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Washington Trust Reports Record Earnings for Third Quarter 2014

WESTERLY, R.I., Oct. 20, 2014 (GLOBE NEWSWIRE) -- Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced net income of $10.5 million, or 62 cents per diluted share, for the third quarter of 2014, up from second quarter of 2014 net income of $9.8 million, or 58 cents per diluted share.

"Washington Trust's strong performance continued into the third quarter, as earnings reached an all-time quarterly high," stated Joseph J. MarcAurele, Washington Trust Chairman and CEO. "These results are truly a company-wide effort, as we had good growth along key business lines."

Selected highlights for the third quarter of 2014 included:

  • Returns on average equity and average assets were 12.15% and 1.25%, respectively. Comparable amounts for the second quarter of 2014 were 11.52% and 1.22%, respectively.
  • Total loans at September 30, 2014 were $2.67 billion, up by a solid $92.9 million, or 4%, from June 30, 2014.
  • Deposit growth was strong in the third quarter, with an increase of $152.8 million, or 6%, from June 30, 2014. Total deposits reached $2.74 billion at September 30, 2014.
  • In September, we declared a quarterly dividend of 32 cents per share, representing a 3 cent increase over the dividend paid last quarter and our third dividend increase in the past year.

Net Interest Income

Net interest income totaled $24.9 million for the third quarter of 2014, up by 2% from $24.5 million for the second quarter of 2014. The net interest margin was 3.21% for the third quarter of 2014, compared to 3.35% for the second quarter of 2014. Significant linked quarter changes included:

  • Average interest-earning assets increased by $146.2 million, reflecting growth in average loan balances. The yield on interest-earning assets declined by 14 basis points from the previous quarter, due to the combined effect of lower rates on loan originations and purchased securities and runoff of higher yielding loan and security balances.
  • Average interest-bearing liabilities increased by $118.0 million, with growth in average wholesale funding balances and average interest-bearing deposits. The cost of funds declined by 1 basis point from the previous quarter.

Noninterest Income

Noninterest income totaled $13.1 million for the third quarter of 2014, up by 2% from $12.8 million for the second quarter of 2014. Included in noninterest income were the following:

  • Wealth management revenues totaled $8.4 million for the third quarter of 2014, down by $156 thousand, or 2%, with a $324 thousand decline in transaction-based revenues, partially offset by a $168 thousand increase in asset-based revenues. The decline in transaction-based revenues was primarily attributable to a decrease in tax preparation fees, which are typically concentrated in the second quarter.
  • Net gains on loan sales and commissions on loans originated for others totaled $1.7 million for the third quarter of 2014, up by $35 thousand, or 2%. Residential mortgage loans sold to the secondary market were $80.1 million in the third quarter, up by $3.1 million from the second quarter.
  • Net gains on interest rate swap contracts amounted to $339 thousand for the third quarter of 2014, up by $376 thousand from the previous quarter, due to an increase in customer-related interest rate swap transactions.

Noninterest Expenses

Noninterest expenses totaled $22.0 million for the third quarter of 2014, down by 2% from $22.4 million for the second quarter of 2014. Included in noninterest expenses were the following:

  • Salaries and employee benefit costs totaled $14.5 million for the third quarter of 2014, down by $255 thousand, or 2%, from the previous quarter, largely due to lower payroll tax expense.
  • Advertising and promotion costs amounted to $368 thousand for the third quarter of 2014, down by $172 thousand, or 32%, as a result of seasonal promotion efforts that occurred in the second quarter.

Income tax expense amounted to $4.9 million for the third quarter of 2014, up by $291 thousand, or 6%, from $4.6 million for the second quarter of 2014. The effective tax rate for the third quarter of 2014 was 31.6%, compared to 31.9% for the second quarter of 2014. Based on current federal and applicable state income tax statutes, the Corporation currently expects the full-year effective tax rate to be approximately 31.8% for 2014.

Asset Quality

Total nonaccrual loans amounted to $17.0 million, or 0.63% of total loans, at September 30, 2014, up from $12.5 million, or 0.49%, at June 30, 2014. The increase in nonaccrual loans during the third quarter was principally due to the classification into nonaccrual status of one commercial real estate loan with a carrying value of $4.9 million. Total past due loans amounted to $19.9 million, or 0.75% of total loans, at September 30, 2014, down from $21.1 million, or 0.82% of total loans, at June 30, 2014. Loans classified as troubled debt restructurings amounted to $18.3 million at September 30, 2014, down from $26.5 million at the end of the previous quarter, reflecting the payoff of an $8.0 million commercial real estate loan.

The loan loss provision charged to earnings in the third quarter of 2014 totaled $600 thousand, up from $450 thousand in the second quarter of 2014. Net charge-offs amounted to $101 thousand in the third quarter of 2014, compared to $224 thousand in the second quarter of 2014. The allowance for loan losses was $27.8 million, or 1.04% of total loans, at September 30, 2014, compared to $27.3 million, or 1.06% of total loans, at June 30, 2014.

