• Washington Trust Bancorp, Inc.
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  • Washington Trust Reports Fourth Quarter 2017 Earnings
    Company Release - 01/30/2018 16:05

    WESTERLY, R.I., Jan. 30, 2018 (GLOBE NEWSWIRE) -- Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced fourth quarter 2017 net income of $8.0 million, or $0.46 per diluted share, compared to net income of $13.0 million, or $0.75 per diluted share, reported for the third quarter of 2017.  Net income for the year ended December 31, 2017 totaled $45.9 million, or $2.64 per diluted share, compared to $46.5 million, or $2.70 per diluted share, reported for the prior year.

    On December 22, 2017, the Tax Cuts and Jobs Act ("the Tax Act") was signed into law, permanently lowering the corporate federal income tax rate from 35% to 21%, effective January 1, 2018.  The enactment of the Tax Act in 2017 required companies to revalue and reassess deferred tax assets and liabilities reflecting the new federal income tax rate.  As a result, in the fourth quarter of 2017, Washington Trust's net deferred tax assets were written down by a non-cash charge of $6.2 million, with a corresponding increase to income tax expense.  This write-down adjustment reduced fourth quarter and full-year 2017 earnings per diluted share by $0.36.

    “Our fourth quarter earnings, excluding the non-cash charge associated with the enactment of the Tax Act, were very solid.  We are pleased to report record levels of total loans, total deposits, and wealth management assets under administration,” stated Joseph J. MarcAurele, Washington Trust Chairman and Chief Executive Officer.  “Washington Trust’s strong financial foundation, diversified revenue stream, and market footprint positions us for future growth and success in the year ahead.”

    Selected highlights for fourth quarter and full-year 2017 include:

    • Full-year 2017 net interest income increased by 8% over the prior year and amounted to $120 million, a record level for Washington Trust.

    • Total loans were $3.4 billion at December 31, 2017, up by 2% in the fourth quarter and up by 4% from a year ago.

    • Deposits totaled $3.2 billion at December 31, 2017, up by 3% in the fourth quarter and up by 6% from a year ago.

    • Wealth management assets grew to a record $6.7 billion at December 31, 2017.  Full-year 2017 wealth management revenues amounted to an all-time high of $39.3 million, up by 5% from the prior year.

    Net Interest Income
    Net interest income totaled $30.9 million for the fourth quarter of 2017, up by $830 thousand, or 3%, from the third quarter.  The net interest margin was 2.95% for the fourth quarter, up by 2 basis points from the preceding quarter.  Significant linked quarter changes included:

    • Average interest-earning assets were up by $79 million, reflecting growth in average loan balances.  The yield on interest-earning assets for the fourth quarter was 3.70%, up by 3 basis points from the preceding quarter.

    • Average interest-bearing liabilities increased by $54 million, with growth in average in-market deposits, partially offset by declines in average wholesale funding balances (Federal Home Loan Bank advances and wholesale brokered time deposits).  The cost of interest-bearing funds was 0.93%, up by 1 basis point from the preceding quarter.

    Noninterest Income
    Noninterest income amounted to $16.2 million for the fourth quarter of 2017, down by $1.1 million, or 6%, from the third quarter.  Significant linked quarter changes included:

    • Wealth management revenues totaled $9.9 million in the fourth quarter of 2017, compared to $10.0 million in the preceding quarter.  Full-year 2017 wealth management revenues amounted to $39.3 million, up by $1.8 million, or 5%, from the prior year, due to growth in asset-based revenues.

      Wealth management assets under administration totaled $6.7 billion at December 31, 2017, up by $127 million, or 2%, from the balance at September 30, 2017.  Wealth management assets were up by $651 million, or 11%, from the balance at the end of 2016, reflecting financial market appreciation.  Managed assets represented 93% of total wealth management assets at December 31, 2017.

    • Mortgage banking revenues totaled $3.1 million in the fourth quarter of 2017, up modestly from the preceding quarter.  Residential mortgage loans sold to the secondary market amounted to $145 million in the fourth quarter, compared to $147 million in the preceding quarter.

    • Loan related derivative income totaled $470 thousand in the fourth quarter of 2017, down by $982 thousand, or 68%, from the preceding quarter, due to a lower volume of commercial borrower loan related derivative transactions.  Full-year 2017 loan related derivative income amounted to $3.2 million, essentially unchanged from the full-year amount recognized in 2016.

    Noninterest Expenses
    Noninterest expenses amounted to $25.8 million for the fourth quarter of 2017, down by $1.0 million, or 4%, from the third quarter.  The linked quarter decline in noninterest expenses was primarily due to the following:

    • A reduction to noninterest expenses of $333 thousand ($0.02 per diluted share) was recognized in the fourth quarter resulting from a nontaxable downward adjustment in the fair value of a contingent consideration liability that was initially recorded upon the completion of a 2015 acquisition.

