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Washington Trust Reports Record Second Quarter 2015 Earnings

WESTERLY, R.I., July 20, 2015 (GLOBE NEWSWIRE) -- Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced net income of $11.5 million, or 68 cents per diluted share, for the second quarter of 2015, compared to net income of $11.0 million, or 65 cents per diluted share, reported for the first quarter of 2015.

"Washington Trust once again posted solid quarterly results, reflecting the strength of our diversified business model and our expanded regional presence," stated Joseph J. MarcAurele, Chairman and Chief Executive Officer. "In June we announced our intention to acquire Halsey Associates, Incorporated, a New Haven, Connecticut-based registered investment adviser. This acquisition, which we expect to complete during the third quarter, is significant as it further enhances our reputation as one of the premier wealth management firms and financial institutions in the region."

Selected highlights for the second quarter of 2015 include:

  • Second quarter net income and earnings per share were both record highs for Washington Trust.
  • Returns on average equity and average assets improved to 12.88% and 1.27%, respectively. Comparable amounts for the first quarter of 2015 were 12.54% and 1.23%, respectively.
  • Wealth management revenues totaled $8.9 million for the second quarter of 2015, up by $477 thousand, or 6%, from the first quarter of 2015.
  • Net gains on loan sales and commissions on loans originated for others amounted to $2.7 million for the second quarter of 2015, up by $163 thousand, or 6%, from the prior quarter.
  • Total loans amounted to $2.9 billion at June 30, 2015, up by $48.0 million, or 2%, from the previous quarter.

Net Interest Income

Net interest income totaled $26.0 million for the second quarter of 2015, up by $326 thousand, or 1%, from the first quarter of 2015. The net interest margin was 3.15% for the second quarter of 2015, compared to 3.18% for the first quarter of 2015. Commercial loan prepayment fee income, which is included in net interest income, amounted to $519 thousand in the second quarter of 2015, compared to $266 thousand in the prior quarter. Excluding the loan prepayment fee income in each period, the second quarter net interest margin was 3.09%, down by 5 basis points on a linked quarter basis. Other significant linked quarter changes included:

  • Average interest-earning assets increased by $34.1 million, largely reflecting growth in average commercial loan balances. The yield on interest-earning assets, excluding the loan prepayment fee income contribution of 6 basis points and 3 basis points, respectively, was 3.74% for the second quarter of 2015, compared to 3.81% for the prior quarter. The 7 basis point decline from the previous quarter was largely due to runoff of higher yielding asset balances.
  • Average interest-bearing liabilities increased by $24.7 million, with growth in average deposit balances, partially offset by a decline in Federal Home Loan Bank of Boston ("FHLBB") advances. The cost of interest-bearing liabilities declined by 3 basis points on a linked quarter basis.

Noninterest Income

Noninterest income totaled $15.3 million for the second quarter of 2015, up by $1.2 million, or 9%, from the first quarter of 2015. Included in noninterest income were the following:

  • Wealth management revenues totaled $8.9 million for the second quarter of 2015, up by $477 thousand, or 6%, over the previous quarter. The increase included a $346 thousand increase in tax preparation fees, which are generally concentrated in the second quarter. Wealth management assets under administration amounted to $5.2 billion at June 30, 2015, up by 1% in the quarter and up by 4% in the last twelve months.
  • Net gains on loan sales and commissions on loans originated for others totaled $2.7 million for the second quarter of 2015, up by $163 thousand, or 6%, on a linked quarter basis. Residential mortgage loans sold to the secondary market amounted to $143.2 million in the second quarter, up by $15.3 million, compared to the first quarter.
  • Net gains on interest rate swap contracts remained relatively strong due to a continuation of borrower demand for these transactions. This revenue source amounted to $717 thousand in the second quarter, up modestly from the first quarter.
  • Other income totaled $662 thousand for the second quarter of 2015, up by $360 thousand on a linked quarter basis. The increase was primarily due to a $250 thousand settlement payment received in the second quarter on a trust preferred debt obligation previously held by the Corporation.

Noninterest Expenses

Noninterest expenses totaled $24.3 million for the second quarter of 2015, up by $768 thousand, or 3%, from the first quarter of 2015. Included in noninterest expenses in the second quarter were acquisition related expenses of $433 thousand. Excluding the acquisition expenses, noninterest expenses increased by $335 thousand, or 1%, which was largely attributable to an increase of $311 thousand in advertising and promotion expenses due to the timing of promotional activities.

Income tax expense amounted to $5.4 million for the second quarter of 2015, up by $206 thousand, or 4%, from the amount recognized in the previous quarter. The effective tax rate for the second quarter of 2015 was 31.9%, compared to 32.0% for the first quarter of 2015. The Corporation currently expects that its full-year 2015 effective tax rate will be approximately 32.5%.