Loans

Total loans amounted to $2.67 billion at September 30, 2014, up by $92.9 million, or 4%, from the balance at June 30, 2014. This increase was comprised of the following:

  • The residential real estate loan portfolio grew by $68.9 million, or 8%.
  • Total commercial loans increased by $24.2 million, or 2%, with growth in both commercial real estate and commercial and industrial loans.
  • Consumer loans declined slightly by $221 thousand, or 0.1%.

Investment Securities

The securities portfolio amounted to $402.6 million, or 12% of total assets, at September 30, 2014, up from $355.4 million, or 11%, at June 30, 2014. The net increase of $47.2 million included purchases of $74.1 million of debt obligations and mortgage-backed securities issued by U.S. government-sponsored enterprises. The purchases were offset, in part, by principal payments received on mortgage-backed securities, maturities and calls of debt obligations of U.S. sponsored enterprises and state and political subdivisions.

Deposits and Borrowings

Deposits totaled $2.74 billion at September 30, 2014, up by $152.8 million, or 6%, from the balance at June 30, 2014. This increase was comprised of the following:

  • Demand deposits increased by $65.2 million, or 16%, while NOW account balances decreased slightly by $669 thousand, or 0.2%.
  • Money market and savings account balances increased by $59.7 million, or 6%.
  • Time deposits increased by $28.6 million, or 4%.

FHLBB advances amounted to $261.7 million at September 30, 2014, down by $60.4 million from June 30, 2014, primarily due to deposit inflows.

Capital Management

Capital levels continued to exceed the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 13.26% at September 30, 2014, compared to 13.24% at June 30, 2014. Total shareholder's equity was $348.6 million at September 30, 2014, up by $5.1 million from June 30, 2014.

Dividends Declared

The Board of Directors declared a quarterly dividend of 32 cents per share for the quarter ended September 30, 2014, a 3 cent increase over the dividend paid in the previous quarter. The dividend was paid on October 15, 2014 to shareholders of record on October 1, 2014.

Conference Call

Washington Trust will host a conference call to discuss third quarter results, business highlights and outlook on Tuesday, October 21, 2014 at 8:30 a.m. (Eastern Time). Individuals may dial in to the call at 1-877-407-0784. An audio replay of the call will be available, shortly after the conclusion of the call, by dialing 1-877-870-5176 and entering the Replay PIN Number 13591326; the audio replay will be available through October 31, 2014. 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, 2014.

Background

Washington Trust Bancorp, Inc. is the parent of The Washington Trust Company, a state-chartered bank headquartered in Westerly, Rhode Island. Founded in 1800, Washington Trust is the oldest community bank in the nation and is the largest independent bank headquartered in Rhode Island. Washington Trust offers a full range of financial services, including commercial banking, small business 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 OMX® under the symbol WASH. Investor information is available on the Corporation's web site: www.washtrustbancorp.com.