    • During the fourth quarter, Washington Trust received $325 thousand (after-tax $205 thousand, or $0.01 per diluted share) in settlement of a claim against another bank related to a previously disclosed dispute.  This matter was the subject of a $570 thousand expense charge recognized in the third quarter.  The settlement was recorded as a reduction to other noninterest expenses in the fourth quarter.

    Excluding the aforementioned items from the third and fourth quarters, noninterest expenses were up by $228 thousand, or 1%, on a linked quarter basis, primarily due to an increase in foreclosed property costs in the fourth quarter.

    Income tax expense totaled $13.2 million for the fourth quarter of 2017, reflecting an effective tax rate of 62.3%.  As previously mentioned, income tax expense included the $6.2 million write-down associated with the revaluation of the Corporation's net deferred tax assets due to the Tax Act.  The revaluation of our net deferred tax assets is subject to further guidance and interpretation of the Tax Act that may be issued.  Excluding the non-cash write-down adjustment, the effective tax rate for the fourth quarter of 2017 would have been 33.1%, compared to 32.8% for the preceding quarter.  Based on current federal and applicable state income tax statutes, the Corporation currently expects its 2018 effective tax rate to be approximately 21.5%.

    Loans
    Total loans amounted to $3.4 billion at December 31, 2017, up by $51 million, or 2%, from the end of the preceding quarter.  Residential loan portfolio balances increased by $32 million, or 3%, from the balance at September 30, 2017.  In late December 2017, $19 million of residential mortgage loans were purchased with a weighted average rate of 3.24%.  These purchased loans were individually evaluated to our underwriting standards and are predominantly secured by properties in Massachusetts.  The commercial loan portfolio increased by $23 million, or 1%, from the end of the preceding quarter, with growth in commercial and industrial loans and in commercial construction and development loans, partially offset by a decrease in commercial mortgage loans.  The consumer loan portfolio was down by $3 million, or 1%, from the end of the third quarter.

    For full-year 2017, total loans rose by $140 million, or 4%, including a 9% increase in the residential loan portfolio and a 3% increase in the commercial loan portfolio.

    Investment Securities
    The investment securities portfolio totaled $793 million at December 31, 2017, up by $66 million, or 9%, from the balance at September 30, 2017.  During the quarter, government agency mortgage-backed debt securities and agency debt securities totaling $94 million and with a weighted average yield of 2.68% were purchased.  The purchases were partially offset by routine principal pay-downs on mortgage-backed securities and a maturity of a municipal bond.  Investment securities represented 18% of total assets at December 31, 2017.

    Deposits and Borrowings
    Total deposits amounted to $3.2 billion at December 31, 2017, up by $86 million, or 3%, from the end of the preceding quarter.  Included in total deposits were wholesale brokered time deposit balances of $398 million, which decreased by $18 million from the balance at September 30, 2017.  Excluding wholesale brokered time deposits, in-market deposits increased by $104 million, or 4%, from the end of the preceding quarter, with growth across all deposit categories.

    Total deposits were up by $179 million, or 6%, from the balance at the end of 2016.  Excluding balances of wholesale brokered time deposits, total in-market deposits were up by $193 million, or 7%, in 2017.  The balances of demand deposits and NOW accounts grew by $114 million, or 11%, in 2017.

    Federal Home Loan Bank advances stood at $791 million at December 31, 2017, down by $23 million, or 3%, from the balance at September 30, 2017 and down by $58 million, or 7%, from a year ago.

    Asset Quality
    Past due loans amounted to $20.1 million, or 0.59% of total loans, at December 31, 2017, compared to $16.4 million, or 0.49% of total loans, at September 30, 2017.  The increase in past due loans was primarily due to one well-secured commercial and industrial loan becoming delinquent in the latter portion of the quarter.  Total nonaccrual loans amounted to $15.2 million, or 0.45% of total loans, at December 31, 2017, down from $18.5 million, or 0.56% of total loans, at September 30, 2017.

    A loan loss provision of $200 thousand was charged to earnings in the fourth quarter of 2017, compared to a loan loss provision of $1.3 million in the preceding quarter.  These provisions were based on management's assessment of loss exposure, as well as loan loss allocations commensurate with changes in the loan portfolio.  Net charge-offs totaled $1.0 million in the fourth quarter of 2017, compared to $654 thousand in the preceding quarter.  The charge-offs recognized in the fourth quarter were largely attributable to two nonaccrual commercial mortgage relationships.  The allowance for loan losses was $26.5 million, or 0.79% of total loans, at December 31, 2017, compared to $27.3 million, or 0.82% of total loans, at September 30, 2017.

    Capital and Dividends
    Total shareholders' equity was $413 million at December 31, 2017, compared to $414 million at September 30, 2017.  Book value per share amounted to $23.99 at December 31, 2017, compared to $24.06 at September 30, 2017.  The decline in shareholders' equity and book value per share reflects the impact of the $6.2 million net deferred tax asset write-down adjustment recognized in earnings due to the enactment of the Tax Act in December 2017.

