• Washington Trust Bancorp, Inc.
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  • Washington Trust Reports Third Quarter 2017 Earnings
    Company Release - 10/23/2017 16:05

    WESTERLY, R.I., Oct. 23, 2017 (GLOBE NEWSWIRE) -- Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced third quarter 2017 net income of $13.0 million, or $0.75 per diluted share, compared to $13.2 million, or $0.76 per diluted share, reported for the second quarter of 2017.

    “Washington Trust’s third quarter performance reflects our continued success at growing our key business lines,” stated Joseph J. MarcAurele, Washington Trust Chairman and Chief Executive Officer.  “Our diversified revenue streams were integral to our solid quarterly results, allowing us to maintain our strong profitability metrics.”

    Selected highlights for the third quarter of 2017 include:

    • Returns on average equity and average assets were 12.56% and 1.18%, respectively.  Comparable amounts for the second quarter of 2017 were 13.06% and 1.21%, respectively.
    • Third quarter 2017 total revenues (net interest income and noninterest income) amounted to $47.3 million, a record level for the Company.
    • Wealth management assets stood at an all-time high of $6.6 billion at September 30, 2017 and third quarter 2017 wealth management revenues exceeded $10.0 million for the first time in the Company's history.
    • Total loans surpassed $3.3 billion at September 30, 2017 and were up by 4% in the third quarter.
    • Total deposits grew by 4% in the third quarter and amounted to $3.2 billion at September 30, 2017.
    • In September 2017, Washington Trust declared a quarterly dividend of 39 cents per share, representing a 1 cent per share increase over the preceding quarter.

    Net Interest Income
    Net interest income totaled $30.1 million for the third quarter of 2017, up by $155 thousand, or 1%, from the second quarter.  Included in net interest income in the third quarter was loan prepayment fee income of $131 thousand, compared to $549 thousand in the second quarter.  Excluding the impact of loan prepayment fee income in each period, net interest income was up by $566 thousand, or 2%, on a linked quarter basis.  The net interest margin was 2.93% for the third quarter of 2017, down by 4 basis points from the preceding quarter.  Excluding the impact of the loan prepayment fee income in each period, the net interest margin was 2.91%, down by 1 basis point from the second quarter of 2017.  Significant linked quarter changes included:

    • Average interest-earning assets increased by $35 million, with an increase of $59 million in average loan balances, partially offset by a $24 million decrease in the average balance of securities.  The yield on interest-earning assets for the third quarter was 3.67%, down by 1 basis point from the preceding quarter.  Excluding the impact of loan prepayment fee income in each period, the yield on interest-earning assets was 3.66%, up by 4 basis points from the preceding quarter.
    • Average interest-bearing liabilities increased by $8 million, reflecting an increase of $32 million in average wholesale funding balances (Federal Home Loan Bank advances and wholesale brokered time deposits), partially offset by a seasonal $24 million decrease in average in-market interest-bearing deposits.  The cost of interest-bearing funds was 0.92%, up by 5 basis points from the preceding quarter.

    Loans
    Total loans amounted to $3.3 billion at September 30, 2017, up by $123 million, or 4%, from the end of the preceding quarter.  Commercial loans increased by $102 million, or 6%, on a linked quarter basis, with growth of $91 million in the commercial real estate portfolio and $11 million in the commercial and industrial portfolio.  Residential loan portfolio balances increased by $27 million, or 2%, from the balance at June 30, 2017.  The consumer loan portfolio was down by $6 million, or 2%, from the end of the preceding quarter.

    Investment Securities
    The investment securities portfolio amounted to $728 million at September 30, 2017, down by $36 million, or 5%, from the balance at June 30, 2017, due to routine principal pay-downs on mortgage-backed securities and calls of debt securities.  Investment securities represented 16% of total assets as at September 30, 2017.

    Deposits and Borrowings
    Total deposits amounted to $3.2 billion at September 30, 2017, up by $136 million, or 4%, from the balance at June 30, 2017.  Included in total deposits were wholesale brokered time deposit balances of $416 million, which increased by $15 million from the end of preceding quarter.  Excluding wholesale brokered time deposits, in-market deposits increased by $121 million, or 5%, in the quarter, reflecting seasonal inflows of various institutional and governmental depositors based on their underlying business cycles, as well as growth in promotional time certificates of deposit.

    Federal Home Loan Bank advances amounted to $814 million at September 30, 2017, down by $56 million from the balance at June 30, 2017.

    Noninterest Income
    Noninterest income totaled $17.3 million for the third quarter of 2017, up by $477 thousand, or 3%, from the preceding quarter.  Linked quarter changes included:

    • Wealth management revenues increased by $71 thousand, or 1%.  This included an increase of $390 thousand in asset-based revenues and a decrease of $319 thousand in transaction-based revenues.  The linked quarter change in transaction-based revenues was affected by the second quarter recognition of tax preparation fee income, which is typically concentrated in that quarter.

