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Washington Trust Reports Record Fourth Quarter and 2014 Earnings

WESTERLY, R.I., Jan. 28, 2015 (GLOBE NEWSWIRE) -- Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced net income of $11.2 million, or 66 cents per diluted share, for the fourth quarter of 2014. Net income was up by 6% from the $10.5 million, or 62 cents per diluted share, reported for the previous quarter.

Net income for the year ended December 31, 2014 totaled $40.8 million, or $2.41 per diluted share. Full-year net income increased by $4.7 million, or 13%, from the amounts reported for 2013.

"Washington Trust posted excellent fourth quarter and full-year results," stated Joseph J. MarcAurele, Chairman and Chief Executive Officer. "In 2014, we opened a mortgage office in Darien, CT, a branch in Johnston, RI, and announced plans to open a branch in Rumford, RI in early 2015. Our ability to bring our unique brand into new markets, while consistently delivering quality products and local, personal service has been a key part of our continued success."

Selected highlights for the fourth quarter of 2014 include:

  • Fourth quarter net income and earnings per share results were both record highs for Washington Trust.
  • Returns on average equity and average assets were 12.68% and 1.27%, respectively. Comparable amounts for the third quarter of 2014 were 12.15% and 1.25%, respectively.
  • Loans totaled $2.86 billion at December 31, 2014, up by 7% from September 30, 2014 and up by 16% from December 31, 2013.

Net Interest Income

Net interest income totaled $26.3 million for the fourth quarter of 2014, up by $1.3 million, or 5%, from the $24.9 million reported for the third quarter of 2014. The net interest margin was 3.23% for the fourth quarter of 2014, compared to 3.21% for the third quarter of 2014. Included in net interest income was commercial loan prepayment penalty fee income of $445 thousand in the fourth quarter of 2014, compared to a minimal amount of such fee income in the previous quarter. Excluding the loan prepayment penalty fees, the net interest margin was 3.18% for the fourth quarter, down by 3 basis points on a linked quarter basis. Other significant linked quarter changes included:

  • Average interest-earning assets increased by $153.0 million, reflecting growth in average commercial and residential loan balances. The yield on interest-earning assets, excluding the contribution of 6 basis points from the loan prepayment penalty fees, was 3.85% for the fourth quarter. The 4 basis point decline from the previous quarter was primarily due to lower rates on loan originations and payoffs of higher yielding loans.
  • Average interest-bearing liabilities increased by $121.5 million, with growth in average wholesale funding balances and average interest-bearing deposits. The cost of funds remained unchanged from the previous quarter.

Noninterest Income

Noninterest income totaled $13.7 million for the fourth quarter of 2014, up by $581 thousand, or 4%, from $13.1 million for the third quarter of 2014. Included in noninterest income were the following:

  • Wealth management revenues totaled $8.4 million for the fourth quarter of 2014, up modestly on a linked quarter basis. Wealth management assets under administration amounted to $5.070 billion at December 31, 2014, up by $86.5 million, or 2%, from September 30, 2014.
  • Net gains on loan sales and commissions on loans originated for others totaled $2.1 million for the fourth quarter of 2014, up by $372 thousand, or 21%, on a linked quarter basis. Residential mortgage loans sold to the secondary market amounted to $99.4 million in the fourth quarter, up by $19.3 million from the previous quarter.
  • Net gains on interest rate swap contracts amounted to $574 thousand for the fourth quarter of 2014, up by $235 thousand, or 69%, from the previous quarter, due to an increase in customer-related interest rate swap transactions in the fourth quarter of 2014. Net gains on interest rate swaps for the fourth quarter of 2014 were approximately $387 thousand higher than the average amount of net gains recognized for each of the first three quarters of 2014.

Noninterest Expenses

Noninterest expenses totaled $23.1 million for the fourth quarter of 2014, up by $1.0 million, or 5%, from $22.0 million for the third quarter of 2014. Included in noninterest expenses in the fourth quarter of 2014 was a charitable contribution expense of $400 thousand (classified in other expenses); there was no such expense in the previous quarter. The remaining linked quarter change was primarily due to an increase of $312 thousand in profit-based incentives and an increase of $148 thousand in outsourced services largely associated with customer-related interest rate swaps executed in the period.

Income tax expense amounted to $5.2 million for the fourth quarter of 2014, up by $340 thousand, or 7%, from $4.9 million for the third quarter of 2014. The effective tax rate for the fourth quarter of 2014 was 31.8%, compared to 31.6% from the third 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 32.0% for 2015.

Asset Quality

Asset quality metrics remained strong and continued to improve. Total nonaccrual loans amounted to $15.9 million, or 0.56% of total loans, at December 31, 2014, down from $17.0 million, or 0.63%, at September 30, 2014. Total past due loans amounted to $18.1 million, or 0.63% of total loans, at December 31, 2014, down from $19.9 million, or 0.75% of total loans, at September 30, 2014. Loans classified as troubled debt restructurings amounted to $18.4 million at December 31, 2014, compared to $18.3 million at the end of the previous quarter.

