short-term investments 1,612  2,420  3,255  4,931  4,409 
    Mortgage loans held for sale 29,434  45,162  38,554  22,895  38,554 
    Securities:     
    Available for sale, at fair value 739,912  564,256  401,749  411,352  375,044 
    Held to maturity, at amortized cost 15,633  16,848  17,917  19,040  20,023 
    Total securities 755,545  581,104  419,666  430,392  395,067 
    Federal Home Loan Bank stock, at cost 43,129  37,249  34,303  26,515  24,316 
    Loans:     
    Commercial 1,771,666  1,757,215  1,732,220  1,698,811  1,654,547 
    Residential real estate 1,122,748  1,079,887  1,005,036  1,004,349  1,013,555 
    Consumer 339,957  344,253  343,628  343,833  345,025 
    Total loans 3,234,371  3,181,355  3,080,884  3,046,993  3,013,127 
    Less allowance for loan losses 26,004  25,649  25,826  26,137  27,069 
    Net loans 3,208,367  3,155,706  3,055,058  3,020,856  2,986,058 
    Premises and equipment, net 29,020  29,433  29,590  29,882  29,593 
    Investment in bank-owned life insurance 71,105  70,557  65,036  66,000  65,501 
    Goodwill 64,059  64,059  64,059  64,059  64,059 
    Identifiable intangible assets, net 10,175  10,493  10,814  11,137  11,460 
    Other assets 62,484  81,099  80,088  71,577  59,365 
    Total assets$4,381,115 $4,204,034 $3,917,081 $3,838,210 $3,771,604 
    Liabilities:     
    Deposits:     
    Demand deposits$585,960 $566,027 $512,307 $539,119 $537,298 
    NOW accounts 427,707  404,827  414,532  394,873  412,602 
    Money market accounts 730,075  794,905  675,896  763,565  823,490 
    Savings accounts 358,397  357,966  342,579  331,800  326,967 
    Time deposits 961,613  913,649  844,036  850,294  833,898 
    Total deposits 3,063,752  3,037,374  2,789,350  2,879,651  2,934,255 
    Federal Home Loan Bank advances 848,930  671,615  640,010  487,189  378,973 
    Junior subordinated debentures 22,681  22,681  22,681  22,681  22,681 
    Other liabilities 54,948  77,037  76,708  67,409  60,307 
    Total liabilities 3,990,311  3,808,707  3,528,749  3,456,930  3,396,216 
    Shareholders’ Equity:     
    Common stock 1,073  1,069  1,068  1,064  1,064 
    Paid-in capital 115,123  113,290  112,314  111,641  110,949 
    Retained earnings 294,365  288,613  282,666  277,810  273,074 
    Accumulated other comprehensive loss (19,757) (7,645) (7,716) (9,235) (9,699)
    Total shareholders’ equity 390,804  395,327  388,332  381,280  375,388 
    Total liabilities and shareholders’ equity$4,381,115 $4,204,034 $3,917,081 $3,838,210 $3,771,604 
                    


    CONSOLIDATED STATEMENTS OF INCOME
    (Unaudited; Dollars in thousands, except per share amounts)
                 