      Wealth management assets under administration amounted to $6.6 billion at September 30, 2017, up by $184 million from the second quarter, reflecting financial market appreciation.  Managed assets represented 92% of total wealth management assets at September 30, 2017.

    • Mortgage banking revenues increased by $117 thousand, or 4%, due to a higher volume of loans sold in the secondary market.  Residential mortgage loans sold to the secondary market amounted to $147 million in the third quarter, compared to $137 million in the preceding quarter.

    • Loan related derivative income increased by $308 thousand, or 27%, reflecting a higher volume of commercial borrower loan related derivative transactions.

    Noninterest Expenses
    Noninterest expenses totaled $26.8 million for the third quarter of 2017, up by $448 thousand, or 2%, from the second quarter.  Included in other noninterest expenses in the third quarter was a charge of approximately $570 thousand associated with an isolated external fraud matter.  Excluding this charge, total noninterest expenses were down by 0.5% on a linked quarter basis.

    Income tax expense totaled $6.3 million for the third quarter of 2017, down by $179 thousand from the preceding quarter.  The effective tax rate for the third quarter of 2017 was 32.8%, compared to 33.0% for the preceding quarter.

    Asset Quality
    Total past due loans amounted to $16.4 million, or 0.49% of total loans, at September 30, 2017, compared to $21.1 million, or 0.66% of total loans, at June 30, 2017.  Total nonaccrual loans amounted to $18.5 million, or 0.56% of total loans, at September 30, 2017, down from $20.2 million, or 0.63% of total loans, at June 30, 2017.

    A loan loss provision totaling $1.3 million was charged to earnings in the third quarter of 2017, compared to a loan loss provision of $700 thousand in the preceding quarter.  The increase in the loan loss provision reflected loan loss allocations commensurate with growth and other changes in the loan portfolio during the quarter as well as an increase in specific reserves on impaired loans.  Net charge-offs amounted to $654 thousand in the third quarter of 2017, compared to $484 thousand in the preceding quarter.  The allowance for loan losses was $27.3 million, or 0.82% of total loans, at September 30, 2017, compared to $26.7 million, or 0.83% of total loans, at June 30, 2017.

    Capital and Dividends
    Total shareholders' equity was $414 million at September 30, 2017, up by $8 million from June 30, 2017.  Capital levels at September 30, 2017 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.53% at September 30, 2017, compared to 12.78% at June 30, 2017.  Book value per share amounted to $24.06 at September 30, 2017, up from $23.59 at June 30, 2017.

    The Board of Directors declared a quarterly dividend of 39 cents per share for the quarter ended September 30, 2017, an increase of 1 cent compared to the second quarter.  The dividend was paid on October 13, 2017 to shareholders of record on October 2, 2017.

    Conference Call
    Washington Trust will host a conference call to discuss its third quarter results, business highlights and outlook on Tuesday, October 24, 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 13671590; the audio replay will be available through November 3, 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 December 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; occurrences of cyberattacks, hacking and identity theft; natural disasters; 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)
          