The loan loss provision charged to earnings in the fourth quarter of 2014 totaled $500 thousand, down from $600 thousand in the third quarter of 2014. Net charge-offs amounted to $245 thousand in the fourth quarter of 2014, compared to $101 thousand in the third quarter of 2014. Net charge-offs as a percentage of average loans was 0.07% on an annualized basis for 2014, down from 0.23% for 2013. The allowance for loan losses was $28.0 million, or 0.98% of total loans, at December 31, 2014, compared to $27.8 million, or 1.04% of total loans, at September 30, 2014. The decline in this ratio is consistent with the stable and favorable trends in asset and credit quality metrics.

Loans

In the latest quarter, Washington Trust achieved solid loan growth in the southern New England market. Total loans amounted to $2.86 billion at December 31, 2014, up by $185.2 million, or 7%, from the balance at September 30, 2014.

  • Total commercial loans increased by $145.1 million, or 10%, with growth in both commercial real estate and commercial and industrial loans.
  • The residential real estate loan portfolio grew by $39.8 million, or 4%.
  • Consumer loans increased slightly by $279 thousand, or 0.1%.

Investment Securities

The securities portfolio amounted to $382.9 million, or 11% of total assets, at December 31, 2014, down from $402.6 million, or 12%, at September 30, 2014. The decrease of $19.7 million was due to principal payments received on mortgage-backed securities and maturities and calls of state and political subdivision debt securities.

Deposits and Borrowings

Deposits totaled $2.75 billion at December 31, 2014, up by $15.9 million, or 1%, from the balance at September 30, 2014. This increase included an $87.9 million increase in wholesale brokered time deposits. Excluding wholesale brokered time deposits, in-market deposits decreased by $72.0 million, or 3%.

  • In-market time deposits decreased by $38.6 million, or 6%.
  • Demand deposits decreased by $17.0 million, or 4%, while NOW account balances increased by $13.0 million, or 4%.
  • Money market and savings account balances decreased by $29.4 million, or 3%.

FHLBB advances amounted to $406.3 million at December 31, 2014, up by $144.6 million from September 30, 2014.

Capital Management and Dividends

Capital levels at December 31, 2014 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.56% at December 31, 2014, compared to 13.26% at September 30, 2014. Total shareholder's equity was $346.3 million at December 31, 2014, down by $2.3 million from September 30, 2014. A charge of $8.9 million to the accumulated other comprehensive income component of shareholders' equity was recorded at December 31, 2014 associated with the annual measurement of defined benefit pension liabilities. This charge was largely due to the adoption of new mortality assumptions recently issued by the Society of Actuaries, as well as a decline in the discount rate used to measure the present value of pension liabilities as a result of a reduction in market interest rates in 2014.

The Board of Directors declared a quarterly dividend of 32 cents per share for the quarter ended December 31, 2014. The dividend was paid on January 14, 2015 to shareholders of record on January 2, 2015.

Conference Call

Washington Trust will host a conference call to discuss fourth quarter results, business highlights and outlook on Thursday, January 29, 2015 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 13598651; the audio replay will be available through February 8, 2015. 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, 2015.