     For the Three Months Ended For the Twelve Months
    Ended
     Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Dec 31,
     2015
     Dec 31,
     2016
    Dec 31,
     2015
    Interest income:        
    Interest and fees on loans$30,738 $29,633 $29,122 $29,998 $28,511  $119,491 $114,229 
    Taxable interest on securities 3,703  3,024  2,487  2,370  2,262   11,584  8,875 
    Nontaxable interest on securities 157  218  280  327  352   982  1,555 
    Dividends on Federal Home Loan Bank stock 362  288  231  210  315   1,091  953 
    Other interest income 95  93  70  64  37   322  138 
    Total interest and dividend income 35,055  33,256  32,190  32,969  31,477   133,470  125,750 
    Interest expense:        
    Deposits 3,445  3,110  2,981  2,968  3,097   12,504  13,142 
    Federal Home Loan Bank advances 2,886  2,641  2,313  2,152  1,966   9,992  7,746 
    Junior subordinated debentures 135  125  119  112  157   491  871 
    Other interest expense 1  1  1  2  2   5  9 
    Total interest expense 6,467  5,877  5,414  5,234  5,222   22,992  21,768 
    Net interest income 28,588  27,379  26,776  27,735  26,255   110,478  103,982 
    Provision for loan losses 2,900  1,800  450  500  750   5,650  1,050 
    Net interest income after provision for loan losses 25,688  25,579  26,326  27,235  25,505   104,828  102,932 
    Noninterest income:        
    Wealth management revenues 9,291  9,623  9,481  9,174  9,167   37,569  35,416 
    Mortgage banking revenues 4,541  3,734  2,710  2,198  2,582   13,183  9,901 
    Service charges on deposit accounts 945  915  935  907  971   3,702  3,865 
    Card interchange fees 858  870  860  797  810   3,385  3,199 
    Income from bank-owned life insurance 549  521  1,090  499  502   2,659  1,982 
    Loan related derivative income 912  1,178  508  645  752   3,243  2,441 
    Equity in losses of unconsolidated subsidiaries (89) (88) (89) (88) (69)  (354) (293)
    Other income 313  508  419  502  431   1,742  1,829 
    Total noninterest income 17,320  17,261  15,914  14,634  15,146   65,129  58,340 
    Noninterest expense:        
    Salaries and employee benefits 16,528  16,908  17,405  16,380  16,053   67,221  63,024 
    Net occupancy 1,775  1,766  1,803  1,807  1,724   7,151  7,000 
    Equipment 1,556  1,648  1,503  1,501  1,393   6,208  5,533 
    Outsourced services 1,311  1,254  1,294  1,363  1,337   5,222  5,111 
    Legal, audit and professional fees 597  691  662  629  825   2,579  2,741 
    FDIC deposit insurance costs 390  504  491  493  470   1,878  1,846 
    Advertising and promotion 403  370  420  265  325   1,458  1,526 
    Amortization of intangibles 318  321  322  323  333   1,284  904 
    Debt prepayment penalties       431     431   
    Acquisition related expenses         52     989 
    Change in fair value of contingent consideration   (939) 16  25  41   (898) 41 
    Other expenses 2,095  2,127  2,114  2,233  2,008   8,569  8,214 
    Total noninterest expense 24,973  24,650  26,030  25,450  24,561   101,103  96,929 
    Income before income taxes 18,035  18,190  16,210  16,419  16,090   68,854  64,343 
    Income tax expense 5,873  5,863  5,153  5,484  5,346   22,373  20,878 
    Net income$12,162 $12,327 $11,057 $10,935 $10,744  $46,481 $43,465 
             
    Net income available to common shareholders:        
    Basic$12,137 $12,302 $11,035 $10,910 $10,718  $46,384 $43,339 
    Diluted$12,137 $12,302 $11,035 $10,910 $10,718  $46,384 $43,339 
    Weighted average common shares outstanding:        
    Basic 17,142  17,090  17,067  17,023  17,004   17,081  16,879 
    Diluted 17,245  17,203  17,194  17,157  17,167   17,208  17,067 
    Earnings per common share:        
    Basic$0.71 $0.72 $0.65 $0.64 $0.63  $2.72 $2.57 
    Diluted$0.70 $0.72 $0.64 $0.64 $0.62  $2.70 $2.54 
             
    Cash dividends declared per share$0.37 $0.37 $0.36 $0.36 $0.34  $1.46 $1.36 
                           


    SELECTED FINANCIAL HIGHLIGHTS
    (Unaudited; Dollars in thousands, except per share amounts)
      
     Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Dec 31,
     2015
    Share and Equity Related Data:     
    Book value per share$22.76 $23.11 $22.73 $22.40 $22.06 
    Tangible book value per share - Non-GAAP (1)$18.44 $18.75 $18.35 $17.98 $17.62 
    Market value per share$56.05 $40.22 $37.92 $37.32 $39.52 
    Shares issued and outstanding at end of period 17,171  17,107  17,081  17,024  17,020 
          
    Capital Ratios:     
    Tier 1 risk-based capital11.44% (i) 11.48% 11.57% 11.56% 11.64%
    Total risk-based capital12.26% (i) 12.31% 12.43% 12.45% 12.58%
    Tier 1 leverage ratio8.67% (i) 8.95% 9.21% 9.31% 9.37%
    Common equity tier 110.75% (i) 10.77% 10.84% 10.82% 10.89%
    Equity to assets 8.92% 9.40% 9.91% 9.93% 9.95%
    Tangible equity to tangible assets - Non-GAAP (1) 7.35% 7.77% 8.16% 8.13% 8.11%
    (i) - estimated     