    Capital levels at December 31, 2017 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.45% at December 31, 2017, compared to 12.53% at September 30, 2017.  The reduction in the total risk-based capital ratio in the fourth quarter reflects a charge of $1.9 million related to the net deferred tax asset write-down adjustment, as determined in accordance with the regulatory guidance issued on January 18, 2018.

    The Board of Directors declared a quarterly dividend of 39 cents per share for the quarter ended December 31, 2017.  The dividend was paid on January 12, 2018 to shareholders of record on January 2, 2018.

    Conference Call
    Washington Trust will host a conference call to discuss its fourth quarter results, business highlights and outlook on Wednesday, January 31, 2018 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 13675605; the audio replay will be available through February 10, 2018.  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, 2018.

    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
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (Unaudited; Dollars in thousands)
          
     Dec 31,
     2017
    Sep 30,
     2017
    Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Assets:     
    Cash and due from banks$79,853 $128,580 $117,608 $111,941 $106,185 
    Short-term investments 3,070  2,600  2,324  2,039  1,612 
    Mortgage loans held for sale 26,943  28,484  32,784  25,414  29,434 
    Securities:     
    Available for sale, at fair value 780,954  714,355  749,486  754,720  739,912 
    Held to maturity, at amortized cost 12,541  13,241  13,942  14,721  15,633 
    Total securities 793,495  727,596  763,428  769,441  755,545 
    Federal Home Loan Bank stock, at cost 40,517  42,173  44,640  43,714  43,129 
    Loans:     
    Commercial mortgages 1,072,487  1,085,535  1,009,096  1,076,648  1,074,186 
    Commercial construction & development 138,008  126,257  112,177  123,841  121,371 
    Commercial & industrial 612,334  588,324  577,116  562,010  576,109 
    Residential real estate 1,227,248  1,195,537  1,168,105  1,131,210  1,122,748 
    Consumer 323,994  327,425  333,606  331,151  339,957 
    Total loans 3,374,071  3,323,078  3,200,100  3,224,860  3,234,371 
    Less allowance for loan losses 26,488  27,308  26,662  26,446  26,004 
    Net loans 3,347,583  3,295,770  3,173,438  3,198,414  3,208,367 
    Premises and equipment, net 28,333  28,591  28,508  28,853  29,020 
    Investment in bank-owned life insurance 73,267  72,729  72,183  71,642  71,105 
    Goodwill 63,909  63,909  63,909  64,059  64,059 
    Identifiable intangible assets, net 9,140  9,388  9,642  9,898  10,175 
    Other assets 63,740  69,410  67,065  63,348  62,484 
    Total assets$4,529,850 $4,469,230 $4,375,529 $4,388,763 $4,381,115 
    Liabilities:     
    Deposits:     
    Demand deposits$661,138 $621,273 $587,813 $596,974 $585,960 
    NOW accounts 466,605  448,128  448,617  454,344  427,707 
    Money market accounts 731,345  716,827  666,047  762,233  730,075 
    Savings accounts 368,524  367,912  364,002  362,281  358,397 
    Time deposits 1,015,095  1,002,941  954,710  939,739  961,613 
    Total deposits 3,242,707  3,157,081  3,021,189  3,115,571  3,063,752 
    Federal Home Loan Bank advances 791,356  814,045  869,733  798,741  848,930 
    Junior subordinated debentures 22,681  22,681  22,681  22,681  22,681 
    Other liabilities 59,822  61,195  55,884  53,985  54,948 
    Total liabilities 4,116,566  4,055,002  3,969,487  3,990,978  3,990,311 
    Shareholders’ Equity:     
    Total shareholders’ equity 413,284  414,228  406,042  397,785  390,804 
    Total liabilities and shareholders’ equity$4,529,850 $4,469,230 $4,375,529 $4,388,763 $4,381,115 


