• Washington Trust Bancorp, Inc.
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  • Washington Trust Reports Record Second Quarter 2017 Earnings
    Company Release - 07/24/2017 16:05

    WESTERLY, R.I., July 24, 2017 (GLOBE NEWSWIRE) -- Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced second quarter 2017 net income of $13.2 million, or $0.76 per diluted share, up by 12% from the $11.8 million, or $0.68 per diluted share, reported for the first quarter of 2017.

    “Washington Trust’s momentum continued into the second quarter of 2017, as we achieved record earnings,” stated Joseph J. MarcAurele, Washington Trust Chairman and Chief Executive Officer.  “As a result of our consistent performance, strong capital position and attractive dividend yield, we continue to be recognized as one of the region’s high-performing financial institutions.”

    Selected highlights for the second quarter of 2017 include:

    • Returns on average equity and average assets were strong at 13.06% and 1.21%, respectively.  Comparable amounts for the first quarter of 2017 were 11.87% and 1.08%, respectively.

    • Wealth management assets under administration at the end of the quarter totaled $6.4 billion and second quarter revenues amounted to $9.9 million.  These were record highs for Washington Trust.

    • Mortgage banking revenues totaled $2.9 million for the second quarter of 2017, up by 25% on a linked quarter basis.

    • Total loans stood at $3.2 billion at June 30, 2017, down by 1% from the preceding quarter and up by 4% from a year ago.

    • Total deposits amounted to $3.0 billion at June 30, 2017, down by 3% in the quarter and up by 8% from a year ago.

    Net Interest Income
    Net interest income totaled $29.9 million for the second quarter of 2017, up by $1.2 million, or 4%, from the first quarter.  Included in net interest income in the second quarter was loan prepayment fee income of $549 thousand, compared to $135 thousand in the first quarter.  Excluding the impact of loan prepayment fee income in each period, net interest income was up by $811 thousand, or 3%, on a linked quarter basis.  The net interest margin was 2.97% for the second quarter of 2017, up by 10 basis points from the preceding quarter.  Excluding the impact of the loan prepayment fee income in each period, the net interest margin was 2.92%, up by 6 basis points from the first quarter of 2017.  Significant linked quarter changes included:

    • Average interest-earning assets decreased by $17 million, primarily due to payoffs in the commercial real estate loan portfolio.  The yield on interest-earning assets for the second quarter was 3.68%, up by 12 basis points from the preceding quarter.  Excluding the impact of loan prepayment fee income in each period, the yield on interest-earning assets was 3.62%, up by 8 basis points from the preceding quarter, due to higher short-term market rates of interest.

    • Average interest-bearing liabilities decreased by $39 million, reflecting declines in both in-market interest-bearing deposits and wholesale funding balances.  The cost of interest-bearing funds was 0.87%, up by 4 basis points from the preceding quarter.

    Loans
    Total loans amounted to $3.2 billion at June 30, 2017, down by $25 million, or 1%, from the end of preceding quarter.  Commercial loans decreased by $64 million, or 4%, on a linked quarter basis, with a $79 million decline in the commercial real estate portfolio resulting from payoffs and a $15 million increase in the commercial and industrial loan portfolio.  Residential loan portfolio balances increased by $37 million, or 3%, from the balance at March 31, 2017.  The consumer loan portfolio increased by $2 million, or 1%, from the end of the preceding quarter.

    Investment Securities
    The investment securities portfolio amounted to $763 million at June 30, 2017, down by $6 million, or 1%, from the balance at March 31, 2017.  Investment securities represented 17% of total assets as of June 30, 2017.

    Deposits and Borrowings
    Total deposits amounted to $3.0 billion at June 30, 2017, down by $94 million, or 3%, from the balance at March 31, 2017.  Included in total deposits were wholesale brokered time deposit balances of $401 million, which increased by $19 million from the end of preceding quarter.  Excluding wholesale brokered time deposits, in-market deposits decreased by $113 million, or 4%, in the quarter, reflecting seasonal outflows of various institutional and governmental depositors based on the their underlying business cycles.

    FHLBB advances amounted to $870 million at June 30, 2017, up by $71 million from the balance at March 31, 2017.

    Noninterest Income
    Noninterest income totaled $16.8 million for the second quarter of 2017, up by $2.3 million, or 16%, from the preceding quarter.  Significant linked quarter changes included:

    • Wealth management revenues increased by $465 thousand, or 5%.  This included increases of $154 thousand in asset-based revenues and $311 thousand in transaction-based revenues.  The increase in transaction-based revenues was largely attributable to tax preparation fees, which are generally concentrated in the second quarter. 

      Wealth management assets under administration increased by $160 million, reflecting financial market appreciation in the second quarter.  Managed assets represented 93% of total wealth management assets at June 30, 2017.