Forward-Looking Statements

This press release contains statements that are "forward-looking statements". We may also make written or oral 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: continued weakness in national, regional or local economies; reductions in net interest income resulting from a sustained low interest rate environment 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 Corporation's competition; changes in legislation or regulation and accounting principles, policies and guidelines; and changes in the assumptions used in making such forward-looking statements. In addition, the factors described under "Risk Factors" in Item 1A of our Annual Report on Form 10-K, as filed with the SEC and as updated by our Quarterly Reports on Form 10-Q and other SEC filings, 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 press release, 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)
Sep 30, Dec 31,
(Dollars in thousands, except par value) 2014 2013
Assets:
Cash and due from banks $86,132 $81,939
Short-term investments 3,869 3,378
Mortgage loans held for sale, at fair value 35,473 11,636
Securities:
Available for sale, at fair value 376,073 392,903
Held to maturity, at amortized cost (fair value $27,074 in 2014 and $29,865 in 2013) 26,480 29,905
Total securities 402,553 422,808
Federal Home Loan Bank stock, at cost 37,730 37,730
Loans:
Commercial 1,390,373 1,363,335
Residential real estate 945,580 772,674
Consumer 338,094 326,875
Total loans 2,674,047 2,462,884
Less allowance for loan losses 27,768 27,886
Net loans 2,646,279 2,434,998
Premises and equipment, net 26,367 25,402
Investment in bank-owned life insurance 63,026 56,673
Goodwill 58,114 58,114
Identifiable intangible assets, net 5,004 5,493
Other assets 51,335 50,696
Total assets $3,415,882 $3,188,867
Liabilities:
Deposits:
Demand deposits $476,808 $440,785
NOW accounts 313,391 309,771
Money market accounts 833,318 666,646
Savings accounts 290,561 297,357
Time deposits 824,810 790,762
Total deposits 2,738,888 2,505,321
Federal Home Loan Bank advances 261,685 288,082
Junior subordinated debentures 22,681 22,681
Other liabilities 44,066 43,137
Total liabilities 3,067,320 2,859,221
Shareholders' Equity:
Common stock of $.0625 par value; authorized 30,000,000 shares; issued and outstanding 16,721,172 shares in 2014 and 16,613,561 shares in 2013 1,045 1,038
Paid-in capital 100,044 97,566
Retained earnings 247,052 232,595
Accumulated other comprehensive income (loss) 421 (1,553)
Total shareholders' equity 348,562 329,646
Total liabilities and shareholders' equity $3,415,882 $3,188,867
Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars and shares in thousands, except per share amounts) Three Months Nine Months
Periods ended September 30, 2014 2013 2014 2013
Interest income:
Interest and fees on loans $27,239 $26,096 $78,997 $76,832
Interest on securities: Taxable 2,397 2,582 8,038 8,003
Nontaxable 519 629 1,658 1,935
Dividends on Federal Home Loan Bank stock 140 36 420 113
Other interest income 36 47 99 99
Total interest and dividend income 30,331 29,390 89,212 86,982
Interest expense:
Deposits 3,317 3,064 9,406 9,354
Federal Home Loan Bank advances 1,832 2,693 5,831 8,109
Junior subordinated debentures 241 241 723 1,243
Other interest expense 3 4 10 12
Total interest expense 5,393 6,002 15,970 18,718
Net interest income 24,938 23,388 73,242 68,264
Provision for loan losses 600 700 1,350 2,000
Net interest income after provision for loan losses 24,338 22,688 71,892 66,264
Noninterest income:
Wealth management revenues 8,374 7,629 24,969 23,015
Merchant processing fees 3,359 1,291 7,949
Net gains on loan sales and commissions on loans originated for others 1,742 3,883 4,688 11,534
Service charges on deposit accounts 881 855 2,459 2,436
Card interchange fees 804 731 2,264 2,013
Income from bank-owned life insurance 468 464 1,354 1,392
Net gains on interest rate swap contracts 339 54 562 225
Equity in earnings (losses) of unconsolidated subsidiaries (63) (47) (213) (65)
Gain on sale of business line 6,265
Other income 580 472 1,670 1,233
Noninterest income, excluding other-than-temporary impairment losses 13,125 17,400 45,309 49,732
Total other-than-temporary impairment losses on securities (613)
Portion of loss recognized in other comprehensive income (before tax) (2,159)
Net impairment losses recognized in earnings (2,772)
Total noninterest income 13,125 17,400 45,309 46,960
Noninterest expense:
Salaries and employee benefits 14,516 14,640 43,845 45,624
Net occupancy 1,557 1,404 4,672 4,282