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 state-chartered 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: 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 Washington Trust'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)
Dec 31, Dec 31,
(Dollars in thousands, except par value) 2014 2013
Assets:
Cash and due from banks $76,386 $81,939
Short-term investments 3,964 3,378
Mortgage loans held for sale (including $30,321 in 2014 and $11,636 in 2013 measured at fair value) 45,693 11,636
Securities:
Available for sale, at fair value 357,662 392,903
Held to maturity, at amortized cost (fair value $26,008 in 2014 and $29,865 in 2013) 25,222 29,905
Total securities 382,884 422,808
Federal Home Loan Bank stock, at cost 37,730 37,730
Loans:
Commercial 1,535,488 1,363,335
Residential real estate 985,415 772,674
Consumer 338,373 326,875
Total loans 2,859,276 2,462,884
Less allowance for loan losses 28,023 27,886
Net loans 2,831,253 2,434,998
Premises and equipment, net 27,495 25,402
Investment in bank-owned life insurance 63,519 56,673
Goodwill 58,114 58,114
Identifiable intangible assets, net 4,849 5,493
Other assets 54,987 50,696
Total assets $3,586,874 $3,188,867
Liabilities:
Deposits:
Demand deposits $459,852 $440,785
NOW accounts 326,375 309,771
Money market accounts 802,764 666,646
Savings accounts 291,725 297,357
Time deposits 874,102 790,762
Total deposits 2,754,818 2,505,321
Federal Home Loan Bank advances 406,297 288,082
Junior subordinated debentures 22,681 22,681
Other liabilities 56,799 43,137
Total liabilities 3,240,595 2,859,221
Shareholders' Equity:
Common stock of $.0625 par value; authorized 30,000,000 shares; issued and outstanding 16,746,363 shares in 2014 and 16,613,561 shares in 2013 1,047 1,038
Paid-in capital 101,204 97,566
Retained earnings 252,837 232,595
Accumulated other comprehensive loss (8,809) (1,553)
Total shareholders' equity 346,279 329,646
Total liabilities and shareholders' equity $3,586,874 $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 Twelve Months
Periods ended December 31, 2014 2013 2014 2013
Interest income:
Interest and fees on loans $28,845 $25,649 $107,842 $102,481
Interest on securities: Taxable 2,399 3,005 10,437 11,008
Nontaxable 491 618 2,149 2,553
Dividends on Federal Home Loan Bank stock 141 35 561 148
Other interest income 29 59 128 158
Total interest and dividend income 31,905 29,366 121,117 116,348
Interest expense:
Deposits 3,531 3,066 12,937 12,420
Federal Home Loan Bank advances 1,867 2,534 7,698 10,643
Junior subordinated debentures 241 241 964 1,484
Other interest expense 3 4 13 16
Total interest expense 5,642 5,845 21,612 24,563
Net interest income 26,263 23,521 99,505 91,785
Provision for loan losses 500 400 1,850 2,400
Net interest income after provision for loan losses 25,763 23,121 97,655 89,385
Noninterest income:
Wealth management revenues 8,409 8,810 33,378 31,825
Merchant processing fees 2,271 1,291 10,220
Net gains on loan sales and commissions on loans originated for others 2,114 1,551 6,802 13,085
Service charges on deposit accounts 936 820 3,395 3,256
Card interchange fees 793 775 3,057 2,788
Income from bank-owned life insurance 492 458 1,846 1,850
Net gains on interest rate swap contracts 574 726 1,136 951
Equity in earnings (losses) of unconsolidated subsidiaries (63) (42) (276) (107)
Gain on sale of business line 6,265
Other income 451 468 2,121 1,701
Noninterest income, excluding other-than-temporary impairment losses 13,706 15,837 59,015 65,569
Total other-than-temporary impairment losses on securities 319 (294
Portion of loss recognized in other comprehensive income (before tax) (1,036) (3,195)
Net impairment losses recognized in earnings (717) (3,489)
Total noninterest income 13,706 15,120 59,015 62,080
Noninterest expense:
Salaries and employee benefits 14,685 14,428 58,530 60,052
Net occupancy 1,640 1,487 6,312 5,769
Equipment 1,221 1,189 4,903 4,847
Merchant processing costs 1,936 1,050 8,682
Outsourced services 1,286 1,072 4,483 3,662
Legal, audit and professional fees 626 639 2,336 2,330
FDIC deposit insurance costs 467 431 1,762 1,761
Advertising and promotion 406 321 1,546 1,464
Amortization of intangibles 155 164 644 680
Foreclosed property costs (5) 36 43 258
Debt prepayment penalties 6,294 1,125