           
     For the Three Months Ended For the Twelve Months
    Ended
     Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Dec 31,
     2015
     Dec 31,
     2016
    Dec 31,
     2015
    Performance Ratios:        
    Net interest margin (FTE)2.89%2.94%3.05%3.24%3.08% 3.02%3.12%
    Return on average assets1.14%1.21%1.14%1.16%1.16% 1.16%1.19%
    Return on average tangible assets - Non-GAAP (1)1.16%1.24%1.17%1.18%1.19% 1.19%1.21%
    Return on average equity12.26%12.57%11.50%11.50%11.52% 11.96%12.00%
    Return on average tangible equity - Non-GAAP (1)15.09%15.53%14.28%14.34%14.45% 14.82%14.79%

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

     
    SELECTED FINANCIAL HIGHLIGHTS
    (Unaudited; Dollars in thousands)
             
     For the Three Months Ended For the Twelve Months
    Ended
     Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Dec 31,
     2015
     Dec 31,
     2016
    Dec 31,
     2015
    Wealth Management Results        
    Wealth Management Revenues:        
    Trust and investment management fees$8,283 $8,358 $8,195 $8,065 $8,001  $32,901 $30,149 
    Mutual fund fees 771  812  812  843  952   3,238  4,009 
    Asset-based revenues 9,054  9,170  9,007  8,908  8,953   36,139  34,158 
    Transaction-based revenues 237  453  474  266  214   1,430  1,258 
    Total wealth management revenues$9,291 $9,623 $9,481 $9,174 $9,167  $37,569 $35,416 
             
    Assets Under Administration:        
    Balance at beginning of period$6,056,859 $5,905,019 $5,878,967 $5,844,636 $5,714,201  $5,844,636 $5,069,966 
    Acquisition of Halsey Associates, Inc.              839,994 
    Net investment appreciation (depreciation)
     & income
     (8,506) 192,518  71,447  22,389  153,953   277,848  (95,228)
    Net client asset flows 14,940  (40,678) (45,395) 11,942  (23,518)  (59,191) 29,904 
    Balance at end of period$6,063,293 $6,056,859 $5,905,019 $5,878,967 $5,844,636  $6,063,293 $5,844,636 
             
    Mortgage Banking Results        
    Mortgage Banking Revenues:        
    Gains & commissions on loan sales, net$4,455 $3,744 $2,804 $2,134 $2,528  $13,137 $9,825 
    Residential mortgage servicing fee income, net 86  (10) (94) 64  54   46  76 
    Total mortgage banking revenues$4,541 $3,734 $2,710 $2,198 $2,582  $13,183 $9,901 
             
    Residential Mortgage Loan Originations:        
    Originations for retention in portfolio$72,533 $90,308 $54,080 $47,545 $38,080  $264,466 $234,852 
    Originations for sale to secondary market (1) 185,626  170,673  154,043  90,458  134,125  $600,800  523,834 
    Total mortgage loan originations$258,159 $260,981 $208,123 $138,003 $172,205  $865,266 $758,686 
             
    Residential Mortgage Loans Sold:        
    Sold with servicing rights retained$48,545 $44,611 $45,804 $26,454 $44,493  $165,414 $162,224 
    Sold with servicing rights released (1) 151,506  119,572  93,239  79,507  82,906  $443,824  368,676 
    Total mortgage loans sold$200,051 $164,183 $139,043 $105,961 $127,399  $609,238 $530,900 
                           

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


    END OF PERIOD LOAN AND DEPOSIT COMPOSITION
    (Unaudited; Dollars in thousands)
      
     Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Dec 31,
     2015
    Commercial:     
    Mortgages$1,074,186 $1,086,175 $1,074,747 $976,931 $931,953 
    Construction & development 121,371  98,735  81,812  123,032  122,297 
    Commercial & industrial 576,109  572,305  575,661  598,848  600,297 
    Total commercial 1,771,666  1,757,215  1,732,220  1,698,811  1,654,547 
    Residential real estate:     
    Mortgages 1,094,824  1,052,829  978,399  980,274  984,437 
    Homeowner construction 27,924  27,058  26,637  24,075  29,118 
    Total residential real estate 1,122,748  1,079,887  1,005,036  1,004,349  1,013,555 
    Consumer:     
    Home equity lines 264,200  265,238  260,541  258,513  255,565 
    Home equity loans 37,272  38,264  39,572  45,499  46,649 
    Other 38,485  40,751  43,515  39,821  42,811 
    Total consumer 339,957  344,253  343,628  343,833  345,025 
    Total loans$3,234,371 $3,181,355 $3,080,884 $3,046,993 $3,013,127 


     December 31, 2016 December 31, 2015
     Balance% of Total Balance% of Total
    Commercial Real Estate Loans by Property Location:     
    Rhode Island, Connecticut, Massachusetts$1,105,539 92.5% $959,883 91.0%
    New York, New Jersey, Pennsylvania 77,038 6.4%  80,989 7.7%
    New Hampshire 12,980 1.1%  13,377 1.3%
    Total commercial real estate loans (1)$1,195,557 100.0% $1,054,249 100.0%
            
    Residential Mortgages by Property Location:       
    Rhode Island, Connecticut, Massachusetts$1,106,366 98.6% $995,743 98.2%
    New Hampshire, Vermont, Maine 11,445 1.0%  10,186 1.0%
    New York, Virginia, New Jersey, Maryland, Pennsylvania 2,648 0.2%  4,163 0.4%
    Ohio 997 0.1%  1,557 0.2%
    Other 1,292 0.1%  1,906 0.2%
    Total residential mortgages$1,122,748 100.0% $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.

          
     Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Dec 31,
     2015
    Deposits:     
    Non-interest bearing demand deposits$521,165 $520,860 $476,848 $474,477 $475,398 
    Interest-bearing demand deposits 64,795  45,167  35,459  64,642  61,900 
    NOW accounts 427,707  404,827  414,532  394,873  412,602 
    Money market accounts 730,075  794,905  675,896  763,565  823,490 
    Savings accounts 358,397  357,966  342,579  331,800  326,967 
    Time deposits (in-market) 549,376  554,669  549,935  540,815  531,419 
    Wholesale brokered time deposits 412,237  358,980  294,101  309,479  302,479 
    Total deposits$3,063,752 $3,037,374 $2,789,350 $2,879,651 $2,934,255 


    CREDIT & ASSET QUALITY DATA
    (Unaudited; Dollars in thousands)
      
     Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Dec 31,
     2015
    Asset Quality Ratios:     
    Nonperforming assets to total assets 0.53% 0.59% 0.48% 0.49% 0.58%
    Nonaccrual loans to total loans 0.68% 0.75% 0.56% 0.57% 0.70%
    Allowance for loan losses to nonaccrual loans 117.89% 107.09% 149.73% 150.00% 128.61%
    Allowance for loan losses to total loans 0.80% 0.81% 0.84% 0.86% 0.90%
                    
    Nonperforming Assets:               
    Commercial mortgages$7,811 $10,357 $4,054 $4,054 $5,711 
    Commercial construction & development          
    Commercial & industrial 1,337  1,744  1,204  2,659  3,018 
    Residential real estate mortgages 11,736  10,140  10,409  9,367  10,666 
    Consumer 1,174  1,709  1,581  1,345  1,652 
    Total nonaccrual loans 22,058  23,950  17,248  17,425  21,047 
    Other real estate owned 1,075  1,045  1,515  1,326  716 
    Total nonperforming assets$23,133 $24,995 $18,763 $18,751 $21,763 
                    
    Past Due Loans:               
    Commercial mortgages$8,708 $10,352 $4,062 $4,564 $4,555 
    Commercial & industrial 1,154  1,047  1,978  2,906  462 
    Residential real estate mortgages 12,226  8,291  8,893  8,703  9,286 
    Consumer loans 2,334  1,565  2,201  2,122  3,256 
    Total past due loans$24,422 $21,255 $17,134 $18,295 $17,559 
                    
    Total past due loans to total loans 0.76% 0.67% 0.56% 0.60% 0.58%
    Accruing loans 90 days or more past due$ $ $ $ $ 
    Nonaccrual loans included in past due loans$18,602 $18,796 $13,211 $14,030 $13,635 