    • Mortgage banking revenues increased by $579 thousand, or 25%, resulting from an increase of residential mortgage loans sold in the secondary market.  Residential mortgage loans sold to the secondary market amounted to $137 million in the second quarter, compared to $107 million in the preceding quarter.

    • Loan related derivative income increased by $996 thousand from the $148 thousand reported for the first quarter, due to higher volume of commercial borrower loan related derivative transactions occurring in the second quarter.

    Noninterest Expenses
    Noninterest expenses totaled $26.3 million for the second quarter of 2017, up by $1.0 million, or 4%, from the first quarter.  Included in the first quarter was a $310 thousand reduction in noninterest expenses resulting from the downward adjustment in the fair value of the contingent consideration liability initially recognized upon the completion of a 2015 acquisition.  Excluding this first quarter adjustment, noninterest expenses were up by $710 thousand, or 3%, on a linked quarter basis.  Salaries and employee benefit costs, the largest component of noninterest expenses, increased by $563 thousand, or 3%, from the preceding quarter, reflecting an increase in commissions expense due to an increase in mortgage banking activities.  The linked quarter change in noninterest expenses also included a $253 thousand increase in outsourced services, which was primarily due to higher volume of loan related derivative transaction execution costs.

    Income tax expense amounted to $6.5 million for the second quarter of 2017, up by $784 thousand from the preceding quarter.  The effective tax rate for the second quarter of 2017 was 33.0%, compared to 32.7% for the first quarter of 2017.  Excess tax benefits on the settlement of share-based awards, which are recorded as a reduction to income tax expense, totaled $155 thousand for the second quarter, compared to $195 thousand in the preceding quarter.  Excluding the impact of the excess tax benefits recognized in each period, the effective tax rate was 33.8% for the second quarter of 2017, unchanged from the first quarter.  Prior to 2017, excess tax benefits on the settlement of share-based awards were recognized as additional paid in capital in shareholders' equity and did not impact income tax expense or the effective tax rate.

    Asset Quality
    Total past due loans amounted to $21.1 million, or 0.66% of total loans, at June 30, 2017, compared to $20.9 million, or 0.65% of total loans, at March 31, 2017.  Total nonaccrual loans amounted to $20.2 million, or 0.63% of total loans, at June 30, 2017, down from $22.1 million, or 0.69% of total loans, at March 31, 2017.

    A loan loss provision totaling $700 thousand was charged to earnings in the second quarter of 2017, compared to a loan loss provision of $400 thousand in the preceding quarter.  The loan loss provision was based on management's assessment of loss exposure, as well as loan loss allocations commensurate with changes in the loan portfolio during the quarter.  Net charge-offs amounted to $484 thousand in the second quarter of 2017, including a $400 thousand charge-off associated with one commercial real estate relationship.  The allowance for loan losses was $26.7 million, or 0.83% of total loans, at June 30, 2017, compared to $26.4 million, or 0.82% of total loans, at March 31, 2017.

    Capital and Dividends
    Total shareholders' equity was $406 million at June 30, 2017, up by $8 million from March 31, 2017.  Capital levels at June 30, 2017 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.78% at June 30, 2017, compared to 12.38% at March 31, 2017.  Book value per share amounted to $23.59 at June 30, 2017, up from $23.14 at March 31, 2017.

    The Board of Directors declared a quarterly dividend of 38 cents per share for the quarter ended June 30, 2017.  The dividend was paid on July 14, 2017 to shareholders of record on July 3, 2017.

    Conference Call
    Washington Trust will host a conference call to discuss its second quarter results, business highlights and outlook on Tuesday, July 25, 2017 at 8:30 a.m. (Eastern Time).  Individuals may dial in to the call at 1-877-407-9208.  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 13665498; the audio replay will be available through August 4, 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 September 30, 2017.

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

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

    Some of the factors that might cause these differences include the following: weakness in national, regional or international economic conditions or conditions affecting the banking or financial services industries or financial capital markets; volatility in national and international financial markets; reductions in net interest income resulting from interest rate volatility as well as changes in the balance and mix of loans and deposits; reductions in the market value of wealth management assets under administration; changes in the value of securities and other assets; reductions in loan demand; changes in loan collectibility, default and charge-off rates; changes in the size and nature of the our competition; changes in legislation or regulation and accounting principles, policies and guidelines; increasing occurrences of cyberattacks, hacking and identity theft; and changes in the assumptions used in making such forward-looking statements. In addition, the factors described under “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as updated by our Quarterly Reports on Form 10-Q and other filings submitted to the SEC, may result in these differences. You should carefully review all of these factors and you should be aware that there may be other factors that could cause these differences. These forward-looking statements were based on information, plans and estimates at the date of this report, and we assume no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

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

     
    Washington Trust Bancorp, Inc. and Subsidiaries
    CONSOLIDATED BALANCE SHEETS
    (Unaudited; Dollars in thousands)
          
     Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
    Assets:     
    Cash and due from banks$117,608 $111,941 $106,185 $126,752 $116,658 
    Short-term investments 2,324  2,039  1,612  2,420  3,255 
    Mortgage loans held for sale 32,784  25,414  29,434  45,162  38,554 
    Securities:     
    Available for sale, at fair value 749,486  754,720  739,912  564,256  401,749 
    Held to maturity, at amortized cost 13,942  14,721  15,633  16,848  17,917 
    Total securities 763,428  769,441  755,545  581,104  419,666 
    Federal Home Loan Bank stock, at cost 44,640  43,714  43,129  37,249  34,303 
    Loans:     
    Commercial 1,698,389  1,762,499  1,771,666  1,757,215  1,732,220 
    Residential real estate 1,168,105  1,131,210  1,122,748  1,079,887  1,005,036 
    Consumer 333,606  331,151  339,957  344,253  343,628 
    Total loans 3,200,100  3,224,860  3,234,371  3,181,355  3,080,884 
    Less allowance for loan losses 26,662  26,446  26,004  25,649  25,826 
    Net loans 3,173,438  3,198,414  3,208,367  3,155,706  3,055,058 
    Premises and equipment, net 28,508  28,853  29,020  29,433  29,590 
    Investment in bank-owned life insurance 72,183  71,642  71,105  70,557  65,036 
    Goodwill 63,909  64,059  64,059  64,059  64,059 
    Identifiable intangible assets, net 9,642  9,898  10,175  10,493  10,814 
    Other assets 67,065  63,348  62,484  81,099  80,088 
    Total assets$4,375,529 $4,388,763 $4,381,115 $4,204,034 $3,917,081 
    Liabilities:     
    Deposits:     
    Demand deposits$587,813 $596,974 $585,960 $566,027 $512,307 
    NOW accounts 448,617  454,344  427,707  404,827  414,532 
    Money market accounts 666,047  762,233  730,075  794,905  675,896 
    Savings accounts 364,002  362,281  358,397  357,966  342,579 
    Time deposits 954,710  939,739  961,613  913,649  844,036 
    Total deposits 3,021,189  3,115,571  3,063,752  3,037,374  2,789,350 
    Federal Home Loan Bank advances 869,733  798,741  848,930  671,615  640,010 
    Junior subordinated debentures 22,681  22,681  22,681  22,681  22,681 
    Other liabilities 55,884  53,985  54,948  77,037  76,708 
    Total liabilities 3,969,487  3,990,978  3,990,311  3,808,707  3,528,749 
    Shareholders’ Equity:     
    Common stock 1,076  1,075  1,073  1,069  1,068 
    Paid-in capital 116,484  116,200  115,123  113,290  112,314 
    Retained earnings 306,151  299,555  294,365  288,613  282,666 
    Accumulated other comprehensive loss (17,669) (19,045) (19,757) (7,645) (7,716)
    Total shareholders’ equity 406,042  397,785  390,804  395,327  388,332 
    Total liabilities and shareholders’ equity$4,375,529 $4,388,763 $4,381,115 $4,204,034 $3,917,081 


    CONSOLIDATED STATEMENTS OF INCOME
    (Unaudited; Dollars in thousands, except per share amounts)
                 