    CONSOLIDATED STATEMENTS OF INCOME
    (Unaudited; Dollars in thousands, except per share amounts)
     For the Three Months Ended
     For the Twelve Months
    Ended
     Dec 31,
     2017
    Sep 30,
     2017
    Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
     Dec 31,
     2017
    Dec 31,
     2016
    Interest income:        
    Interest and fees on loans$33,459 $32,509 $31,642 $30,352 $30,738  $127,962 $119,491 
    Taxable interest on securities 4,719  4,655  4,844  4,709  3,703   18,927  11,584 
    Nontaxable interest on securities 24  41  72  112  157   249  982 
    Dividends on Federal Home Loan Bank stock 481  467  439  387  362   1,774  1,091 
    Other interest income 217  197  156  104  95   674  322 
    Total interest and dividend income 38,900  37,869  37,153  35,664  35,055   149,586  133,470 
    Interest expense:        
    Deposits 4,136  3,835  3,591  3,502  3,445   15,064  12,504 
    Federal Home Loan Bank advances 3,708  3,816  3,509  3,344  2,886   14,377  9,992 
    Junior subordinated debentures 167  159  149  138  135   613  491 
    Other interest expense       1  1   1  5 
    Total interest expense 8,011  7,810  7,249  6,985  6,467   30,055  22,992 
    Net interest income 30,889  30,059  29,904  28,679  28,588   119,531  110,478 
    Provision for loan losses 200  1,300  700  400  2,900   2,600  5,650 
    Net interest income after provision for loan losses 30,689  28,759  29,204  28,279  25,688   116,931  104,828 
    Noninterest income:        
    Wealth management revenues 9,914  10,013  9,942  9,477  9,291   39,346  37,569 
    Mortgage banking revenues 3,097  3,036  2,919  2,340  4,541   11,392  13,183 
    Service charges on deposit accounts 946  942  901  883  945   3,672  3,702 
    Card interchange fees 904  894  902  802  858   3,502  3,385 
    Income from bank-owned life insurance 537  546  542  536  549   2,161  2,659 
    Loan related derivative income 470  1,452  1,144  148  912   3,214  3,243 
    Other income 342  400  456  324  224   1,522  1,388 
    Total noninterest income 16,210  17,283  16,806  14,510  17,320   64,809  65,129 
    Noninterest expense:        
    Salaries and employee benefits 17,083  17,251  17,358  16,795  16,528   68,487  67,221 
    Net occupancy 1,859  1,928  1,767  1,967  1,775   7,521  7,151 
    Equipment 1,198  1,380  1,313  1,467  1,556   5,358  6,208 
    Outsourced services 1,960  1,793  1,710  1,457  1,311   6,920  5,222 
    Legal, audit and professional fees 562  534  582  616  597   2,294  2,579 
    FDIC deposit insurance costs 389  308  469  481  390   1,647  1,878 
    Advertising and promotion 466  416  362  237  403   1,481  1,458 
    Amortization of intangibles 248  253  257  277  318   1,035  1,284 
    Debt prepayment penalties              431 
    Change in fair value of contingent consideration (333)     (310)    (643) (898)
    Other expenses 2,322  2,891  2,488  2,299  2,095   10,000  8,569 
    Total noninterest expense 25,754  26,754  26,306  25,286  24,973   104,100  101,103 
    Income before income taxes 21,145  19,288  19,704  17,503  18,035   77,640  68,854 
    Income tax expense 13,163  6,326  6,505  5,721  5,873   31,715  22,373 
    Net income$7,982 $12,962 $13,199 $11,782 $12,162  $45,925 $46,481 
             
    Net income available to common shareholders:        
    Basic$7,958 $12,934 $13,170 $11,755 $12,137  $45,817 $46,384 
    Diluted$7,958 $12,934 $13,170 $11,755 $12,137  $45,817 $46,384 
    Weighted average common shares outstanding:        
    Basic 17,223  17,212  17,206  17,186  17,142   17,207  17,081 
    Diluted 17,349  17,318  17,316  17,293  17,245   17,338  17,208 
    Earnings per common share:        
    Basic$0.46 $0.75 $0.77 $0.68 $0.71  $2.66 $2.72 
    Diluted$0.46 $0.75 $0.76 $0.68 $0.70  $2.64 $2.70 
             
    Cash dividends declared per share$0.39 $0.39 $0.38 $0.38 $0.37  $1.54 $1.46 


    SELECTED FINANCIAL HIGHLIGHTS
    (Unaudited; Dollars in thousands, except per share amounts)
      
     Dec 31,
     2017
    Sep 30,
     2017
    Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Share and Equity Related Data:     
    Book value per share$23.99 $24.06 $23.59 $23.14 $22.76 
    Tangible book value per share - Non-GAAP (1)$19.75 $19.81 $19.32 $18.83 $18.44 
    Market value per share$53.25 $57.25 $51.55 $49.30 $56.05 
    Shares issued and outstanding at end of period 17,227  17,214  17,210  17,193  17,171 
          
    Capital Ratios:     
    Tier 1 risk-based capital11.65% (i)
      11.69% 11.92% 11.54% 11.44%
    Total risk-based capital12.45% (i)
      12.53% 12.78% 12.38% 12.26%
    Tier 1 leverage ratio8.79% (i)
      8.83% 8.78% 8.58% 8.67%
    Common equity tier 110.99% (i)
      11.02% 11.23% 10.86% 10.75%
    Equity to assets 9.12% 9.27% 9.28% 9.06% 8.92%
    Tangible equity to tangible assets - Non-GAAP (1) 7.63% 7.76% 7.73% 7.51% 7.35%
    (i) - estimated     


     For the Three Months Ended For the Twelve Months
    Ended
     Dec 31,
     2017
    Sep 30,
     2017
    Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
     Dec 31,
     2017
    Dec 31,
     2016
    Performance Ratios:        
    Net interest margin (FTE)2.95%2.93%2.97%2.87%2.89% 2.93%3.02%
    Return on average assets0.71%1.18%1.21%1.08%1.14% 1.04%1.16%
    Return on average tangible assets - Non-GAAP (1)0.73%1.20%1.23%1.10%1.16% 1.06%1.19%
    Return on average equity7.65%12.56%13.06%11.87%12.26% 11.26%11.96%
    Return on average tangible equity - Non-GAAP (1)9.27%15.27%15.98%14.59%15.09% 13.73%14.82%