Equipment 1,211 1,222 3,682 3,658
Merchant processing costs 2,862 1,050 6,746
Outsourced services 1,138 878 3,197 2,590
Legal, audit and professional fees 494 529 1,710 1,691
FDIC deposit insurance costs 442 448 1,295 1,330
Advertising and promotion 368 312 1,140 1,143
Amortization of intangibles 161 170 489 516
Foreclosed property costs 27 38 48 222
Debt prepayment penalties 1,125 6,294 1,125
Other expenses 2,133 1,920 6,365 5,810
Total noninterest expense 22,047 25,548 73,787 74,737
Income before income taxes 15,416 14,540 43,414 38,487
Income tax expense 4,878 4,580 13,781 12,123
Net income $10,538 $9,960 $29,633 $26,364
Weighted average common shares outstanding - basic 16,714 16,563 16,673 16,473
Weighted average common shares outstanding - diluted 16,855 16,696 16,832 16,600
Per share information: Basic earnings per common share $0.63 $0.60 $1.77 $1.59
Diluted earnings per common share $0.62 $0.59 $1.75 $1.58
Cash dividends declared per share $0.32 $0.26 $0.90 $0.76
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
At or for the Quarters Ended
Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
(Dollars and shares in thousands, except per share amounts) 2014 2014 2014 2013 2013
Financial Data:
Total assets $3,415,882 $3,317,022 $3,194,146 $3,188,867 $3,131,958
Total loans 2,674,047 2,581,124 2,478,603 2,462,884 2,353,766
Total securities 402,553 355,392 389,889 422,808 419,349
Total deposits 2,738,888 2,586,097 2,591,654 2,505,321 2,454,831
Total shareholders' equity 348,562 343,450 335,858 329,646 323,585
Net interest income 24,938 24,468 23,836 23,521 23,388
Provision for loan losses 600 450 300 400 700
Noninterest income, excluding OTTI losses 13,125 12,814 19,370 15,837 17,400
Net OTTI losses recognized in earnings (717)
Noninterest expense 22,047 22,448 29,292 24,048 25,548
Income tax expense 4,878 4,587 4,316 4,404 4,580
Net income 10,538 9,797 9,298 9,789 9,960
Share Data:
Basic earnings per common share $0.63 $0.59 $0.56 $0.59 $0.60
Diluted earnings per common share $0.62 $0.58 $0.55 $0.58 $0.59
Dividends declared per share $0.32 $0.29 $0.29 $0.27 $0.26
Book value per share $20.85 $20.56 $20.19 $19.84 $19.51
Tangible book value per share - Non-GAAP (1) $17.07 $16.77 $16.38 $16.01 $15.66
Market value per share $32.99 $36.77 $37.47 $37.22 $31.43
Shares outstanding at end of period 16,721 16,705 16,635 16,614 16,589
Weighted average common shares outstanding - basic 16,714 16,678 16,626 16,602 16,563
Weighted average common shares outstanding - diluted 16,855 16,831 16,800 16,770 16,696
Key Ratios:
Return on average assets 1.25% 1.22% 1.17% 1.24% 1.29%
Return on average tangible assets - Non-GAAP (1) 1.27% 1.24% 1.20% 1.26% 1.31%
Return on average equity 12.15% 11.52% 11.10% 11.98% 12.82%
Return on average tangible equity - Non-GAAP (1) 14.86% 14.15% 13.70% 14.80% 16.13%
Tier 1 risk-based capital 12.16% (i) 12.13% 12.42% 12.12% 12.23%
Total risk-based capital 13.26% (i) 13.24% 13.56% 13.29% 13.44%
Tier 1 leverage ratio 9.35% (i) 9.62% 9.56% 9.41% 9.41%
Equity to assets 10.20% 10.35% 10.51% 10.34% 10.33%
Tangible equity to tangible assets - Non-GAAP (1) 8.51% 8.61% 8.70% 8.51% 8.47%
(i) - estimated
Wealth Management Revenues:
Trust and investment management fees $6,982 $6,828 $6,685 $6,637 $6,291
Mutual fund fees 1,100 1,086 1,081 1,104 1,075
Asset-based revenues 8,082 7,914 7,766 7,741 7,366
Transaction-based revenues 292 616 299 1,069 263
Total wealth management revenues $8,374 $8,530 $8,065 $8,810 $7,629
Wealth Management Assets Under Administration:
Balance at beginning of period $5,010,588 $4,806,381 $4,781,958 $4,595,594 $4,433,574
Net investment appreciation (depreciation) & income (29,199) 131,269 44,335 248,727 190,931
Net client cash flows 2,075 72,938 (19,912) (62,363) (28,911)
Balance at end of period $4,983,464 $5,010,588 $4,806,381 $4,781,958 $4,595,594
(1) See the section labeled "Supplemental Information - Non-GAAP Financial Measures" at the end of this document.
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
Nine Months Ended
Sep 30, Sep 30,
(Dollars and shares in thousands, except per share amounts) 2014 2013
Key Ratios:
Return on average assets 1.21% 1.15%
Return on average tangible assets - Non-GAAP (1) 1.24% 1.18%
Return on average equity 11.60% 11.54%
Return on average tangible equity - Non-GAAP (1) 14.24% 14.61%
Allowance for Loan Losses:
Balance at beginning of period $27,886 $30,873
Provision charged to earnings 1,350 2,000
Charge-offs (1,638) (5,319)
Recoveries 170 454
Balance at end of period $27,768 $28,008