     For the Three Months Ended For the Six Months
    Ended
     Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
     Jun 30,
     2017
    Jun 30,
     2016
    Interest income:        
    Interest and fees on loans$31,642 $30,352 $30,738 $29,633 $29,122  $61,994 $59,120 
    Taxable interest on securities 4,844  4,709  3,703  3,024  2,487   9,553  4,857 
    Nontaxable interest on securities 72  112  157  218  280   184  607 
    Dividends on Federal Home Loan Bank stock 439  387  362  288  231   826  441 
    Other interest income 156  104  95  93  70   260  134 
    Total interest and dividend income 37,153  35,664  35,055  33,256  32,190   72,817  65,159 
    Interest expense:        
    Deposits 3,591  3,502  3,445  3,110  2,981   7,093  5,949 
    Federal Home Loan Bank advances 3,509  3,344  2,886  2,641  2,313   6,853  4,465 
    Junior subordinated debentures 149  138  135  125  119   287  231 
    Other interest expense   1  1  1  1   1  3 
    Total interest expense 7,249  6,985  6,467  5,877  5,414   14,234  10,648 
    Net interest income 29,904  28,679  28,588  27,379  26,776   58,583  54,511 
    Provision for loan losses 700  400  2,900  1,800  450   1,100  950 
    Net interest income after provision for loan losses 29,204  28,279  25,688  25,579  26,326   57,483  53,561 
    Noninterest income:        
    Wealth management revenues 9,942  9,477  9,291  9,623  9,481   19,419  18,655 
    Mortgage banking revenues 2,919  2,340  4,541  3,734  2,710   5,259  4,908 
    Service charges on deposit accounts 901  883  945  915  935   1,784  1,842 
    Card interchange fees 902  802  858  870  860   1,704  1,657 
    Income from bank-owned life insurance 542  536  549  521  1,090   1,078  1,589 
    Loan related derivative income 1,144  148  912  1,178  508   1,292  1,153 
    Equity in losses of unconsolidated subsidiaries (89) (88) (89) (88) (89)  (177) (177)
    Other income 545  412  313  508  419   957  921 
    Total noninterest income 16,806  14,510  17,320  17,261  15,914   31,316  30,548 
    Noninterest expense:        
    Salaries and employee benefits 17,358  16,795  16,528  16,908  17,405   34,153  33,785 
    Net occupancy 1,767  1,967  1,775  1,766  1,803   3,734  3,610 
    Equipment 1,313  1,467  1,556  1,648  1,503   2,780  3,004 
    Outsourced services 1,710  1,457  1,311  1,254  1,294   3,167  2,657 
    Legal, audit and professional fees 582  616  597  691  662   1,198  1,291 
    FDIC deposit insurance costs 469  481  390  504  491   950  984 
    Advertising and promotion 362  237  403  370  420   599  685 
    Amortization of intangibles 257  277  318  321  322   534  645 
    Debt prepayment penalties              431 
    Change in fair value of contingent consideration   (310)   (939) 16   (310) 41 
    Other expenses 2,488  2,299  2,095  2,127  2,114   4,787  4,347 
    Total noninterest expense 26,306  25,286  24,973  24,650  26,030   51,592  51,480 
    Income before income taxes 19,704  17,503  18,035  18,190  16,210   37,207  32,629 
    Income tax expense 6,505  5,721  5,873  5,863  5,153   12,226  10,637 
    Net income$13,199 $11,782 $12,162 $12,327 $11,057  $24,981 $21,992 
             
    Net income available to common shareholders:        
    Basic$13,170 $11,755 $12,137 $12,302 $11,035  $24,925 $21,945 
    Diluted$13,170 $11,755 $12,137 $12,302 $11,035  $24,925 $21,945 
    Weighted average common shares outstanding:        
    Basic 17,206  17,186  17,142  17,090  17,067   17,196  17,045 
    Diluted 17,316  17,293  17,245  17,203  17,194   17,312  17,185 
    Earnings per common share:        
    Basic$0.77 $0.68 $0.71 $0.72 $0.65  $1.45 $1.29 
    Diluted$0.76 $0.68 $0.70 $0.72 $0.64  $1.44 $1.28 
             
    Cash dividends declared per share$0.38 $0.38 $0.37 $0.37 $0.36  $0.76 $0.72 


    SELECTED FINANCIAL HIGHLIGHTS
    (Unaudited; Dollars in thousands, except per share amounts)
      
     Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
    Share and Equity Related Data:     
    Book value per share$23.59 $23.14 $22.76 $23.11 $22.73 
    Tangible book value per share - Non-GAAP (1)$19.32 $18.83 $18.44 $18.75 $18.35 
    Market value per share$51.55 $49.30 $56.05 $40.22 $37.92 
    Shares issued and outstanding at end of period 17,210  17,193  17,171  17,107  17,081 
          
    Capital Ratios:     
    Tier 1 risk-based capital11.92% (i) 11.54% 11.44% 11.48% 11.57%
    Total risk-based capital12.78% (i) 12.38% 12.26% 12.31% 12.43%
    Tier 1 leverage ratio8.78% (i) 8.58% 8.67% 8.95% 9.21%
    Common equity tier 111.23% (i) 10.86% 10.75% 10.77% 10.84%
    Equity to assets 9.28% 9.06% 8.92% 9.40% 9.91%
    Tangible equity to tangible assets - Non-GAAP (1) 7.73% 7.51% 7.35% 7.77% 8.16%
    (i) - estimated     


           
     For the Three Months Ended For the Six Months
    Ended
     Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
     Jun 30,
     2017
    Jun 30,
     2016
    Performance Ratios:        
    Net interest margin (FTE)2.97%2.87%2.89%2.94%3.05% 2.92%3.15%
    Return on average assets1.21%1.08%1.14%1.21%1.14% 1.15%1.15%
    Return on average tangible assets - Non-GAAP (1)1.23%1.10%1.16%1.24%1.17% 1.17%1.17%
    Return on average equity13.06%11.87%12.26%12.57%11.50% 12.47%11.50%
    Return on average tangible equity - Non-GAAP (1)15.98%14.59%15.09%15.53%14.28% 15.29%14.31%

    (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 Six Months
    Ended
     Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
     Jun 30,
     2017
    Jun 30,
     2016
    Wealth Management Results        
    Wealth Management Revenues:        
    Trust and investment management fees$8,781 $8,518 $8,283 $8,358 $8,195  $17,299 $16,260 
    Mutual fund fees 620  729  771  812  812   1,349  1,655 
    Asset-based revenues 9,401  9,247  9,054  9,170  9,007   18,648  17,915 
    Transaction-based revenues 541  230  237  453  474   771  740 
    Total wealth management revenues$9,942 $9,477 $9,291 $9,623 $9,481  $19,419 $18,655 
             
