EX-99.1 2 exhibit9912019q2.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1

bancorpflatbluehorizontala12.jpg
NASDAQ: WASH
Contact: Elizabeth B. Eckel
Senior Vice President, Marketing
Telephone: (401) 348-1309
E-mail: ebeckel@washtrust.com
Date: July 22, 2019
FOR IMMEDIATE RELEASE

Washington Trust Reports Second Quarter 2019 Earnings

WESTERLY, R.I., July 22, 2019 (PR NEWSWIRE)…Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced second quarter 2019 net income of $17.3 million, or $0.99 per diluted share, compared to net income of $17.5 million, or $1.00 per diluted share, reported for the first quarter of 2019.

“Washington Trust’s second quarter earnings reflect our success at generating revenues from our diversified business model,” stated Edward O. Handy III, Chairman and Chief Executive Officer.  “We continue to see positive results from our key business lines, despite a competitive and challenging economic environment.”

Selected highlights for the second quarter of 2019 include:
•
Returns on average equity and average assets were 14.58% and 1.34%, respectively.
•
Mortgage banking revenues were $3.6 million, up by $994 thousand, or 38%, from the preceding quarter.
•
Total loans amounted to $3.7 billion, down by $8.1 million from the preceding quarter. Total loans were up by $240 million, or 7%, from the balance at June 30, 2018.
•
Total deposits amounted to $3.5 billion, up by $362 thousand from the preceding quarter. Total deposits were up by $183 million, or 6%, from the balance at June 30, 2018.
•
In June, Washington Trust declared a quarterly dividend of 51 cents per share, representing a 4 cent per share, or 9%, increase over the preceding quarter.
Net Interest Income
Net interest income was $33.9 million for the second quarter of 2019, down by $726 thousand, or 2%, from the first quarter of 2019. The net interest margin was 2.81% for the second quarter, down by 12 basis points from 2.93% reported in the preceding quarter. Income associated with loan payoffs and prepayment penalties, which is included in net interest income, was modest at $37 thousand in the second quarter and $49 thousand in the preceding quarter.

-1-
Washington Trust
July 22, 2019


Significant linked quarter changes included:
•
Average interest-earning assets increased by $56 million, including an increase of $32 million in average commercial loans. The yield on interest-earning assets for the second quarter was 4.18%, down by 6 basis points from the preceding quarter. The yield was impacted by lower market interest rates.
•
Average interest-bearing liabilities increased by $45 million, including an increase of $57 million in average wholesale funding balances (wholesale brokered time deposits and Federal Home Loan Bank advances), partially offset by a $12 million decline in average in-market deposits. The cost of interest-bearing liabilities for the second quarter was 1.68%, up by 8 basis points from the preceding quarter. This increase largely reflected higher rates paid on wholesale funding sources and promotional certificates of deposit.

Noninterest Income
Noninterest income totaled $16.8 million for the second quarter of 2019, up by $1.4 million, or 9%, from the first quarter of 2019. Significant linked quarter changes included:
•
Wealth management revenues were $9.5 million for the second quarter of 2019, up by $297 thousand, or 3%, on a linked quarter basis, consisting of increases of $220 thousand in asset-based revenues and $77 thousand in transaction-based revenues. Wealth management assets under administration stood at $6.5 billion at June 30, 2019, up by $128.8 million, or 2%, from the balance at March 31, 2019. The average balance of wealth management assets under administration for the second quarter of 2019 increased by 3% from the average balance in the preceding quarter. Both the increase in asset-based revenues and wealth management assets under administration were attributable to financial market appreciation.
In late June, two client-facing senior counselors in our Weston Financial Group subsidiary left the firm. As a result, Washington Trust could experience an increased level of client asset outflows in upcoming months.
•
Mortgage banking revenues totaled $3.6 million for the second quarter of 2019, up by $994 thousand, or 38%, from the preceding quarter. Mortgage loans sold in the secondary market amounted to $137.4 million for the second quarter of 2019, an increase of $45.3 million, or 49%, compared to the preceding quarter.

Noninterest Expenses
Noninterest expenses totaled $28.2 million for the second quarter of 2019, up by $1.2 million, or 4%, from the first quarter of 2019. The linked quarter change reflected increases of $817 thousand in salaries and employee benefits expense and $286 thousand in advertising and promotion costs. The increase in salaries and employee benefits expense from the preceding quarter reflected increased commissions expense due to an increase in mortgage banking activities. The linked quarter increase in advertising and promotion costs was largely due to the timing of promotional activities.

Income tax expense totaled $4.7 million for the second quarter of 2019, down by $180 thousand from the preceding quarter. The effective tax rate for the second quarter of 2019 was 21.3%, compared to 21.7% for the preceding quarter. Based on current federal and applicable state income tax statutes, the Corporation currently expects its 2019 effective tax rate to be 21.6%.


-2-
Washington Trust
July 22, 2019


Investment Securities
The securities portfolio totaled $969 million at June 30, 2019, down by $26 million from the balance at March 31, 2019. The decrease was primarily due to routine principal pay-downs on mortgage-backed securities, partially offset by an increase in the fair value of available for sale debt securities. Investment securities represented 19% of total assets at both June 30, 2019 and March 31, 2019.

Loans
Total loans amounted to $3.7 billion at June 30, 2019, down by $8 million from the end of the preceding quarter. The commercial real estate portfolio increased by $19 million, while the commercial and industrial portfolio declined by $27 million, from the end of the prior quarter. Commercial loan originations and advances totaled $107 million in the second quarter of 2019, offset by payoffs and paydowns totaling $113 million during the period. The residential real estate loan portfolio decreased by $7 million from the end of the first quarter of 2019 and consumer loan portfolio increased by $6 million from the balance at March 31, 2019.