    (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,
     2017
    Sep 30,
     2017
    Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
     Dec 31,
     2017
    Dec 31,
     2016
    Wealth Management Results        
    Wealth Management Revenues:        
    Asset-based revenues 9,686  9,791  9,401  9,247  9,054   38,125  36,139 
    Transaction-based revenues 228  222  541  230  237   1,221  1,430 
    Total wealth management revenues$9,914 $10,013 $9,942 $9,477 $9,291  $39,346 $37,569 
             
    Assets Under Administration:        
    Balance at beginning of period$6,587,899 $6,403,501 $6,243,301 $6,063,293 $6,056,859  $6,063,293 $5,844,636 
    Net investment appreciation (depreciation) & income 163,681  270,549  162,924  220,423  (8,506)  817,577  277,848 
    Net client asset flows (36,943) (86,151) (2,724) (40,415) 14,940   (166,233) (59,191)
    Balance at end of period$6,714,637 $6,587,899 $6,403,501 $6,243,301 $6,063,293  $6,714,637 $6,063,293 
             
    Mortgage Banking Results        
    Mortgage Banking Revenues:        
    Gains & commissions on loan sales, net$2,987 $2,952 $2,784 $2,268 $4,455  $10,991 $13,137 
    Residential mortgage servicing fee income, net 110  84  135  72  86   401  46 
    Total mortgage banking revenues$3,097 $3,036 $2,919 $2,340 $4,541  $11,392 $13,183 
             
    Residential Mortgage Loan Originations:        
    Originations for retention in portfolio$75,595 $90,378 $94,794 $57,907 $72,533  $318,674 $264,466 
    Originations for sale to secondary market (1) 143,834  143,112  144,491  102,441  185,626   533,878  600,800 
    Total mortgage loan originations$219,429 $233,490 $239,285 $160,348 $258,159  $852,552 $865,266 
             
    Residential Mortgage Loans Sold:        
    Sold with servicing rights retained$39,769 $37,823 $29,199 $22,567 $48,545  $129,358 $165,414 
    Sold with servicing rights released (1) 105,416  109,508  108,245  84,345  151,506   407,514  443,824 
    Total mortgage loans sold$145,185 $147,331 $137,444 $106,912 $200,051  $536,872 $609,238 

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


    END OF PERIOD LOAN AND DEPOSIT COMPOSITION
    (Unaudited; Dollars in thousands)
      
     Dec 31,
     2017
    Sep 30,
     2017
    Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Commercial:     
    Mortgages$1,072,487 $1,085,535 $1,009,096 $1,076,648 $1,074,186 
    Construction & development 138,008  126,257  112,177  123,841  121,371 
    Commercial & industrial 612,334  588,324  577,116  562,010  576,109 
    Total commercial 1,822,829  1,800,116  1,698,389  1,762,499  1,771,666 
    Residential Real Estate:     
    Mortgages 1,206,458  1,171,161  1,143,416  1,100,435  1,094,824 
    Homeowner construction 20,790  24,376  24,689  30,775  27,924 
    Total residential real estate 1,227,248  1,195,537  1,168,105  1,131,210  1,122,748 
    Consumer:     
    Home equity lines 258,114  259,880  263,934  258,695  264,200 
    Home equity loans 34,353  34,777  35,173  36,050  37,272 
    Other 31,527  32,768  34,499  36,406  38,485 
    Total consumer 323,994  327,425  333,606  331,151  339,957 
    Total loans$3,374,071 $3,323,078 $3,200,100 $3,224,860 $3,234,371 


     December 31, 2017 December 31, 2016
     Balance% of Total Balance% of Total
    Commercial Real Estate Loans by Property Location:     
    Rhode Island, Connecticut, Massachusetts$1,131,077 93.5% $1,105,539 92.5%
    New York, New Jersey, Pennsylvania 66,857 5.5%  77,038 6.4%
    New Hampshire 12,561 1.0%  12,980 1.1%
    Total commercial real estate loans (1)$1,210,495 100.0% $1,195,557 100.0%
                        
    Residential Mortgages by Property Location:                   
    Rhode Island, Connecticut, Massachusetts$1,210,895 98.6% $1,106,366 98.6%
    New Hampshire, Vermont, Maine 12,061 1.0%  11,445 1.0%
    New York, Virginia, New Jersey, Maryland, Pennsylvania 2,168 0.2%  2,648 0.2%
    Ohio 862 0.1%  997 0.1%
    Other 1,262 0.1%  1,292 0.1%
    Total residential mortgages$1,227,248 100.0% $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.