Asset Quality

Asset quality metrics remained at stable and manageable levels in the second quarter of 2015. Total nonaccrual loans amounted to $15.1 million, or 0.52% of total loans, at June 30, 2015, down from $15.9 million, or 0.55%, at March 31, 2015. Total past due loans amounted to $24.0 million, or 0.82% of total loans, at June 30, 2015, up from $19.1 million, or 0.66% of total loans, at March 31, 2015. This increase was largely attributable to a well-secured commercial relationship.

A loan loss provision totaling $100 thousand was charged to earnings in the second quarter of 2015, compared to no loan loss provision recognized in the first quarter of 2015. The second quarter provision reflects loan loss allocations commensurate with growth in loan portfolio balances, offset by reductions in other loan loss exposures in response to continued improvement in credit quality conditions. Net charge-offs amounted to $323 thousand in the second quarter of 2015, compared to $213 thousand in the first quarter of 2015. The allowance for loan losses was $27.6 million, or 0.94% of total loans, at June 30, 2015, compared to $27.8 million, or 0.97% of total loans, at March 31, 2015.

Loans

Total loans amounted to $2.9 billion at June 30, 2015, up by $48.0 million, or 2%, from the balance at March 31, 2015.

  • Total commercial loans increased by $24.0 million, or 2%, in the second quarter of 2015. The commercial real estate portfolio grew by $32.7 million, or 3%, while the commercial and industrial portfolio declined by $8.7 million, or 1%.
  • The residential real estate loan portfolio grew by $13.7 million, or 1%, from the first quarter of 2015.
  • Consumer loans increased by $10.3 million, or 3%, with growth in home equity lines of credit.

Investment Securities

The securities portfolio amounted to $373.9 million at June 30, 2015, up $8.9 million from the balance at March 31, 2015. The increase reflects purchases of U.S. government agency securities for balance sheet liquidity management purposes.

Deposits and Borrowings

Deposits totaled $2.7 billion at June 30, 2015, down by $44.0 million, or 2%, from the balance at March 31, 2015. Wholesale brokered time deposits decreased by $6.3 million from the previous quarter. Excluding wholesale brokered time deposits, in-market deposits declined by $37.8 million, or 2%. The largest outflow in the quarter was $32.0 million in the category of money market deposits, a portion of which is considered to be seasonal flows associated with governmental and other institutional depositors.

FHLBB advances amounted to $471.3 million at June 30, 2015, up by $85.3 million, or 22% from March 31, 2015.

Capital Management and Dividends

Capital levels at June 30, 2015 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.78% at June 30, 2015, compared to 12.80% at March 31, 2015. Total shareholder's equity was $359.2 million at June 30, 2015, up by $5.3 million from March 31, 2015.

The Board of Directors declared a quarterly dividend of 34 cents per share for the quarter ended June 30, 2015. The dividend was paid on July 14, 2015 to shareholders of record on July 1, 2015.

Acquisition of Halsey Associates, Incorporated

In June, we announced that we signed a definitive agreement to acquire Halsey Associates, Incorporated, a registered investment adviser firm located in New Haven, CT. Halsey specializes in providing investment counseling services to high-net worth families, corporations, foundations and endowment clients and has annualized revenues of approximately $4 million. The purchase price, including Washington Trust stock and cash to be paid at closing, plus estimated future earn-outs based on the future revenue growth of the acquired business during the 5-year period following the acquisition, will amount to approximately 6.5 times Halsey's 2014 earnings before interest, taxes, depreciation and amortization. We expect to consummate this transaction in the third quarter. The transaction is expected to result in a modest reduction in tangible book value per share and capital ratios and is expected to be modestly accretive to earnings per share commencing in the latter part of 2015, following the recognition of estimated acquisition related expenses of approximately $900 thousand, which include $433 thousand recognized through June 30, 2015.