    Assets Under Administration:        
    Balance at beginning of period$6,243,301 $6,063,293 $6,056,859 $5,905,019 $5,878,967  $6,063,293 $5,844,636 
    Net investment appreciation (depreciation) & income 162,924  220,423  (8,506) 192,518  71,447   383,347  93,835 
    Net client asset flows (2,724) (40,415) 14,940  (40,678) (45,395)  (43,139) (33,452)
    Balance at end of period$6,403,501 $6,243,301 $6,063,293 $6,056,859 $5,905,019  $6,403,501 $5,905,019 
             
    Mortgage Banking Results        
    Mortgage Banking Revenues:        
    Gains & commissions on loan sales, net$2,784 $2,268 $4,455 $3,744 $2,804  $5,052 $4,938 
    Residential mortgage servicing fee income, net 135  72  86  (10) (94)  207  (30)
    Total mortgage banking revenues$2,919 $2,340 $4,541 $3,734 $2,710  $5,259 $4,908 
             
    Residential Mortgage Loan Originations:        
    Originations for retention in portfolio$94,794 $57,907 $72,533 $90,308 $54,080  $152,701 $101,626 
    Originations for sale to secondary market (1) 144,491  102,441  185,626  170,673  154,043   246,932  244,501 
    Total mortgage loan originations$239,285 $160,348 $258,159 $260,981 $208,123  $399,633 $346,127 
             
    Residential Mortgage Loans Sold:        
    Sold with servicing rights retained$29,198 $22,567 $48,545 $44,611 $45,804  $51,766 $72,258 
    Sold with servicing rights released (1) 108,246  84,345  151,506  119,572  93,239   192,590  172,746 
    Total mortgage loans sold$137,444 $106,912 $200,051 $164,183 $139,043  $244,356 $245,004 

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

     
    END OF PERIOD LOAN AND DEPOSIT COMPOSITION
    (Unaudited; Dollars in thousands)
      
     Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
    Commercial:     
    Mortgages$1,009,096 $1,076,648 $1,074,186 $1,086,175 $1,074,747 
    Construction & development 112,177  123,841  121,371  98,735  81,812 
    Commercial & industrial 577,116  562,010  576,109  572,305  575,661 
    Total commercial 1,698,389  1,762,499  1,771,666  1,757,215  1,732,220 
    Residential Real Estate:     
    Mortgages 1,143,416  1,100,435  1,094,824  1,052,829  978,399 
    Homeowner construction 24,689  30,775  27,924  27,058  26,637 
    Total residential real estate 1,168,105  1,131,210  1,122,748  1,079,887  1,005,036 
    Consumer:     
    Home equity lines 263,934  258,695  264,200  265,238  260,541 
    Home equity loans 35,173  36,050  37,272  38,264  39,572 
    Other 34,499  36,406  38,485  40,751  43,515 
    Total consumer 333,606  331,151  339,957  344,253  343,628 
    Total loans$3,200,100 $3,224,860 $3,234,371 $3,181,355 $3,080,884 


     June 30, 2017 December 31, 2016
     Balance% of Total Balance% of Total
    Commercial Real Estate Loans by Property Location:     
    Rhode Island, Connecticut, Massachusetts$1,048,992 93.6% $1,105,539 92.5%
    New York, New Jersey, Pennsylvania 59,508 5.3%  77,038 6.4%
    New Hampshire 12,773 1.1%  12,980 1.1%
    Total commercial real estate loans (1)$1,121,273 100.0% $1,195,557 100.0%
              
    Residential Mortgages by Property Location:         
    Rhode Island, Connecticut, Massachusetts$1,151,846 98.6% $1,106,366 98.6%
    New Hampshire, Vermont, Maine 11,871 1.0%  11,445 1.0%
    New York, Virginia, New Jersey, Maryland, Pennsylvania 2,208 0.2%  2,648 0.2%
    Ohio 903 0.1%  997 0.1%
    Other 1,277 0.1%  1,292 0.1%
    Total residential mortgages$1,168,105 100.0% $1,122,748 100.0%

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

          
     Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
    Deposits:     
    Non-interest bearing demand deposits$533,147 $534,792 $521,165 $520,860 $476,848 
    Interest-bearing demand deposits 54,666  62,182  64,795  45,167  35,459 
    NOW accounts 448,617  454,344  427,707  404,827  414,532 
    Money market accounts 666,047  762,233  730,075  794,905  675,896 
    Savings accounts 364,002  362,281  358,397  357,966  342,579 
    Time deposits (in-market) 553,783  557,312  549,376  554,669  549,935 
    Wholesale brokered time deposits 400,927  382,427  412,237  358,980  294,101 
    Total deposits$3,021,189 $3,115,571 $3,063,752 $3,037,374 $2,789,350 


