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Washington Trust Reports Third Quarter 2015 Earnings

WESTERLY, R.I., Oct. 19, 2015 (GLOBE NEWSWIRE) -- Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced net income of $10.2 million, or 60 cents per diluted share, for the third quarter of 2015, compared to net income of $11.5 million, or 68 cents per diluted share, reported for the second quarter of 2015. The decrease in earnings was largely reflective of conditions affecting revenues in several business lines, including mortgage banking, commercial banking and wealth management.

Earnings on a year-to-date basis are up 10% over the same period in 2014. Returns on average equity and average assets were 12.17% and 1.20%, respectively, for the nine months ended September 30, 2015, compared to 11.60% and 1.21%, respectively, for the same period in 2014.

"Washington Trust's third quarter results reflect our continued efforts to compete and grow in a challenging environment," stated Joseph J. MarcAurele, Chairman and Chief Executive Officer. "During the quarter we completed the acquisition of Halsey Associates, Inc., providing a wealth management presence and client base in Connecticut. While loan growth was affected by strong competition and other factors, asset quality remained very satisfactory and we had solid deposit growth in the quarter."

Acquisition of Halsey Associates, Inc.

The acquisition of Halsey Associates, Inc. ("Halsey"), a registered investment adviser firm located in New Haven, CT, was completed on August 1, 2015. The cost to acquire Halsey was $10.0 million, including approximately $1.7 million in cash, $5.4 million in the form of 136,543 shares of Washington Trust common stock and $2.9 million for the estimated present value of future earn-outs to be paid. As of the date of acquisition, Halsey's assets under administration amounted to approximately $840 million. The transaction resulted in the recognition of intangible assets and goodwill of approximately $6.6 million and $6.7 million, respectively. Acquisition related expenses amounted to $504 thousand in the third quarter and $433 thousand in the second quarter. On an after-tax basis, these acquisition related expenses resulted in a charge of 3 cents per diluted share in the third quarter of 2015 and 2 cents per diluted share in the second quarter of 2015. A small amount of acquisition related expenses is expected to be recognized in the fourth quarter of 2015.

Net Interest Income

Net interest income totaled $26.0 million for the third quarter of 2015, a slight decrease from the second quarter of 2015. This reflects continued pressure on net interest margin, a lower level of prepayment fee income and a modest increase of average interest‑earning assets of $46.1 million, or 1%.

The net interest margin was 3.07% for the third quarter of 2015, down 8 basis points from the previous quarter. Commercial loan prepayment fee income, which is included in net interest income, amounted to $169 thousand in the third quarter of 2015, compared to $519 thousand in the prior quarter. Excluding the loan prepayment fee income in each period, the third quarter net interest margin was 3.05%, down by 4 basis points on a linked quarter basis. This decline in the net interest margin reflects continued pressure on asset yields resulting from a sustained low interest rate environment.

Noninterest Income

Noninterest income totaled $13.9 million for the third quarter of 2015, down by $1.3 million, or 9%, from the second quarter of 2015. Significant linked quarter changes included:

  • Wealth management revenues totaled $8.9 million for the third quarter, down slightly by $10 thousand, or 0.1%, from the previous quarter. While total wealth management revenues were essentially unchanged, included in these results were $662 thousand of revenues generated by Halsey since the August 1 acquisition date. Overall wealth management revenues were affected by equity market declines in the quarter and also included a $344 thousand decline in tax preparation fees, which are typically concentrated in the second quarter.

    Wealth management assets under administration amounted to $5.7 billion at September 30, 2015, up by $503 million, or 9.6%, in the quarter. While the net increase reflects the addition of assets under administration attributable to Halsey, total wealth management assets under administration were impacted by financial market declines.

  • Mortgage banking revenues (net gains on loan sales and commissions on loans originated for others) totaled $2.0 million for the third quarter, down by $785 thousand, or 29%, on a linked quarter basis. The decline largely reflects a lower yield on loan sales and a decrease in loan sales volume. Residential mortgage loans sold to the secondary market amounted to $132.4 million in the third quarter, down by $10.8 million, compared to the second quarter.
  • Loan related derivative income amounted to $327 thousand in the third quarter, down by $390 thousand from the prior quarter.
  • Other income totaled $457 thousand for the third quarter, down by $205 thousand on a linked quarter basis. The decrease was largely due to a $250 thousand settlement payment received in the second quarter on a trust preferred debt obligation previously held by the Corporation. On an after-tax basis, this second quarter transaction amounted to 1 cent per diluted share.

Noninterest Expenses

Noninterest expenses totaled $24.5 million for the third quarter of 2015, up by $239 thousand, or 1%, from the second quarter of 2015. The increase in noninterest expenses was largely attributable to the addition of Halsey for the two-month period since the date of acquisition, offset, in part, by a decline in advertising and promotion expenses due to the timing of promotional activities. Halsey noninterest expenses since the date of acquisition totaled $447 thousand, including $289 thousand of salaries and benefits expense and $110 thousand of amortization of intangible assets.