Conference Call

Washington Trust will host a conference call to discuss second quarter results, business highlights and outlook on Tuesday, July 21, 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 13612145; the audio replay will be available through August 4, 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 September 30, 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 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: 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)
Jun 30, Dec 31,
(Dollars in thousands, except par value) 2015 2014
Assets:
Cash and due from banks $79,795 $76,386
Short-term investments 4,298 3,964
Mortgage loans held for sale (including $17,260 at June 30, 2015 and $30,321 at December 31, 2014 measured at fair value) 37,389 45,693
Securities:
Available for sale, at fair value 351,378 357,662
Held to maturity, at amortized cost (fair value $23,091 at June 30, 2015 and $26,008 at December 31, 2014) 22,523 25,222
Total securities 373,901 382,884
Federal Home Loan Bank stock, at cost 37,730 37,730
Loans:
Commercial 1,583,537 1,535,488
Residential real estate 1,001,263 985,415
Consumer 343,784 338,373
Total loans 2,928,584 2,859,276
Less allowance for loan losses 27,587 28,023
Net loans 2,900,997 2,831,253
Premises and equipment, net 28,124 27,495
Investment in bank-owned life insurance 64,502 63,519
Goodwill 58,114 58,114
Identifiable intangible assets, net 4,539 4,849
Other assets 55,088 54,987
Total assets $3,644,477 $3,586,874
Liabilities:
Deposits:
Demand deposits $457,755 $459,852
NOW accounts 357,922 326,375
Money market accounts 789,334 802,764
Savings accounts 300,108 291,725
Time deposits 834,000 874,102
Total deposits 2,739,119 2,754,818
Federal Home Loan Bank advances 471,321 406,297
Junior subordinated debentures 22,681 22,681
Other liabilities 52,189 56,799
Total liabilities 3,285,310 3,240,595
Shareholders' Equity:
Common stock of $.0625 par value; authorized 30,000,000 shares; issued and outstanding 16,833,525 shares at June 30, 2015 and 16,746,363 shares at December 31, 2014 1,052 1,047
Paid-in capital 103,408 101,204
Retained earnings 263,790 252,837
Accumulated other comprehensive loss (9,083) (8,809)
Total shareholders' equity 359,167 346,279
Total liabilities and shareholders' equity $3,644,477 $3,586,874
Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars and shares in thousands, except per share amounts) Three Months Six Months
Periods ended June 30, 2015 2014 2015 2014
Interest income:
Interest and fees on loans $28,739 $26,169 $57,092 $51,758
Interest on securities: Taxable 2,176 2,699 4,435 5,641
Nontaxable 402 557 837 1,139
Dividends on Federal Home Loan Bank stock 164 138 329 280
Other interest income 29 28 54 63
Total interest and dividend income 31,510 29,591 62,747 58,881
Interest expense:
Deposits 3,348 3,120 6,737 6,089
Federal Home Loan Bank advances 1,891 1,758 3,793 3,999
Junior subordinated debentures 241 241 482 482
Other interest expense 2 4 5 7
Total interest expense 5,482 5,123 11,017 10,577
Net interest income 26,028 24,468 51,730 48,304
Provision for loan losses 100 450 100 750
Net interest income after provision for loan losses 25,928 24,018 51,630 47,554
Noninterest income:
Wealth management revenues 8,912 8,530 17,347 16,595
Merchant processing fees 1,291
Net gains on loan sales and commissions on loans originated for others 2,748 1,707 5,333 2,946
Service charges on deposit accounts 973 824 1,908 1,578
Card interchange fees 826 779 1,540 1,460
Income from bank-owned life insurance 492 441 982 886
Net gains (losses) on interest rate swap contracts 717 (37) 1,362 223
Equity in earnings (losses) of unconsolidated subsidiaries (69) (107) (155) (150)
Gain on sale of business line 6,265
Other income 662 677 964 1,090
Total noninterest income 15,261 12,814 29,281 32,184
Noninterest expense:
Salaries and employee benefits 15,506 14,771 31,000 29,329
Net occupancy 1,669 1,475 3,555 3,115
Equipment 1,376 1,235 2,716 2,471
Merchant processing costs 1,050
Outsourced services 1,277 1,015 2,524 2,059
Legal, audit and professional fees 610 598 1,286 1,216
FDIC deposit insurance costs 436 413 909 853
Advertising and promotion 578 540 845 772
Amortization of intangibles 156 164 311 328
Debt prepayment penalties 6,294
Other expenses 2,691 2,237 4,684 4,253
Total noninterest expense 24,299 22,448 47,830 51,740
Income before income taxes 16,890 14,384 33,081 27,998
Income tax expense 5,387 4,587 10,568 8,903