Deposits and Borrowings
Total deposits amounted to $3.5 billion at June 30, 2019, unchanged from the end of the preceding quarter. Excluding the balances of wholesale brokered time deposits, total in-market deposits were up by $1 million. Federal Home Loan Bank advances amounted to $1.1 billion at June 30, 2019, up by $5 million from the balance at March 31, 2019.

Asset Quality
Total nonaccrual loans amounted to $12.9 million, or 0.34% of total loans, at June 30, 2019, compared to $12.4 million, or 0.33% of total loans, at March 31, 2019. Total past due loans amounted to $17.9 million, or 0.48% of total loans, at June 30, 2019, compared to $14.7 million, or 0.39% of total loans, at March 31, 2019. The increase in past due loans was largely due to one commercial real estate loan with a carrying value of $2.7 million that went delinquent in the second quarter of 2019. This loan returned to current status in early July 2019.

A loan loss provision totaling $525 thousand was recognized in the second quarter of 2019, compared to a loan loss provision of $650 thousand recognized in the preceding quarter. These provisions were based on management's assessment of loss exposure, as well as loan loss allocations commensurate with changes in the loan portfolio. Net charge-offs totaled $771 thousand in the second quarter and were largely attributable to one residential real estate relationship. Net charge-offs were $78 thousand in the preceding quarter. The allowance for loan losses amounted to $27.4 million, or 0.73% of total loans, at June 30, 2019, compared to $27.6 million, or 0.74% of total loans, at March 31, 2019.

Capital and Dividends
Total shareholders' equity was $484 million at June 30, 2019, up by $14.4 million from March 31, 2019. This increase included net income of $17.3 million and an increase of $5.6 million in the accumulated other comprehensive income component of shareholders' equity reflecting an increase in the fair value of available for sale debt securities, partially offset by $8.9 million in dividend declarations in the second quarter. The Board of Directors declared a quarterly dividend of 51 cents per share for the quarter ended June 30, 2019, an increase of 4 cents per share, or 9%, over the preceding quarter. The dividend was paid on July 12, 2019 to shareholders of record on July 1, 2019.


-3-
Washington Trust
July 22, 2019


Capital levels at June 30, 2019 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.80% at June 30, 2019, compared to 12.59% at March 31, 2019. Book value per share amounted to $27.93 at June 30, 2019, compared to $27.15 at March 31, 2019.

Conference Call
Washington Trust will host a conference call to discuss its second quarter results, business highlights and outlook on Tuesday, July 23, 2019 at 8:30 a.m. (Eastern Time). Individuals may dial in to the call at 1-888-317-6016. An audio replay of the call will be available, shortly after the conclusion of the call, by dialing 1-877-344-7529 and entering the Replay PIN Number 10132712; the audio replay will be available through August 5, 2019. Also, a webcast of the call will be posted in the Investor Relations section of Washington Trust's web site, http://ir.washtrust.com, and will be available through September 30, 2019.

Background
Washington Trust Bancorp, Inc. is the parent of The Washington Trust Company. Founded in 1800, Washington Trust is the oldest community bank in the nation, the largest state-chartered bank headquartered in Rhode Island and one of the Northeast's premier financial services companies. Washington Trust offers a full range of financial services, including commercial banking, mortgage 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 under the symbol WASH. Investor information is available on the Corporation’s web site at http://ir.washtrust.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 our annual reports to shareholders, 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 our control. These risks, uncertainties and other factors may cause our actual results, performance or achievements 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; 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 or outflows 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 our competition; changes in legislation or regulation and accounting principles, policies and guidelines; occurrences of cyberattacks, hacking and identity theft; natural disasters; 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, 2018, 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.

-4-



Washington Trust Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; Dollars in thousands)
 
 
 
 
 
 
 
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
Assets:
 
 
 
 
 
Cash and due from banks

$115,904


$88,242


$89,923


$72,934


$132,068

Short-term investments
3,910

3,317

3,552

2,917

2,624

Mortgage loans held for sale, at fair value
39,996

14,608

20,996

22,571

35,207

Securities:
 
 
 
 
 
Available for sale debt securities, at fair value
969,168

994,881

927,810

812,647

776,693

Held to maturity debt securities, at amortized cost
—

—

10,415

10,863

11,412

Total securities
969,168

994,881

938,225

823,510

788,105

Federal Home Loan Bank stock, at cost
49,759

48,025

46,068

44,525

46,281

Loans:
 
 
 
 
 
Total loans
3,730,339

3,738,469

3,680,360

3,556,203

3,490,230

Less allowance for loan losses
27,398

27,644

27,072

26,509

26,174

Net loans
3,702,941

3,710,825

3,653,288

3,529,694

3,464,056

Premises and equipment, net
29,302

29,822

29,005

28,195

28,377

Operating lease right-of-use assets
28,174

28,249

—

—

—

Investment in bank-owned life insurance
81,351

80,786

80,463

79,891

79,319

Goodwill
63,909

63,909

63,909

63,909

63,909

Identifiable intangible assets, net
7,684

7,923

8,162

8,400

8,645

Other assets
97,574

84,142

77,175

94,126

88,651

Total assets

$5,189,672


$5,154,729


$5,010,766


$4,770,672


$4,737,242

Liabilities:
 
 
 
 
 
Deposits:
 
 
 
 
 