Income tax expense amounted to $5.0 million for the third quarter of 2015, down by $423 thousand, or 8%, from the amount recognized in the previous quarter. The effective tax rate for the third quarter of 2015 was 32.7%, compared to 31.9% for the second quarter of 2015. The effective tax rate for the remainder of 2015 will be approximately 32.5%.

Loans

Total loans amounted to $2.9 billion at September 30, 2015, up by $21.3 million, or 1%, from the balance at June 30, 2015. Significant linked quarter changes included:

  • Total commercial loans decreased by $3.7 million, or 0.2%, with an $8.0 million increase in commercial real estate and an $11.7 million decline in commercial and industrial. The $8.0 million increase in the commercial real estate portfolio included a $10.9 million increase in construction and development loans, but was hindered by unscheduled loan payoffs of approximately $36 million in the most recent quarter. The decline in the commercial and industrial portfolio was primarily due to decreased line utilization by commercial borrowers.
  • The residential real estate loan portfolio grew by $23.0 million, or 2%.
  • Consumer loans increased by $2.1 million, or 1%, with growth in home equity lines of credit.

Investment Securities

The securities portfolio amounted to $344.9 million at September 30, 2015, down $29.0 million, or 8%, from the balance at June 30, 2015. The decrease reflects calls of securities and routine principal pay-downs on mortgage backed securities, partially offset by purchases of U.S. government agency securities.

Deposits and Borrowings

Total deposits grew by $97.2 million, or 4%, in the third quarter of 2015 and amounted to $2.8 billion at September 30, 2015. Wholesale brokered time deposits decreased by $17.0 million from the previous quarter. Excluding wholesale brokered time deposits, in-market deposits increased by $114.2 million, or 5%. This increase included a $56.1 million, or 12%, increase in demand deposit accounts.

FHLBB advances amounted to $381.6 million at September 30, 2015, down by $89.7 million, or 19%, from June 30, 2015.

Asset Quality

Asset quality metrics remained at manageable levels in the third quarter of 2015. Total nonaccrual loans amounted to $16.8 million, or 0.57% of total loans, at September 30, 2015, up from $15.1 million, or 0.52%, at June 30, 2015. Total past due loans amounted to $21.8 million, or 0.74% of total loans, at September 30, 2015, down from $24.0 million, or 0.82% of total loans, at June 30, 2015.

A loan loss provision totaling $200 thousand was charged to earnings in the third quarter of 2015, compared to a loss provision of $100 thousand recognized in the second quarter of 2015. The third quarter provision includes loan loss allocations commensurate with growth in loan portfolio balances, offset by reductions in other loan loss exposures based on management's assessment of continued improvement in credit quality conditions. Net charge-offs amounted to $626 thousand in the third quarter of 2015, compared to $323 thousand in the second quarter of 2015. The allowance for loan losses was $27.2 million, or 0.92% of total loans, at September 30, 2015, compared to $27.6 million, or 0.94% of total loans, at June 30, 2015.

Capital and Dividends

Total shareholder's equity was $370.5 million at September 30, 2015, up by $11.4 million from June 30, 2015. Capital levels at September 30, 2015 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk‑based capital ratio of 12.80% at September 30, 2015, compared to 12.78% at June 30, 2015.

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

Conference Call

Washington Trust will host a conference call to discuss third quarter results, business highlights and outlook on Tuesday, October 20, 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 13621367; the audio replay will be available through October 30, 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 December 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 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 forward-looking statements in other documents we file with the SEC, in press releases and other written materials, and in oral statements made by our officers, directors or employees. You can identify forward-looking statements by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “outlook,” “will,” “should,” and other expressions that predict or indicate future events and trends and which do not relate to historical matters. You should not rely on forward-looking statements, because they involve known and unknown risks, uncertainties and other factors, some of which are beyond the control of Washington Trust. These risks, uncertainties and other factors may cause the actual results, performance or achievements of Washington Trust to be materially different from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements.

Some of the factors that might cause these differences include the following: weakness in national, regional or international economic conditions or conditions affecting the banking or financial services industries or financial capital markets; volatility in national and international financial markets; additional government intervention in the U.S. financial system; reductions in net interest income resulting from interest rate volatility as well as changes in the balance and mix of loans and deposits; reductions in the market value of wealth management assets under administration; changes in the value of securities and other assets; reductions in loan demand; changes in loan collectibility, default and charge-off rates; changes in the size and nature of the our competition; changes in legislation or regulation and accounting principles, policies and guidelines; the ability to fully realize the expected cost savings and revenues from the Halsey acquisition; and changes in the assumptions used in making such forward-looking statements. In addition, the factors described under “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as updated by our Quarterly Reports on Form 10-Q and other filings submitted to the SEC, may result in these differences. You should carefully review all of these factors and you should be aware that there may be other factors that could cause these differences. These forward-looking statements were based on information, plans and estimates at the date of this report, and we assume no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

Supplemental Information - Explanation of Non-GAAP Financial Measures

In addition to results presented in accordance with generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures. Washington Trust's management believes that the supplemental non-GAAP information, which consists of measurements and ratios based on tangible equity and tangible assets, is utilized by regulators and market analysts to evaluate a company's financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.

Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS (unaudited)
Sep 30,Dec 31,
(Dollars in thousands, except par value) 2015 2014
Assets:
Cash and due from banks $106,445 $76,386
Short-term investments 3,629 3,964
Mortgage loans held for sale (including $21,136 at September 30, 2015 and $30,321 at December 31, 2014 measured at fair value) 31,805 45,693
Securities:
Available for sale, at fair value 323,795 357,662
Held to maturity, at amortized cost (fair value $21,820 at September 30, 2015 and $26,008 at December 31, 2014) 21,140 25,222
Total securities 344,935 382,884
Federal Home Loan Bank stock, at cost 37,730 37,730
Loans:
Commercial 1,579,854 1,535,488
Residential real estate 1,024,214 985,415
Consumer
345,850 338,373
Total loans 2,949,918 2,859,276
Less allowance for loan losses
27,161 28,023
Net loans 2,922,757 2,831,253
Premises and equipment, net 28,180 27,495
Investment in bank-owned life insurance 65,000 63,519
Goodwill 64,803 58,114
Identifiable intangible assets, net 10,832 4,849
Other assets
58,720 54,987
Total assets
$3,674,836 $3,586,874
Liabilities:
Deposits:
Demand deposits $513,856 $459,852
NOW accounts 358,973 326,375
Money market accounts 855,858 802,764
Savings accounts 305,775 291,725
Time deposits
801,818 874,102
Total deposits 2,836,280 2,754,818
Federal Home Loan Bank advances 381,649 406,297
Junior subordinated debentures 22,681 22,681
Other liabilities
63,699 56,799
Total liabilities
3,304,309 3,240,595
Shareholders’ Equity:
Common stock of $.0625 par value; authorized 30,000,000 shares; issued and outstanding 16,984,737 shares at September 30, 2015 and 16,746,363 shares at December 31, 2014 1,062 1,047
Paid-in capital 109,724 101,204
Retained earnings 268,166 252,837
Accumulated other comprehensive loss
(8,425) (8,809)
Total shareholders’ equity
370,527 346,279
Total liabilities and shareholders’ equity
$3,674,836 $3,586,874
Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars and shares in thousands, except per share amounts)Three MonthsNine Months
Periods ended September 30, 2015 2014 2015 2014
Interest income:
Interest and fees on loans $28,626 $27,239 $85,718 $78,997
Interest on securities:Taxable 2,178 2,397 6,613 8,038
Nontaxable 366 519 1,203 1,658
Dividends on Federal Home Loan Bank stock 309 140 638 420
Other interest income
47 36 101 99
Total interest and dividend income
31,526 30,331 94,273 89,212
Interest expense:
Deposits 3,308 3,317 10,045 9,406
Federal Home Loan Bank advances 1,987 1,832 5,780 5,831
Junior subordinated debentures 232 241 714 723
Other interest expense
2 3 7 10
Total interest expense
5,529 5,393 16,546 15,970
Net interest income 25,997 24,938 77,727 73,242
Provision for loan losses
200 600 300 1,350
Net interest income after provision for loan losses 25,797 24,338 77,427 71,892
Noninterest income:
Wealth management revenues 8,902 8,374 26,249 24,969
Merchant processing fees 1,291
Net gains on loan sales and commissions on loans originated for others 1,963 1,742 7,296 4,688
Service charges on deposit accounts 986 881 2,894 2,459
Card interchange fees 849 804 2,389 2,264
Income from bank-owned life insurance 498 468 1,480 1,354
Loan related derivative income 327 339 1,689 562
Equity in earnings (losses) of unconsolidated subsidiaries (69) (63) (224) (213)
Gain on sale of business line 6,265
Other income
457 580 1,421 1,670
Total noninterest income
13,913 13,125 43,194 45,309
Noninterest expense:
Salaries and employee benefits 15,971 14,516 46,971 43,845
Net occupancy 1,721 1,557 5,276 4,672
Equipment 1,424 1,211 4,140 3,682
Merchant processing costs 1,050
Outsourced services 1,250 1,138 3,774 3,197
Legal, audit and professional fees 630 494 1,916 1,710
FDIC deposit insurance costs 467 442 1,376 1,295
Advertising and promotion 356 368 1,201 1,140
Amortization of intangibles 260 161 571 489
Debt prepayment penalties 6,294
Other expenses
2,459 2,160 7,143 6,413
Total noninterest expense
24,538 22,047 72,368 73,787
Income before income taxes 15,172 15,416 48,253 43,414
Income tax expense
4,964 4,878 15,532 13,781
Net income
$10,208 $10,538 $32,721 $29,633
Weighted average common shares outstanding - basic 16,939 16,714 16,837 16,673
Weighted average common shares outstanding - diluted 17,102 16,855 17,027 16,832
Per share information:Basic earnings per common share$0.60 $0.63 $1.94 $1.77
Diluted earnings per common share$0.60 $0.62 $1.92 $1.75
Cash dividends declared per share$0.34 $0.32 $1.02 $0.90


Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
At or for the Quarters Ended
(Dollars and shares in thousands, except per share amounts)Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Dec 31,
2014
Sep 30,
2014
Financial Data:
Total assets$3,674,836 $3,644,477 $3,602,514 $3,586,874 $3,415,882
Total loans 2,949,918 2,928,584 2,880,592 2,859,276 2,674,047
Total securities 344,935 373,901 364,967 382,884 402,553
Total deposits 2,836,280 2,739,119 2,783,143 2,754,818 2,738,888
Total shareholders' equity 370,527 359,167 353,879 346,279 348,562
Net interest income 25,997 26,028 25,702 26,263 24,938
Provision for loan losses 200 100 500 600
Noninterest income 13,913 15,261 14,020 13,706 13,125
Noninterest expense 24,538 24,299 23,531 23,060 22,047
Income tax expense 4,964 5,387 5,181 5,218 4,878
Net income 10,208 11,503 11,010 11,191 10,538
Share Data:
Basic earnings per common share$0.60 $0.68 $0.65 $0.67 $0.63
Diluted earnings per common share$0.60 $0.68 $0.65 $0.66 $0.62
Dividends declared per share$0.34 $0.34 $0.34 $0.32 $0.32
Book value per share$21.82 $21.34 $21.10 $20.68 $20.85
Tangible book value per share - Non-GAAP (1)$17.36 $17.61 $17.35 $16.92 $17.07
Market value per share$38.45 $39.48 $38.19 $40.18 $32.99
Shares outstanding at end of period 16,985 16,834 16,773 16,746 16,721
Weighted average common shares outstanding - basic 16,939 16,811 16,759 16,735 16,714
Weighted average common shares outstanding - diluted 17,102 16,989 16,939 16,911 16,855
Key Ratios:
Return on average assets 1.11 % 1.27 % 1.23 % 1.27 % 1.25 %
Return on average tangible assets - Non-GAAP (1) 1.13 % 1.29 % 1.25 % 1.29 % 1.27 %
Return on average equity 11.13 % 12.88 % 12.54 % 12.68 % 12.15 %
Return on average tangible equity - Non-GAAP (1) 13.82 % 15.62 % 15.27 % 15.44 % 14.86 %
Tier 1 risk-based capital11.83% (i) 11.79 % 11.78 % 11.52 % 12.15 %
Total risk-based capital12.80% (i) 12.78 % 12.80 % 12.56 % 13.26 %
Tier 1 leverage ratio9.25% (i) 9.31 % 9.21 % 9.14 % 9.35 %
Tier 1 common equity (2)11.05% (i) 11.00 % 10.98 % N/A N/A
Equity to assets 10.08 % 9.86 % 9.82 % 9.65 % 10.20 %
Tangible equity to tangible assets - Non-GAAP (1) 8.19 % 8.28 % 8.22 % 8.04 % 8.51 %
(i) - estimated
Wealth Management Revenues:
Trust and investment management fees$7,768 $7,238 $7,142 $7,059 $6,982
Mutual fund fees 989 1,032 1,036 1,068 1,100
Asset-based revenues 8,757 8,270 8,178 8,127 8,082
Transaction-based revenues 145 642 257 282 292
Total wealth management revenues$8,902 $8,912 $8,435 $8,409 $8,374
Wealth Management Assets Under Administration:
Balance at beginning of period$5,211,548 $5,159,663 $5,069,966 $4,983,464 $5,010,588
Acquisition of Halsey Associates, Inc. (Aug. 1, 2015) 839,994
Net investment appreciation (depreciation) & income (316,121) (13,932) 80,872 111,715 (29,199)
Net client cash flows (21,220) 65,817 8,825 (25,213) 2,075
Balance at end of period$5,714,201 $5,211,548 $5,159,663 $5,069,966 $4,983,464
(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)
Nine Months Ended
Sep 30,Sep 30,
(Dollars in thousands) 2015 2014
Key Ratios:
Return on average assets 1.20% 1.21%
Return on average tangible assets - Non-GAAP (1) 1.22% 1.24%
Return on average equity 12.17% 11.60%
Return on average tangible equity - Non-GAAP (1) 14.90% 14.24%
Allowance for Loan Losses:
Balance at beginning of period $28,023 $27,886
Provision charged to earnings 300 1,350
Charge-offs (1,401) (1,638)
Recoveries 239 170
Balance at end of period $27,161 $27,768
Net Loan Charge-Offs (Recoveries):
Commercial mortgages $312 $958
Commercial & industrial 367 328
Residential real estate mortgages 62 36
Consumer 421 146
Total $1,162 $1,468
Net charge-offs to average loans (annualized) 0.05% 0.08%
Wealth Management Revenues:
Trust and investment management fees $22,148 $20,495
Mutual fund fees 3,057 3,267
Asset-based revenues 25,205 23,762
Transaction-based revenues 1,044 1,207
Total wealth management revenues $26,249 $24,969
Wealth Management Assets Under Administration:
Balance at beginning of period $5,069,966 $4,781,958
Acquisition of Halsey Associates, Inc. (Aug. 1, 2015) 839,994
Net investment appreciation & income (249,181) 146,405
Net client cash flows 53,422 55,101
Balance at end of period $5,714,201 $4,983,464
(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,
2015 2015 2015 2014 2014
Average Yield / Rate (taxable equivalent basis):
Assets:
Commercial loans 3.91% 4.06% 4.02% 4.23% 4.20%
Residential real estate loans, including mortgage loans held for sale 3.90% 3.95% 4.06% 4.06% 4.06%
Consumer loans 3.79% 3.77% 3.82% 3.79% 3.83%
Total loans 3.89% 3.99% 4.01% 4.12% 4.10%
Cash, federal funds sold and other short-term investments 0.21% 0.18% 0.20% 0.18% 0.19%
FHLBB stock 3.25% 1.74% 1.77% 1.48% 1.47%
Taxable debt securities 2.73% 2.72% 2.84% 2.83% 2.94%
Nontaxable debt securities 5.95% 6.15% 6.03% 5.87% 5.86%
Total securities 3.08% 3.11% 3.23% 3.22% 3.36%
Total interest-earning assets 3.70% 3.80% 3.84% 3.91% 3.89%
Liabilities:
Interest-bearing demand deposits 0.07% 0.03% 0.09% % %
NOW accounts 0.06% 0.06% 0.06% 0.06% 0.06%
Money market accounts 0.46% 0.46% 0.45% 0.43% 0.41%
Savings accounts 0.07% 0.07% 0.06% 0.06% 0.06%
Time deposits (in-market) 0.98% 1.00% 1.05% 1.14% 1.17%
Wholesale brokered time deposits 1.29% 1.28% 1.29% 1.23% 1.09%
FHLBB advances 1.85% 1.94% 1.91% 2.28% 2.57%
Junior subordinated debentures 4.06% 4.26% 4.31% 4.22% 4.22%
Other 7.63% 6.92% 9.51% 8.50% 7.88%
Total interest-bearing liabilities 0.79% 0.79% 0.82% 0.84% 0.84%
Interest rate spread (taxable equivalent basis) 2.91% 3.01% 3.02% 3.07% 3.05%
Net interest margin (taxable equivalent basis) 3.07% 3.15% 3.18% 3.23% 3.21%
At September 30, 2015
AmortizedUnrealizedUnrealizedFair
(Dollars in thousands) CostGainsLossesValue
Securities Available for Sale:
Obligations of U.S. government-sponsored enterprises $52,430 $220 $(7)$52,643
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises 197,790 8,498 206,288
Obligations of states and political subdivisions 36,775 982 37,757
Individual name issuer trust preferred debt securities 29,806 (4,123) 25,683
Corporate bonds 1,418 8 (2) 1,424
Total securities available for sale 318,219 9,708 (4,132) 323,795
Held to Maturity:
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises 21,140 680 21,820
Total securities held to maturity 21,140 680 21,820
Total securities $339,359 $10,388 $(4,132)$345,615



Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
Period End Balances At
(Dollars in thousands)Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Dec 31,
2014
Sep 30,
2014
Loans:
Commercial:Mortgages$873,767 $876,589 $865,042 $843,978 $766,703
Construction & development 121,857 110,989 89,851 79,592 58,750
Commercial & industrial 584,230 595,959 604,630 611,918 564,920
Total commercial 1,579,854 1,583,537 1,559,523 1,535,488 1,390,373
Residential real estate:Mortgages 994,808 971,705 954,905 948,731 912,956
Homeowner construction 29,406 29,558 32,659 36,684 32,624
Total residential real estate 1,024,214 1,001,263 987,564 985,415 945,580
Consumer:Home equity lines 252,862 249,845 239,537 242,480 240,567
Home equity loans 47,610 47,437 46,727 46,967 46,455
Other 45,378 46,502 47,241 48,926 51,072
Total consumer 345,850 343,784 333,505 338,373 338,094
Total loans$2,949,918 $2,928,584 $2,880,592 $2,859,276 $2,674,047
At September 30, 2015
(Dollars in thousands)Balance % of Total
Commercial Real Estate Loans by Property Location:
Rhode Island, Connecticut, Massachusetts$919,473 92.4%
New York, New Jersey, Pennsylvania 62,678 6.3%
New Hampshire 13,473 1.3%
Total commercial real estate loans (1)$995,624 100.0%
(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, 2015
(Dollars in thousands)Balance % of Total
Residential Mortgages by Property Location:
Rhode Island, Connecticut, Massachusetts$1,005,610 98.1%
New Hampshire 10,867 1.1%
New York, Virginia, New Jersey, Maryland, Pennsylvania 4,200 0.4%
Ohio 1,622 0.2%
Other 1,915 0.2%
Total residential mortgages$1,024,214 100.0%
Period End Balances At
(Dollars in thousands) Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Dec 31,
2014
Sep 30,
2014
Deposits:
Demand deposits $513,856 $457,755 $477,046 $459,852 $476,808
NOW accounts 358,973 357,922 333,321 326,375 313,391
Money market accounts 855,858 789,334 821,353 802,764 833,318
Savings accounts 305,775 300,108 298,802 291,725 290,561
Time deposits 801,818 834,000 852,621 874,102 824,810
Total deposits $2,836,280 $2,739,119 $2,783,143 $2,754,818 $2,738,888
Out-of-market brokered certificates of deposits included in time deposits $267,552 $284,590 $290,863 $299,129 $211,222
In-market deposits, excluding out-of-market brokered certificates of deposit $2,568,728 $2,454,529 $2,492,280 $2,455,689 $2,527,666