Net income $11,503 $9,797 $22,513 $19,095
Weighted average common shares outstanding - basic 16,811 16,678 16,785 16,653
Weighted average common shares outstanding - diluted 16,989 16,831 16,977 16,817
Per share information: Basic earnings per common share $0.68 $0.59 $1.34 $1.14
Diluted earnings per common share $0.68 $0.58 $1.32 $1.13
Cash dividends declared per share $0.34 $0.29 $0.68 $0.58
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
At or for the Quarters Ended
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
(Dollars and shares in thousands, except per share amounts) 2015 2015 2014 2014 2014
Financial Data:
Total assets $3,644,477 $3,602,514 $3,586,874 $3,415,882 $3,317,022
Total loans 2,928,584 2,880,592 2,859,276 2,674,047 2,581,124
Total securities 373,901 364,967 382,884 402,553 355,392
Total deposits 2,739,119 2,783,143 2,754,818 2,738,888 2,586,097
Total shareholders' equity 359,167 353,879 346,279 348,562 343,450
Net interest income 26,028 25,702 26,263 24,938 24,468
Provision for loan losses 100 500 600 450
Noninterest income, excluding OTTI losses 15,261 14,020 13,706 13,125 12,814
Net OTTI losses recognized in earnings
Noninterest expense 24,299 23,531 23,060 22,047 22,448
Income tax expense 5,387 5,181 5,218 4,878 4,587
Net income 11,503 11,010 11,191 10,538 9,797
Share Data:
Basic earnings per common share $0.68 $0.65 $0.67 $0.63 $0.59
Diluted earnings per common share $0.68 $0.65 $0.66 $0.62 $0.58
Dividends declared per share $0.34 $0.34 $0.32 $0.32 $0.29
Book value per share $21.34 $21.10 $20.68 $20.85 $20.56
Tangible book value per share - Non-GAAP (1) $17.61 $17.35 $16.92 $17.07 $16.77
Market value per share $39.48 $38.19 $40.18 $32.99 $36.77
Shares outstanding at end of period 16,834 16,773 16,746 16,721 16,705
Weighted average common shares outstanding - basic 16,811 16,759 16,735 16,714 16,678
Weighted average common shares outstanding - diluted 16,989 16,939 16,911 16,855 16,831
Key Ratios:
Return on average assets 1.27% 1.23% 1.27% 1.25% 1.22%
Return on average tangible assets - Non-GAAP (1) 1.29% 1.25% 1.29% 1.27% 1.24%
Return on average equity 12.88% 12.54% 12.68% 12.15% 11.52%
Return on average tangible equity - Non-GAAP (1) 15.62% 15.27% 15.44% 14.86% 14.15%
Tier 1 risk-based capital 11.78% (i) 11.78% 11.52% 12.15% 12.24%
Total risk-based capital 12.78% (i) 12.80% 12.56% 13.26% 13.36%
Tier 1 leverage ratio 9.31% (i) 9.21% 9.14% 9.35% 9.62%
Tier 1 common equity (2) 11.00% (i) 10.98% N/A N/A N/A
Equity to assets 9.86% 9.82% 9.65% 10.20% 10.35%
Tangible equity to tangible assets - Non-GAAP (1) 8.28% 8.22% 8.04% 8.51% 8.61%
(i) - estimated
Wealth Management Revenues:
Trust and investment management fees $7,238 $7,142 $7,059 $6,982 $6,828
Mutual fund fees 1,032 1,036 1,068 1,100 1,086
Asset-based revenues 8,270 8,178 8,127 8,082 7,914
Transaction-based revenues 642 257 282 292 616
Total wealth management revenues $8,912 $8,435 $8,409 $8,374 $8,530
Wealth Management Assets Under Administration:
Balance at beginning of period $5,159,663 $5,069,966 $4,983,464 $5,010,588 $4,806,381
Net investment appreciation (depreciation) & income (13,932) 80,872 111,715 (29,199) 131,269
Net client cash flows 65,817 8,825 (25,213) 2,075 72,938
Balance at end of period $5,211,548 $5,159,663 $5,069,966 $4,983,464 $5,010,588
(1) See the section labeled "Supplemental Information - Non-GAAP Financial Measures" at the end of this document.
(2) New capital ratio effective January 1, 2015 under the Basel III capital requirements.
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
Six Months Ended
Jun 30, Jun 30,
(Dollars in thousands) 2015 2014
Key Ratios:
Return on average assets 1.25% 1.20%
Return on average tangible assets - Non-GAAP (1) 1.27% 1.22%
Return on average equity 12.71% 11.31%
Return on average tangible equity - Non-GAAP (1) 15.45% 13.93%
Allowance for Loan Losses:
Balance at beginning of period $28,023 $27,886
Provision charged to earnings 100 750
Charge-offs (676) (1,490)
Recoveries 140 123
Balance at end of period $27,587 $27,269
Net Loan Charge-Offs (Recoveries):
Commercial mortgages $316 $965
Commercial & industrial 19 265
Residential real estate mortgages 50 37
Consumer 151 100
Total $536 $1,367
Net charge-offs to average loans (annualized) 0.04% 0.11%
Wealth Management Revenues:
Trust and investment management fees $14,380 $13,513
Mutual fund fees 2,068 2,167
Asset-based revenues 16,448 15,680
Transaction-based revenues 899 915
