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Washington Trust Reports First Quarter 2016 Earnings

WESTERLY, R.I., April 27, 2016 (GLOBE NEWSWIRE) -- Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced net income of $10.9 million, or $0.64 per diluted share, for the first quarter of 2016, up from net income of $10.7 million, or $0.62 per diluted share, reported for the fourth quarter of 2015.

"Washington Trust continued to post solid earnings in the latest quarter," stated Joseph J. MarcAurele, Washington Trust Chairman and CEO. "We recently opened a new retail branch on the East Side of Providence, Rhode Island, and have selected a site, and are awaiting regulatory approval, for a new mortgage banking office in Wellesley, Massachusetts. Our market expansion efforts, along with the continuing strength of our commercial, retail, mortgage banking and wealth management business lines, will help us to continue to achieve favorable results in future periods."

Selected highlights for the first quarter of 2016 include:

  • Returns on average equity and average assets were solid at 11.50% and 1.16%, respectively. Comparable amounts for the fourth quarter of 2015 were 11.52% and 1.16%, respectively.
  • Total loans stood at $3.0 billion at March 31, 2016, up by 1.1% in the quarter. Total loans were up by 5.8% from a year ago.
  • Total deposits amounted to $2.9 billion at March 31, 2016, down by 1.9% in the quarter and up by 3.5% from a year ago.
  • In March, Washington Trust declared a quarterly dividend of 36 cents per share, representing a $0.02 per share increase over the previous quarter and the sixth consecutive year of dividend increases.

Net Interest Income
Net interest income totaled $27.7 million for the first quarter of 2016, up by $1.5 million, or 6%, from the fourth quarter of 2015. The net interest margin was 3.24% for the first quarter of 2016, up 16 basis points from the previous quarter. Commercial loan prepayment fee income, which is included in net interest income, amounted to $1.0 million in the first quarter of 2016, compared to $73 thousand in the prior quarter. A significant portion of the latest quarter prepayment fee amount was attributable to one relationship. Excluding the loan prepayment fee income in each period, the first quarter net interest margin was 3.13%, up by 6 basis points on a linked quarter basis. This increase also reflects a modest benefit resulting from the increase in the short-term borrowing rate announced by the Federal Reserve in December 2015. Other significant linked quarter changes included:

  • Average interest-earning assets increased by $60 million, largely due to growth in average balances of commercial loans. Loan prepayment fee income contributed 12 basis points to the yield on interest-earning assets in the first quarter of 2016, compared to 1 basis point in the prior quarter. Excluding the impact of prepayment fee income in each period, the yield on interest-earning assets was 3.72% for the first quarter, compared to 3.67% in the prior quarter.
  • Average interest-bearing liabilities rose by $70 million, reflecting increases in average wholesale funding balances. The cost of interest-bearing funds was 0.74%, unchanged from the previous quarter.

Noninterest Income
Noninterest income totaled $14.6 million for the first quarter of 2016, down by $512 thousand, or 3%, from the fourth quarter of 2015. Significant linked quarter changes included:

  • Wealth management revenues totaled $9.2 million for the first quarter, in-line with the previous quarter. Wealth management assets under administration amounted to $5.9 billion at March 31, 2016, up by $34 million, or 1%, on a linked quarter basis. Managed assets represented approximately 92% of total wealth management assets at March 31, 2016.
  • Mortgage banking revenues totaled $2.2 million for the first quarter, down by $384 thousand, or 15%, on a linked quarter basis, reflecting a lower volume of loan sales sold to the secondary market. Residential mortgage loans sold to the secondary market amounted to $106.0 million in the first quarter, compared to $127.4 million in the previous quarter.
  • Loan related derivative income amounted to $645 thousand in the first quarter, down by $107 thousand, or 14%, from the prior quarter.

Noninterest Expenses
Noninterest expenses totaled $25.5 million for the first quarter of 2016, up by $889 thousand, or 4%, from the prior quarter. Included in noninterest expenses for first quarter of 2016 was $431 thousand of debt prepayment penalty expense associated with the prepayment of $10.0 million in FHLBB advances. Excluding the debt prepayment penalty expense, noninterest expenses were up by $458 thousand, or 2%, from the fourth quarter. Salaries and employee benefit costs, the largest component of noninterest expenses, increased by $327 thousand from the prior quarter, reflecting an increase in payroll taxes associated with the start of the new calendar year.