Other expenses 2,579 2,345 8,944 8,155
Total noninterest expense 23,060 24,048 96,847 98,785
Income before income taxes 16,409 14,193 59,823 52,680
Income tax expense 5,218 4,404 18,999 16,527
Net income $11,191 $9,789 $40,824 $36,153
Weighted average common shares outstanding - basic 16,735 16,602 16,689 16,506
Weighted average common shares outstanding - diluted 16,911 16,770 16,872 16,664
Per share information: Basic earnings per common share $0.67 $0.59 $2.44 $2.18
Diluted earnings per common share $0.66 $0.58 $2.41 $2.16
Cash dividends declared per share $0.32 $0.27 $1.22 $1.03
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
At or for the Quarters Ended
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
(Dollars and shares in thousands, except per share amounts) 2014 2014 2014 2014 2013
Financial Data:
Total assets $3,586,874 $3,415,882 $3,317,022 $3,194,146 $3,188,867
Total loans 2,859,276 2,674,047 2,581,124 2,478,603 2,462,884
Total securities 382,884 402,553 355,392 389,889 422,808
Total deposits 2,754,818 2,738,888 2,586,097 2,591,654 2,505,321
Total shareholders' equity 346,279 348,562 343,450 335,858 329,646
Net interest income 26,263 24,938 24,468 23,836 23,521
Provision for loan losses 500 600 450 300 400
Noninterest income, excluding OTTI losses 13,706 13,125 12,814 19,370 15,837
Net OTTI losses recognized in earnings (717)
Noninterest expense 23,060 22,047 22,448 29,292 24,048
Income tax expense 5,218 4,878 4,587 4,316 4,404
Net income 11,191 10,538 9,797 9,298 9,789
Share Data:
Basic earnings per common share $0.67 $0.63 $0.59 $0.56 $0.59
Diluted earnings per common share $0.66 $0.62 $0.58 $0.55 $0.58
Dividends declared per share $0.32 $0.32 $0.29 $0.29 $0.27
Book value per share $20.68 $20.85 $20.56 $20.19 $19.84
Tangible book value per share - Non-GAAP (1) $16.92 $17.07 $16.77 $16.38 $16.01
Market value per share $40.18 $32.99 $36.77 $37.47 $37.22
Shares outstanding at end of period 16,746 16,721 16,705 16,635 16,614
Weighted average common shares outstanding - basic 16,735 16,714 16,678 16,626 16,602
Weighted average common shares outstanding - diluted 16,911 16,855 16,831 16,800 16,770
Key Ratios:
Return on average assets 1.27% 1.25% 1.22% 1.17% 1.24%
Return on average tangible assets - Non-GAAP (1) 1.29% 1.27% 1.24% 1.20% 1.26%
Return on average equity 12.68% 12.15% 11.52% 11.10% 11.98%
Return on average tangible equity - Non-GAAP (1) 15.44% 14.86% 14.15% 13.70% 14.80%
Tier 1 risk-based capital 11.52% (i) 12.15% 12.24% 12.42% 12.12%
Total risk-based capital 12.56% (i) 13.26% 13.36% 13.56% 13.29%
Tier 1 leverage ratio 9.14% (i) 9.35% 9.62% 9.56% 9.41%
Equity to assets 9.65% 10.2% 10.35% 10.51% 10.34%
Tangible equity to tangible assets - Non-GAAP (1) 8.04% 8.51% 8.61% 8.70% 8.51%
(i) - estimated
Wealth Management Revenues:
Trust and investment management fees $7,059 $6,982 $6,828 $6,685 $6,637
Mutual fund fees 1,068 1,100 1,086 1,081 1,104
Asset-based revenues 8,127 8,082 7,914 7,766 7,741
Transaction-based revenues 282 292 616 299 1,069
Total wealth management revenues $8,409 $8,374 $8,530 $8,065 $8,810
Wealth Management Assets Under Administration:
Balance at beginning of period $4,983,464 $5,010,588 $4,806,381 $4,781,958 $4,595,594
Net investment appreciation (depreciation) & income 111,715 (29,199) 131,269 44,335 248,727
Net client cash flows (25,213) 2,075 72,938 (19,912) (62,363)
Balance at end of period $5,069,966 $4,983,464 $5,010,588 $4,806,381 $4,781,958
(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)
Twelve Months Ended
Dec 31, Dec 31,
(Dollars in thousands) 2014 2013
Key Ratios:
Return on average assets 1.23% 1.17%
Return on average tangible assets - Non-GAAP (1) 1.25% 1.20%
Return on average equity 11.87% 11.65%
Return on average tangible equity - Non-GAAP (1) 14.55% 14.68%
Allowance for Loan Losses:
Balance at beginning of period $27,886 $30,873
Provision charged to earnings 1,850 2,400
Charge-offs (1,949) (6,022)
Recoveries 236 635
Balance at end of period $28,023 $27,886
Net Loan Charge-Offs (Recoveries):
Commercial mortgages $953 $4,833
Commercial & industrial 472 205
Residential real estate mortgages 81 125
Consumer 207 224
Total $1,713 $5,387
Net charge-offs to average loans (annualized) 0.07% 0.23%
Wealth Management Revenues:
Trust and investment management fees $27,554 $25,224