Total wealth management revenues $17,347 $16,595
Wealth Management Assets Under Administration:
Balance at beginning of period $5,069,966 $4,781,958
Net investment appreciation & income 66,940 175,604
Net client cash flows 74,642 53,026
Balance at end of period $5,211,548 $5,010,588
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
For the Quarters Ended
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
2015 2015 2014 2014 2014
Average Yield / Rate (taxable equivalent basis):
Assets:
Commercial loans 4.06% 4.02% 4.23% 4.20% 4.35%
Residential real estate loans, including mortgage loans held for sale 3.95% 4.06% 4.06% 4.06% 4.12%
Consumer loans 3.77% 3.82% 3.79% 3.83% 3.81%
Total loans 3.99% 4.01% 4.12% 4.10% 4.20%
Cash, federal funds sold and other short-term investments 0.18% 0.20% 0.18% 0.19% 0.19%
FHLBB stock 1.74% 1.77% 1.48% 1.47% 1.47%
Taxable debt securities 2.72% 2.84% 2.83% 2.94% 3.36%
Nontaxable debt securities 6.15% 6.03% 5.87% 5.86% 5.92%
Total securities 3.11% 3.23% 3.22% 3.36% 3.74%
Total interest-earning assets 3.80% 3.84% 3.91% 3.89% 4.03%
Liabilities:
Interest-bearing demand deposits 0.03% 0.09% —% —% —%
NOW accounts 0.06% 0.06% 0.06% 0.06% 0.06%
Money market accounts 0.46% 0.45% 0.43% 0.41% 0.38%
Savings accounts 0.07% 0.06% 0.06% 0.06% 0.06%
Time deposits (in-market) 1.00% 1.05% 1.14% 1.17% 1.16%
Wholesale brokered time deposits 1.28% 1.29% 1.23% 1.09% 1.05%
FHLBB advances 1.94% 1.91% 2.28% 2.57% 3.20%
Junior subordinated debentures 4.26% 4.31% 4.22% 4.22% 4.26%
Other 6.92% 9.51% 8.50% 7.88% 9.90%
Total interest-bearing liabilities 0.79% 0.82% 0.84% 0.84% 0.85%
Interest rate spread (taxable equivalent basis) 3.01% 3.02% 3.07% 3.05% 3.18%
Net interest margin (taxable equivalent basis) 3.15% 3.18% 3.23% 3.21% 3.35%
At June 30, 2015
Amortized Unrealized Unrealized Fair
(Dollars in thousands) Cost Gains Losses Value
Securities Available for Sale:
Obligations of U.S. government-sponsored enterprises $61,430 $49 ($225) $61,254
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises 208,539 8,091 (10) 216,620
Obligations of states and political subdivisions 39,487 1,187 40,674
Individual name issuer trust preferred debt securities 30,772 16 (4,064) 26,724
Corporate bonds 6,118 12 (24) 6,106
Total securities available for sale 346,346 9,355 (4,323) 351,378
Held to Maturity:
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises 22,523 568 23,091
Total securities held to maturity 22,523 568 23,091
Total securities $368,869 $9,923 ($4,323) $374,469
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
Period End Balances At
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
(Dollars in thousands) 2015 2015 2014 2014 2014
Loans:
Commercial: Mortgages $876,589 $865,042 $843,978 $766,703 $772,772
Construction & development 110,989 89,851 79,592 58,750 38,574
Commercial & industrial 595,959 604,630 611,918 564,920 554,824
Total commercial 1,583,537 1,559,523 1,535,488 1,390,373 1,366,170
Residential real estate: Mortgages 971,705 954,905 948,731 912,956 846,187
Homeowner construction 29,558 32,659 36,684 32,624 30,452
Total residential real estate 1,001,263 987,564 985,415 945,580 876,639
Consumer: Home equity lines 249,845 239,537 242,480 240,567 237,390
Home equity loans 47,437 46,727 46,967 46,455 45,632
Other 46,502 47,241 48,926 51,072 55,293
Total consumer 343,784 333,505 338,373 338,094 338,315
Total loans $2,928,584 $2,880,592 $2,859,276 $2,674,047 $2,581,124
At June 30, 2015
(Dollars in thousands) Balance % of Total
Commercial Real Estate Loans by Property Location:
Rhode Island, Connecticut, Massachusetts $915,622 92.7%
New York, New Jersey, Pennsylvania 58,379 5.9%
New Hampshire 13,577 1.4%
Total commercial real estate loans (1) $987,578 100.0%
(1) Commercial real estate loans consist of commercial mortgages and construction and development loans. Commercial mortgages are loans secured by income producing property.
At June 30, 2015
(Dollars in thousands) Balance % of Total
Residential Mortgages by Property Location:
Rhode Island, Connecticut, Massachusetts $980,646 98.0%
New Hampshire 11,487 1.1%
New York, Virginia, New Jersey, Maryland, Pennsylvania 4,620 0.5%
Ohio 1,686 0.2%
Washington, Oregon 1,318 0.1%
Georgia 1,052 0.1%
Other 454 —%
Total residential mortgages $1,001,263 100.0%
Period End Balances At
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
(Dollars in thousands) 2015 2015 2014 2014 2014
Deposits:
Demand deposits $457,755 $477,046 $459,852 $476,808 $411,586