Noninterest-bearing deposits

$587,326


$577,319


$603,216


$611,829


$577,656

Interest-bearing deposits
2,917,296

2,926,941

2,920,832

2,802,519

2,743,955

Total deposits
3,504,622

3,504,260

3,524,048

3,414,348

3,321,611

Federal Home Loan Bank advances
1,060,960

1,056,129

950,722

828,392

901,053

Junior subordinated debentures
22,681

22,681

22,681

22,681

22,681

Operating lease liabilities
30,210

30,187

—

—

—

Other liabilities
86,994

71,629

65,131

77,342

70,326

Total liabilities
4,705,467

4,684,886

4,562,582

4,342,763

4,315,671

Shareholders’ Equity:
 
 
 
 
 
Common stock
1,083

1,082

1,081

1,081

1,080

Paid-in capital
121,115

120,743

119,888

119,220

118,883

Retained earnings
373,873

365,521

355,524

346,685

336,670

Accumulated other comprehensive loss
(11,866
)
(17,503
)
(28,309
)
(39,077
)
(35,062
)
Total shareholders’ equity
484,205

469,843

448,184

427,909

421,571

Total liabilities and shareholders’ equity

$5,189,672


$5,154,729


$5,010,766


$4,770,672


$4,737,242




-5-


Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; Dollars and shares in thousands, except per share amounts)
 
For the Three Months Ended
 
For the Six Months Ended
 
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
 
Jun 30,
2019
Jun 30,
2018
Interest income:
 
 
 
 
 
 
 
 
Interest and fees on loans

$42,138


$41,744


$40,299


$38,493


$36,788

 

$83,882


$71,140

Interest on mortgage loans held for sale
288

180

289

384

313

 
468

539

Taxable interest on debt securities
7,006

7,226

5,957

5,383

5,358

 
14,232

10,476

Nontaxable interest on debt securities
8

9

9

9

20

 
17

43

Dividends on Federal Home Loan Bank stock
720

695

669

634

550

 
1,415

1,066

Other interest income
399

340

294

261

257

 
739

462

Total interest and dividend income
50,559

50,194

47,517

45,164

43,286

 
100,753

83,726

Interest expense:


 
 
 
 
 
 
 
Deposits
9,469

8,696

7,953

6,546

5,254

 
18,165

9,676

Federal Home Loan Bank advances
6,980

6,661

5,446

4,937

4,707

 
13,641

8,690

Junior subordinated debentures
252

253

240

232

214

 
505

397

Total interest expense
16,701

15,610

13,639

11,715

10,175

 
32,311

18,763

Net interest income
33,858

34,584

33,878

33,449

33,111

 
68,442

64,963

Provision for loan losses
525

650

800

350

400

 
1,175

400

Net interest income after provision for loan losses
33,333

33,934

33,078

33,099

32,711

 
67,267

64,563

Noninterest income:


 






 
 
 
Wealth management revenues
9,549

9,252

9,012

9,454

9,602

 
18,801

19,875

Mortgage banking revenues
3,640

2,646

1,978

2,624

2,941

 
6,286

5,779

Card interchange fees
1,018

997

977

983

961

 
2,015

1,808

Service charges on deposit accounts
929

875

977

885

903

 
1,804

1,766

Loan related derivative income
746

724

1,374

278

668

 
1,470

809

Income from bank-owned life insurance
566

649

572

572

537

 
1,215

1,052

Net realized losses on securities
(80
)
—

—

—

—

 
(80
)
—

Other income
385

224

273

419

381

 
609

647

Total noninterest income
16,753

15,367

15,163

15,215

15,993

 
32,120

31,736

Noninterest expense:


 






 
 
 
Salaries and employee benefits
18,436

17,619

16,918

17,283

17,304

 
36,055

35,076

Outsourced services
2,518

2,606

2,510

1,951

2,350

 
5,124

4,223

Net occupancy
1,904

1,998

1,946

2,013

1,930

 
3,902

3,932

Equipment
1,028

1,011

983

1,080

1,069

 
2,039

2,249

Legal, audit and professional fees
664

534

587

559

555

 
1,198

1,281

FDIC deposit insurance costs
540

429

376

410

422

 
969

826

Advertising and promotion
525

239

460

440

329

 
764

506

Amortization of intangibles
239

239

239

245

247

 
478

495

Change in fair value of contingent consideration
—

—

(187
)
—

—

 
—

—

Other expenses
2,297

2,289

2,850

2,081

2,082

 
4,586

4,830

Total noninterest expense
28,151

26,964

26,682

26,062

26,288

 
55,115

53,418

Income before income taxes
21,935

22,337

21,559

22,252

22,416

 
44,272

42,881

Income tax expense
4,662

4,842

4,523

4,741

4,742

 
9,504

8,996

Net income

$17,273


$17,495


$17,036


$17,511


$17,674

 

$34,768


$33,885

 
 
 
 
 
 
 
 
 
Net income available to common shareholders

$17,238


$17,461


$17,004


$17,475


$17,636

 

$34,699


$33,809

 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
  Basic
17,330

17,304

17,297

17,283

17,272

 
17,317

17,253

  Diluted
17,405

17,401

17,385

17,382

17,387

 
17,403

17,384

Earnings per common share:
 
 
 
 
 
 
 
 
  Basic

$0.99


$1.01


$0.98


$1.01


$1.02

 

$2.00


$1.96

  Diluted

$0.99


$1.00


$0.98


$1.01


$1.01

 

$1.99


$1.94

 
 
 
 
 
 
 
 
 
Cash dividends declared per share

$0.51


$0.47


$0.47


$0.43


$0.43

 