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) 2015 2015 2015 2014 2014
Asset Quality Ratios:
Total past due loans to total loans 0.74% 0.82% 0.66% 0.63% 0.75%
Nonperforming assets to total assets 0.48% 0.45% 0.48% 0.48% 0.53%
Nonaccrual loans to total loans 0.57% 0.52% 0.55% 0.56% 0.63%
Allowance for loan losses to nonaccrual loans 161.25% 182.32% 175.29% 175.75% 163.68%
Allowance for loan losses to total loans 0.92% 0.94% 0.97% 0.98% 1.04%
Nonperforming Assets:
Commercial mortgages$4,915 $4,915 $5,115 $5,315 $6,022
Commercial construction & development
Commercial & industrial 1,137 1,039 2,193 1,969 1,326
Residential real estate mortgages 9,472 7,411 6,956 7,124 7,890
Consumer 1,320 1,766 1,601 1,537 1,727
Total nonaccrual loans 16,844 15,131 15,865 15,945 16,965
Nonaccrual investment securities
Property acquired through foreclosure or repossession 955 1,388 1,398 1,176 988
Total nonperforming assets$17,799 $16,519 $17,263 $17,121 $17,953
Troubled Debt Restructured Loans:
Accruing troubled debt restructured loans:
Commercial mortgages$10,637 $9,448 $9,448 $9,676 $9,677
Commercial & industrial 2,069 2,209 881 954 1,036
Residential real estate mortgages 674 679 684 1,252 1,258
Consumer 232 201 134 135 164
Accruing troubled debt restructured loans 13,612 12,537 11,147 12,017 12,135
Nonaccrual troubled debt restructured loans:
Commercial mortgages 4,498 4,498 4,698 4,898 4,898
Commercial & industrial 380 381 1,442 1,193 854
Residential real estate mortgages 613 92 338 248 441
Consumer 33 34
Nonaccrual troubled debt restructured loans 5,491 5,004 6,512 6,339 6,193
Total troubled debt restructured loans$19,103 $17,541 $17,659 $18,356 $18,328
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) 2015 2015 2015 2014 2014
Past Due Loans:
Loans 30-59 Days Past Due:
Commercial mortgages$147 $14 $497 $ $
Commercial & industrial 162 2,581 229 2,136 1,129
Residential real estate mortgages 3,610 5,120 4,470 2,943 2,582
Consumer loans 899 1,634 1,512 954 1,677
Loans 30-59 days past due$4,818 $9,349 $6,708 $6,033 $5,388
Loans 60-89 Days Past Due:
Commercial mortgages$ $ $61 $ $
Commercial & industrial 3,455 2,299 229 1,202 314
Residential real estate mortgages 2,458 913 1,352 821 2,001
Consumer loans 338 397 565 345 356
Loans 60-89 days past due$6,251 $3,609 $2,207 $2,368 $2,671
Loans 90 Days or More Past Due:
Commercial mortgages$4,915 $4,915 $5,115 $5,315 $5,995
Commercial & industrial 720 638 721 181 970
Residential real estate mortgages 4,499 4,871 3,607 3,284 3,922
Consumer loans 608 647 723 897 989
Loans 90 days or more past due$10,742 $11,071 $10,166 $9,677 $11,876
Total Past Due Loans:
Commercial mortgages$5,062 $4,929 $5,673 $5,315 $5,995
Commercial & industrial 4,337 5,518 1,179 3,519 2,413
Residential real estate mortgages 10,567 10,904 9,429 7,048 8,505
Consumer loans 1,845 2,678 2,800 2,196 3,022
Total past due loans$21,811 $24,029 $19,081 $18,078 $19,935
Accruing loans 90 days or more past due$ $ $ $ $
Nonaccrual loans included in past due loans$13,964 $12,397 $12,314 $12,721 $14,364
For the Quarters Ended
Sep 30,Jun 30,Mar 31,Dec 31,Sep 30,
(Dollars in thousands) 2015 2015 2015 2014 2014
Allowance for Loan Losses:
Balance at beginning of period$27,587 $27,810 $28,023 $27,768 $27,269
Provision charged to earnings 200 100 500 600
Charge-offs (725) (355) (321) (311) (148)
Recoveries 99 32 108 66 47
Balance at end of period$27,161 $27,587 $27,810 $28,023 $27,768
Net Loan Charge-Offs (Recoveries):
Commercial mortgages$(4)$196 $120 $(5)$(7)
Commercial & industrial 348 26 (7) 144 63
Residential real estate mortgages 12 4 46 45 (1)
Consumer 270 97 54 61 46
Total$626 $323 $213 $245 $101
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, 2015 June 30, 2015 September 30, 2014
Average BalanceInterestYield/
Rate
Average BalanceInterestYield/
Rate
Average BalanceInterestYield/
Rate
(Dollars in thousands)
Assets:
Commercial loans $1,571,645 $15,475 3.91% $1,574,183 $15,930 4.06% $1,380,229 $14,624 4.20 %
Residential real estate loans, including loans held for sale 1,050,949 10,329 3.90% 1,025,029 10,102 3.95% 946,738 9,685 4.06 %
Consumer loans 343,603 3,283 3.79% 338,809 3,183 3.77% 337,598 3,259 3.83 %
Total loans 2,966,197 29,087 3.89% 2,938,021 29,215 3.99% 2,664,565 27,568 4.10 %
Cash, federal funds sold and short-term investments 89,280 47 0.21% 63,858 29 0.18% 74,569 36 0.19 %
FHLBB stock 37,730 309 3.25% 37,730 164 1.74% 37,730 140 1.47 %
Taxable debt securities 316,214 2,178 2.73% 320,643 2,176 2.72% 323,140 2,397 2.94 %
Nontaxable debt securities 37,780 567 5.95% 40,886 627 6.15% 53,374 789 5.86 %
Total securities 353,994 2,745 3.08% 361,529 2,803 3.11% 376,514 3,186 3.36 %
Total interest-earning assets 3,447,201 32,188 3.70% 3,401,138 32,211 3.80% 3,153,378 30,930 3.89 %
Noninterest-earning assets 231,286 221,577 216,945
Total assets $3,678,487 $3,622,715 $3,370,323
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits $30,392 $5 0.07% $38,129 $3 0.03% $12,862 $ %
NOW accounts 357,128 53 0.06% 363,434 53 0.06% 311,077 47 0.06 %
Money market accounts 820,597 951 0.46% 820,887 941 0.46% 798,273 830 0.41 %
Savings accounts 303,587 52 0.07% 298,286 50 0.07% 291,386 46 0.06 %
Time deposits (in-market) 541,486 1,338 0.98% 554,839 1,390 1.00% 623,221 1,832 1.17 %
Wholesale brokered time deposits 279,839 909 1.29% 285,844 911 1.28% 204,046 562 1.09 %
FHLBB advances 425,931 1,987 1.85% 391,152 1,891 1.94% 283,219 1,832 2.57 %
Junior subordinated debentures 22,681 232 4.06% 22,681 241 4.26% 22,681 241 4.22 %
Other 104 2 7.63% 116 2 6.92% 151 3 7.88 %
Total interest-bearing liabilities 2,781,745 5,529 0.79% 2,775,368 5,482 0.79% 2,546,916 5,393 0.84 %
Demand deposits 477,393 441,355 439,353
Other liabilities 52,625 48,627 37,217
Shareholders' equity 366,724 357,365 346,837
Total liabilities and shareholders' equity $3,678,487 $3,622,715 $3,370,323
Net interest income (FTE) $26,659 $26,729 $25,537
Interest rate spread 2.91% 3.01% 3.05 %
Net interest margin 3.07% 3.15% 3.21 %
Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:
(Dollars in thousands) Three Months Ended
Sep 30,
2015
Jun 30, 2015Sep 30, 2014
Commercial loans $461 $476 $329
Nontaxable debt securities 201 225 270
Total $662 $701 $599


Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS (unaudited)
Nine Months Ended
September 30, 2015 September 30, 2014
Average
Balance
InterestYield/
Rate
Average
Balance
InterestYield/
Rate
(Dollars in thousands)
Assets:
Commercial loans $1,563,615 $46,717 3.99% $1,352,271 $43,733 4.32 %
Residential real estate loans, including loans held for sale 1,035,408 30,745 3.97% 869,230 26,704 4.11 %
Consumer loans 339,608 9,634 3.79% 333,127 9,527 3.82 %
Total loans 2,938,631 87,096 3.96% 2,554,628 79,964 4.19 %
Cash, federal funds sold and short-term investments 68,205 101 0.20% 65,486 99 0.20 %
FHLBB stock 37,730 638 2.26% 37,730 420 1.49 %
Taxable debt securities 319,786 6,613 2.76% 329,779 8,038 3.26 %
Nontaxable debt securities 41,083 1,858 6.05% 56,894 2,520 5.92 %
Total securities 360,869 8,471 3.14% 386,673 10,558 3.65 %
Total interest-earning assets 3,405,435 96,306 3.78% 3,044,517 91,041 4.00 %
Noninterest-earning assets 224,921 209,286
Total assets $3,630,356 $3,253,803
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits $35,430 $17 0.06% $10,906 $ %
NOW accounts 350,151 153 0.06% 309,101 141 0.06 %
Money market accounts 813,915 2,775 0.46% 748,121 2,152 0.38 %
Savings accounts 298,635 148 0.07% 291,949 136 0.06 %
Time deposits (in-market) 554,369 4,198 1.01% 649,166 5,645 1.16 %
Wholesale brokered time deposits 286,728 2,754 1.28% 163,705 1,332 1.09 %
FHLBB advances 407,363 5,780 1.90% 257,814 5,831 3.02 %
Junior subordinated debentures 22,681 714 4.21% 22,681 723 4.26 %
Other 116 7 8.07% 162 10 8.25 %
Total interest-bearing liabilities 2,769,388 16,546 0.80% 2,453,605 15,970 0.87 %
Demand deposits 452,691 424,120
Other liabilities 49,786 35,335
Shareholders' equity 358,491 340,743
Total liabilities and shareholders' equity $3,630,356 $3,253,803
Net interest income (FTE) $79,760 $75,071
Interest rate spread 2.98% 3.13 %
Net interest margin 3.13% 3.30 %
(Dollars in thousands) Nine Months Ended
Sep 30,
2015
Sep 30,
2014
Commercial loans $1,378 $967
Nontaxable debt securities 655 862
Total $2,033 $1,829