     Sep 30,
     2017
    Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
    Assets:     
    Cash and due from banks$128,580 $117,608 $111,941 $106,185 $126,752 
    Short-term investments 2,600  2,324  2,039  1,612  2,420 
    Mortgage loans held for sale 28,484  32,784  25,414  29,434  45,162 
    Securities:     
    Available for sale, at fair value 714,355  749,486  754,720  739,912  564,256 
    Held to maturity, at amortized cost 13,241  13,942  14,721  15,633  16,848 
    Total securities 727,596  763,428  769,441  755,545  581,104 
    Federal Home Loan Bank stock, at cost 42,173  44,640  43,714  43,129  37,249 
    Loans:     
    Commercial 1,800,116  1,698,389  1,762,499  1,771,666  1,757,215 
    Residential real estate 1,195,537  1,168,105  1,131,210  1,122,748  1,079,887 
    Consumer 327,425  333,606  331,151  339,957  344,253 
    Total loans 3,323,078  3,200,100  3,224,860  3,234,371  3,181,355 
    Less allowance for loan losses 27,308  26,662  26,446  26,004  25,649 
    Net loans 3,295,770  3,173,438  3,198,414  3,208,367  3,155,706 
    Premises and equipment, net 28,591  28,508  28,853  29,020  29,433 
    Investment in bank-owned life insurance 72,729  72,183  71,642  71,105  70,557 
    Goodwill 63,909  63,909  64,059  64,059  64,059 
    Identifiable intangible assets, net 9,388  9,642  9,898  10,175  10,493 
    Other assets 69,410  67,065  63,348  62,484  81,099 
    Total assets$4,469,230 $4,375,529 $4,388,763 $4,381,115 $4,204,034 
    Liabilities:     
    Deposits:     
    Demand deposits$621,273 $587,813 $596,974 $585,960 $566,027 
    NOW accounts 448,128  448,617  454,344  427,707  404,827 
    Money market accounts 716,827  666,047  762,233  730,075  794,905 
    Savings accounts 367,912  364,002  362,281  358,397  357,966 
    Time deposits 1,002,941  954,710  939,739  961,613  913,649 
    Total deposits 3,157,081  3,021,189  3,115,571  3,063,752  3,037,374 
    Federal Home Loan Bank advances 814,045  869,733  798,741  848,930  671,615 
    Junior subordinated debentures 22,681  22,681  22,681  22,681  22,681 
    Other liabilities 61,195  55,884  53,985  54,948  77,037 
    Total liabilities 4,055,002  3,969,487  3,990,978  3,990,311  3,808,707 
    Shareholders’ Equity:     
    Common stock 1,076  1,076  1,075  1,073  1,069 
    Paid-in capital 117,189  116,484  116,200  115,123  113,290 
    Retained earnings 312,334  306,151  299,555  294,365  288,613 
    Accumulated other comprehensive loss (16,371) (17,669) (19,045) (19,757) (7,645)
    Total shareholders’ equity 414,228  406,042  397,785  390,804  395,327 
    Total liabilities and shareholders’ equity$4,469,230 $4,375,529 $4,388,763 $4,381,115 $4,204,034 


    CONSOLIDATED STATEMENTS OF INCOME
    (Unaudited; Dollars in thousands, except per share amounts)
           For the Nine Months Ended
     For the Three Months Ended 
     Sep 30,
     2017
    Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
     Sep 30,
     2017
    Sep 30,
     2016
    Interest income:        
    Interest and fees on loans$32,509 $31,642 $30,352 $30,738 $29,633  $94,503 $88,753 
    Taxable interest on securities 4,655  4,844  4,709  3,703  3,024   14,208  7,881 
    Nontaxable interest on securities 41  72  112  157  218   225  825 
    Dividends on Federal Home Loan Bank stock 467  439  387  362  288   1,293  729 
    Other interest income 197  156  104  95  93   457  227 
    Total interest and dividend income 37,869  37,153  35,664  35,055  33,256   110,686  98,415 
    Interest expense:        
    Deposits 3,835  3,591  3,502  3,445  3,110   10,928  9,059 
    Federal Home Loan Bank advances 3,816  3,509  3,344  2,886  2,641   10,669  7,106 
    Junior subordinated debentures 159  149  138  135  125   446  356 
    Other interest expense     1  1  1   1  4 
    Total interest expense 7,810  7,249  6,985  6,467  5,877   22,044  16,525 
    Net interest income 30,059  29,904  28,679  28,588  27,379   88,642  81,890 
    Provision for loan losses 1,300  700  400  2,900  1,800   2,400  2,750 
    Net interest income after provision for loan losses 28,759  29,204  28,279  25,688  25,579   86,242  79,140 
    Noninterest income:        
    Wealth management revenues 10,013  9,942  9,477  9,291  9,623   29,432  28,278 
    Mortgage banking revenues 3,036  2,919  2,340  4,541  3,734   8,295  8,642 
    Service charges on deposit accounts 942  901  883  945  915   2,726  2,757 
    Card interchange fees 894  902  802  858  870   2,598  2,527 
    Income from bank-owned life insurance 546  542  536  549  521   1,624  2,110 
    Loan related derivative income 1,452  1,144  148  912  1,178   2,744  2,331 
    Equity in losses of unconsolidated subsidiaries (89) (89) (88) (89) (88)  (266) (265)
    Other income 489  545  412  313  508   1,446  1,429 
    Total noninterest income 17,283  16,806  14,510  17,320  17,261   48,599  47,809 
    Noninterest expense:        
    Salaries and employee benefits 17,251  17,358  16,795  16,528  16,908   51,404  50,693 
    Net occupancy 1,928  1,767  1,967  1,775  1,766   5,662  5,376 
    Equipment 1,380  1,313  1,467  1,556  1,648   4,160  4,652 
    Outsourced services 1,793  1,710  1,457  1,311  1,254   4,960  3,911 
    Legal, audit and professional fees 534  582  616  597  691   1,732  1,982 
    FDIC deposit insurance costs 308  469  481  390  504   1,258  1,488 
    Advertising and promotion 416  362  237  403  370   1,015  1,055 
    Amortization of intangibles 253  257  277  318  321   787  966 
    Debt prepayment penalties              431 
    Change in fair value of contingent consideration     (310)   (939)  (310) (898)
    Other expenses 2,891  2,488  2,299  2,095  2,127   7,678  6,474 
    Total noninterest expense 26,754  26,306  25,286  24,973  24,650   78,346  76,130 
    Income before income taxes 19,288  19,704  17,503  18,035  18,190   56,495  50,819 
    Income tax expense 6,326  6,505  5,721  5,873  5,863   18,552  16,500 
    Net income$12,962 $13,199 $11,782 $12,162 $12,327  $37,943 $34,319 
             