Net Loan Charge-Offs (Recoveries):
Commercial mortgages $958 $4,524
Other commercial 328 132
Residential real estate mortgages 36 45
Consumer 146 164
Total $1,468 $4,865
Net charge-offs to average loans (annualized) 0.08% 0.27%
Wealth Management Revenues:
Trust and investment management fees $20,495 $18,587
Mutual fund fees 3,267 3,174
Asset-based revenues 23,762 21,761
Transaction-based revenues 1,207 1,254
Total wealth management revenues $24,969 $23,015
Wealth Management Assets Under Administration:
Balance at beginning of period $4,781,958 $4,199,640
Net investment appreciation & income 146,405 383,954
Net client cash flows 55,101 12,000
Balance at end of period $4,983,464 $4,595,594
(1) See the section labeled "Supplemental Information - Non-GAAP Financial Measures" at the end of this document.
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
For the Quarters Ended
Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
2014 2014 2014 2013 2013
Average Yield / Rate (taxable equivalent basis):
Assets:
Commercial loans 4.20% 4.35% 4.43% 4.52% 4.67%
Residential real estate loans, including mortgage loans held for sale 4.06% 4.12% 4.15% 4.09% 4.06%
Consumer loans 3.83% 3.81% 3.83% 3.77% 3.78%
Total loans 4.10% 4.20% 4.26% 4.28% 4.35%
Cash, federal funds sold and other short-term investments 0.19% 0.19% 0.23% 0.22% 0.21%
FHLBB stock 1.47% 1.47% 1.53% 0.37% 0.38%
Taxable debt securities 2.94% 3.36% 3.47% 3.40% 3.44%
Nontaxable debt securities 5.86% 5.92% 5.98% 5.88% 5.87%
Total securities 3.36% 3.74% 3.84% 3.78% 3.88%
Total interest-earning assets 3.89% 4.03% 4.08% 4.02% 4.12%
Liabilities:
Interest-bearing demand deposits —% —% —% —% —%
NOW accounts 0.06% 0.06% 0.06% 0.06% 0.06%
Money market accounts 0.41% 0.38% 0.36% 0.34% 0.31%
Savings accounts 0.06% 0.06% 0.06% 0.06% 0.06%
Time deposits 1.15% 1.14% 1.15% 1.19% 1.23%
FHLBB advances 2.57% 3.20% 3.37% 3.49% 3.25%
Junior subordinated debentures 4.22% 4.26% 4.31% 4.22% 4.22%
Other 7.88% 9.90% 7.03% 2.52% 4.50%
Total interest-bearing liabilities 0.84% 0.85% 0.93% 0.98% 1.01%
Interest rate spread (taxable equivalent basis) 3.05% 3.18% 3.15% 3.04% 3.11%
Net interest margin (taxable equivalent basis) 3.21% 3.35% 3.34% 3.24% 3.29%
At September 30, 2014
Amortized Unrealized Unrealized Fair
(Dollars in thousands) Cost (1) Gains Losses Value
Securities Available for Sale:
Obligations of U.S. government-sponsored enterprises $ 31,008 $— ($89) $ 30,919
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises 248,369 9,012 (160) 257,221
Obligations of states and political subdivisions 52,526 1,991 54,517
Individual name issuer trust preferred debt securities 30,743 (3,546) 27,197
Corporate bonds 6,122 104 (7) 6,219
Total securities available for sale 368,768 11,107 (3,802) 376,073
Held to Maturity:
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises 26,480 594 27,074
Total securities held to maturity 26,480 594 27,074
Total securities $ 395,248 $ 11,701 ($3,802) $ 403,147
(1) Net of other-than-temporary impairment losses recognized in earnings.
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
Period End Balances At
Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
(Dollars in thousands) 2014 2014 2014 2013 2013
Loans:
Commercial: Mortgages $766,703 $772,772 $788,836 $796,249 $727,375
Construction & development 58,750 38,574 24,696 36,289 51,951
Other 564,920 554,824 523,751 530,797 518,566
Total commercial 1,390,373 1,366,170 1,337,283 1,363,335 1,297,892
Residential real estate: Mortgages 912,956 846,187 784,623 749,163 711,427
Homeowner construction 32,624 30,452 25,770 23,511 20,265
Total residential real estate 945,580 876,639 810,393 772,674 731,692
Consumer: Home equity lines 240,567 237,390 233,728 231,362 227,063
Home equity loans 46,455 45,632 41,991 40,212 41,158
Other 51,072 55,293 55,208 55,301 55,961
Total consumer 338,094 338,315 330,927 326,875 324,182
Total loans $2,674,047 $2,581,124 $2,478,603 $2,462,884 $2,353,766
At September 30, 2014
(Dollars in thousands) Balance % of Total
Commercial Real Estate Loans by Property Location:
Rhode Island, Connecticut, Massachusetts $778,746 94.4%
New York, New Jersey 38,131 4.6%
New Hampshire 8,576 1.0%
Total commercial real estate loans (1) $825,453 100.0%
(1) Commercial real estate loans consist of commercial mortgages and construction and development loans. Commercial mortgages are loans secured by income producing property.
At September 30, 2014
(Dollars in thousands) Balance % of Total
Residential Mortgages by Property Location:
Rhode Island, Connecticut, Massachusetts $926,029 98.1%
New Hampshire 9,522 1.0%
New York, Virginia, New Jersey, Maryland, Pennsylvania 5,138 0.5%
Ohio 2,025 0.2%
Washington, Oregon 1,337 0.1%
Georgia 1,067 0.1%
New Mexico 462 —%
Total residential mortgages $945,580 100.0%
Period End Balances At
Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
(Dollars in thousands) 2014 2014 2014 2013 2013
Deposits:
Demand deposits $476,808 $411,586 $445,570 $440,785 $420,075
NOW accounts 313,391 314,060 311,461 309,771 301,250
Money market accounts 833,318 772,084 704,434 666,646 623,631
Savings accounts 290,561 292,112 293,322 297,357 292,765
Time deposits 824,810 796,255 836,867 790,762 817,110
Total deposits $2,738,888 $2,586,097 $2,591,654 $2,505,321 $2,454,831
Out-of-market brokered certificates of deposits included in time deposits $211,222 $171,216 $171,275 $98,009 $106,231
In-market deposits, excluding out-of-market brokered certificates of deposit $2,527,666 $2,414,881 $2,420,379 $2,407,312 $2,348,600
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
Period End Balances At
Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
(Dollars in thousands) 2014 2014 2014 2013 2013
Asset Quality Data:
Nonperforming Assets:
Commercial mortgages $6,022 $2,290 $2,293 $7,492 $8,956
Commercial construction and development
Other commercial 1,326 1,615 1,198 1,291 1,248
Residential real estate mortgages 7,890 7,417 8,975 8,315 8,095
Consumer 1,727 1,213 1,108 1,204 1,204
Total nonaccrual loans 16,965 12,535 13,574 18,302 19,503
Nonaccrual investment securities 547 425
Property acquired through foreclosure or repossession 988 1,309 750 932 594
Total nonperforming assets $17,953 $13,844 $14,324 $19,781 $20,522
Total past due loans to total loans 0.75% 0.82% 0.73% 0.89% 1.02%
Nonperforming assets to total assets 0.53% 0.42% 0.45% 0.62% 0.66%
Nonaccrual loans to total loans 0.63% 0.49% 0.55% 0.74% 0.83%
Allowance for loan losses to nonaccrual loans 163.68% 217.54% 199.23% 152.37% 143.61%
Allowance for loan losses to total loans 1.04% 1.06% 1.09% 1.13% 1.19%
Troubled Debt Restructured Loans:
Accruing troubled debt restructured loans:
Commercial mortgages $9,677 $22,603 $22,796 $22,800 $23,892
Other commercial 1,036 969 989 1,265 1,576
Residential real estate mortgages 1,258 1,459 1,467 1,442 870
Consumer 164 167 233 236 239
Accruing troubled debt restructured loans 12,135 25,198 25,485 25,743 26,577
Nonaccrual troubled debt restructured loans:
Commercial mortgages 4,898
Other commercial 854 872 369 542 547
Residential real estate mortgages 441 448 447
Consumer 29 38 40
Nonaccrual troubled debt restructured loans 6,193 1,320 845 580 587
Total troubled debt restructured loans $18,328 $26,518 $26,330 $26,323 $27,164
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
Period End Balances At
Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
(Dollars in thousands) 2014 2014 2014 2013 2013
Past Due Loans:
Loans 30-59 Days Past Due:
Commercial mortgages $— $311 $— $— $—
Other commercial loans 1,129 1,785 3,351 276 2,648
Residential real estate mortgages 2,582 5,249 2,232 4,040 2,624
Consumer loans 1,677 1,889 1,365 1,322 1,013
Loans 30-59 days past due $5,388 $9,234 $6,948 $5,638 $6,285
Loans 60-89 Days Past Due:
Commercial mortgages $— $1,583 $15 $— $730
Other commercial loans 314 773 127 302 8
Residential real estate mortgages 2,001 855 1,265 1,285 1,960
Consumer loans 356 1,102 658 166 328
Loans 60-89 days past due $2,671 $4,313 $2,065 $1,753 $3,026
Loans 90 Days or more Past Due:
Commercial mortgages $5,995 $2,250 $2,238 $7,492 $8,226
Other commercial loans 970 417 428 731 929
Residential real estate mortgages 3,922 4,335 5,634 5,633 4,843
Consumer loans 989 512 701 656 693
Loans 90 days or more past due $11,876 $7,514 $9,001 $14,512 $14,691
Total Past Due Loans:
Commercial mortgages $5,995 $4,144 $2,253 $7,492 $8,956
Other commercial loans 2,413 2,975 3,906 1,309 3,585
Residential real estate mortgages 8,505 10,439 9,131 10,958 9,427
Consumer loans 3,022 3,503 2,724 2,144 2,034
Total past due loans $19,935 $21,061 $18,014 $21,903 $24,002
Accruing loans 90 days or more past due $— $— $— $— $—
Nonaccrual loans included in past due loans $14,364 $10,432 $11,487 $15,591 $17,275
For the Quarters Ended
Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
(Dollars in thousands) 2014 2014 2014 2013 2013
Allowance for Loan Losses:
Balance at beginning of period $27,269 $27,043 $27,886 $28,008 $27,884
Provision charged to earnings 600 450 300 400 700
Charge-offs (148) (267) (1,223) (703) (770)