    CREDIT & ASSET QUALITY DATA
    (Unaudited; Dollars in thousands)
      
     Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
    Asset Quality Ratios:     
    Nonperforming assets to total assets 0.49% 0.54% 0.53% 0.59% 0.48%
    Nonaccrual loans to total loans 0.63% 0.69% 0.68% 0.75% 0.56%
    Total past due loans to total loans 0.66% 0.65% 0.76% 0.67% 0.56%
    Allowance for loan losses to nonaccrual loans 132.00% 119.52% 117.89% 107.09% 149.73%
    Allowance for loan losses to total loans 0.83% 0.82% 0.80% 0.81% 0.84%
          
    Nonperforming Assets:     
    Commercial mortgages$6,422 $7,809 $7,811 $10,357 $4,054 
    Commercial construction & development          
    Commercial & industrial 1,232  1,129  1,337  1,744  1,204 
    Residential real estate mortgages 11,815  12,253  11,736  10,140  10,409 
    Consumer 729  936  1,174  1,709  1,581 
    Total nonaccrual loans 20,198  22,127  22,058  23,950  17,248 
    Other real estate owned 1,342  1,410  1,075  1,045  1,515 
    Total nonperforming assets$21,540 $23,537 $23,133 $24,995 $18,763 
          
    Past Due Loans (30 days or more past due):     
    Commercial mortgages$6,422 $7,806 $8,708 $10,352 $4,062 
    Commercial & industrial 4,009  1,046  1,154  1,047  1,978 
    Residential real estate mortgages 8,857  10,533  12,226  8,291  8,893 
    Consumer loans 1,832  1,547  2,334  1,565  2,201 
    Total past due loans$21,120 $20,932 $24,422 $21,255 $17,134 
          
    Accruing loans 90 days or more past due$— $— $— $— $— 
    Nonaccrual loans included in past due loans$14,490 $18,081 $18,602 $18,796 $13,211 


             
     For the Three Months Ended For the Six Months
    Ended
     Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
     Jun 30,
     2017
    Jun 30,
     2016
    Nonaccrual Loan Activity:        
    Balance at beginning of period$22,127 $22,058 $23,950 $17,248 $17,425  $22,058 $21,047 
    Additions to nonaccrual status 1,946  2,138  2,105  9,750  2,072   4,084  3,424 
    Loans returned to accruing status (779) (547) (718) (592)    (1,325) (206)
    Loans charged-off (642) (79) (2,622) (2,055) (860)  (721) (2,335)
    Loans transferred to other real estate owned   (478) (30)   (435)  (576) (1,045)
    Payments, payoffs and other changes (2,454) (965) (627) (401) (954)  (3,322) (3,637)
    Balance at end of period$20,198 $22,127 $22,058 $23,950 $17,248  $20,198 $17,248 
             
    Allowance for Loan Losses:        
    Balance at beginning of period$26,446 $26,004 $25,649 $25,826 $26,137  $26,004 $27,069 
    Provision charged to earnings 700  400  2,900  1,800  450   1,100  950 
    Charge-offs (642) (79) (2,622) (2,055) (860)  (721) (2,335)
    Recoveries 158  121  77  78  99   279  142 
    Balance at end of period$26,662 $26,446 $26,004 $25,649 $25,826  $26,662 $25,826 
             
    Net Loan Charge-Offs (Recoveries):        
    Commercial mortgages$318 $ $2,510 $1,936 $65  $318 $1,314 
    Commercial & industrial 115  (105) (20) (43) 684   10  666 
    Residential real estate mortgages 8  (4) 6  47  2   4  136 
    Consumer 43  67  49  37  10   110  77 
    Total$484 ($42)$2,545 $1,977 $761  $442 $2,193 
             
    Net charge-offs to average loans (annualized) 0.06% (0.01%) 0.31% 0.25% 0.10%  0.03% 0.14%
                           

    The following table presents average balance and interest rate information.  Tax-exempt income is converted to a fully taxable equivalent (FTE) 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 (FTE Basis)
    (Unaudited; Dollars in thousands)
      
    For the Three Months EndedJune 30, 2017  March 31, 2017  June 30, 2016 
     Average
    Balance
     Interest Yield/
    Rate
      Average
    Balance
     Interest Yield/
    Rate
      Average
    Balance
     Interest Yield/
     Rate
     