$0.98


$0.86


-6-


Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited; Dollars and shares in thousands, except per share amounts)
 
 
 
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
Share and Equity Related Data:
 
 
 
 
 
Book value per share

$27.93


$27.15


$25.90


$24.75


$24.40

Tangible book value per share - Non-GAAP (1)

$23.80


$23.00


$21.74


$20.57


$20.20

Market value per share

$52.18


$48.15


$47.53


$55.30


$58.10

Shares issued and outstanding at end of period
17,336

17,305

17,302

17,290

17,278

 
 
 
 
 
 
Capital Ratios (2):
 
 
 
 
 
Tier 1 risk-based capital
12.06
%
11.84
%
11.81
%
12.00
%
11.84
%
Total risk-based capital
12.80
%
12.59
%
12.56
%
12.77
%
12.61
%
Tier 1 leverage ratio
8.76
%
8.69
%
8.89
%
8.91
%
8.87
%
Common equity tier 1
11.46
%
11.25
%
11.20
%
11.37
%
11.20
%
 
 
 
 
 
 
Balance Sheet Ratios:
 
 
 
 
 
Equity to assets
9.33
%
9.11
%
8.94
%
8.97
%
8.90
%
Tangible equity to tangible assets - Non-GAAP (1)
8.06
%
7.83
%
7.62
%
7.57
%
7.48
%
Loans to deposits (3)
106.8
%
106.3
%
104.3
%
104.0
%
105.3
%

 
 
 
For the Six Months Ended
 
For the Three Months Ended
 
 
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
 
Jun 30,
2019
Jun 30,
2018
Performance Ratios (4):
 
 
 
 
 
 
 
 
Net interest margin (5)
2.81
%
2.93
%
2.95
%
2.99
%
3.05
%
 
2.87
%
3.04
%
Return on average assets (net income divided by average assets)
1.34
%
1.39
%
1.40
%
1.47
%
1.53
%
 
1.37
%
1.49
%
Return on average tangible assets - Non-GAAP (1)
1.36
%
1.41
%
1.42
%
1.49
%
1.56
%
 
1.39
%
1.52
%
Return on average equity (net income available for common shareholders divided by average equity)
14.58
%
15.52
%
15.61
%
16.26
%
16.99
%
 
15.04
%
16.48
%
Return on average tangible equity - Non-GAAP (1)
17.17
%
18.43
%
18.75
%
19.59
%
20.58
%
 
17.78
%
20.00
%
Efficiency ratio (6)
55.6
%
54.0
%
54.4
%
53.6
%
53.5
%
 
54.8
%
55.2
%
(1)
See the section labeled “SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures” at the end of this document.
(2)
Estimated for June 30, 2019 and actuals for prior periods.
(3)
Period-end balances of net loans and mortgage loans held for sale as a percentage of total deposits.
(4)
Annualized based on the actual number of days in the period.
(5)
Fully taxable equivalent (FTE) net interest income as a percentage of average-earnings assets.
(6)
Total noninterest expense as percentage of total revenues (net interest income and noninterest income).



-7-


Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited; Dollars in thousands)
 
 
 
 
 
 
For the Three Months Ended
 
For the Six Months Ended
 
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
 
Jun 30,
2019
Jun 30,
2018
Wealth Management Results
 
 
 
 
 
 
 
 
Wealth Management Revenues:
 
 
 
 
 
 
 
 
Asset-based revenues

$9,141


$8,921


$8,930


$9,322


$9,136

 

$18,062


$19,091

Transaction-based revenues
408

331

82

132

466

 
739

784

Total wealth management revenues

$9,549


$9,252


$9,012


$9,454


$9,602

 

$18,801


$19,875

 
 
 
 
 
 
 
 
 
Assets Under Administration (AUA):
 
 
 
 
 
 
 
 
Balance at beginning of period

$6,350,128


$5,910,814


$6,462,340


$6,220,155


$6,343,720

 

$5,910,814


$6,714,637

Net investment appreciation (depreciation) & income
222,489

520,057

(534,847
)
232,245

133,450

 
742,546

101,426

Net client asset flows
(93,727
)
(80,743
)
(16,679
)
9,940

(257,015
)
 
(174,470
)
(595,908
)
Balance at end of period

$6,478,890


$6,350,128


$5,910,814


$6,462,340


$6,220,155

 

$6,478,890


$6,220,155

 
 
 
 
 
 
 
 
 
Percentage of AUA that are managed assets
91%
91%
90%
91%
92%
 
91%
92%
 
 
 
 
 
 
 
 
 
Mortgage Banking Results
 
 
 
 
 
 
 
 
Mortgage Banking Revenues:
 
 
 
 
 
 
 
 
Gains & commissions on loan sales, net (1)

$3,523


$2,474


$1,798


$2,485


$2,786

 

$5,997


$5,465

Loan servicing fee income, net (2)
117

172

180

139

155

 
289

314

Total mortgage banking revenues

$3,640


$2,646


$1,978


$2,624


$2,941

 

$6,286


$5,779

 
 
 
 
 
 
 
 
 
Residential Mortgage Loan Originations:
 
 
 
 
 
 
 
 
Originations for retention in portfolio

$69,736


$51,697


$58,515


$80,751


$128,479

 

$121,433


$196,319

Originations for sale to secondary market (3)
162,123

85,826

96,792

119,832

122,693

 
247,949

210,413

Total mortgage loan originations

$231,859


$137,523


$155,307


$200,583


$251,172

 

$369,382


$406,732

 
 
 
 
 
 
 
 
 
Residential Mortgage Loans Sold:
 
 
 
 
 
 
 
 
Sold with servicing rights retained

$18,292


$9,490


$16,577


$24,422


$24,367

 

$27,782


$57,942

Sold with servicing rights released (3)
119,122

82,589

81,985

107,694

81,054

 
201,711

144,319

Total mortgage loans sold

$137,414


$92,079


$98,562


$132,116


$105,421

 

$229,493


$202,261

(1)
Includes gains on loan sales, commissions on loans originated for others, servicing right gains, fair value adjustments on mortgage loans held for sale, and fair value adjustments and gains on forward loan commitments.
(2)
Represents loan servicing fee income, net of servicing right amortization and valuation adjustments.
(3)
Includes brokered loans.