             
     For the Three Months Ended For the Twelve Months
    Ended
     Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Dec 31,
     2015
     Dec 31,
     2016
    Dec 31,
     2015
    Nonaccrual Loan Activity:        
    Balance at beginning of period$23,950 $17,248 $17,425 $21,047 $16,844  $21,047 $15,945 
    Additions to nonaccrual status 2,105  9,750  2,072  1,352  7,029   15,278  14,964 
    Loans returned to accruing status (718) (592)   (206) (303)  (1,516) (2,489)
    Loans charged-off (2,622) (2,055) (860) (1,475) (904)  (7,012) (2,305)
    Loans transferred to other real estate owned (30)   (435) (610) (716)  (1,075) (1,206)
    Payments, payoffs and other changes (627) (401) (954) (2,683) (903)  (4,664) (3,862)
    Balance at end of period$22,058 $23,950 $17,248 $17,425 $21,047  $22,058 $21,047 
             
    Allowance for Loan Losses:        
    Balance at beginning of period$25,649 $25,826 $26,137 $27,069 $27,161  $27,069 $28,023 
    Provision charged to earnings 2,900  1,800  450  500  750   5,650  1,050 
    Charge-offs (2,622) (2,055) (860) (1,475) (904)  (7,012) (2,305)
    Recoveries 77  78  99  43  62   297  301 
    Balance at end of period$26,004 $25,649 $25,826 $26,137 $27,069  $26,004 $27,069 
             
    Net Loan Charge-Offs (Recoveries):        
    Commercial mortgages$2,510 $1,936 $65 $1,249 $405  $5,760 $717 
    Commercial & industrial (20) (43) 684  (18) 217   603  584 
    Residential real estate mortgages 6  47  2  134  117   189  179 
    Consumer 49  37  10  67  103   163  524 
    Total$2,545 $1,977 $761 $1,432 $842  $6,715 $2,004 
             
    Net charge-offs to average loans (annualized) 0.31% 0.25% 0.10% 0.19% 0.11%  0.21% 0.07%
                           

    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 EndedDecember 31, 2016  September 30, 2016  December 31, 2015 
     Average
    Balance
     Interest Yield/
    Rate
      Average
    Balance
     Interest Yield/
    Rate
      Average
    Balance
     Interest Yield/
     Rate
     
    Assets:                          
    Commercial mortgages$1,086,772 $9,520 3.48  $1,079,917 $9,362 3.45  $885,967 $7,887 3.53 
    Construction & development 110,342  927 3.34   86,623  712 3.27   134,243  1,004 2.97 
    Commercial & industrial 575,983  6,927 4.78   565,170  6,382 4.49   581,584  6,520 4.45 
    Total commercial loans 1,773,097 $17,374 3.90   1,731,710 $16,456 3.78   1,601,794 $15,411 3.82 
    Residential real estate loans, including loans held for sale 1,140,492  10,652 3.72   1,080,302  10,386 3.82   1,049,007  10,338 3.91 
    Consumer loans 341,528  3,284 3.83   341,829  3,340 3.89   344,690  3,251 3.74 
    Total loans 3,255,117  31,310 3.83   3,153,841  30,182 3.81   2,995,491  29,000 3.84 
    Cash, federal funds sold and short-term investments 77,092  95 0.49   88,414  93 0.42   72,031  37 0.20 
    FHLBB stock 39,212  362 3.67   37,933  288 3.02   24,316  315 5.14 
    Taxable debt securities 636,277  3,703 2.32   497,738  3,024 2.42   341,130  2,262 2.63 
    Nontaxable debt securities 16,003  244 6.07   22,038  336 6.07   35,799  550 6.10 
    Total securities 652,280  3,947 2.41   519,776  3,360 2.57   376,929  2,812 2.96 
    Total interest-earning assets 4,023,701  35,714 3.53   3,799,964  33,923 3.55   3,468,767  32,164 3.68 
    Noninterest-earning assets 249,182     262,724     231,674   
    Total assets$4,272,883    $4,062,688    $3,700,441   
    Liabilities and Shareholders' Equity:           
    Interest-bearing demand deposits$46,668 $16 0.14  $39,865 $13 0.13  $42,324 $11 0.10 
    NOW accounts 408,788  51 0.05   402,307  51 0.05   376,185  56 0.06 
    Money market accounts 761,582  574 0.30   709,549  487 0.27   856,405  707 0.33 
    Savings accounts 356,837  51 0.06   352,032  52 0.06   310,608  47 0.06 
    Time deposits (in-market) 552,474  1,419 1.02   552,576  1,408 1.01   533,224  1,333 0.99 
    Wholesale brokered time deposits 382,798  1,334 1.39   310,740  1,099 1.41   277,681  943 1.35 
    FHLBB advances 732,269  2,886 1.57   690,843  2,641 1.52   373,652  1,966 2.09 
    Junior subordinated debentures 22,681  135 2.37   22,681  125 2.19   22,681  157 2.75 
    Other 40  1 9.95   53  1 7.51   92  2 8.62 
    Total interest-bearing liabilities 3,264,137  6,467 0.79   3,080,646  5,877 0.76   2,792,852  5,222 0.74 
    Demand deposits 548,595     520,439     475,215   
    Other liabilities 63,410     69,370     59,177   
    Shareholders' equity 396,741     392,233     373,197   
    Total liabilities and shareholders' equity$4,272,883    $4,062,688    $3,700,441   
    Net interest income (FTE) $29,247    $28,046    $26,942  
    Interest rate spread  2.74    2.79    2.94 
    Net interest margin  2.89    2.94    3.08 