NOW accounts 357,922 333,321 326,375 313,391 314,060
Money market accounts 789,334 821,353 802,764 833,318 772,084
Savings accounts 300,108 298,802 291,725 290,561 292,112
Time deposits 834,000 852,621 874,102 824,810 796,255
Total deposits $2,739,119 $2,783,143 $2,754,818 $2,738,888 $2,586,097
Out-of-market brokered certificates of deposits included in time deposits $284,590 $290,863 $299,129 $211,222 $171,216
In-market deposits, excluding out-of-market brokered certificates of deposit $2,454,529 $2,492,280 $2,455,689 $2,527,666 $2,414,881
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
Period End Balances At
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
(Dollars in thousands) 2015 2015 2014 2014 2014
Asset Quality Ratios:
Total past due loans to total loans 0.82% 0.66% 0.63% 0.75% 0.82%
Nonperforming assets to total assets 0.45% 0.48% 0.48% 0.53% 0.42%
Nonaccrual loans to total loans 0.52% 0.55% 0.56% 0.63% 0.49%
Allowance for loan losses to nonaccrual loans 182.32% 175.29% 175.75% 163.68% 217.54%
Allowance for loan losses to total loans 0.94% 0.97% 0.98% 1.04% 1.06%
Nonperforming Assets:
Commercial mortgages $4,915 $5,115 $5,315 $6,022 $2,290
Commercial construction & development
Commercial & industrial 1,039 2,193 1,969 1,326 1,615
Residential real estate mortgages 7,411 6,956 7,124 7,890 7,417
Consumer 1,766 1,601 1,537 1,727 1,213
Total nonaccrual loans 15,131 15,865 15,945 16,965 12,535
Nonaccrual investment securities
Property acquired through foreclosure or repossession 1,388 1,398 1,176 988 1,309
Total nonperforming assets $16,519 $17,263 $17,121 $17,953 $13,844
Troubled Debt Restructured Loans:
Accruing troubled debt restructured loans:
Commercial mortgages $9,448 $9,448 $9,676 $9,677 $22,603
Commercial & industrial 2,209 881 954 1,036 969
Residential real estate mortgages 679 684 1,252 1,258 1,459
Consumer 201 134 135 164 167
Accruing troubled debt restructured loans 12,537 11,147 12,017 12,135 25,198
Nonaccrual troubled debt restructured loans:
Commercial mortgages 4,498 4,698 4,898 4,898
Commercial & industrial 381 1,442 1,193 854 872
Residential real estate mortgages 92 338 248 441 448
Consumer 33 34
Nonaccrual troubled debt restructured loans 5,004 6,512 6,339 6,193 1,320
Total troubled debt restructured loans $17,541 $17,659 $18,356 $18,328 $26,518
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
Period End Balances At
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
(Dollars in thousands) 2015 2015 2014 2014 2014
Past Due Loans:
Loans 30-59 Days Past Due:
Commercial mortgages $14 $497 $— $— $311
Commercial & industrial 2,581 229 2,136 1,129 1,785
Residential real estate mortgages 5,120 4,470 2,943 2,582 5,249
Consumer loans 1,634 1,512 954 1,677 1,889
Loans 30-59 days past due $9,349 $6,708 $6,033 $5,388 $9,234
Loans 60-89 Days Past Due:
Commercial mortgages $— $61 $— $— $1,583
Commercial & industrial 2,299 229 1,202 314 773
Residential real estate mortgages 913 1,352 821 2,001 855
Consumer loans 397 565 345 356 1,102
Loans 60-89 days past due $3,609 $2,207 $2,368 $2,671 $4,313
Loans 90 Days or More Past Due:
Commercial mortgages $4,915 $5,115 $5,315 $5,995 $2,250
Commercial & industrial 638 721 181 970 417
Residential real estate mortgages 4,871 3,607 3,284 3,922 4,335
Consumer loans 647 723 897 989 512
Loans 90 days or more past due $11,071 $10,166 $9,677 $11,876 $7,514
Total Past Due Loans:
Commercial mortgages $4,929 $5,673 $5,315 $5,995 $4,144
Commercial & industrial 5,518 1,179 3,519 2,413 2,975
Residential real estate mortgages 10,904 9,429 7,048 8,505 10,439
Consumer loans 2,678 2,800 2,196 3,022 3,503
Total past due loans $24,029 $19,081 $18,078 $19,935 $21,061
Accruing loans 90 days or more past due $— $— $— $— $—
Nonaccrual loans included in past due loans $12,397 $12,314 $12,721 $14,364 $10,432
For the Quarters Ended
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
(Dollars in thousands) 2015 2015 2014 2014 2014
Allowance for Loan Losses:
Balance at beginning of period $27,810 $28,023 $27,768 $27,269 $27,043
Provision charged to earnings 100 500 600 450
Charge-offs (355) (321) (311) (148) (267)
Recoveries 32 108 66 47 43
Balance at end of period $27,587 $27,810 $28,023 $27,768 $27,269
Net Loan Charge-Offs (Recoveries):
Commercial mortgages $196 $120 ($5) ($7) $26
Commercial & industrial 26 (7) 144 63 95
Residential real estate mortgages 4 46 45 (1) 30
Consumer 97 54 61 46 73
Total $323 $213 $245 $101 $224