Income tax expense amounted to $5.5 million for the first quarter of 2016, up by $138 thousand from the amount recognized in the previous quarter. The effective tax rate for the first quarter of 2016 was 33.4%, compared to 33.2% for the fourth quarter of 2015.

Loans
Total loans amounted to $3.0 billion at March 31, 2016, up by $34 million, or 1.1%, from the balance at the end of the fourth quarter. Significant linked quarter changes included:

  • Total commercial loans increased by $44 million, or 2.7%, including growth of $46 million in the commercial real estate portfolio.
  • The residential real estate loan portfolio declined by $9 million, or 0.9%.
  • Consumer loans decreased by $1 million, or 0.3%.

Investment Securities
The securities portfolio amounted to $430 million at March 31, 2016, up by $35 million, or 8.9%, from the balance at December 31, 2015, primarily due to the purchases of $51 million of additional U.S. government agency and agency mortgage-backed debt securities, partially offset by calls, maturities and routine principal pay-downs. Investment securities were 11% of total assets as of March 31, 2016.

Deposits and Borrowings
Total deposits amounted to $2.9 billion at March 31, 2016, down by $55 million, or 1.9%, in the first quarter. Excluding wholesale brokered time deposits, in-market deposits decreased by $62 million, or 2.3%, in the quarter. The largest outflow during the quarter was $60 million of money market deposits, attributable to outflows in various institutional and commercial deposits.

FHLBB advances amounted to $487 million at March 31, 2016, up by $108 million, or 28.6%, from December 31, 2015. FHLBB advances totaling $10.0 million were prepaid in late March 2016. The weighted average rate of these advances was 2.72% with a weighted average remaining term of 32 months. These were replaced with $10.0 million of brokered time certificates of deposits with an 18-month maturity and a fixed interest rate of 0.95%. Net interest savings of $132 thousand for the remainder of 2016 are expected as a result of the extinguishment of the FHLBB advances.

Asset Quality
Total past due loans amounted to $18 million, or 0.60% of total loans, at March 31, 2016, compared to $18 million, or 0.58% of total loans, at December 31, 2015. Total nonaccrual loans declined from $21 million, or 0.70% of total loans, at December 31, 2015, to $17 million, or 0.57%, at March 31, 2016.

A loan loss provision totaling $500 thousand was charged to earnings in the first quarter of 2016, compared to a loan loss provision of $750 thousand recognized in the fourth quarter of 2015. Net charge-offs amounted to $1.4 million in the first quarter of 2016, including a $1.2 million charge-off associated with one commercial real estate relationship. Net charge-offs for the prior quarter amounted to $842 thousand. The allowance for loan losses was $26.1 million, or 0.86% of total loans, at March 31, 2016, compared to $27.1 million, or 0.90% of total loans, at December 31, 2015. The reduction in ratio of the allowance to total loans includes the impact of loan charge-offs for which loss exposure had been allocated prior to the latest quarter. The loan loss provision was based on management’s assessment of loss exposure, as well as loan loss allocations commensurate with loan portfolio growth in the quarter.

Capital and Dividends
Total shareholder's equity was $381 million at March 31, 2016, up by $6 million from December 31, 2015. Capital levels at March 31, 2016 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.45% at March 31, 2016, compared to 12.58% at December 31, 2015. At March 31, 2016, book value per share amounted to $22.40, up from $22.06 in the prior quarter.

The Board of Directors declared a quarterly dividend of 36 cents per share for the quarter ended March 31, 2016, a $0.02 increase from the prior quarter. The dividend was paid on April 14, 2016 to shareholders of record on April 1, 2016.

Conference Call
Washington Trust will host a conference call to discuss its first quarter results, business highlights and outlook on Wednesday, April 27, 2016 at 1:30 p.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 13634508; the audio replay will be available through May 4, 2016. 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 June 30, 2016.