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

    For the Three Months EndedDec 31,
    2016
    Sep 30,
    2016
    Dec 31,
    2015
    Commercial loans$572 $549 $489 
    Nontaxable debt securities 87  118  198 
    Total$659 $667 $687 


    CONSOLIDATED AVERAGE BALANCE SHEETS
    (Unaudited; Dollars in thousands)
      
    For the Twelve Months EndedDecember 31, 2016  December 31, 2015 
     Average
    Balance
     Interest Yield/
    Rate
      Average
    Balance
     Interest Yield/
     Rate
     
    Assets:       
    Commercial mortgages$1,030,289 $36,089 3.50  $870,241 $31,281 3.59 
    Construction & development 110,770  3,732 3.37   109,198  3,340 3.06 
    Commercial & industrial 584,307  27,398 4.69   593,799  27,507 4.63 
    Total commercial loans 1,725,366  67,219 3.90   1,573,238  62,128 3.95 
    Residential real estate loans, including loans held for sale 1,069,402  41,173 3.85   1,038,836  41,083 3.95 
    Consumer loans 342,431  13,328 3.89   340,889  12,885 3.78 
    Total loans 3,137,199  121,720 3.88   2,952,963  116,096 3.93 
    Cash, federal funds sold and short-term investments 75,997  322 0.42   69,169  138 0.20 
    FHLBB stock 33,643  1,091 3.24   34,349  953 2.77 
    Taxable debt securities 472,892  11,584 2.45   325,166  8,875 2.73 
    Nontaxable debt securities 24,939  1,520 6.09   39,751  2,408 6.06 
    Total securities 497,831  13,104 2.63   364,917  11,283 3.09 
    Total interest-earning assets 3,744,670  136,237 3.64   3,421,398  128,470 3.75 
    Noninterest-earning assets 249,808     226,623   
    Total assets$3,994,478    $3,648,021   
    Liabilities and Shareholders' Equity:       
    Interest-bearing demand deposits$45,038 $49 0.11  $37,168 $27 0.07 
    NOW accounts 400,209  212 0.05   356,713  209 0.06 
    Money market accounts 741,925  2,035 0.27   824,625  3,482 0.42 
    Savings accounts 343,943  200 0.06   301,652  196 0.06 
    Time deposits (in-market) 546,460  5,486 1.00   549,039  5,531 1.01 
    Wholesale brokered time deposits 323,390  4,522 1.40   284,448  3,697 1.30 
    FHLBB advances 616,404  9,992 1.62   398,866  7,746 1.94 
    Junior subordinated debentures 22,681  491 2.16   22,681  871 3.84 
    Other 60  5 8.33   110  9 8.18 
    Total interest-bearing liabilities 3,040,110  22,992 0.76   2,775,302  21,768 0.78 
    Demand deposits 503,806     458,369   
    Other liabilities 62,021     52,152   
    Shareholders' equity 388,541     362,198   
    Total liabilities and shareholders' equity$3,994,478    $3,648,021   
    Net interest income (FTE) $113,245    $106,702  
    Interest rate spread  2.88    2.97 
    Net interest margin  3.02    3.12 