-8-


Washington Trust Bancorp, Inc. and Subsidiaries
END OF PERIOD LOAN AND DEPOSIT COMPOSITION
(Unaudited; Dollars in thousands)
 
 
 
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
Loans:
 
 
 
 
 
Commercial real estate (1)

$1,482,836


$1,463,682


$1,392,408


$1,240,350


$1,218,643

Commercial & industrial
583,873

610,608

620,704

656,882

632,029

Total commercial
2,066,709

2,074,290

2,013,112

1,897,232

1,850,672

 
 
 
 
 
 
Residential real estate (2)
1,352,113

1,359,072

1,360,387

1,349,340

1,327,418

 
 
 
 
 
 
Home equity
288,078

279,938

280,626

282,331

283,744

Other
23,439

25,169

26,235

27,300

28,396

Total consumer
311,517

305,107

306,861

309,631

312,140

Total loans

$3,730,339


$3,738,469


$3,680,360


$3,556,203


$3,490,230

(1)
Commercial real estate loans consist of commercial mortgages and construction and development loans. Commercial mortgages are loans secured by income producing property.
(2)
Residential real estate loans consist of mortgage and homeowner construction loans secured by one- to four-family residential properties.

 
June 30, 2019
 
December 31, 2018
 
Balance

% of Total
 
Balance
% of Total
Commercial Real Estate Loans by Property Location:
 
 
 
 
 
Rhode Island

$384,603

26
%
 

$377,249

27
%
Connecticut
603,036

41

 
570,116

41

Massachusetts
407,350

27

 
356,615

26

Subtotal
1,394,989

94

 
1,303,980

94

All other states
87,847

6

 
88,428

6

Total commercial real estate loans

$1,482,836

100
%
 

$1,392,408

100
%
 
 
 
 
 
 
Residential Real Estate Loans by Property Location:
 
 
 
 
 
Rhode Island

$347,406

26
%


$352,141

26
%
Connecticut
144,664

11


141,775

10

Massachusetts
844,024

62


849,435

63

Subtotal
1,336,094

99


1,343,351

99

All other states
16,019

1


17,036

1

Total residential real estate loans

$1,352,113

100
%


$1,360,387

100
%

 
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
Deposits:
 
 
 
 
 
Noninterest-bearing demand deposits

$587,326


$577,319


$603,216


$611,829


$577,656

Interest-bearing demand deposits
128,355

162,598

178,733

151,322

136,640

NOW accounts
484,615

471,682

466,568

468,578

481,905

Money market accounts
654,719

644,949

646,878

650,976

604,954

Savings accounts
365,069

371,248

373,545

372,425

375,983

Time deposits (in-market)
801,501

792,470

778,105

715,635

698,286

In-market deposits
3,021,585

3,020,266

3,047,045

2,970,765

2,875,424

Wholesale brokered time deposits
483,037

483,994

477,003

443,583

446,187

Total deposits

$3,504,622


$3,504,260


$3,524,048


$3,414,348


$3,321,611


-9-


Washington Trust Bancorp, Inc. and Subsidiaries
CREDIT & ASSET QUALITY DATA
(Unaudited; Dollars in thousands)
 
 
 
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
Asset Quality Ratios:
 
 
 
 
 
Nonperforming assets to total assets
0.29
%
0.28
%
0.28
%
0.29
%
0.32
%
Nonaccrual loans to total loans
0.34
%
0.33
%
0.32
%
0.30
%
0.34
%
Total past due loans to total loans
0.48
%
0.39
%
0.37
%
0.38
%
0.48
%
Allowance for loan losses to nonaccrual loans
212.93
%
223.57
%
231.25
%
245.25
%
222.85
%
Allowance for loan losses to total loans
0.73
%
0.74
%
0.74
%
0.75
%
0.75
%
 
 
 
 
 
 
Nonperforming Assets:
 
 
 
 
 
Commercial real estate

$926


$926


$925


$—


$—

Commercial & industrial
—

—

—

122

397

Total commercial
926

926

925

122

397

Residential real estate
10,610

10,032

9,346

9,063

10,206

Home equity
1,243

1,407

1,436

1,624

1,133

Other consumer
88

—

—

—

9

Total consumer
1,331

1,407

1,436

1,624

1,142

Total nonaccrual loans
12,867

12,365

11,707

10,809

11,745

Other real estate owned
2,142

2,142

2,142

2,974

3,206

Total nonperforming assets

$15,009


$14,507


$13,849


$13,783


$14,951

 
 
 
 
 
 
Past Due Loans (30 days or more past due):
 
 
 
 
 