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 financial results from the Halsey Associates, Inc. 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, 2015, 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)
(Dollars and shares in thousands)Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Assets:
Cash and due from banks$89,966 $93,222 $106,445 $79,795 $84,842
Short-term investments 4,931 4,409 3,629 4,298 4,191
Mortgage loans held for sale 22,895 38,554 31,805 37,389 47,117
Securities:
Available for sale, at fair value 411,352 375,044 323,795 351,378 340,942
Held to maturity, at amortized cost 19,040 20,023 21,140 22,523 24,025
Total securities 430,392 395,067 344,935 373,901 364,967
Federal Home Loan Bank stock, at cost 26,515 24,316 37,730 37,730 37,730
Loans:
Commercial 1,698,811 1,654,547 1,579,854 1,583,537 1,559,523
Residential real estate 1,004,349 1,013,555 1,024,214 1,001,263 987,564
Consumer 343,833 345,025 345,850 343,784 333,505
Total loans 3,046,993 3,013,127 2,949,918 2,928,584 2,880,592
Less allowance for loan losses 26,137 27,069 27,161 27,587 27,810
Net loans 3,020,856 2,986,058 2,922,757 2,900,997 2,852,782
Premises and equipment, net 29,882 29,593 28,180 28,124 27,839
Investment in bank-owned life insurance 66,000 65,501 65,000 64,502 64,009
Goodwill 64,059 64,059 64,196 58,114 58,114
Identifiable intangible assets, net 11,137 11,460 11,793 4,539 4,694
Other assets 71,577 59,365 58,366 55,088 56,229
Total assets$3,838,210 $3,771,604 $3,674,836 $3,644,477 $3,602,514
Liabilities:
Deposits:
Demand deposits$539,119 $537,298 $513,856 $457,755 $477,046
NOW accounts 394,873 412,602 358,973 357,922 333,321
Money market accounts 763,565 823,490 855,858 789,334 821,353
Savings accounts 331,800 326,967 305,775 300,108 298,802
Time deposits 850,294 833,898 801,818 834,000 852,621
Total deposits 2,879,651 2,934,255 2,836,280 2,739,119 2,783,143
Federal Home Loan Bank advances 487,189 378,973 381,649 471,321 385,992
Junior subordinated debentures 22,681 22,681 22,681 22,681 22,681
Other liabilities 67,409 60,307 63,699 52,189 56,819
Total liabilities 3,456,930 3,396,216 3,304,309 3,285,310 3,248,635
Shareholders’ Equity:
Common stock 1,064 1,064 1,062 1,052 1,048
Paid-in capital 111,641 110,949 109,724 103,408 102,587
Retained earnings 277,810 273,074 268,166 263,790 258,069
Accumulated other comprehensive loss (9,235) (9,699) (8,425) (9,083) (7,825)
Total shareholders’ equity 381,280 375,388 370,527 359,167 353,879
Total liabilities and shareholders’ equity$3,838,210 $3,771,604 $3,674,836 $3,644,477 $3,602,514