     Dec 31,
     2017
    Sep 30,
     2017
    Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Deposits:     
    Non-interest bearing demand deposits$578,410 $575,866 $533,147 $534,792 $521,165 
    Interest-bearing demand deposits 82,728  45,407  54,666  62,182  64,795 
    NOW accounts 466,605  448,128  448,617  454,344  427,707 
    Money market accounts 731,345  716,827  666,047  762,233  730,075 
    Savings accounts 368,524  367,912  364,002  362,281  358,397 
    Time deposits (in-market) 617,368  587,166  553,783  557,312  549,376 
    Wholesale brokered time deposits 397,727  415,775  400,927  382,427  412,237 
    Total deposits$3,242,707 $3,157,081 $3,021,189 $3,115,571 $3,063,752 



    CREDIT & ASSET QUALITY DATA
    (Unaudited; Dollars in thousands)
      
     Dec 31,
     2017
    Sep 30,
     2017
    Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Asset Quality Ratios:     
    Nonperforming assets to total assets 0.34% 0.44% 0.49% 0.54% 0.53%
    Nonaccrual loans to total loans 0.45% 0.56% 0.63% 0.69% 0.68%
    Total past due loans to total loans 0.59% 0.49% 0.66% 0.65% 0.76%
    Allowance for loan losses to nonaccrual loans 174.14% 147.52% 132.00% 119.52% 117.89%
    Allowance for loan losses to total loans 0.79% 0.82% 0.83% 0.82% 0.80%
          
    Nonperforming Assets:     
    Commercial mortgages$4,954 $5,887 $6,422 $7,809 $7,811 
    Commercial & industrial 283  429  1,232  1,129  1,337 
    Residential real estate mortgages 9,414  11,699  11,815  12,253  11,736 
    Consumer 560  496  729  936  1,174 
    Total nonaccrual loans 15,211  18,511  20,198  22,127  22,058 
    Other real estate owned 131  1,038  1,342  1,410  1,075 
    Total nonperforming assets$15,342 $19,549 $21,540 $23,537 $23,133 
          
    Past Due Loans (30 days or more past due):     
    Commercial mortgages$4,960 $5,887 $6,422 $7,806 $8,708 
    Commercial & industrial 4,076  455  4,009  1,046  1,154 
    Residential real estate mortgages 7,855  7,802  8,857  10,533  12,226 
    Consumer loans 3,184  2,303  1,832  1,547  2,334 
    Total past due loans$20,075 $16,447 $21,120 $20,932 $24,422 
          
    Accruing loans 90 days or more past due$—
     $—
     $—
     $—
     $—
     
    Nonaccrual loans included in past due loans$11,788 $13,216 $14,490 $18,081 $18,602 


      For the Three Months Ended For the Twelve Months
    Ended
     Dec 31,
     2017
    Sep 30,
     2017
    Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
     Dec 31,
     2017
    Dec 31,
     2016
    Nonaccrual Loan Activity:        
    Balance at beginning of period$18,511 $20,198 $22,127 $22,058 $23,950  $22,058 $21,047 
    Additions to nonaccrual status 462  1,969  1,946  2,138  2,105   6,515  15,278 
    Loans returned to accruing status (1,316) (1,411) (778) (547) (718)  (4,052) (1,516)
    Loans charged-off (1,047) (694) (642) (79) (2,622)  (2,462) (7,012)
    Loans transferred to other real estate owned     (98) (478) (30)  (576) (1,075)
    Payments, payoffs and other changes (1,399) (1,551) (2,357) (965) (627)  (6,272) (4,664)
    Balance at end of period$15,211 $18,511 $20,198 $22,127 $22,058  $15,211 $22,058 
             
    Allowance for Loan Losses:        
    Balance at beginning of period$27,308 $26,662 $26,446 $26,004 $25,649  $26,004 $27,069 
    Provision charged to earnings 200  1,300  700  400  2,900   2,600  5,650 
    Charge-offs (1,047) (694) (642) (79) (2,622)  (2,462) (7,012)
    Recoveries 27  40  158  121  77   346  297 
    Balance at end of period$26,488 $27,308 $26,662 $26,446 $26,004  $26,488 $26,004 
             
    Net Loan Charge-Offs (Recoveries):        
    Commercial mortgages$932 $535 $318 $ $2,510  $1,785 $5,760 
    Commercial & industrial 43  114  115  (105) (20)  167  603 
    Residential real estate mortgages 32  (1) 8  (4) 6   35  189 
    Consumer 13  6  43  67  49   129  163 
    Total$1,020 $654 $484 ($42)$2,545  $2,116 $6,715 
             
    Net charge-offs to average loans (annualized) 0.12% 0.08% 0.06% (0.01%) 0.31%  0.06% 0.21%