Commercial real estate

$3,670


$926


$1,080


$931


$—

Commercial & industrial
1

1

—

142

2,851

Total commercial
3,671

927

1,080

1,073

2,851

Residential real estate
11,237

10,849

10,520

9,398

11,243

Home equity
2,904

2,911

1,989

2,939

2,585

Other consumer
102

13

33

109

16

Total consumer
3,006

2,924

2,022

3,048

2,601

Total past due loans

$17,914


$14,700


$13,622


$13,519


$16,695

 
 
 
 
 
 
Accruing loans 90 days or more past due

$—


$—


$—


$—


$—

Nonaccrual loans included in past due loans

$8,581


$8,563


$8,613


$6,425


$8,575


-10-


Washington Trust Bancorp, Inc. and Subsidiaries
CREDIT & ASSET QUALITY DATA
(Unaudited; Dollars in thousands)
 
For the Three Months Ended
 
For the Six Months Ended
 
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
 
Jun 30,
2019
Jun 30,
2018
Nonaccrual Loan Activity:
 
 
 
 
 
 
 
 
Balance at beginning of period

$12,365


$11,707


$10,809


$11,745


$10,521

 

$11,707


$15,211

Additions to nonaccrual status
1,620

1,924

2,918

2,179

2,457

 
3,544

3,667

Loans returned to accruing status
(118
)
(855
)
(1,500
)
(361
)
(475
)
 
(973
)
(819
)
Loans charged-off
(819
)
(103
)
(298
)
(96
)
(103
)
 
(922
)
(793
)
Loans transferred to other real estate owned
—

—

—

—

—

 
—

(3,074
)
Payments, payoffs and other changes
(181
)
(308
)
(222
)
(2,658
)
(655
)
 
(489
)
(2,447
)
Balance at end of period

$12,867


$12,365


$11,707


$10,809


$11,745

 

$12,867


$11,745

 
 
 
 
 
 
 
 
 
Allowance for Loan Losses:
 
 
 
 
 
 
 
 
Balance at beginning of period

$27,644


$27,072


$26,509


$26,174


$25,864

 

$27,072


$26,488

Provision charged to earnings
525

650

800

350

400

 
1,175

400

Charge-offs
(819
)
(103
)
(298
)
(96
)
(103
)
 
(922
)
(793
)
Recoveries
48

25

61

81

13

 
73

79

Balance at end of period

$27,398


$27,644


$27,072


$26,509


$26,174

 

$27,398


$26,174

 
 
 
 
 
 
 
 
 
Net Loan Charge-Offs (Recoveries):
 
 
 
 
 
 
 
 
Commercial real estate

$—


$—


$—


$—


$—

 

$—


$602

Commercial & industrial
(16
)
6

(13
)
(70
)
(3
)
 
(10
)
(26
)
Total commercial
(16
)
6

(13
)
(70
)
(3
)
 
(10
)
576

Residential real estate
486

—

156

68

5

 
486

5

Home equity
289

48

65

(2
)
73

 
337

101

Other consumer
12

24

29

19

15

 
36

32

Total consumer
301

72

94

17

88

 
373

133

Total

$771


$78


$237


$15


$90

 

$849


$714

 
 
 
 
 
 
 
 
 
Net charge-offs to average loans (annualized)
0.08
%
0.01
%
0.03
%
—
%
0.01
%
 
0.05
%
0.04
%

-11-


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 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 (FTE Basis)
(Unaudited; Dollars in thousands)
For the Three Months Ended
June 30, 2019
 
March 31, 2019
 
Quarter Change
 
Average Balance
Interest
Yield/
Rate
 
Average Balance
Interest
Yield/
Rate
 
Average Balance
Interest
Yield/
Rate
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash, federal funds sold and short-term investments

$72,976


$399

2.19
%
 

$56,359


$340

2.45
%
 

$16,617


$59

(0.26
)%
Mortgage loans held for sale
28,532

288

4.05

 
16,587

180

4.40

 
11,945

108

(0.35
)
Taxable debt securities
996,590

7,006

2.82

 
1,000,911

7,226

2.93

 
(4,321
)
(220
)
(0.11
)
Nontaxable debt securities
805

11

5.48

 
935

10

4.34

 
(130
)
1

1.14

Total securities
997,395

7,017

2.82

 
1,001,846

7,236

2.93

 
(4,451
)
(219
)
(0.11
)
FHLB stock
49,574

720

5.83

 
46,988

695

6.00

 
2,586

25

(0.17
)
Commercial real estate
1,468,382

17,509

4.78

 
1,425,225

16,879

4.80

 
43,157

630

(0.02
)
Commercial & industrial
606,835

7,482

4.95

 
618,364

7,544

4.95

 
(11,529
)
(62
)
—

Total commercial
2,075,217

24,991

4.83

 
2,043,589

24,423

4.85

 
31,628

568

(0.02
)
Residential real estate
1,350,865

13,606

4.04

 
1,357,835

13,765

4.11

 
(6,970
)
(159
)
(0.07
)
Home equity
284,195

3,579

5.05

 
278,581

3,564

5.19

 
5,614

15

(0.14
)
Other
24,189

292

4.84

 
25,629

316

5.00

 
(1,440
)
(24
)
(0.16
)
Total consumer
308,384

3,871

5.03

 
304,210

3,880

5.17

 
4,174

(9
)
(0.14
)
Total loans
3,734,466

42,468

4.56

 
3,705,634

42,068

4.60

 
28,832

400

(0.04
)
Total interest-earning assets
4,882,943

50,892

4.18

 
4,827,414

50,519

4.24

 
55,529

373

(0.06
)
Noninterest-earning assets
288,619

 
 
 
268,689

 
 
 
19,930

 
 
Total assets

$5,171,562

 
 
 

$5,096,103

 
 