    Net income available to common shareholders:        
      Basic$12,934 $13,170 $11,755 $12,137 $12,302  $37,859 $34,247 
      Diluted$12,934 $13,170 $11,755 $12,137 $12,302  $37,859 $34,247 
    Weighted average common shares outstanding:        
      Basic 17,212  17,206  17,186  17,142  17,090   17,201  17,060 
      Diluted 17,318  17,316  17,293  17,245  17,203   17,320  17,198 
    Earnings per common share:        
      Basic$0.75 $0.77 $0.68 $0.71 $0.72  $2.20 $2.01 
      Diluted$0.75 $0.76 $0.68 $0.70 $0.72  $2.19 $1.99 
             
    Cash dividends declared per share$0.39 $0.38 $0.38 $0.37 $0.37  $1.15 $1.09 


    SELECTED FINANCIAL HIGHLIGHTS
    (Unaudited; Dollars in thousands, except per share amounts)
      
     Sep 30,
     2017
    Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
    Share and Equity Related Data:     
    Book value per share$24.06 $23.59 $23.14 $22.76 $23.11 
    Tangible book value per share - Non-GAAP (1)$19.81 $19.32 $18.83 $18.44 $18.75 
    Market value per share$57.25 $51.55 $49.30 $56.05 $40.22 
    Shares issued and outstanding at end of period 17,214  17,210  17,193  17,171  17,107 
          
    Capital Ratios:     
    Tier 1 risk-based capital11.69% (i) 11.92% 11.54% 11.44% 11.48%
    Total risk-based capital12.53% (i) 12.78% 12.38% 12.26% 12.31%
    Tier 1 leverage ratio8.83% (i) 8.78% 8.58% 8.67% 8.95%
    Common equity tier 111.02% (i) 11.23% 10.86% 10.75% 10.77%
    Equity to assets 9.27% 9.28% 9.06% 8.92% 9.40%
    Tangible equity to tangible assets - Non-GAAP (1) 7.76% 7.73% 7.51% 7.35% 7.77%
                    
    (i) - estimated               


       For the Nine Months Ended
     For the Three Months Ended 
     Sep 30,
     2017
    Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
     Sep 30,
     2017
    Sep 30,
     2016
    Performance Ratios:        
    Net interest margin (FTE)2.93%2.97%2.87%2.89%2.94% 2.92%3.07%
    Return on average assets1.18%1.21%1.08%1.14%1.21% 1.16%1.17%
    Return on average tangible assets - Non-GAAP (1)1.20%1.23%1.10%1.16%1.24% 1.18%1.20%
    Return on average equity12.56%13.06%11.87%12.26%12.57% 12.50%11.86%
    Return on average tangible equity - Non-GAAP (1)15.27%15.98%14.59%15.09%15.53% 15.28%14.72%


    (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,
     2017
    Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
     Sep 30,
     2017
    Sep 30,
     2016
    Wealth Management Results        
    Wealth Management Revenues:        
    Trust and investment management fees$9,101 $8,781 $8,518 $8,283 $8,358  $26,400 $24,618 
    Mutual fund fees 690  620  729  771  812   2,039  2,467 
      Asset-based revenues 9,791  9,401  9,247  9,054  9,170   28,439  27,085 
    Transaction-based revenues 222  541  230  237  453   993  1,193 
    Total wealth management revenues$10,013 $9,942 $9,477 $9,291 $9,623  $29,432 $28,278 
             
    Assets Under Administration:        
    Balance at beginning of period$6,403,501 $6,243,301 $6,063,293 $6,056,859 $5,905,019  $6,063,293 $5,844,636 
    Net investment appreciation (depreciation) & income 270,549  162,924  220,423  (8,506) 192,518   653,896  286,354 
    Net client asset flows (86,151) (2,724) (40,415) 14,940  (40,678)  (129,290) (74,131)
    Balance at end of period$6,587,899 $6,403,501 $6,243,301 $6,063,293 $6,056,859  $6,587,899 $6,056,859 
             