Mutual fund fees 4,335 4,278
Asset-based revenues 31,889 29,502
Transaction-based revenues 1,489 2,323
Total wealth management revenues $33,378 $31,825
Wealth Management Assets Under Administration:
Balance at beginning of period $4,781,958 $4,199,640
Net investment appreciation & income 258,120 632,681
Net client cash flows 29,888 (50,363)
Balance at end of period $5,069,966 $4,781,958
(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
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
2014 2014 2014 2014 2013
Average Yield / Rate (taxable equivalent basis):
Assets:
Commercial loans 4.23% 4.20% 4.35% 4.43% 4.52%
Residential real estate loans, including mortgage loans held for sale 4.06% 4.06% 4.12% 4.15% 4.09%
Consumer loans 3.79% 3.83% 3.81% 3.83% 3.77%
Total loans 4.12% 4.10% 4.20% 4.26% 4.28%
Cash, federal funds sold and other short-term investments 0.18% 0.19% 0.19% 0.23% 0.22%
FHLBB stock 1.48% 1.47% 1.47% 1.53% 0.37%
Taxable debt securities 2.83% 2.94% 3.36% 3.47% 3.40%
Nontaxable debt securities 5.87% 5.86% 5.92% 5.98% 5.88%
Total securities 3.22% 3.36% 3.74% 3.84% 3.78%
Total interest-earning assets 3.91% 3.89% 4.03% 4.08% 4.02%
Liabilities:
Interest-bearing demand deposits —% —% —% —% —%
NOW accounts 0.06% 0.06% 0.06% 0.06% 0.06%
Money market accounts 0.43% 0.41% 0.38% 0.36% 0.34%
Savings accounts 0.06% 0.06% 0.06% 0.06% 0.06%
Time deposits (in-market) 1.14% 1.17% 1.16% 1.16% 1.20%
Wholesale brokered time deposits 1.23% 1.09% 1.05% 1.12% 1.13%
FHLBB advances 2.28% 2.57% 3.20% 3.37% 3.49%
Junior subordinated debentures 4.22% 4.22% 4.26% 4.31% 4.22%
Other 8.50% 7.88% 9.90% 7.03% 2.52%
Total interest-bearing liabilities 0.84% 0.84% 0.85% 0.93% 0.98%
Interest rate spread (taxable equivalent basis) 3.07% 3.05% 3.18% 3.15% 3.04%
Net interest margin (taxable equivalent basis) 3.23% 3.21% 3.35% 3.34% 3.24%
At December 31, 2014
Amortized Unrealized Unrealized Fair
(Dollars in thousands) Cost (1) Gains Losses Value
Securities Available for Sale:
Obligations of U.S. government-sponsored enterprises $31,205 $21 ($54) $31,172
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises 235,343 10,023 245,366
Obligations of states and political subdivisions 47,647 1,529 49,176
Individual name issuer trust preferred debt securities 30,753 (4,979) 25,774
Corporate bonds 6,120 57 (3) 6,174
Total securities available for sale 351,068 11,630 (5,036) 357,662
Held to Maturity:
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises 25,222 786 26,008
Total securities held to maturity 25,222 786 26,008
Total securities $376,290 $12,416 ($5,036) $383,670
(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
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
(Dollars in thousands) 2014 2014 2014 2014 2013
Loans:
Commercial: Mortgages $843,978 $766,703 $772,772 $788,836 $796,249
Construction & development 79,592 58,750 38,574 24,696 36,289
Commercial & industrial 611,918 564,920 554,824 523,751 530,797
Total commercial 1,535,488 1,390,373 1,366,170 1,337,283 1,363,335
Residential real estate: Mortgages 948,731 912,956 846,187 784,623 749,163
Homeowner construction 36,684 32,624 30,452 25,770 23,511
Total residential real estate 985,415 945,580 876,639 810,393 772,674
Consumer: Home equity lines 242,480 240,567 237,390 233,728 231,362
Home equity loans 46,967 46,455 45,632 41,991 40,212
Other 48,926 51,072 55,293 55,208 55,301
Total consumer 338,373 338,094 338,315 330,927 326,875
Total loans $2,859,276 $2,674,047 $2,581,124 $2,478,603 $2,462,884
At December 31, 2014
(Dollars in thousands) Balance % of Total
Commercial Real Estate Loans by Property Location:
Rhode Island, Connecticut, Massachusetts $861,422 93.3%
New York, New Jersey, Pennsylvania 53,625 5.8%
New Hampshire 8,523 0.9%
Total commercial real estate loans (1) $923,570 100.0%
(1) Commercial real estate loans consist of commercial mortgages and construction and development loans. Commercial mortgages are loans secured by income producing property.
At December 31, 2014
(Dollars in thousands) Balance % of Total
Residential Mortgages by Property Location:
Rhode Island, Connecticut, Massachusetts $965,452 98.1%
New Hampshire 10,204 1.0%
New York, Virginia, New Jersey, Maryland, Pennsylvania 5,096 0.5%
Ohio 1,812 0.2%
Washington, Oregon 1,331 0.1%
Georgia 1,062 0.1%