Recoveries 47 43 80 181 194
Balance at end of period $27,768 $27,269 $27,043 $27,886 $28,008
Net Loan Charge-Offs (Recoveries):
Commercial mortgages ($7) $26 $939 $309 $602
Other commercial 63 95 170 73 (2)
Residential real estate mortgages (1) 30 7 80
Consumer 46 73 27 60 (24)
Total $101 $224 $1,143 $522 $576
The following tables present average balance and interest rate information. Tax-exempt income is converted to a fully taxable equivalent basis using the statutory federal income tax rate adjusted for applicable state income taxes, net of the related federal tax benefit. For dividends on corporate stocks, the 70% federal dividends received deduction is also used in the calculation of tax equivalency. Unrealized gains (losses) on available for sale securities are excluded from the average balance and yield calculations. Nonaccrual and renegotiated loans, as well as interest earned on these loans (to the extent recognized in the Consolidated Statements of Income) are included in amounts presented for loans.
Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS (unaudited)
Three Months Ended
September 30, 2014 June 30, 2014 September 30, 2013
Yield/ Yield/ Yield/
(Dollars in thousands) Average Balance Interest Rate Average Balance Interest Rate Average Balance Interest Rate
Assets:
Commercial loans $1,380,229 $14,624 4.20% $1,339,310 $14,509 4.35% $1,297,705 $15,274 4.67%
Residential real estate loans, including loans held for sale 946,738 9,685 4.06% 856,955 8,811 4.12% 780,323 7,991 4.06%
Consumer loans 337,598 3,259 3.83% 333,881 3,171 3.81% 323,398 3,083 3.78%
Total loans 2,664,565 27,568 4.10% 2,530,146 26,491 4.20% 2,401,426 26,348 4.35%
Cash, federal funds sold and short-term investments 74,569 36 0.19% 59,507 28 0.19% 87,048 47 0.21%
FHLBB stock 37,730 140 1.47% 37,730 138 1.47% 37,730 36 0.38%
Taxable debt securities 323,140 2,397 2.94% 322,418 2,699 3.36% 297,532 2,582 3.44%
Nontaxable debt securities 53,374 789 5.86% 57,422 847 5.92% 64,836 960 5.87%
Total securities 376,514 3,186 3.36% 379,840 3,546 3.74% 362,368 3,542 3.88%
Total interest-earning assets 3,153,378 30,930 3.89% 3,007,223 30,203 4.03% 2,888,572 29,973 4.12%
Noninterest-earning assets 216,945 207,426 209,656
Total assets $3,370,323 $3,214,649 $3,098,228
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits $12,862 $— —% $9,067 $— —% $6,688 $— —%
NOW accounts 311,077 47 0.06% 311,948 47 0.06% 293,634 45 0.06%
Money market accounts 798,273 830 0.41% 759,704 713 0.38% 591,860 456 0.31%
Savings accounts 291,386 46 0.06% 291,671 45 0.06% 295,821 47 0.06%
Time deposits 827,267 2,394 1.15% 813,558 2,315 1.14% 811,850 2,516 1.23%
FHLBB advances 283,219 1,832 2.57% 220,088 1,758 3.20% 328,705 2,693 3.25%
Junior subordinated debentures 22,681 241 4.22% 22,681 241 4.26% 22,681 241 4.22%
Other 151 3 7.88% 162 4 9.90% 353 4 4.50%
Total interest-bearing liabilities 2,546,916 5,393 0.84% 2,428,879 5,123 0.85% 2,351,592 6,002 1.01%
Demand deposits 439,353 409,851 384,665
Other liabilities 37,217 35,684 51,186
Shareholders' equity 346,837 340,235 310,785
Total liabilities and shareholders' equity $3,370,323 $3,214,649 $3,098,228
Net interest income (FTE) $25,537 $25,080 $23,971
Interest rate spread 3.05% 3.18% 3.11%
Net interest margin 3.21% 3.35% 3.29%
Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:
(Dollars in thousands) Three Months Ended
Sep 30,
2014
Jun 30,
2014
Sep 30,
2013
Commercial loans $329 $322 $252
Nontaxable debt securities 270 290 331
Total $599 $612 $583
Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS (unaudited)
Nine Months Ended
September 30, 2014 September 30, 2013
Yield/ Yield/
(Dollars in thousands) Average Balance Interest Rate Average Balance Interest Rate
Assets:
Commercial loans $1,352,271 $43,733 4.32% $1,277,753 $44,443 4.65%
Residential real estate loans, including loans held for sale 869,230 26,704 4.11% 766,162 23,805 4.15%
Consumer loans 333,127 9,527 3.82% 323,871 9,226 3.81%
Total loans 2,554,628 79,964 4.19% 2,367,786 77,474 4.37%
Cash, federal funds sold and short-term investments 65,486 99 0.20% 61,945 99 0.21%
FHLBB stock 37,730 420 1.49% 38,409 113 0.39%
Taxable debt securities 329,779 8,038 3.26% 304,854 8,003 3.51%
Nontaxable debt securities 56,894 2,520 5.92% 66,444 2,949 5.93%
Total securities 386,673 10,558 3.65% 371,298 10,952 3.94%
Total interest-earning assets 3,044,517 91,041 4.00% 2,839,438 88,638 4.17%
Noninterest-earning assets 209,286 211,108
Total assets $3,253,803 $3,050,546
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits $10,906 $— —% $2,299 $— —%