    Mortgage Banking Results        
    Mortgage Banking Revenues:        
    Gains & commissions on loan sales, net$2,952 $2,784 $2,268 $4,455 $3,744  $8,004 $8,682 
    Residential mortgage servicing fee income, net 84  135  72  86  (10)  291  (40)
    Total mortgage banking revenues$3,036 $2,919 $2,340 $4,541 $3,734  $8,295 $8,642 
             
    Residential Mortgage Loan Originations:        
    Originations for retention in portfolio$90,378 $94,794 $57,907 $72,533 $90,308  $243,079 $191,934 
    Originations for sale to secondary market (1) 143,112  144,491  102,441  185,626  170,673   390,044  415,174 
    Total mortgage loan originations$233,490 $239,285 $160,348 $258,159 $260,981  $633,123 $607,108 
             
    Residential Mortgage Loans Sold:        
    Sold with servicing rights retained$37,823 $29,199 $22,567 $48,545 $44,611  $89,589 $116,869 
    Sold with servicing rights released (1) 109,508  108,245  84,345  151,506  119,572   302,098  292,318 
    Total mortgage loans sold$147,331 $137,444 $106,912 $200,051 $164,183  $391,687 $409,187 


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


    END OF PERIOD LOAN AND DEPOSIT COMPOSITION
    (Unaudited; Dollars in thousands)
      
     Sep 30,
     2017
    Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
    Commercial:     
    Mortgages$1,085,535 $1,009,096 $1,076,648 $1,074,186 $1,086,175 
    Construction & development 126,257  112,177  123,841  121,371  98,735 
    Commercial & industrial 588,324  577,116  562,010  576,109  572,305 
    Total commercial 1,800,116  1,698,389  1,762,499  1,771,666  1,757,215 
    Residential Real Estate:     
    Mortgages 1,171,161  1,143,416  1,100,435  1,094,824  1,052,829 
    Homeowner construction 24,376  24,689  30,775  27,924  27,058 
    Total residential real estate 1,195,537  1,168,105  1,131,210  1,122,748  1,079,887 
    Consumer:     
    Home equity lines 259,880  263,934  258,695  264,200  265,238 
    Home equity loans 34,777  35,173  36,050  37,272  38,264 
    Other 32,768  34,499  36,406  38,485  40,751 
    Total consumer 327,425  333,606  331,151  339,957  344,253 
    Total loans$3,323,078 $3,200,100 $3,224,860 $3,234,371 $3,181,355 


     September 30, 2017 December 31, 2016
     Balance% of Total Balance% of Total
    Commercial Real Estate Loans by Property Location:     
    Rhode Island, Connecticut, Massachusetts$1,136,168 93.8% $1,105,539 92.5%
    New York, New Jersey, Pennsylvania 62,956 5.2%  77,038 6.4%
    New Hampshire 12,668 1.0%  12,980 1.1%
    Total commercial real estate loans (1)$1,211,792 100.0% $1,195,557 100.0%
          
    Residential Mortgages by Property Location:     
    Rhode Island, Connecticut, Massachusetts$1,179,112 98.6% $1,106,366 98.6%
    New Hampshire, Vermont, Maine 12,085 1.0%  11,445 1.0%
    New York, Virginia, New Jersey, Maryland, Pennsylvania 2,187 0.2%  2,648 0.2%
    Ohio 884 0.1%  997 0.1%
    Other 1,269 0.1%  1,292 0.1%
    Total residential mortgages$1,195,537 100.0% $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.


     Sep 30,
     2017
    Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
    Deposits:     
    Non-interest bearing demand deposits$575,866 $533,147 $534,792 $521,165 $520,860 
    Interest-bearing demand deposits 45,407  54,666  62,182  64,795  45,167 
    NOW accounts 448,128  448,617  454,344  427,707  404,827 
    Money market accounts 716,827  666,047  762,233  730,075  794,905 
    Savings accounts 367,912  364,002  362,281  358,397  357,966 
    Time deposits (in-market) 587,166  553,783  557,312  549,376  554,669 
    Wholesale brokered time deposits 415,775  400,927  382,427  412,237  358,980 
    Total deposits$3,157,081 $3,021,189 $3,115,571 $3,063,752 $3,037,374 



    CREDIT & ASSET QUALITY DATA
    (Unaudited; Dollars in thousands)
      
     Sep 30,
     2017
    Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
    Asset Quality Ratios:     
    Nonperforming assets to total assets 0.44% 0.49% 0.54% 0.53% 0.59%
    Nonaccrual loans to total loans 0.56% 0.63% 0.69% 0.68% 0.75%
    Total past due loans to total loans 0.49% 0.66% 0.65% 0.76% 0.67%
    Allowance for loan losses to nonaccrual loans 147.52% 132.00% 119.52% 117.89% 107.09%
    Allowance for loan losses to total loans 0.82% 0.83% 0.82% 0.80% 0.81%
          