Other 458 —%
Total residential mortgages $985,415 100.0%
Period End Balances At
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
(Dollars in thousands) 2014 2014 2014 2014 2013
Deposits:
Demand deposits $459,852 $476,808 $411,586 $445,570 $440,785
NOW accounts 326,375 313,391 314,060 311,461 309,771
Money market accounts 802,764 833,318 772,084 704,434 666,646
Savings accounts 291,725 290,561 292,112 293,322 297,357
Time deposits 874,102 824,810 796,255 836,867 790,762
Total deposits $2,754,818 $2,738,888 $2,586,097 $2,591,654 $2,505,321
Out-of-market brokered certificates of deposits included in time deposits $299,129 $211,222 $171,216 $171,275 $98,009
In-market deposits, excluding out-of-market brokered certificates of deposit $2,455,689 $2,527,666 $2,414,881 $2,420,379 $2,407,312
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
Period End Balances At
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
(Dollars in thousands) 2014 2014 2014 2014 2013
Asset Quality Ratios:
Total past due loans to total loans 0.63% 0.75% 0.82% 0.73% 0.89%
Nonperforming assets to total assets 0.48% 0.53% 0.42% 0.45% 0.62%
Nonaccrual loans to total loans 0.56% 0.63% 0.49% 0.55% 0.74%
Allowance for loan losses to nonaccrual loans 175.75% 163.68% 217.54% 199.23% 152.37%
Allowance for loan losses to total loans 0.98% 1.04% 1.06% 1.09% 1.13%
Nonperforming Assets:
Commercial mortgages $5,315 $6,022 $2,290 $2,293 $7,492
Commercial construction & development
Commercial & industrial 1,969 1,326 1,615 1,198 1,291
Residential real estate mortgages 7,124 7,890 7,417 8,975 8,315
Consumer 1,537 1,727 1,213 1,108 1,204
Total nonaccrual loans 15,945 16,965 12,535 13,574 18,302
Nonaccrual investment securities 547
Property acquired through foreclosure or repossession 1,176 988 1,309 750 932
Total nonperforming assets $17,121 $17,953 $13,844 $14,324 $19,781
Troubled Debt Restructured Loans:
Accruing troubled debt restructured loans:
Commercial mortgages $9,676 $9,677 $22,603 $22,796 $22,800
Commercial & industrial 954 1,036 969 989 1,265
Residential real estate mortgages 1,252 1,258 1,459 1,467 1,442
Consumer 135 164 167 233 236
Accruing troubled debt restructured loans 12,017 12,135 25,198 25,485 25,743
Nonaccrual troubled debt restructured loans:
Commercial mortgages 4,898 4,898
Commercial & industrial 1,193 854 872 369 542
Residential real estate mortgages 248 441 448 447
Consumer 29 38
Nonaccrual troubled debt restructured loans 6,339 6,193 1,320 845 580
Total troubled debt restructured loans $18,356 $18,328 $26,518 $26,330 $26,323
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
Period End Balances At
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
(Dollars in thousands) 2014 2014 2014 2014 2013
Past Due Loans:
Loans 30-59 Days Past Due:
Commercial mortgages $— $— $311 $— $—
Commercial & industrial 2,136 1,129 1,785 3,351 276
Residential real estate mortgages 2,943 2,582 5,249 2,232 4,040
Consumer loans 954 1,677 1,889 1,365 1,322
Loans 30-59 days past due $6,033 $5,388 $9,234 $6,948 $5,638
Loans 60-89 Days Past Due:
Commercial mortgages $— $— $1,583 $15 $—
Commercial & industrial 1,202 314 773 127 302
Residential real estate mortgages 821 2,001 855 1,265 1,285
Consumer loans 345 356 1,102 658 166
Loans 60-89 days past due $2,368 $2,671 $4,313 $2,065 $1,753
Loans 90 Days or more Past Due:
Commercial mortgages $5,315 $5,995 $2,250 $2,238 $7,492
Commercial & industrial 181 970 417 428 731
Residential real estate mortgages 3,284 3,922 4,335 5,634 5,633
Consumer loans 897 989 512 701 656
Loans 90 days or more past due $9,677 $11,876 $7,514 $9,001 $14,512
Total Past Due Loans:
Commercial mortgages $5,315 $5,995 $4,144 $2,253 $7,492
Commercial & industrial 3,519 2,413 2,975 3,906 1,309
Residential real estate mortgages 7,048 8,505 10,439 9,131 10,958
Consumer loans 2,196 3,022 3,503 2,724 2,144
Total past due loans $18,078 $19,935 $21,061 $18,014 $21,903
Accruing loans 90 days or more past due $— $— $— $— $—
Nonaccrual loans included in past due loans $12,721 $14,364 $10,432 $11,487 $15,591
For the Quarters Ended
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
(Dollars in thousands) 2014 2014 2014 2014 2013
Allowance for Loan Losses:
Balance at beginning of period $27,768 $27,269 $27,043 $27,886 $28,008
Provision charged to earnings 500 600 450 300 400