    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 EndedDecember 31, 2017
     September 30, 2017
     December 31, 2016
     Average
    Balance
    InterestYield/
    Rate
     Average
    Balance
    InterestYield/
    Rate
     Average
    Balance
    InterestYield/
     Rate
    Assets:           
    Commercial mortgages$1,076,786 $10,356 3.82  $1,027,517 $9,909 3.83  $1,086,772 $9,520 3.48 
    Construction & development 142,584  1,487 4.14   133,190  1,326 3.95   110,342  927 3.34 
    Commercial & industrial 598,790  6,897 4.57   590,915  6,684 4.49   575,983  6,927 4.78 
    Total commercial loans 1,818,160 $18,740 4.09   1,751,622 $17,919 4.06   1,773,097 $17,374 3.90 
    Residential real estate loans, including loans held for sale 1,226,369  11,727 3.79   1,210,686  11,541 3.78   1,140,492  10,652 3.72 
    Consumer loans 326,445  3,556 4.32   329,689  3,604 4.34   341,528  3,284 3.83 
    Total loans 3,370,974  34,023 4.00   3,291,997  33,064 3.98   3,255,117  31,310 3.83 
    Cash, federal funds sold and short-term investments 62,040  217 1.39   61,390  197 1.27   77,092  95 0.49 
    FHLBB stock 41,003  481 4.65   44,057  467 4.21   39,212  362 3.67 
    Taxable debt securities 756,322  4,719 2.48   751,735  4,655 2.46   636,277  3,703 2.32 
    Nontaxable debt securities 2,625  38 5.74   4,287  65 6.02   16,003  244 6.07 
    Total securities 758,947  4,757 2.49   756,022  4,720 2.48   652,280  3,947 2.41 
    Total interest-earning assets 4,232,964  39,478 3.70   4,153,466  38,448 3.67   4,023,701  35,714 3.53 
    Noninterest-earning assets 240,376     248,070     249,182   
    Total assets$4,473,340    $4,401,536    $4,272,883   
    Liabilities and Shareholders' Equity:           
    Interest-bearing demand deposits$64,344 $25 0.15  $46,352 $30 0.26  $46,668 $16 0.14 
    NOW accounts 448,677  42 0.04   442,166  68 0.06   408,788  51 0.05 
    Money market accounts 743,966  807 0.43   680,755  642 0.37   761,582  574 0.30 
    Savings accounts 371,236  63 0.07   366,177  56 0.06   356,837  51 0.06 
    Time deposits (in-market) 606,732  1,765 1.15   565,402  1,566 1.10   552,474  1,419 1.02 
    Wholesale brokered time deposits 376,709  1,434 1.51   404,953  1,473 1.44   382,798  1,334 1.39 
    FHLBB advances 785,169  3,708 1.87   837,300  3,816 1.81   732,269  2,886 1.57 
    Junior subordinated debentures 22,681  167 2.92   22,681  159 2.78   22,681  135 2.37 
    Other       1      40  1 9.95 
    Total interest-bearing liabilities 3,419,514  8,011 0.93   3,365,787  7,810 0.92   3,264,137  6,467 0.79 
    Demand deposits 582,714     567,737     548,595   
    Other liabilities 53,544     55,150     63,410   
    Shareholders' equity 417,568     412,862     396,741   
    Total liabilities and shareholders' equity$4,473,340    $4,401,536    $4,272,883   
    Net interest income (FTE) $31,467    $30,638    $29,247  
    Interest rate spread  2.77    2.75    2.74 
    Net interest margin  2.95    2.93    2.89 

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

    For the Three Months EndedDec 31,
    2017
    Sep 30,
    2017
    Dec 31,
    2016
    Commercial loans$564 $555 $572 
    Nontaxable debt securities 14  24  87 
    Total$578 $579 $659 


            
    CONSOLIDATED AVERAGE BALANCE SHEETS (FTE Basis)
    (Unaudited; Dollars in thousands)
      
    For the Twelve Months EndedDecember 31, 2017
      December 31, 2016
     
     Average
    Balance
     Interest
     Yield/
    Rate
      Average
    Balance
     Interest
     Yield/
     Rate
     
    Assets:       
    Commercial mortgages$1,055,127 $39,529 3.75  $1,030,289 $36,089 3.50 
    Construction & development 132,504  5,137 3.88   110,770  3,732 3.37 
    Commercial & industrial 584,647  26,347 4.51   584,307  27,398 4.69 
    Total commercial loans 1,772,278  71,013 4.01   1,725,366  67,219 3.90 
    Residential real estate loans, including loans held for sale 1,188,369  45,224 3.81   1,069,402  41,173 3.85 
    Consumer loans 330,783  13,947 4.22   342,431  13,328 3.89 
    Total loans 3,291,430  130,184 3.96   3,137,199  121,720 3.88 
    Cash, federal funds sold and short-term investments 60,033  674 1.12   75,997  322 0.42 
    FHLBB stock 43,256  1,774 4.10   33,643  1,091 3.24 
    Taxable debt securities 759,304  18,927 2.49   472,892  11,584 2.45 
    Nontaxable debt securities 6,347  384 6.05   24,939  1,520 6.09 
    Total securities 765,651  19,311 2.52   497,831  13,104 2.63 
    Total interest-earning assets 4,160,370  151,943 3.65   3,744,670  136,237 3.64 
    Noninterest-earning assets 238,636     249,808   
    Total assets$4,399,006    $3,994,478   
    Liabilities and Shareholders' Equity:       
    Interest-bearing demand deposits$55,534 $62 0.11  $45,038 $49 0.11 
    NOW accounts 437,277  218 0.05   400,209  212 0.05 
    Money market accounts 722,590  2,688 0.37   741,925  2,035 0.27 
    Savings accounts 364,255  221 0.06   343,943  200 0.06 
    Time deposits (in-market) 571,733  6,208 1.09   546,460  5,486 1.00 
    Wholesale brokered time deposits 392,894  5,667 1.44   323,390  4,522 1.40 
    FHLBB advances 817,784  14,377 1.76   616,404  9,992 1.62 
    Junior subordinated debentures 22,681  613 2.70   22,681  491 2.16 
    Other 10  1 10.00   60  5 8.33 
    Total interest-bearing liabilities 3,384,758  30,055 0.89   3,040,110  22,992 0.76 
    Demand deposits 555,548     503,806   
    Other liabilities 50,684     62,021   
    Shareholders' equity 408,016     388,541   
    Total liabilities and shareholders' equity$4,399,006    $3,994,478   
    Net interest income (FTE) $121,888    $113,245  
    Interest rate spread  2.76    2.88 
    Net interest margin  2.93    3.02 