    Nonperforming Assets:     
    Commercial mortgages$5,887 $6,422 $7,809 $7,811 $10,357 
    Commercial construction & development          
    Commercial & industrial 429  1,232  1,129  1,337  1,744 
    Residential real estate mortgages 11,699  11,815  12,253  11,736  10,140 
    Consumer 496  729  936  1,174  1,709 
    Total nonaccrual loans 18,511  20,198  22,127  22,058  23,950 
    Other real estate owned 1,038  1,342  1,410  1,075  1,045 
    Total nonperforming assets$19,549 $21,540 $23,537 $23,133 $24,995 
          
    Past Due Loans (30 days or more past due):     
    Commercial mortgages$5,887 $6,422 $7,806 $8,708 $10,352 
    Commercial & industrial 455  4,009  1,046  1,154  1,047 
    Residential real estate mortgages 7,802  8,857  10,533  12,226  8,291 
    Consumer loans 2,303  1,832  1,547  2,334  1,565 
    Total past due loans$16,447 $21,120 $20,932 $24,422 $21,255 
          
    Accruing loans 90 days or more past due$ $ $ $ $ 
    Nonaccrual loans included in past due loans$13,216 $14,490 $18,081 $18,602 $18,796 


       For the Nine Months Ended
     For the Three Months Ended 
     Sep 30,
     2017
    Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
     Sep 30,
     2017
    Sep 30,
     2016
    Nonaccrual Loan Activity:        
    Balance at beginning of period$20,198 $22,127 $22,058 $23,950 $17,248  $22,058 $21,047 
    Additions to nonaccrual status 1,969  1,946  2,138  2,105  9,750   6,053  13,174 
    Loans returned to accruing status (1,411) (778) (547) (718) (592)  (2,736) (798)
    Loans charged-off (694) (642) (79) (2,622) (2,055)  (1,415) (4,390)
    Loans transferred to other real estate owned   (98) (478) (30)    (576) (1,045)
    Payments, payoffs and other changes (1,551) (2,357) (965) (627) (401)  (4,873) (4,038)
    Balance at end of period$18,511 $20,198 $22,127 $22,058 $23,950  $18,511 $23,950 
             
    Allowance for Loan Losses:        
    Balance at beginning of period$26,662 $26,446 $26,004 $25,649 $25,826  $26,004 $27,069 
    Provision charged to earnings 1,300  700  400  2,900  1,800   2,400  2,750 
    Charge-offs (694) (642) (79) (2,622) (2,055)  (1,415) (4,390)
    Recoveries 40  158  121  77  78   319  220 
    Balance at end of period$27,308 $26,662 $26,446 $26,004 $25,649  $27,308 $25,649 
             
    Net Loan Charge-Offs (Recoveries):        
    Commercial mortgages$535 $318 $ $2,510 $1,936  $853 $3,250 
    Commercial & industrial 114  115  (105) (20) (43)  124  623 
    Residential real estate mortgages (1) 8  (4) 6  47   3  183 
    Consumer 6  43  67  49  37   116  114 
    Total$654 $484 ($42)$2,545 $1,977  $1,096 $4,170 
             
    Net charge-offs to average loans (annualized) 0.08% 0.06% (0.01%) 0.31% 0.25%  0.04% 0.18%
                           

    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 EndedSeptember 30, 2017 June 30, 2017 September 30, 2016
     Average
    Balance
    InterestYield/
    Rate
     Average
    Balance
    InterestYield/
    Rate
     Average
    Balance
    InterestYield/
     Rate
     