    Assets:           
    Commercial mortgages$1,037,327 $9,821 3.80  $1,079,171 $9,444 3.55  $1,019,290 $8,992 3.55 
    Construction & development 126,212  1,211 3.85   127,861  1,113 3.53   117,204  985 3.38 
    Commercial & industrial 574,775  6,607 4.61   573,801  6,157 4.35   591,893  6,408 4.35 
    Total commercial loans 1,738,314 $17,639 4.07   1,780,833 $16,714 3.81   1,728,387 $16,385 3.81 
    Residential real estate loans, including loans held for sale 1,162,895  11,088 3.82   1,152,468  10,868 3.82   1,024,653  9,980 3.92 
    Consumer loans 332,053  3,464 4.18   335,054  3,323 4.02   342,866  3,311 3.88 
    Total loans 3,233,262  32,191 3.99   3,268,355  30,905 3.83   3,095,906  29,676 3.86 
    Cash, federal funds sold and short-term investments 60,428  156 1.04   56,195  104 0.75   69,839  70 0.40 
    FHLBB stock 44,362  439 3.97   43,622  387 3.60   31,723  231 2.93 
    Taxable debt securities 773,280  4,844 2.51   755,955  4,709 2.53   396,428  2,487 2.52 
    Nontaxable debt securities 7,076  109 6.18   11,521  173 6.09   28,531  433 6.10 
    Total securities 780,356  4,953 2.55   767,476  4,882 2.58   424,959  2,920 2.76 
    Total interest-earning assets 4,118,408  37,739 3.68   4,135,648  36,278 3.56   3,622,427  32,897 3.65 
    Noninterest-earning assets 236,056     229,823     247,081   
    Total assets$4,354,464    $4,365,471    $3,869,508   
    Liabilities and Shareholders' Equity:           
    Interest-bearing demand deposits$54,675 ($8)(0.06) $56,782 $15 0.11  $42,952 $7 0.07 
    NOW accounts 437,282  57 0.05   420,622  50 0.05   403,136  53 0.05 
    Money market accounts 711,711  640 0.36   754,501  599 0.32   710,075  459 0.26 
    Savings accounts 361,545  52 0.06   357,894  51 0.06   338,504  49 0.06 
    Time deposits (in-market) 559,442  1,460 1.05   554,855  1,418 1.04   542,621  1,345 1.00 
    Wholesale brokered time deposits 392,734  1,390 1.42   397,274  1,369 1.40   302,707  1,068 1.42 
    FHLBB advances 817,349  3,509 1.72   831,614  3,344 1.63   587,395  2,313 1.58 
    Junior subordinated debentures 22,681  149 2.63   22,681  138 2.47   22,681  119 2.11 
    Other 13      27  1 15.02   66  1 6.09 
    Total interest-bearing liabilities 3,357,432  7,249 0.87   3,396,250  6,985 0.83   2,950,137  5,414 0.74 
    Demand deposits 543,781     527,215     473,731   
    Other liabilities 49,013     44,889     60,923   
    Shareholders' equity 404,238     397,117     384,717   
    Total liabilities and shareholders' equity$4,354,464    $4,365,471    $3,869,508   
    Net interest income (FTE) $30,490    $29,293    $27,483  
    Interest rate spread  2.81    2.73    2.91 
    Net interest margin  2.97    2.87    3.05 

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

        
    For the Three Months EndedJun 30,
    2017
    Mar 31,
    2017
    Jun 30,
    2016
    Commercial loans$549 $553 $554 
    Nontaxable debt securities 37  61  153 
    Total$586 $614 $707 


            
    CONSOLIDATED AVERAGE BALANCE SHEETS (FTE Basis)
    (Unaudited; Dollars in thousands)
      
    For the Six Months EndedJune 30, 2017  June 30, 2016 
     Average
    Balance
     Interest Yield/
    Rate
      Average
    Balance
     Interest Yield/
     Rate
     
    Assets:       
    Commercial mortgages$1,058,139 $19,264 3.67  $976,619 $17,207 3.54 
    Construction & development 127,031  2,324 3.69   123,209  2,093 3.42 
    Commercial & industrial 574,286  12,765 4.48   598,203  14,089 4.74 
    Total commercial loans 1,759,456  34,353 3.94   1,698,031  33,389 3.95 
    Residential real estate loans, including loans held for sale 1,157,710  21,956 3.82   1,027,956  20,135 3.94 
    Consumer loans 333,545  6,787 4.10   343,193  6,704 3.93 
    Total loans 3,250,711  63,096 3.91   3,069,180  60,228 3.95 
    Cash, federal funds sold and short-term investments 58,323  260 0.90   69,164  134 0.39 
    FHLBB stock 43,994  826 3.79   28,660  441 3.09 
    Taxable debt securities 764,666  9,553 2.52   377,744  4,857 2.59 
    Nontaxable debt securities 9,286  282 6.12   30,922  940 6.11 
    Total securities 773,952  9,835 2.56   408,666  5,797 2.85 
    Total interest-earning assets 4,126,980  74,017 3.62   3,575,670  66,600 3.75 
    Noninterest-earning assets 232,957     243,597   
    Total assets$4,359,937    $3,819,267   
    Liabilities and Shareholders' Equity:       
    Interest-bearing demand deposits$55,722 $7 0.03  $46,828 $20 0.09 
    NOW accounts 428,998  108 0.05   394,812  110 0.06 
    Money market accounts 732,988  1,239 0.34   748,354  975 0.26 
    Savings accounts 359,730  102 0.06   333,339  96 0.06 
    Time deposits (in-market) 557,161  2,878 1.04   540,328  2,659 0.99 
    Wholesale brokered time deposits 394,992  2,759 1.41   299,754  2,089 1.40 
    FHLBB advances 824,442  6,853 1.68   520,207  4,465 1.73 
    Junior subordinated debentures 22,681  287 2.55   22,681  231 2.05 
    Other 20  1 10.08   73  3 8.26 
    Total interest-bearing liabilities 3,376,734  14,234 0.85   2,906,376  10,648 0.74 
    Demand deposits 535,544     472,757   
    Other liabilities 46,962     57,605   
    Shareholders' equity 400,697     382,529   
    Total liabilities and shareholders' equity$4,359,937    $3,819,267   
    Net interest income (FTE) $59,783    $55,952  
    Interest rate spread  2.77    3.01 
    Net interest margin  2.92    3.15 