Washington Trust Bancorp, Inc. and Subsidiaries
FIVE QUARTER CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars and shares in thousands, except per share amounts)
Three Months EndedMar 31,
2016
Dec 31,
2015
Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Interest income:
Interest and fees on loans $29,998 $28,511 $28,626 $28,739 $28,353
Interest on securities:Taxable 2,370 2,262 2,178 2,176 2,259
Nontaxable 327 352 366 402 435
Dividends on Federal Home Loan Bank stock 210 315 309 164 165
Other interest income 64 37 47 29 25
Total interest and dividend income 32,969 31,477 31,526 31,510 31,237
Interest expense:
Deposits 2,968 3,097 3,308 3,348 3,389
Federal Home Loan Bank advances 2,152 1,966 1,987 1,891 1,902
Junior subordinated debentures 112 157 232 241 241
Other interest expense 2 2 2 2 3
Total interest expense 5,234 5,222 5,529 5,482 5,535
Net interest income 27,735 26,255 25,997 26,028 25,702
Provision for loan losses 500 750 200 100
Net interest income after provision for loan losses 27,235 25,505 25,797 25,928 25,702
Noninterest income:
Wealth management revenues 9,174 9,167 8,902 8,912 8,435
Mortgage banking revenues 2,198 2,582 1,990 2,741 2,588
Service charges on deposit accounts 907 971 986 973 935
Card interchange fees 797 810 849 826 714
Income from bank-owned life insurance 499 502 498 492 490
Loan related derivative income 645 752 327 717 645
Equity in earnings (losses) of unconsolidated subsidiaries (88) (69) (69) (69) (86)
Other income 502 431 430 669 299
Total noninterest income 14,634 15,146 13,913 15,261 14,020
Noninterest expense:
Salaries and employee benefits 16,380 16,053 15,971 15,506 15,494
Net occupancy 1,807 1,724 1,721 1,669 1,886
Equipment 1,501 1,393 1,424 1,376 1,340
Outsourced services 1,363 1,337 1,250 1,277 1,247
Legal, audit and professional fees 629 825 630 610 676
FDIC deposit insurance costs 493 470 467 436 473
Advertising and promotion 265 325 356 578 267
Amortization of intangibles 323 333 260 156 155
Debt prepayment penalties 431
Acquisition related expenses 52 504 433
Other expenses 2,258 2,049 1,955 2,258 1,993
Total noninterest expense 25,450 24,561 24,538 24,299 23,531
Income before income taxes 16,419 16,090 15,172 16,890 16,191
Income tax expense 5,484 5,346 4,964 5,387 5,181
Net income$10,935 $10,744 $10,208 $11,503 $11,010
Net income available to common shareholders - basic$10,910 $10,718 $10,181 $11,469 $10,971
Net income available to common shareholders - diluted$10,910 $10,718 $10,180 $11,470 $10,971
Weighted average common shares outstanding - basic 17,023 17,004 16,939 16,811 16,759
Weighted average common shares outstanding - diluted 17,157 17,167 17,102 16,989 16,939
Per share information:Basic earnings per common share$0.64 $0.63 $0.60 $0.68 $0.65
Diluted earnings per common share$0.64 $0.62 $0.60 $0.68 $0.65
Cash dividends declared per share$0.36 $0.34 $0.34 $0.34 $0.34


Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
At or for the Three Months Ended
(Dollars and shares in thousands, except per share amounts)Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Share and Equity Related Data:
Book value per share$22.40 $22.06 $21.82 $21.34 $21.10
Tangible book value per share - Non-GAAP (1)$17.98 $17.62 $17.36 $17.61 $17.35
Market value per share$37.32 $39.52 $38.45 $39.48 $38.19
Shares issued and outstanding at end of period 17,024 17,020 16,985 16,834 16,773
Performance Ratios:
Net interest margin (FTE) 3.24% 3.08% 3.07% 3.15% 3.18%
Return on average assets 1.16% 1.16% 1.11% 1.27% 1.23%
Return on average tangible assets - Non-GAAP (1) 1.18% 1.19% 1.13% 1.29% 1.25%
Return on average equity 11.50% 11.52% 11.13% 12.88% 12.54%
Return on average tangible equity - Non-GAAP (1) 14.34% 14.45% 13.82% 15.62% 15.27%
Capital Ratios:
Tier 1 risk-based capital11.56% (i) 11.64% 11.83% 11.79% 11.78%
Total risk-based capital12.45% (i) 12.58% 12.80% 12.78% 12.80%
Tier 1 leverage ratio9.31% (i) 9.37% 9.26% 9.31% 9.21%
Common equity tier 110.82% (i) 10.89% 11.05% 11.00% 10.98%
Equity to assets 9.93% 9.95% 10.08% 9.86% 9.82%
Tangible equity to tangible assets - Non-GAAP (1) 8.13% 8.11% 8.18% 8.28% 8.22%
(i) - estimated
Wealth Management Revenues:
Trust and investment management fees$8,065 $8,001 $7,768 $7,238 $7,142
Mutual fund fees 843 952 989 1,032 1,036
Asset-based revenues 8,908 8,953 8,757 8,270 8,178
Transaction-based revenues 266 214 145 642 257
Total wealth management revenues$9,174 $9,167 $8,902 $8,912 $8,435
Wealth Management Assets Under Administration:
Balance at beginning of period$5,844,636 $5,714,201 $5,211,548 $5,159,663 $5,069,966
Acquisition of Halsey Associates, Inc. (Aug. 1, 2015) 839,994
Net investment appreciation (depreciation) & income 22,389 153,953 (316,121) (13,932) 80,872
Net client cash flows 11,942 (23,518) (21,220) 65,817 8,825
Balance at end of period$5,878,967 $5,844,636 $5,714,201 $5,211,548 $5,159,663
Mortgage Banking Revenues:
Gains and commissions on residential loan sales, net$2,134 $2,528 $1,964 $2,748 $2,585
Residential mortgage servicing fee income, net 64 54 26 (7) 3
Total mortgage banking revenues$2,198 $2,582 $1,990 $2,741 $2,588
Residential Mortgage Loan Originations:
Originations for retention in portfolio$47,545 $38,080 $76,963 $65,134 $54,675
Originations for sale to the secondary market (2) 90,458 134,125 126,353 134,360 128,996
Total mortgage loan originations$138,003 $172,205 $203,316 $199,494 $183,671
Residential Mortgage Loans Sold:
Loans sold with servicing rights retained$26,454 $44,493 $37,782 $32,693 $47,256
Loans sold with servicing rights released (2) 79,507 82,906 94,645 110,484 80,641
Total mortgage loans sold$105,961 $127,399 $132,427 $143,177 $127,897