    Assets:           
    Commercial mortgages$1,027,517 $9,909 3.83  $1,037,327 $9,821 3.80  $1,079,917 $9,362 3.45 
    Construction & development 133,190  1,326 3.95   126,212  1,211 3.85   86,623  712 3.27 
    Commercial & industrial 590,915  6,684 4.49   574,775  6,607 4.61   565,170  6,382 4.49 
    Total commercial loans 1,751,622 $17,919 4.06   1,738,314 $17,639 4.07   1,731,710 $16,456 3.78 
    Residential real estate loans, including loans held for sale 1,210,686  11,541 3.78   1,162,895  11,088 3.82   1,080,302  10,386 3.82 
    Consumer loans 329,689  3,604 4.34   332,053  3,464 4.18   341,829  3,340 3.89 
    Total loans 3,291,997  33,064 3.98   3,233,262  32,191 3.99   3,153,841  30,182 3.81 
    Cash, federal funds sold and short-term investments 61,390  197 1.27   60,428  156 1.04   88,414  93 0.42 
    FHLBB stock 44,057  467 4.21   44,362  439 3.97   37,933  288 3.02 
    Taxable debt securities 751,735  4,655 2.46   773,280  4,844 2.51   497,738  3,024 2.42 
    Nontaxable debt securities 4,287  65 6.02   7,076  109 6.18   22,038  336 6.07 
    Total securities 756,022  4,720 2.48   780,356  4,953 2.55   519,776  3,360 2.57 
    Total interest-earning assets 4,153,466  38,448 3.67   4,118,408  37,739 3.68   3,799,964  33,923 3.55 
    Noninterest-earning assets 248,070     236,056     262,724   
    Total assets$4,401,536    $4,354,464    $4,062,688   
    Liabilities and Shareholders' Equity:           
    Interest-bearing demand deposits$46,352 $30 0.26  $54,675 ($8)(0.06) $39,865 $13 0.13 
    NOW accounts 442,166  68 0.06   437,282  57 0.05   402,307  51 0.05 
    Money market accounts 680,755  642 0.37   711,711  640 0.36   709,549  487 0.27 
    Savings accounts 366,177  56 0.06   361,545  52 0.06   352,032  52 0.06 
    Time deposits (in-market) 565,402  1,566 1.10   559,442  1,460 1.05   552,576  1,408 1.01 
    Wholesale brokered time deposits 404,953  1,473 1.44   392,734  1,390 1.42   310,740  1,099 1.41 
    FHLBB advances 837,300  3,816 1.81   817,349  3,509 1.72   690,843  2,641 1.52 
    Junior subordinated debentures 22,681  159 2.78   22,681  149 2.63   22,681  125 2.19 
    Other 1      13      53  1 7.51 
    Total interest-bearing liabilities 3,365,787  7,810 0.92   3,357,432  7,249 0.87   3,080,646  5,877 0.76 
    Demand deposits 567,737     543,781     520,439   
    Other liabilities 55,150     49,013     69,370   
    Shareholders' equity 412,862     404,238     392,233   
    Total liabilities and shareholders' equity$4,401,536    $4,354,464    $4,062,688   
    Net interest income (FTE) $30,638    $30,490    $28,046  
    Interest rate spread  2.75    2.81    2.79 
    Net interest margin  2.93    2.97    2.94 
                   

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

    For the Three Months EndedSep 30,
    2017
    Jun 30,
    2017
    Sep 30,
    2016
    Commercial loans$555 $549 $549 
    Nontaxable debt securities 24  37  118 
    Total$579 $586 $667 


    CONSOLIDATED AVERAGE BALANCE SHEETS (FTE Basis)
    (Unaudited; Dollars in thousands)
      
    For the Nine Months EndedSeptember 30, 2017 September 30, 2016
     Average
    Balance
    InterestYield/
    Rate
     Average
    Balance
    InterestYield/
     Rate
     
    Assets:       
    Commercial mortgages$1,047,831 $29,174 3.72  $1,011,327 $26,569 3.51 
    Construction & development 129,104  3,650 3.78   110,914  2,806 3.38 
    Commercial & industrial 579,881  19,448 4.48   587,098  20,470 4.66 
    Total commercial loans 1,756,816  52,272 3.98   1,709,339  49,845 3.90 
    Residential real estate loans, including loans held for sale 1,175,563  33,497 3.81   1,045,532  30,521 3.90 
    Consumer loans 332,245  10,391 4.18   342,735  10,044 3.91 
    Total loans 3,264,624  96,160 3.94   3,097,606  90,410 3.90 
    Cash, federal funds sold and short-term investments 59,357  457 1.03   75,627  227 0.40 
    FHLBB stock 44,015  1,293 3.93   31,774  729 3.06 
    Taxable debt securities 760,308  14,208 2.50   418,034  7,881 2.52 
    Nontaxable debt securities 7,602  347 6.10   27,939  1,276 6.10 
    Total securities 767,910  14,555 2.53   445,973  9,157 2.74 
    Total interest-earning assets 4,135,906  112,465 3.64   3,650,980  100,523 3.68 
    Noninterest-earning assets 238,050     250,019   
    Total assets$4,373,956    $3,900,999   
    Liabilities and Shareholders' Equity:       
    Interest-bearing demand deposits$52,564 $37 0.09  $44,490 $34 0.10 
    NOW accounts 433,435  176 0.05   397,329  161 0.05 
    Money market accounts 715,386  1,881 0.35   735,324  1,461 0.27 
    Savings accounts 361,904  158 0.06   339,616  148 0.06 
    Time deposits (in-market) 559,938  4,443 1.06   544,441  4,067 1.00 
    Wholesale brokered time deposits 398,349  4,233 1.42   303,442  3,188 1.40 
    FHLBB advances 828,775  10,669 1.72   577,501  7,106 1.64 
    Junior subordinated debentures 22,681  446 2.63   22,681  356 2.10 
    Other 13  1 10.28   66  4 8.10 
    Total interest-bearing liabilities 3,373,045  22,044 0.87   2,964,890  16,525 0.74 
    Demand deposits 546,393     488,767   
    Other liabilities 49,721     61,555   
    Shareholders' equity 404,797     385,787   
    Total liabilities and shareholders' equity$4,373,956    $3,900,999   
    Net interest income (FTE) $90,421    $83,998  
    Interest rate spread  2.77    2.94 
    Net interest margin  2.92    3.07 
              