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

       
    For the Six Months EndedJun 30,
    2017
    Jun 30,
    2016
    Commercial loans$1,102 $1,108 
    Nontaxable debt securities 98  333 
    Total$1,200 $1,441 


    SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures
    (Unaudited; Dollars in thousands, except per share amounts)
      
     Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
    Tangible Book Value per Share:     
    Total shareholders' equity, as reported$406,042 $397,785 $390,804 $395,327 $388,332 
    Less:     
    Goodwill 63,909  64,059  64,059  64,059  64,059 
    Identifiable intangible assets, net 9,642  9,898  10,175  10,493  10,814 
    Total tangible shareholders' equity$332,491 $323,828 $316,570 $320,775 $313,459 
          
    Shares outstanding, as reported 17,210  17,193  17,171  17,107  17,081 
          
    Book value per share - GAAP$23.59 $23.14 $22.76 $23.11 $22.73 
    Tangible book value per share - Non-GAAP$19.32 $18.83 $18.44 $18.75 $18.35 
          
    Tangible Equity to Tangible Assets:     
    Total tangible shareholders' equity$332,491 $323,828 $316,570 $320,775 $313,459 
          
    Total assets, as reported$4,375,529 $4,388,763 $4,381,115 $4,204,034 $3,917,081 
    Less:     
    Goodwill 63,909  64,059  64,059  64,059  64,059 
    Identifiable intangible assets, net 9,642  9,898  10,175  10,493  10,814 
    Total tangible assets$4,301,978 $4,314,806 $4,306,881 $4,129,482 $3,842,208 
          
    Equity to assets - GAAP 9.28% 9.06% 8.92% 9.40% 9.91%
    Tangible equity to tangible assets - Non-GAAP 7.73% 7.51% 7.35% 7.77% 8.16%


     For the Three Months Ended For the Six Months Ended
     Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
    Jun 30,
     2016
     Jun 30,
     2017
    Jun 30,
     2016
    Return on Average Tangible Assets:        
    Net income, as reported$13,199 $11,782 $12,162 $12,327 $11,057  $24,981 $21,992 
             
    Total average assets, as reported$4,354,464 $4,365,471 $4,272,883 $4,062,688 $3,869,508  $4,359,937 $3,819,267 
    Less average balances of:        
    Goodwill 64,058  64,059  64,059  64,059  64,059   64,059  64,059 
    Identifiable intangible assets, net 9,767  10,027  10,330  10,650  10,972   9,896  11,133 
    Total average tangible assets$4,280,639 $4,291,385 $4,198,494 $3,987,979 $3,794,477  $4,285,982 $3,744,075 
             
    Return on average assets - GAAP 1.21% 1.08% 1.14% 1.21% 1.14%  1.15% 1.15%
    Return on average tangible assets - Non-GAAP 1.23% 1.10% 1.16% 1.24% 1.17%  1.17% 1.17%
             
    Return on Average Tangible Equity:        
    Net income, as reported$13,199 $11,782 $12,162 $12,327 $11,057  $24,981 $21,992 
             
    Total average equity, as reported$404,238 $397,117 $396,741 $392,233 $384,717  $400,697 $382,529 
    Less average balances of:        
    Goodwill 64,058  64,059  64,059  64,059  64,059   64,059  64,059 
    Identifiable intangible assets, net 9,767  10,027  10,330  10,650  10,972   9,896  11,133 
    Total average tangible equity$330,413 $323,031 $322,352 $317,524 $309,686  $326,742 $307,337 
             
    Return on average equity - GAAP 13.06% 11.87% 12.26% 12.57% 11.50%  12.47% 11.50%
    Return on average tangible equity - Non-GAAP 15.98% 14.59% 15.09% 15.53% 14.28%  15.29% 14.31%

     

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

    Source: Washington Trust Bancorp, Inc.