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
June 30, 2015 March 31, 2015 June 30, 2014
Average Yield/ Average Yield/ Average Yield/
(Dollars in thousands) Balance Interest Rate Balance Interest Rate Balance Interest Rate
Assets:
Commercial loans $1,574,183 $15,930 4.06% $1,544,720 $15,313 4.02% $1,339,310 $14,509 4.35%
Residential real estate loans, including loans held for sale 1,025,029 10,102 3.95% 1,030,016 10,314 4.06% 856,955 8,811 4.12%
Consumer loans 338,809 3,183 3.77% 336,333 3,168 3.82% 333,881 3,171 3.81%
Total loans 2,938,021 29,215 3.99% 2,911,069 28,795 4.01% 2,530,146 26,491 4.20%
Cash, federal funds sold and short-term investments 63,858 29 0.18% 51,058 25 0.20% 59,507 28 0.19%
FHLBB stock 37,730 164 1.74% 37,730 165 1.77% 37,730 138 1.47%
Taxable debt securities 320,643 2,176 2.72% 322,570 2,259 2.84% 322,418 2,699 3.36%
Nontaxable debt securities 40,886 627 6.15% 44,659 664 6.03% 57,422 847 5.92%
Total securities 361,529 2,803 3.11% 367,229 2,923 3.23% 379,840 3,546 3.74%
Total interest-earning assets 3,401,138 32,211 3.80% 3,367,086 31,908 3.84% 3,007,223 30,203 4.03%
Noninterest-earning assets 221,577 221,795 207,426
Total assets $3,622,715 $3,588,881 $3,214,649
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits $38,129 $3 0.03% $37,851 $8 0.09% $9,067 $— —%
NOW accounts 363,434 53 0.06% 329,588 48 0.06% 311,948 47 0.06%
Money market accounts 820,887 941 0.46% 800,036 883 0.45% 759,704 713 0.38%
Savings accounts 298,286 50 0.07% 293,926 46 0.06% 291,671 45 0.06%
Time deposits (in-market) 554,839 1,390 1.00% 567,063 1,469 1.05% 649,018 1,882 1.16%
Wholesale brokered time deposits 285,844 911 1.28% 294,664 935 1.29% 164,540 433 1.06%
FHLBB advances 391,152 1,891 1.94% 404,773 1,902 1.91% 220,088 1,758 3.20%
Junior subordinated debentures 22,681 241 4.26% 22,681 241 4.31% 22,681 241 4.26%
Other 116 2 6.92% 128 3 9.51% 162 4 9.90%
Total interest-bearing liabilities 2,775,368 5,482 0.79% 2,750,710 5,535 0.82% 2,428,879 5,123 0.85%
Demand deposits 441,355 438,904 409,851
Other liabilities 48,627 48,052 35,684
Shareholders' equity 357,365 351,215 340,235
Total liabilities and shareholders' equity $3,622,715 $3,588,881 $3,214,649
Net interest income (FTE) $26,729 $26,373 $25,080
Interest rate spread 3.01% 3.02% 3.18%
Net interest margin 3.15% 3.18% 3.35%