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

    For the Twelve Months EndedDec 31,
    2016
    Dec 31,
    2015
    Commercial loans$2,229 $1,867 
    Nontaxable debt securities 538  853 
    Total$2,767 $2,720 


    SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures
    (Unaudited; Dollars in thousands, except per share amounts)
      
     Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Dec 31,
     2015
    Tangible Book Value per Share:     
    Total shareholders' equity, as reported$390,804 $395,327 $388,332 $381,280 $375,388 
    Less:     
    Goodwill 64,059  64,059  64,059  64,059  64,059 
    Identifiable intangible assets, net 10,175  10,493  10,814  11,137  11,460 
    Total tangible shareholders' equity$316,570 $320,775 $313,459 $306,084 $299,869 
          
    Shares outstanding, as reported 17,171  17,107  17,081  17,024  17,020 
          
    Book value per share - GAAP$22.76 $23.11 $22.73 $22.40 $22.06 
    Tangible book value per share - Non-GAAP$18.44 $18.75 $18.35 $17.98 $17.62 
          
    Tangible Equity to Tangible Assets:     
    Total tangible shareholders' equity$316,570 $320,775 $313,459 $306,084 $299,869 
          
    Total assets, as reported$4,381,115 $4,204,034 $3,917,081 $3,838,210 $3,771,604 
    Less:     
    Goodwill 64,059  64,059  64,059  64,059  64,059 
    Identifiable intangible assets, net 10,175  10,493  10,814  11,137  11,460 
    Total tangible assets$4,306,881 $4,129,482 $3,842,208 $3,763,014 $3,696,085 
          
    Equity to assets - GAAP 8.92% 9.40% 9.91% 9.93% 9.95%
    Tangible equity to tangible assets - Non-GAAP 7.35% 7.77% 8.16% 8.13% 8.11%


     For the Three Months Ended For the Twelve Months Ended
     Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
    Mar 31,
     2016
    Dec 31,
     2015
     Dec 31,
     2016
    Dec 31,
     2015
    Return on Average Tangible Assets:        
    Net income, as reported$12,162 $12,327 $11,057 $10,935 $10,744  $46,481 $43,465 
             
    Total average assets, as reported$4,272,883 $4,062,688 $3,869,508 $3,769,025 $3,700,441  $3,994,478 $3,648,021 
    Less average balances of:        
    Goodwill 64,059  64,059  64,059  64,059  64,194   64,059  60,657 
    Identifiable intangible assets, net 10,330  10,650  10,972  11,294  11,616   10,810  7,625 
    Total average tangible assets$4,198,494 $3,987,979 $3,794,477 $3,693,672 $3,624,631  $3,919,609 $3,579,739 
             
    Return on average assets - GAAP 1.14% 1.21% 1.14% 1.16% 1.16%  1.16% 1.19%
    Return on average tangible assets -
      Non-GAAP
     1.16% 1.24% 1.17% 1.18% 1.19%  1.19% 1.21%
                           
    Return on Average Tangible Equity:                      
    Net income, as reported$12,162 $12,327 $11,057 $10,935 $10,744  $46,481 $43,465 
                           
    Total average equity, as reported$396,741 $392,233 $384,717 $380,342 $373,197  $388,541 $362,198 
    Less average balances of:                      
    Goodwill 64,059  64,059  64,059  64,059  64,194   64,059  60,657 
    Identifiable intangible assets, net 10,330  10,650  10,972  11,294  11,616   10,810  7,625 
    Total average tangible equity$322,352 $317,524 $309,686 $304,989 $297,387  $313,672 $293,916 
                           
    Return on average equity - GAAP 12.26% 12.57% 11.50% 11.50% 11.52%  11.96% 12.00%
    Return on average tangible equity -
      Non-GAAP
     15.09% 15.53% 14.28% 14.34% 14.45%  14.82% 14.79%

     

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

    Source: Washington Trust Bancorp, Inc.