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

    For the Nine Months EndedSep 30,
    2017
    Sep 30,
    2016
    Commercial loans$1,657 $1,657 
    Nontaxable debt securities 122  451 
    Total$1,779 $2,108 


    SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures
    (Unaudited; Dollars in thousands, except per share amounts)
      
     Sep 30,
     2017
    Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
    Tangible Book Value per Share:     
    Total shareholders' equity, as reported$414,228 $406,042 $397,785 $390,804 $395,327 
    Less:     
    Goodwill 63,909  63,909  64,059  64,059  64,059 
    Identifiable intangible assets, net 9,388  9,642  9,898  10,175  10,493 
    Total tangible shareholders' equity$340,931 $332,491 $323,828 $316,570 $320,775 
          
    Shares outstanding, as reported 17,214  17,210  17,193  17,171  17,107 
          
    Book value per share - GAAP$24.06 $23.59 $23.14 $22.76 $23.11 
    Tangible book value per share - Non-GAAP$19.81 $19.32 $18.83 $18.44 $18.75 
          
    Tangible Equity to Tangible Assets:     
    Total tangible shareholders' equity$340,931 $332,491 $323,828 $316,570 $320,775 
          
    Total assets, as reported$4,469,230 $4,375,529 $4,388,763 $4,381,115 $4,204,034 
    Less:     
    Goodwill 63,909  63,909  64,059  64,059  64,059 
    Identifiable intangible assets, net 9,388  9,642  9,898  10,175  10,493 
    Total tangible assets$4,395,933 $4,301,978 $4,314,806 $4,306,881 $4,129,482 
          
    Equity to assets - GAAP 9.27% 9.28% 9.06% 8.92% 9.40%
    Tangible equity to tangible assets - Non-GAAP 7.76% 7.73% 7.51% 7.35% 7.77%


     For the Three Months Ended For the Nine Months Ended
     Sep 30,
     2017
    Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Sep 30,
     2016
     Sep 30,
     2017
    Sep 30,
     2016
    Return on Average Tangible Assets:        
    Net income, as reported$12,962 $13,199 $11,782 $12,162 $12,327  $37,943 $34,319 
             
    Total average assets, as reported$4,401,536 $4,354,464 $4,365,471 $4,272,883 $4,062,688  $4,373,956 $3,900,999 
    Less average balances of:        
    Goodwill 63,909  64,058  64,059  64,059  64,059   64,008  64,059 
    Identifiable intangible assets, net 9,511  9,767  10,027  10,330  10,650   9,766  10,971 
    Total average tangible assets$4,328,116 $4,280,639 $4,291,385 $4,198,494 $3,987,979  $4,300,182 $3,825,969 
             
    Return on average assets - GAAP 1.18% 1.21% 1.08% 1.14% 1.21%  1.16% 1.17%
    Return on average tangible assets - Non-GAAP 1.20% 1.23% 1.10% 1.16% 1.24%  1.18% 1.20%
             
    Return on Average Tangible Equity:        
    Net income, as reported$12,962 $13,199 $11,782 $12,162 $12,327  $37,943 $34,319 
             
    Total average equity, as reported$412,862 $404,238 $397,117 $396,741 $392,233  $404,797 $385,787 
    Less average balances of:        
    Goodwill 63,909  64,058  64,059  64,059  64,059   64,008  64,059 
    Identifiable intangible assets, net 9,511  9,767  10,027  10,330  10,650   9,766  10,971 
    Total average tangible equity$339,442 $330,413 $323,031 $322,352 $317,524  $331,023 $310,757 
             
    Return on average equity - GAAP 12.56% 13.06% 11.87% 12.26% 12.57%  12.50% 11.86%
    Return on average tangible equity - Non-GAAP 15.27% 15.98% 14.59% 15.09% 15.53%  15.28% 14.72%

       

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

    Source: Washington Trust Bancorp, Inc.