(1) See the section labeled “Supplemental Information - Non-GAAP Financial Measures” at the end of this document.
(2) Also includes loans originated in a broker capacity.

Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
At March 31, 2016
Amortized Unrealized Unrealized Fair
(Dollars in thousands) Cost Gains Losses Value
Securities Available for Sale:
Obligations of U.S. government-sponsored enterprises $97,151 $160 $(26) $97,285
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises 249,141 8,322 257,463
Obligations of states and political subdivisions 31,025 511 31,536
Individual name issuer trust preferred debt securities 29,824 (6,743) 23,081
Corporate bonds 1,965 32 (10) 1,987
Total securities available for sale 409,106 9,025 (6,779) 411,352
Held to Maturity:
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises 19,040 624 19,664
Total securities held to maturity 19,040 624 19,664
Total securities $428,146 $9,649 $(6,779) $431,016


Period End Balances At
(Dollars in thousands)Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Commercial:
Mortgages$976,931 $931,953 $873,767 $876,589 $865,042
Construction & development 123,032 122,297 121,857 110,989 89,851
Commercial & industrial 598,848 600,297 584,230 595,959 604,630
Total commercial 1,698,811 1,654,547 1,579,854 1,583,537 1,559,523
Residential real estate:
Mortgages 980,274 984,437 994,808 971,705 954,905
Homeowner construction 24,075 29,118 29,406 29,558 32,659
Mortgages 1,004,349 1,013,555 1,024,214 1,001,263 987,564
Consumer:
Home equity lines 258,513 255,565 252,862 249,845 239,537
Home equity loans 45,499 46,649 47,610 47,437 46,727
Other 39,821 42,811 45,378 46,502 47,241
Total consumer 343,833 345,025 345,850 343,784 333,505
Total loans$3,046,993 $3,013,127 $2,949,918 $2,928,584 $2,880,592


At March 31, 2016 At December 31, 2015
(Dollars in thousands)Balance % of Total Balance % of Total
Commercial Real Estate Loans by Property Location:
Rhode Island, Connecticut, Massachusetts$1,009,962 91.8% $959,883 91.0%
New York, New Jersey, Pennsylvania 76,721 7.0% 80,989 7.7%
New Hampshire 13,280 1.2% 13,377 1.3%
Total commercial real estate loans (1)$1,099,963 100.0% $1,054,249 100.0%
Residential Mortgages by Property Location:
Rhode Island, Connecticut, Massachusetts$987,695 98.4% $995,743 98.2%
New Hampshire 9,517 0.9% 10,186 1.0%
New York, Virginia, New Jersey, Maryland, Pennsylvania 3,753 0.4% 4,163 0.4%
Ohio 1,488 0.1% 1,557 0.2%
Other 1,896 0.2% 1,906 0.2%
Total residential mortgages$1,004,349 100.0% $1,013,555 100.0%

(1) Commercial real estate loans consist of commercial mortgages and construction and development loans. Commercial mortgages are loans secured by income producing property.

Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
Period End Balances At
(Dollars in thousands)Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Deposits:
Non-interest bearing demand deposits$464,639 $455,124 $462,115 $419,768 $419,063
Interest-bearing demand deposits 74,480 82,174 51,741 37,987 57,983
NOW accounts 394,873 412,602 358,973 357,922 333,321
Money market accounts 763,565 823,490 855,858 789,334 821,353
Savings accounts 331,800 326,967 305,775 300,108 298,802
Time deposits (in-market) 540,815 531,419 534,266 549,410 561,758
Wholesale brokered time deposits 309,479 302,479 267,552 284,590 290,863
Total deposits$2,879,651 $2,934,255 $2,836,280 $2,739,119 $2,783,143
Asset Quality Ratios:
Nonperforming assets to total assets 0.49% 0.58% 0.48% 0.45% 0.48%
Nonaccrual loans to total loans 0.57% 0.70% 0.57% 0.52% 0.55%
Allowance for loan losses to nonaccrual loans 150.00% 128.61% 161.25% 182.32% 175.29%
Allowance for loan losses to total loans 0.86% 0.90% 0.92% 0.94% 0.97%
Nonperforming Assets:
Commercial mortgages$4,054 $5,711 $4,915 $4,915 $5,115
Commercial construction & development
Commercial & industrial 2,659 3,018 1,137 1,039 2,193
Residential real estate mortgages 9,367 10,666 9,472 7,411 6,956
Consumer 1,345 1,652 1,320 1,766 1,601
Total nonaccrual loans 17,425 21,047 16,844 15,131 15,865
Property acquired through foreclosure or repossession 1,326 716 955 1,388 1,398
Total nonperforming assets$18,751 $21,763 $17,799 $16,519 $17,263
Three Months Ended
(Dollars in thousands)Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Nonaccrual Loan Activity:
Balance at beginning of period$21,047 $16,844 $15,131 $15,865 $15,945
Additions to nonaccrual status 1,352 7,029 3,319 2,567 1,608
Loans returned to accruing status (206) (303) (156) (1,756) (366)
Loans charged-off (1,475) (904) (725) (355) (321)
Loans transferred to other real estate owned (610) (716) (261) (230)
Payments, payoffs and other changes (2,683) (903) (725) (929) (771)
Balance at end of period$17,425 $21,047 $16,844 $15,131 $15,865
Allowance for Loan Losses:
Balance at beginning of period$27,069 $27,161 $27,587 $27,810 $28,023
Provision charged to earnings 500 750 200 100
Charge-offs (1,475) (904) (725) (355) (321)
Recoveries 43 62 99 32 108
Balance at end of period$26,137 $27,069 $27,161 $27,587 $27,810
Net Loan Charge-Offs (Recoveries):
Commercial mortgages$1,249 $405 $(4) $196 $120
Commercial & industrial (18) 217 348 26 (7)
Residential real estate mortgages 134 117 12 4 46
Consumer 67 103 270 97 54
Total$1,432 $842 $626 $323 $213
Net charge-offs to average loans (annualized) 0.19% 0.11% 0.08% 0.04% 0.03%


Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
Period End Balances At
(Dollars in thousands)Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Past Due Loans:
Loans 30-59 Days Past Due:
Commercial mortgages$510 $51 $147 $14 $497
Commercial & industrial 268 405 162 2,581 229
Residential real estate mortgages 2,695 3,028 3,610 5,120 4,470
Consumer loans 904 1,653 899 1,634 1,512
Loans 30-59 days past due$4,377 $5,137 $4,818 $9,349 $6,708
Loans 60-89 Days Past Due:
Commercial mortgages$ $ $ $ $61
Commercial & industrial 1,568 9 3,455 2,299 229
Residential real estate mortgages 2,026 2,964 2,458 913 1,352
Consumer loans 549 863 338 397 565
Loans 60-89 days past due$4,143 $3,836 $6,251 $3,609 $2,207
Loans 90 Days or More Past Due:
Commercial mortgages$4,054 $4,504 $4,915 $4,915 $5,115
Commercial & industrial 1,070 48 720 638 721
Residential real estate mortgages 3,982 3,294 4,499 4,871 3,607
Consumer loans 669 740 608 647 723
Loans 90 days or more past due$9,775 $8,586 $10,742 $11,071 $10,166
Total Past Due Loans:
Commercial mortgages$4,564 $4,555 $5,062 $4,929 $5,673
Commercial & industrial 2,906 462 4,337 5,518 1,179
Residential real estate mortgages 8,703 9,286 10,567 10,904 9,429
Consumer loans 2,122 3,256 1,845 2,678 2,800
Total past due loans$18,295 $17,559 $21,811 $24,029 $19,081
Total past due loans to total loans 0.60% 0.58% 0.74% 0.82% 0.66%
Accruing loans 90 days or more past due$ $ $ $ $
Nonaccrual loans included in past due loans$14,030 $13,635 $13,964 $12,397 $12,314
Troubled Debt Restructured Loans:
Accruing troubled debt restructured loans:
Commercial mortgages$9,427 $9,430 $10,637 $9,448 $9,448
Commercial & industrial 837 853 2,069 2,209 881
Residential real estate mortgages 646 669 674 679 684
Consumer 226 228 232 201 134
Accruing troubled debt restructured loans 11,136 11,180 13,612 12,537 11,147
Nonaccrual troubled debt restructured loans:
Commercial mortgages 4,054 5,296 4,498 4,498 4,698
Commercial & industrial 857 1,371 380 381 1,442
Residential real estate mortgages 586 596 613 92 338
Consumer 33 34
Nonaccrual troubled debt restructured loans 5,497 7,263 5,491 5,004 6,512
Total troubled debt restructured loans$16,633 $18,443 $19,103 $17,541 $17,659

The following table presents 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. Unrealized gains (losses) on available for sale securities and fair value adjustments on mortgage loans held for sale are excluded from the average balance and yield calculations. Nonaccrual and renegotiated loans, as well as interest recognized on these loans are included in amounts presented for loans.

Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS (unaudited)
Three Months Ended
March 31, 2016 December 31, 2015 March 31, 2015
Average
Balance
InterestYield/
Rate
Average
Balance
InterestYield/
Rate
Average
Balance
InterestYield/
Rate
(Dollars in thousands)
Assets:
Commercial mortgages $933,939 $8,215 3.54% $885,967 $7,887 3.53% $851,946 $7,717 3.67%
Construction & development 129,217 1,108 3.45% 134,243 1,004 2.97% 84,302 666 3.20%
Commercial & industrial 604,519 7,681 5.11% 581,584 6,520 4.45% 608,472 6,930 4.62%
Total commercial loans $1,667,675 $17,004 4.10% $1,601,794 $15,411 3.82% $1,544,720 $15,313 4.02%
Residential real estate loans, including loans held for sale 1,031,260 10,155 3.96% 1,049,007 10,338 3.91% 1,030,016 10,314 4.06%
Consumer loans 343,519 3,393 3.97% 344,690 3,251 3.74% 336,333 3,168 3.82%
Total loans 3,042,454 30,552 4.04% 2,995,491 29,000 3.84% 2,911,069 28,795 4.01%
Cash, federal funds sold and short-term investments 68,488 64 0.38% 72,031 37 0.20% 51,058 25 0.20%
FHLBB stock 25,597 210 3.30% 24,316 315 5.14% 37,730 165 1.77%
Taxable debt securities 359,060 2,370 2.65% 341,130 2,262 2.63% 322,570 2,259 2.84%
Nontaxable debt securities 33,313 507 6.12% 35,799 550 6.10% 44,659 664 6.03%
Total securities 392,373 2,877 2.95% 376,929 2,812 2.96% 367,229 2,923 3.23%
Total interest-earning assets 3,528,912 33,703 3.84% 3,468,767 32,164 3.68% 3,367,086 31,908 3.84%
Noninterest-earning assets 240,113 231,674 221,795
Total assets $3,769,025 $3,700,441 $3,588,881
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits $50,704 $13 0.10% $42,324 $11 0.10% $37,851 $8 0.09%
NOW accounts 386,488 56 0.06% 376,185 56 0.06% 329,588 48 0.06%
Money market accounts 786,633 515 0.26% 856,405 707 0.33% 800,036 883 0.45%
Savings accounts 328,174 49 0.06% 310,608 47 0.06% 293,926 46 0.06%
Time deposits (in-market) 538,035 1,315 0.98% 533,224 1,333 0.99% 567,063 1,469 1.05%
Wholesale brokered time deposits 296,801 1,020 1.38% 277,681 943 1.35% 294,664 935 1.29%
FHLBB advances 453,019 2,152 1.91% 373,652 1,966 2.09% 404,773 1,902 1.91%
Junior subordinated debentures 22,681 112 1.99% 22,681 157 2.75% 22,681 241 4.31%
Other 79 2 10.18% 92 2 8.62% 128 3 9.51%
Total interest-bearing liabilities 2,862,614 5,234 0.74% 2,792,852 5,222 0.74% 2,750,710 5,535 0.82%
Demand deposits 471,782 475,215 438,904
Other liabilities 54,287 59,177 48,052
Shareholders' equity 380,342 373,197 351,215
Total liabilities and shareholders' equity $3,769,025 $3,700,441 $3,588,881
Net interest income (FTE) $28,469 $26,942 $26,373
Interest rate spread 3.10% 2.94% 3.02%
Net interest margin 3.24% 3.08% 3.18%