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

(Dollars in thousands) Three Months Ended
June 30, 2015 March 31, 2015 June 30, 2014
Commercial loans $476 $442 $322
Nontaxable debt securities 225 229 290
Total $701 $671 $612
Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS (unaudited)
Six Months Ended
June 30, 2015 June 30, 2014
Average Yield/ Average Yield/
(Dollars in thousands) Balance Interest Rate Balance Interest Rate
Assets:
Commercial loans $1,559,533 $31,242 4.04% $1,338,061 $29,109 4.39%
Residential real estate loans, including loans held for sale 1,027,509 20,416 4.01% 829,834 17,019 4.14%
Consumer loans 337,578 6,351 3.79% 330,854 6,268 3.82%
Total loans 2,924,620 58,009 4.00% 2,498,749 52,396 4.23%
Cash, federal funds sold and short-term investments 57,492 54 0.19% 60,869 63 0.21%
FHLBB stock 37,730 329 1.76% 37,730 280 1.50%
Taxable debt securities 321,602 4,435 2.78% 333,154 5,641 3.41%
Nontaxable debt securities 42,762 1,291 6.09% 58,683 1,731 5.95%
Total securities 364,364 5,726 3.17% 391,837 7,372 3.79%
Total interest-earning assets 3,384,206 64,118 3.82% 2,989,185 60,111 4.06%
Noninterest-earning assets 221,686 205,391
Total assets $3,605,892 $3,194,576
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits $37,991 $11 0.06% $9,912 $— —%
NOW accounts 346,605 100 0.06% 308,096 94 0.06%
Money market accounts 810,519 1,825 0.45% 722,629 1,322 0.37%
Savings accounts 296,117 96 0.07% 292,237 90 0.06%
Time deposits (in-market) 560,917 2,859 1.03% 662,354 3,813 1.16%
Wholesale brokered time deposits 290,230 1,846 1.28% 143,199 770 1.08%
FHLBB advances 397,925 3,793 1.92% 244,900 3,999 3.29%
Junior subordinated debentures 22,681 482 4.29% 22,681 482 4.29%
Other 122 5 8.26% 168 7 8.40%
Total interest-bearing liabilities 2,763,107 11,017 0.80% 2,406,176 10,577 0.89%
Demand deposits 440,136 416,377
Other liabilities 48,342 34,377
Shareholders' equity 354,307 337,646
Total liabilities and shareholders' equity $3,605,892 $3,194,576
Net interest income (FTE) $53,101 $49,534
Interest rate spread 3.02% 3.17%
Net interest margin 3.16% 3.34%
(Dollars in thousands) Six Months Ended
June 30, 2015 June 30, 2014
Commercial loans $917 $638
Nontaxable debt securities 454 592
Total $1,371 $1,230
Washington Trust Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION - Non-GAAP Financial Measures (unaudited)
At or for the Quarters Ended
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
(Dollars in thousands, except per share amounts) 2015 2015 2014 2014 2014
Calculation of Tangible Book Value per Share:
Total shareholders' equity at end of period $359,167 $353,879 $346,279 $348,562 $343,450
Less:
Goodwill 58,114 58,114 58,114 58,114 58,114
Identifiable intangible assets, net 4,539 4,694 4,849 5,004 5,165
Total tangible shareholders' equity at end of period $296,514 $291,071 $283,316 $285,444 $280,171
Shares outstanding at end of period 16,834 16,773 16,746 16,721 16,705
Book value per share - GAAP $21.34 $21.10 $20.68 $20.85 $20.56
Tangible book value per share - Non-GAAP $17.61 $17.35 $16.92 $17.07 $16.77
Calculation of Tangible Equity to Tangible Assets:
Total tangible shareholders' equity at end of period $296,514 $291,071 $283,316 $285,444 $280,171
Total assets at end of period $3,644,477 $3,602,514 $3,586,874 $3,415,882 $3,317,022
Less:
Goodwill 58,114 58,114 58,114 58,114 58,114
Identifiable intangible assets, net 4,539 4,694 4,849 5,004 5,165
Total tangible assets at end of period $3,581,824 $3,539,706 $3,523,911 $3,352,764 $3,253,743
Equity to assets - GAAP 9.86% 9.82% 9.65% 10.20% 10.35%
Tangible equity to tangible assets - Non-GAAP 8.28% 8.22% 8.04% 8.51% 8.61%
Calculation of Return on Average Tangible Assets:
Net income $11,503 $11,010 $11,191 $10,538 $9,797
Total average assets $3,622,715 $3,588,881 $3,521,503 $3,370,323 $3,214,649
Less:
Average goodwill 58,114 58,114 58,114 58,114 58,114
Average identifiable intangible assets, net 4,614 4,770 4,924 5,082 5,245
Total average tangible assets $3,559,987 $3,525,997 $3,458,465 $3,307,127 $3,151,290
Return on average assets - GAAP 1.27% 1.23% 1.27% 1.25% 1.22%
Return on average tangible assets - Non-GAAP 1.29% 1.25% 1.29% 1.27% 1.24%
Calculation of Return on Average Tangible Equity:
Net income $11,503 $11,010 $11,191 $10,538 $9,797
Total average shareholders' equity $357,365 $351,215 $352,916 $346,837 $340,235
Less:
Average goodwill 58,114 58,114 58,114 58,114 58,114
Average identifiable intangible assets, net 4,614 4,770 4,924 5,082 5,245
Total average tangible shareholders' equity $294,637 $288,331 $289,878 $283,641 $276,876
Return on average shareholders' equity - GAAP 12.88% 12.54% 12.68% 12.15% 11.52%
Return on average tangible shareholders' equity - Non-GAAP 15.62% 15.27% 15.44% 14.86% 14.15%
Washington Trust Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION - Non-GAAP Financial Measures (unaudited)
Six Months Ended
Jun 30, Jun 30,
(Dollars in thousands) 2015 2014
Calculation of Return on Average Tangible Assets:
Net income $22,513 $19,095
Total average assets $3,605,892 $3,194,576
Less:
Average goodwill 58,114 58,114
Average identifiable intangible assets, net 4,691 5,327
Total average tangible assets $3,543,087 $3,131,135
Return on average assets - GAAP 1.25% 1.20%
Return on average tangible assets - Non-GAAP 1.27% 1.22%
Calculation of Return on Average Tangible Equity:
Net income $22,513 $19,095
Total average shareholders' equity $354,307 $337,646
Less:
Average goodwill 58,114 58,114
Average identifiable intangible assets, net 4,691 5,327
Total average tangible shareholders' equity $291,502 $274,205
Return on average shareholders' equity - GAAP 12.71% 11.31%
Return on average tangible shareholders' equity - Non-GAAP 15.45% 13.93%

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

Source:Washington Trust Bancorp, Inc.