NOW accounts 309,101 141 0.06% 288,871 135 0.06%
Money market accounts 748,121 2,152 0.38% 541,160 1,189 0.29%
Savings accounts 291,949 136 0.06% 287,360 139 0.06%
Time deposits 812,871 6,977 1.15% 841,418 7,891 1.25%
FHLBB advances 257,814 5,831 3.02% 333,544 8,109 3.25%
Junior subordinated debentures 22,681 723 4.26% 28,988 1,243 5.73%
Other 162 10 8.25% 565 12 2.84%
Total interest-bearing liabilities 2,453,605 15,970 0.87% 2,324,205 18,718 1.08%
Demand deposits 424,120 370,508
Other liabilities 35,335 51,250
Shareholders' equity 340,743 304,583
Total liabilities and shareholders' equity $3,253,803 $3,050,546
Net interest income (FTE) $75,071 $69,920
Interest rate spread 3.13% 3.09%
Net interest margin 3.30% 3.29%
Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:
(Dollars in thousands) Nine Months Ended
Sep 30,
2014
Sep 30,
2013
Commercial loans $967 $642
Nontaxable debt securities 862 1,014
Total $1,829 $1,656
Washington Trust Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION - Non-GAAP Financial Measures (unaudited)
At or for the Quarters Ended
Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
(Dollars in thousands, except per share amounts) 2014 2014 2014 2013 2013
Calculation of Tangible Book Value per Share:
Total shareholders' equity at end of period $348,562 $343,450 $335,858 $329,646 $323,585
Less:
Goodwill 58,114 58,114 58,114 58,114 58,114
Identifiable intangible assets, net 5,004 5,165 5,329 5,493 5,657
Total tangible shareholders' equity at end of period $285,444 $280,171 $272,415 $266,039 $259,814
Shares outstanding at end of period 16,721 16,705 16,635 16,614 16,589
Book value per share - GAAP $20.85 $20.56 $20.19 $19.84 $19.51
Tangible book value per share - Non-GAAP $17.07 $16.77 $16.38 $16.01 $15.66
Calculation of Tangible Equity to Tangible Assets:
Total tangible shareholders' equity at end of period $285,444 $280,171 $272,415 $266,039 $259,814
Total assets at end of period $3,415,882 $3,317,022 $3,194,146 $3,188,867 $3,131,958
Less:
Goodwill 58,114 58,114 58,114 58,114 58,114
Identifiable intangible assets, net 5,004 5,165 5,329 5,493 5,657
Total tangible assets at end of period $3,352,764 $3,253,743 $3,130,703 $3,125,260 $3,068,187
Equity to assets - GAAP 10.20% 10.35% 10.51% 10.34% 10.33%
Tangible equity to tangible assets - Non-GAAP 8.51% 8.61% 8.70% 8.51% 8.47%
Calculation of Return on Average Tangible Assets:
Net income $10,538 $9,797 $9,298 $9,789 $9,960
Total average assets $3,370,323 $3,214,649 $3,174,281 $3,163,042 $3,098,228
Less:
Average goodwill 58,114 58,114 58,114 58,114 58,114
Average identifiable intangible assets, net 5,082 5,245 5,410 5,573 5,739
Total average tangible assets $3,307,127 $3,151,290 $3,110,757 $3,099,355 $3,034,375
Return on average assets - GAAP 1.25% 1.22% 1.17% 1.24% 1.29%
Return on average tangible assets - Non-GAAP 1.27% 1.24% 1.20% 1.26% 1.31%
Calculation of Return on Average Tangible Equity:
Net income $10,538 $9,797 $9,298 $9,789 $9,960
Total average shareholders' equity $346,837 $340,235 $335,029 $326,866 $310,785
Less:
Average goodwill 58,114 58,114 58,114 58,114 58,114
Average identifiable intangible assets, net 5,082 5,245 5,410 5,573 5,739
Total average tangible shareholders' equity $283,641 $276,876 $271,505 $263,179 $246,932
Return on average shareholders' equity - GAAP 12.15% 11.52% 11.10% 11.98% 12.82%
Return on average tangible shareholders' equity - Non-GAAP 14.86% 14.15% 13.70% 14.80% 16.13%
Washington Trust Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION - Non-GAAP Financial Measures (unaudited)
Nine Months Ended
Sep 30, Sep 30,
(Dollars in thousands) 2014 2013
Calculation of return on average tangible assets:
Net income $29,633 $26,364
Total average assets $3,253,803 $3,050,546
Less:
Average goodwill 58,114 58,114
Average identifiable intangible assets, net 5,244 5,911
Total average tangible assets $3,190,445 $2,986,521
Return on average assets - GAAP 1.21% 1.15%
Return on average tangible assets - Non-GAAP 1.24% 1.18%
Calculation of return on average tangible equity:
Net income $29,633 $26,364
Total average shareholders' equity $340,743 $304,583
Less:
Average goodwill 58,114 58,114
Average identifiable intangible assets, net 5,244 5,911
Total average tangible shareholders' equity $277,385 $240,558
Return on average shareholders' equity - GAAP 11.60% 11.54%
Return on average tangible shareholders' equity - Non-GAAP 14.24% 14.61%

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

Source:Washington Trust Bancorp, Inc.