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) 2015 2015 2015 2014 2014
Calculation of Tangible Book Value per Share:
Total shareholders' equity at end of period$370,527 $359,167 $353,879 $346,279 $348,562
Less:
Goodwill 64,803 58,114 58,114 58,114 58,114
Identifiable intangible assets, net 10,832 4,539 4,694 4,849 5,004
Total tangible shareholders' equity at end of period$294,892 $296,514 $291,071 $283,316 $285,444
Shares outstanding at end of period 16,985 16,834 16,773 16,746 16,721
Book value per share - GAAP$21.82 $21.34 $21.10 $20.68 $20.85
Tangible book value per share - Non-GAAP$17.36 $17.61 $17.35 $16.92 $17.07
Calculation of Tangible Equity to Tangible Assets:
Total tangible shareholders' equity at end of period$294,892 $296,514 $291,071 $283,316 $285,444
Total assets at end of period$3,674,836 $3,644,477 $3,602,514 $3,586,874 $3,415,882
Less:
Goodwill 64,803 58,114 58,114 58,114 58,114
Identifiable intangible assets, net 10,832 4,539 4,694 4,849 5,004
Total tangible assets at end of period$3,599,201 $3,581,824 $3,539,706 $3,523,911 $3,352,764
Equity to assets - GAAP 10.08% 9.86% 9.82% 9.65% 10.20%
Tangible equity to tangible assets - Non-GAAP 8.19% 8.28% 8.22% 8.04% 8.51%
Calculation of Return on Average Tangible Assets:
Net income$10,208 $11,503 $11,010 $11,191 $10,538
Total average assets$3,678,487 $3,622,715 $3,588,881 $3,521,503 $3,370,323
Less:
Average goodwill 62,524 58,114 58,114 58,114 58,114
Average identifiable intangible assets, net 8,768 4,614 4,770 4,924 5,082
Total average tangible assets$3,607,195 $3,559,987 $3,525,997 $3,458,465 $3,307,127
Return on average assets - GAAP 1.11% 1.27% 1.23% 1.27% 1.25%
Return on average tangible assets - Non-GAAP 1.13% 1.29% 1.25% 1.29% 1.27%
Calculation of Return on Average Tangible Equity:
Net income$10,208 $11,503 $11,010 $11,191 $10,538
Total average shareholders' equity$366,724 $357,365 $351,215 $352,916 $346,837
Less:
Average goodwill 62,524 58,114 58,114 58,114 58,114
Average identifiable intangible assets, net 8,768 4,614 4,770 4,924 5,082
Total average tangible shareholders' equity$295,432 $294,637 $288,331 $289,878 $283,641
Return on average shareholders' equity - GAAP 11.13% 12.88% 12.54% 12.68% 12.15%
Return on average tangible shareholders' equity - Non-GAAP 13.82% 15.62% 15.27% 15.44% 14.86%
Washington Trust Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION - Non-GAAP Financial Measures (unaudited)
Nine Months Ended
Sep 30,Sep 30,
(Dollars in thousands) 2015 2014
Calculation of Return on Average Tangible Assets:
Net income $32,721 $29,633
Total average assets $3,630,356 $3,253,803
Less:
Average goodwill 59,600 58,114
Average identifiable intangible assets, net 6,065 5,244
Total average tangible assets $3,564,691 $3,190,445
Return on average assets - GAAP 1.20% 1.21%
Return on average tangible assets - Non-GAAP 1.22% 1.24%
Calculation of Return on Average Tangible Equity:
Net income $32,721 $29,633
Total average shareholders' equity $358,491 $340,743
Less:
Average goodwill 59,600 58,114
Average identifiable intangible assets, net 6,065 5,244
Total average tangible shareholders' equity $292,826 $277,385
Return on average shareholders' equity - GAAP 12.17% 11.60%
Return on average tangible shareholders' equity - Non-GAAP 14.90% 14.24%

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

Source:Washington Trust Bancorp, Inc.