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

(Dollars in thousands)Three Months Ended
Mar 31,
2016
Dec 31,
2015
Mar 31,
2015
Commercial loans$554 $489 $442
Nontaxable debt securities 180 198 229
Total$734 $687 $671


Washington Trust Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION - Non-GAAP Financial Measures (unaudited)
At or for the Three Months Ended
(Dollars in thousands, except per share amounts)Mar 31,
2016
Dec 31,
2015
Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Calculation of Tangible Book Value per Share:
Total shareholders' equity at end of period$381,280 $375,388 $370,527 $359,167 $353,879
Less:
Goodwill 64,059 64,059 64,196 58,114 58,114
Identifiable intangible assets, net 11,137 11,460 11,793 4,539 4,694
Total tangible shareholders' equity at end of period$306,084 $299,869 $294,538 $296,514 $291,071
Shares outstanding at end of period 17,024 17,020 16,985 16,834 16,773
Book value per share - GAAP$22.40 $22.06 $21.82 $21.34 $21.10
Tangible book value per share - Non-GAAP$17.98 $17.62 $17.34 $17.61 $17.35
Calculation of Tangible Equity to Tangible Assets:
Total tangible shareholders' equity at end of period$306,084 $299,869 $294,538 $296,514 $291,071
Total assets at end of period$3,838,210 $3,771,604 $3,674,836 $3,644,477 $3,602,514
Less:
Goodwill 64,059 64,059 64,196 58,114 58,114
Identifiable intangible assets, net 11,137 11,460 11,793 4,539 4,694
Total tangible assets at end of period$3,763,014 $3,696,085 $3,598,847 $3,581,824 $3,539,706
Equity to assets - GAAP 9.93% 9.95% 10.08% 9.86% 9.82%
Tangible equity to tangible assets - Non-GAAP 8.13% 8.11% 8.18% 8.28% 8.22%
Calculation of Return on Average Tangible Assets:
Net income$10,935 $10,744 $10,208 $11,503 $11,010
Total average assets$3,769,025 $3,700,441 $3,678,487 $3,622,715 $3,588,881
Less:
Average goodwill 64,059 64,194 62,524 58,114 58,114
Average identifiable intangible assets, net 11,294 11,616 8,768 4,614 4,770
Total average tangible assets$3,693,672 $3,624,631 $3,607,195 $3,559,987 $3,525,997
Return on average assets - GAAP 1.16% 1.16% 1.11% 1.27% 1.23%
Return on average tangible assets - Non-GAAP 1.18% 1.19% 1.13% 1.29% 1.25%
Calculation of Return on Average Tangible Equity:
Net income$10,935 $10,744 $10,208 $11,503 $11,010
Total average shareholders' equity$380,342 $373,197 $366,724 $357,365 $351,215
Less:
Average goodwill 64,059 64,194 62,524 58,114 58,114
Average identifiable intangible assets, net 11,294 11,616 8,768 4,614 4,770
Total average tangible shareholders' equity$304,989 $297,387 $295,432 $294,637 $288,331
Return on average shareholders' equity - GAAP 11.50% 11.52% 11.13% 12.88% 12.54%
Return on average tangible shareholders' equity - Non-GAAP 14.34% 14.45% 13.82% 15.62% 15.27%

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

Source:Washington Trust Bancorp, Inc.