Charge-offs (311) (148) (267) (1,223) (703)
Recoveries 66 47 43 80 181
Balance at end of period $28,023 $27,768 $27,269 $27,043 $27,886
Net Loan Charge-Offs (Recoveries):
Commercial mortgages ($5) ($7) $26 $939 $309
Commercial & industrial 144 63 95 170 73
Residential real estate mortgages 45 (1) 30 7 80
Consumer 61 46 73 27 60
Total $245 $101 $224 $1,143 $522
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
December 31, 2014 September 30, 2014 December 31, 2013
Average Yield/ Average Yield/ Average Yield/
(Dollars in thousands) Balance Interest Rate Balance Interest Rate Balance Interest Rate
Assets:
Commercial loans $1,470,360 $15,688 4.23% $1,380,229 $14,624 4.20% $1,310,584 $14,944 4.52%
Residential real estate loans, including loans held for sale 1,009,382 10,329 4.06% 946,738 9,685 4.06% 771,272 7,947 4.09%
Consumer loans 338,050 3,231 3.79% 337,598 3,259 3.83% 323,778 3,078 3.77%
Total loans 2,817,792 29,248 4.12% 2,664,565 27,568 4.10% 2,405,634 25,969 4.28%
Cash, federal funds sold and short-term investments 63,736 29 0.18% 74,569 36 0.19% 104,718 59 0.22%
FHLBB stock 37,730 141 1.48% 37,730 140 1.47% 37,730 35 0.37%
Taxable debt securities 336,661 2,399 2.83% 323,140 2,397 2.94% 350,821 3,005 3.40%
Nontaxable debt securities 50,505 747 5.87% 53,374 789 5.86% 63,524 941 5.88%
Total securities 387,166 3,146 3.22% 376,514 3,186 3.36% 414,345 3,946 3.78%
Total interest-earning assets 3,306,424 32,564 3.91% 3,153,378 30,930 3.89% 2,962,427 30,009 4.02%
Noninterest-earning assets 215,079 216,945 200,615
Total assets $3,521,503 $3,370,323 $3,163,042
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits $19,163 $— —% $12,862 $— —% $10,877 $— —%
NOW accounts 320,313 49 0.06% 311,077 47 0.06% 300,113 48 0.06%
Money market accounts 829,472 903 0.43% 798,273 830 0.41% 653,731 560 0.34%
Savings accounts 291,683 45 0.06% 291,386 46 0.06% 293,434 47 0.06%
Time deposits (in-market) 602,005 1,735 1.14% 623,221 1,832 1.17% 698,653 2,115 1.20%
Wholesale brokered time deposits 257,415 799 1.23% 204,046 562 1.09% 104,326 296 1.13%
FHLBB advances 325,518 1,867 2.28% 283,219 1,832 2.57% 288,212 2,534 3.49%
Junior subordinated debentures 22,681 241 4.22% 22,681 241 4.22% 22,681 241 4.22%
Other 140 3 8.50% 151 3 7.88% 629 4 2.52%
Total interest-bearing liabilities 2,668,390 5,642 0.84% 2,546,916 5,393 0.84% 2,372,656 5,845 0.98%
Demand deposits 458,782 439,353 425,316
Other liabilities 41,415 37,217 38,204
Shareholders' equity 352,916 346,837 326,866
Total liabilities and shareholders' equity $3,521,503 $3,370,323 $3,163,042
Net interest income (FTE) $26,922 $25,537 $24,164
Interest rate spread 3.07% 3.05% 3.04%
Net interest margin 3.23% 3.21% 3.24%
Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:
(Dollars in thousands) Three Months Ended
Dec 31,
2014
Sep 30,
2014
Dec 31,
2013
Commercial loans $403 $329 $320
Nontaxable debt securities 256 270 323
Total $659 $599 $643
Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS (unaudited)
Twelve Months Ended
December 31, 2014 December 31, 2013
Average Yield/ Average Yield/
(Dollars in thousands) Balance Interest Rate Balance Interest Rate
Assets:
Commercial loans $1,382,036 $59,421 4.30% $1,286,029 $59,387 4.62%
Residential real estate loans, including loans held for sale 904,556 37,033 4.09% 767,450 31,752 4.14%
Consumer loans 334,368 12,758 3.82% 323,847 12,304 3.80%
Total loans 2,620,960 109,212 4.17% 2,377,326 103,443 4.35%
Cash, federal funds sold and short-term investments 65,045 128 0.20% 72,726 158 0.22%
FHLBB stock 37,730 561 1.49% 38,238 148 0.39%
Taxable debt securities 331,514 10,437 3.15% 316,440 11,008 3.48%
Nontaxable debt securities 55,283 3,267 5.91% 65,708 3,889 5.92%
Total securities 386,797 13,704 3.54% 382,148 14,897 3.90%
Total interest-earning assets 3,110,532 123,605 3.97% 2,870,438 118,646 4.13%
Noninterest-earning assets 210,746 208,463
Total assets $3,321,278 $3,078,901
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits $12,988 $— —% $4,461 $— —%
NOW accounts 311,927 190 0.06% 291,705 183 0.06%
Money market accounts 768,626 3,054 0.40% 569,534 1,749 0.31%
Savings accounts 291,880 182 0.06% 288,892 186 0.06%
Time deposits (in-market) 637,279 7,380 1.16% 728,328 9,144 1.26%
Wholesale brokered time deposits 187,325 2,131 1.14% 103,401 1,158 1.12%