 

$75,459

 
 
Liabilities and Shareholders' Equity:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits

$129,334


$624

1.94
%
 

$165,911


$686

1.68
%
 

($36,577
)

($62
)
0.26
 %
NOW accounts
462,217

75

0.07

 
454,868

84

0.07

 
7,349

(9
)
—

Money market accounts
659,021

1,831

1.11

 
646,250

1,609

1.01

 
12,771

222

0.10

Savings accounts
366,449

71

0.08

 
369,219

61

0.07

 
(2,770
)
10

0.01

Time deposits (in-market)
796,606

3,992

2.01

 
789,378

3,727

1.91

 
7,228

265

0.10

Total interest-bearing in-market deposits
2,413,627

6,593

1.10

 
2,425,626

6,167

1.03

 
(11,999
)
426

0.07

Wholesale brokered time deposits
507,376

2,876

2.27

 
473,799

2,529

2.16

 
33,577

347

0.11

Total interest-bearing deposits
2,921,003

9,469

1.30

 
2,899,425

8,696

1.22

 
21,578

773

0.08

FHLB advances
1,050,660

6,980

2.66

 
1,027,285

6,661

2.63

 
23,375

319

0.03

Junior subordinated debentures
22,681

252

4.46

 
22,681

253

4.52

 
—

(1
)
(0.06
)
Total interest-bearing liabilities
3,994,344

16,701

1.68

 
3,949,391

15,610

1.60

 
44,953

1,091

0.08

Noninterest-bearing demand deposits
608,099

 
 
 
607,033

 
 
 
1,066



Other liabilities
94,766

 
 
 
83,438

 
 
 
11,328



Shareholders' equity
474,353

 
 
 
456,241

 
 
 
18,112

 
 
Total liabilities and shareholders' equity

$5,171,562

 
 
 

$5,096,103

 
 
 

$75,459

 
 
Net interest income (FTE)
 

$34,191

 
 
 

$34,909

 
 
 

($718
)
 
Interest rate spread
 
 
2.50
%
 
 
 
2.64
%
 
 
 
(0.14
)%
Net interest margin
 
 
2.81
%
 
 
 
2.93
%
 
 
 
(0.12
)%
Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:
For the Three Months Ended
Jun 30, 2019
Mar 31, 2019
Quarter Change
Commercial loans

$330


$324


$6

Nontaxable debt securities
3

1

2

Total

$333


$325


$8


-12-


 
 
 
 
 
 
 
 
 
 
Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS (FTE Basis)
(Unaudited; Dollars in thousands)
For the Six Months Ended
June 30, 2019
June 30, 2018
Change
 
Average Balance
Interest
Yield/
Rate
Average Balance
Interest
Yield/
 Rate
Average Balance
Interest
Yield/
Rate
 
Assets:
 
 
 
 
 
 
 
 
 
Cash, federal funds sold and short-term investments

$64,713


$739

2.30
%

$54,649


$462

1.70
%

$10,064


$277

0.60
 %
Mortgage loans for sale
22,588

468

4.18

27,329

539

3.98

(4,741
)
(71
)
0.20

Taxable debt securities
998,738

14,232

2.87

813,193

10,476

2.60

185,545

3,756

0.27

Nontaxable debt securities
870

21

4.87

2,154

55

5.15

(1,284
)
(34
)
(0.28
)
Total securities
999,608

14,253

2.88

815,347

10,531

2.60

184,261

3,722

0.28

FHLB stock
48,288

1,415

5.91

42,116

1,066

5.10

6,172

349

0.81

Commercial real estate
1,446,923

34,388

4.79

1,222,136

25,809

4.26

224,787

8,579

0.53

Commercial & industrial
612,568

15,026

4.95

615,698

14,392

4.71

(3,130
)
634

0.24

Total commercial
2,059,491

49,414

4.84

1,837,834

40,201

4.41

221,657

9,213

0.43

Residential real estate
1,354,330

27,371

4.08

1,251,904

24,355

3.92

102,426

3,016

0.16

Home equity
281,404

7,142

5.12

285,684

6,439

4.55

(4,280
)
703

0.57

Other
24,905

609

4.93

30,188

729

4.87

(5,283
)
(120
)
0.06

Total consumer
306,309

7,751

5.10

315,872

7,168

4.58

(9,563
)
583

0.52

Total loans
3,720,130

84,536

4.58

3,405,610

71,724

4.25

314,520

12,812

0.33

Total interest-earning assets
4,855,327

101,411

4.21

4,345,051

84,322

3.91

510,276

17,089

0.30

Noninterest-earning assets
278,714

 
 
234,485

 
 
44,229


 
Total assets

$5,134,041

 
 

$4,579,536

 
 

$554,505


 
Liabilities and Shareholders' Equity:
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits

$147,522


$1,311

1.79
%

$83,368


$129

0.31
%

$64,154


$1,182

1.48
 %
NOW accounts
458,563

159

0.07

455,036

111

0.05

3,527

48

0.02

Money market accounts
652,671

3,440

1.06

691,245

1,840

0.54

(38,574
)
1,600

0.52

Savings accounts
367,826

131

0.07

371,873

114

0.06

(4,047
)
17

0.01

Time deposits (in-market)
793,012

7,719

1.96

640,548

4,085

1.29

152,464

3,634

0.67

Total interest-bearing in-market deposits
2,419,594

12,760

1.06

2,242,070

6,279

0.56

177,524

6,481

0.50

Wholesale brokered time deposits
490,680

5,405

2.22

419,738

3,397

1.63

70,942

2,008

0.59

Total interest-bearing deposits
2,910,274

18,165

1.26

2,661,808

9,676

0.73

248,466

8,489

0.53

FHLB advances
1,039,037

13,641

2.65

843,033

8,690

2.08

196,004

4,951

0.57

Junior subordinated debentures
22,681

505

4.49

22,681

397

3.53

—

108

0.96

Total interest-bearing liabilities
3,971,992

32,311

1.64

3,527,522

18,763

1.07

444,470

13,548

0.57

Noninterest-bearing demand deposits
607,569

 
 