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

    For the Twelve Months EndedDec 31,
    2017
    Dec 31,
    2016
    Commercial loans$2,222 $2,229 
    Nontaxable debt securities 135  538 
    Total$2,357 $2,767 


    SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures
    (Unaudited; Dollars in thousands, except per share amounts)
      
     Dec 31,
     2017
    Sep 30,
     2017
    Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
    Tangible Book Value per Share:     
    Total shareholders' equity, as reported$413,284 $414,228 $406,042 $397,785 $390,804 
    Less:     
    Goodwill 63,909  63,909  63,909  64,059  64,059 
    Identifiable intangible assets, net 9,140  9,388  9,642  9,898  10,175 
    Total tangible shareholders' equity$340,235 $340,931 $332,491 $323,828 $316,570 
          
    Shares outstanding, as reported 17,227  17,214  17,210  17,193  17,171 
          
    Book value per share - GAAP$23.99 $24.06 $23.59 $23.14 $22.76 
    Tangible book value per share - Non-GAAP$19.75 $19.81 $19.32 $18.83 $18.44 
          
    Tangible Equity to Tangible Assets:     
    Total tangible shareholders' equity$340,235 $340,931 $332,491 $323,828 $316,570 
          
    Total assets, as reported$4,529,850 $4,469,230 $4,375,529 $4,388,763 $4,381,115 
    Less:     
    Goodwill 63,909  63,909  63,909  64,059  64,059 
    Identifiable intangible assets, net 9,140  9,388  9,642  9,898  10,175 
    Total tangible assets$4,456,801 $4,395,933 $4,301,978 $4,314,806 $4,306,881 
          
    Equity to assets - GAAP 9.12% 9.27% 9.28% 9.06% 8.92%
    Tangible equity to tangible assets - Non-GAAP 7.63% 7.76% 7.73% 7.51% 7.35%


     For the Three Months Ended For the Twelve Months Ended
     Dec 31,
     2017
    Sep 30,
     2017
    Jun 30,
     2017
    Mar 31,
     2017
    Dec 31,
     2016
     Dec 31,
     2017
    Dec 31,
     2016
    Return on Average Tangible Assets:        
    Net income, as reported$7,982 $12,962 $13,199 $11,782 $12,162  $45,925 $46,481 
             
    Total average assets, as reported$4,473,340 $4,401,536 $4,354,464 $4,365,471 $4,272,883  $4,399,006 $3,994,478 
    Less average balances of:        
    Goodwill 63,909  63,909  64,058  64,059  64,059   63,983  64,059 
    Identifiable intangible assets, net 9,261  9,511  9,767  10,027  10,330   9,639  10,810 
    Total average tangible assets$4,400,170 $4,328,116 $4,280,639 $4,291,385 $4,198,494  $4,325,384 $3,919,609 
             
    Return on average assets - GAAP 0.71% 1.18% 1.21% 1.08% 1.14%  1.04% 1.16%
    Return on average tangible assets - Non-GAAP 0.73% 1.20% 1.23% 1.10% 1.16%  1.06% 1.19%
             
    Return on Average Tangible Equity:        
    Net income, as reported$7,982 $12,962 $13,199 $11,782 $12,162  $45,925 $46,481 
             
    Total average equity, as reported$417,568 $412,862 $404,238 $397,117 $396,741  $408,016 $388,541 
    Less average balances of:        
    Goodwill 63,909  63,909  64,058  64,059  64,059   63,983  64,059 
    Identifiable intangible assets, net 9,261  9,511  9,767  10,027  10,330   9,639  10,810 
    Total average tangible equity$344,398 $339,442 $330,413 $323,031 $322,352  $334,394 $313,672 
             
    Return on average equity - GAAP 7.65% 12.56% 13.06% 11.87% 12.26%  11.26% 11.96%
    Return on average tangible equity - Non-GAAP 9.27% 15.27% 15.98% 14.59% 15.09%  13.73% 14.82%

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

    Source: Washington Trust Bancorp, Inc.