FHLBB advances 274,879 7,698 2.80% 322,118 10,643 3.30%
Junior subordinated debentures 22,681 964 4.25% 27,398 1,484 5.42%
Other 157 13 8.28% 581 16 2.75%
Total interest-bearing liabilities 2,507,742 21,612 0.86% 2,336,418 24,563 1.05%
Demand deposits 432,857 384,323
Other liabilities 36,868 47,961
Shareholders' equity 343,811 310,199
Total liabilities and shareholders' equity $3,321,278 $3,078,901
Net interest income (FTE) $101,993 $94,083
Interest rate spread 3.11% 3.08%
Net interest margin 3.28% 3.28%
Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:
(Dollars in thousands) Twelve Months Ended
Dec 31,
2014
Dec 31,
2013
Commercial loans $1,370 $962
Nontaxable debt securities 1,118 1,336
Total $2,488 $2,298
Washington Trust Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION - Non-GAAP Financial Measures (unaudited)
At or for the Quarters Ended
(Dollars in thousands, except per share amounts) Dec 31,
2014
Sep 30,
2014
Jun 30,
2014
Mar 31,
2014
Dec 31,
2013
Calculation of Tangible Book Value per Share:
Total shareholders' equity at end of period $346,279 $348,562 $343,450 $335,858 $329,646
Less:
Goodwill 58,114 58,114 58,114 58,114 58,114
Identifiable intangible assets, net 4,849 5,004 5,165 5,329 5,493
Total tangible shareholders' equity at end of period $283,316 $285,444 $280,171 $272,415 $266,039
Shares outstanding at end of period 16,746 16,721 16,705 16,635 16,614
Book value per share - GAAP $20.68 $20.85 $20.56 $20.19 $19.84
Tangible book value per share - Non-GAAP $16.92 $17.07 $16.77 $16.38 $16.01
Calculation of Tangible Equity to Tangible Assets:
Total tangible shareholders' equity at end of period $283,316 $285,444 $280,171 $272,415 $266,039
Total assets at end of period $3,586,874 $3,415,882 $3,317,022 $3,194,146 $3,188,867
Less:
Goodwill 58,114 58,114 58,114 58,114 58,114
Identifiable intangible assets, net 4,849 5,004 5,165 5,329 5,493
Total tangible assets at end of period $3,523,911 $3,352,764 $3,253,743 $3,130,703 $3,125,260
Equity to assets - GAAP 9.65% 10.2% 10.35% 10.51% 10.34%
Tangible equity to tangible assets - Non-GAAP 8.04% 8.51% 8.61% 8.70% 8.51%
Calculation of Return on Average Tangible Assets:
Net income $11,191 $10,538 $9,797 $9,298 $9,789
Total average assets $3,521,503 $3,370,323 $3,214,649 $3,174,281 $3,163,042
Less:
Average goodwill 58,114 58,114 58,114 58,114 58,114
Average identifiable intangible assets, net 4,924 5,082 5,245 5,410 5,573
Total average tangible assets $3,458,465 $3,307,127 $3,151,290 $3,110,757 $3,099,355
Return on average assets - GAAP 1.27% 1.25% 1.22% 1.17% 1.24%
Return on average tangible assets - Non-GAAP 1.29% 1.27% 1.24% 1.20% 1.26%
Calculation of Return on Average Tangible Equity:
Net income $11,191 $10,538 $9,797 $9,298 $9,789
Total average shareholders' equity $352,916 $346,837 $340,235 $335,029 $326,866
Less:
Average goodwill 58,114 58,114 58,114 58,114 58,114
Average identifiable intangible assets, net 4,924 5,082 5,245 5,410 5,573
Total average tangible shareholders' equity $289,878 $283,641 $276,876 $271,505 $263,179
Return on average shareholders' equity - GAAP 12.68% 12.15% 11.52% 11.10% 11.98%
Return on average tangible shareholders' equity - Non-GAAP 15.44% 14.86% 14.15% 13.70% 14.80%
Washington Trust Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION - Non-GAAP Financial Measures (unaudited)
Twelve Months Ended
Dec 31, Dec 31,
(Dollars in thousands) 2014 2013
Calculation of return on average tangible assets:
Net income $40,824 $36,153
Total average assets $3,321,278 $3,078,901
Less:
Average goodwill 58,114 58,114
Average identifiable intangible assets, net 5,164 5,826
Total average tangible assets $3,258,000 $3,014,961
Return on average assets - GAAP 1.23% 1.17%
Return on average tangible assets - Non-GAAP 1.25% 1.20%
Calculation of return on average tangible equity:
Net income $40,824 $36,153
Total average shareholders' equity $343,811 $310,199
Less:
Average goodwill 58,114 58,114
Average identifiable intangible assets, net 5,164 5,826
Total average tangible shareholders' equity $280,533 $246,259
Return on average shareholders' equity - GAAP 11.87% 11.65%
Return on average tangible shareholders' equity - Non-GAAP 14.55% 14.68%

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

Source:Washington Trust Bancorp, Inc.