579,379

 
 
28,190

 
 
Other liabilities
89,133

 
 
58,926

 
 
30,207

 
 
Shareholders' equity
465,347

 
 
413,709

 
 
51,638

 
 
Total liabilities and shareholders' equity

$5,134,041

 
 

$4,579,536

 
 

$554,505

 
 
Net interest income (FTE)
 

$69,100

 
 

$65,559

 
 

$3,541

 
Interest rate spread
 
 
2.57
%
 
 
2.84
%
 
 
(0.27
)%
Net interest margin
 
 
2.87
%
 
 
3.04
%
 
 
(0.17
)%
Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:
 
 
 
 
For the Six Months Ended
Jun 30, 2019
Jun 30, 2018
Change
Commercial loans

$654


$584


$70

Nontaxable debt securities
4

12

(8
)
Total

$658


$596


$62


-13-


Washington Trust Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures
(Unaudited; Dollars in thousands, except per share amounts)
 
 
 
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
Tangible Book Value per Share:
 
 
 
 
 
Total shareholders' equity, as reported

$484,205


$469,843


$448,184


$427,909


$421,571

Less:
 
 
 
 
 
Goodwill
63,909

63,909

63,909

63,909

63,909

Identifiable intangible assets, net
7,684

7,923

8,162

8,400

8,645

Total tangible shareholders' equity

$412,612


$398,011


$376,113


$355,600


$349,017

 
 
 
 
 
 
Shares outstanding, as reported
17,336

17,305

17,302

17,290

17,278

 
 
 
 
 
 
Book value per share - GAAP

$27.93


$27.15


$25.90


$24.75


$24.40

Tangible book value per share - Non-GAAP

$23.80


$23.00


$21.74


$20.57


$20.20

 
 
 
 
 
 
Tangible Equity to Tangible Assets:
 
 
 
 
 
Total tangible shareholders' equity

$412,612


$398,011


$376,113


$355,600


$349,017

 
 
 
 
 
 
Total assets, as reported

$5,189,672


$5,154,729


$5,010,766


$4,770,672


$4,737,242

Less:
 
 
 
 
 
Goodwill
63,909

63,909

63,909

63,909

63,909

Identifiable intangible assets, net
7,684

7,923

8,162

8,400

8,645

Total tangible assets

$5,118,079


$5,082,897


$4,938,695


$4,698,363


$4,664,688

 
 
 
 
 
 
Equity to assets - GAAP
9.33
%
9.11
%
8.94
%
8.97
%
8.90
%
Tangible equity to tangible assets - Non-GAAP
8.06
%
7.83
%
7.62
%
7.57
%
7.48
%
 
For the Three Months Ended
 
For the Six Months Ended
 
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
 
Jun 30,
2019
Jun 30,
2018
Return on Average Tangible Assets:
 
 
 
 
 
 
 
 
Net income, as reported

$17,273


$17,495


$17,036


$17,511


$17,674

 

$34,768


$33,885

 
 
 
 
 
 
 
 
 
Total average assets, as reported

$5,171,562


$5,096,103


$4,840,158


$4,724,898


$4,628,816

 

$5,134,041


$4,579,536

Less average balances of:
 
 
 
 
 
 
 
 
Goodwill
63,909

63,909

63,909

63,909

63,909

 
63,909

63,909

Identifiable intangible assets, net
7,800

8,040

8,278

8,519

8,766

 
7,919

8,889

Total average tangible assets

$5,099,853


$5,024,154


$4,767,971


$4,652,470


$4,556,141

 

$5,062,213


$4,506,738

 
 
 
 
 
 
 
 
 
Return on average assets - GAAP
1.34
%
1.39
%
1.40
%
1.47
%
1.53
%
 
1.37
%
1.49
%
Return on average tangible assets - Non-GAAP
1.36
%
1.41
%
1.42
%
1.49
%
1.56
%
 
1.39
%
1.52
%
 
 
 
 
 
 
 
 
 
Return on Average Tangible Equity:
 
 
 
 
 
 
 
 
Net income available to common shareholders, as reported

$17,238


$17,461


$17,004


$17,475


$17,636

 

$34,699


$33,809

 
 
 
 
 
 
 
 
 
Total average equity, as reported

$474,353


$456,241


$432,043


$426,306


$416,433

 

$465,347


$413,709

Less average balances of:
 
 
 
 
 
 
 
 
Goodwill
63,909

63,909

63,909

63,909

63,909

 
63,909

63,909

Identifiable intangible assets, net
7,800

8,040

8,278

8,519

8,766

 
7,919

8,889

Total average tangible equity

$402,644


$384,292


$359,856


$353,878


$343,758

 

$393,519


$340,911

 
 
 
 
 
 
 
 
 
Return on average equity - GAAP
14.58
%
15.52
%
15.61
%
16.26
%
16.99
%
 
15.04
%
16.48
%
Return on average tangible equity - Non-GAAP
17.17
%
18.43
%
18.75
%
19.59
%
20.58
%
 
17.78
%
20.00
%

-14-