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8-K - 8-K - WASHINGTON TRUST BANCORP INCform8-k2014q1earningsrelea.htm
Exhibit 99.1

NASDAQ: WASH
Contact: Elizabeth B. Eckel
Senior Vice President, Marketing
Telephone: (401) 348-1309
E-mail: ebeckel@washtrust.com
Date: April 21, 2014
FOR IMMEDIATE RELEASE

Washington Trust Reports First Quarter 2014 Earnings

Westerly, Rhode Island…Washington Trust Bancorp, Inc. (NASDAQ OMX®: WASH), parent company of The Washington Trust Company, today announced net income of $9.3 million, or 55 cents per diluted share, for the first quarter of 2014, compared to fourth quarter of 2013 net income of $9.8 million, or 58 cents per diluted share.

“Washington Trust posted another quarter of solid earnings,” stated Joseph J. MarcAurele, Washington Trust Chairman and CEO.  “We continue to build relationships in key market areas and are excited about entering a new market with the opening of our new branch in Johnston, Rhode Island next month.”

Selected highlights for the first quarter of 2014 included:
The net interest margin for the first quarter was 3.34%, up from 3.24% for the fourth quarter of 2013.
Asset quality continued to improve. Nonperforming assets were down by $5.5 million, or 28%, and total past due loans were down by $3.9 million, or 18%, from December 31, 2013.
In March, we declared a quarterly dividend of 29 cents per share, representing a 2 cent increase over the dividend paid last quarter and our third consecutive quarterly dividend increase.

As previously reported, on March 1, 2014, the Corporation sold its merchant processing services business line to a third party. The sale resulted in a net gain of $6.3 million, after-tax $4.0 million, or 24 cents per diluted share. In connection with the sale, Washington Trust incurred divestiture costs of $355 thousand, or 1 cent per diluted share, in the first quarter of 2014. The Corporation also prepaid $99.3 million of Federal Home Loan Bank of Boston (FHLBB) advances in March 2014, resulting in debt prepayment penalty expense of $6.3 million, after-tax $4.0 million, or 24 cents per diluted share. The net impact of these transactions was a reduction equal to 1 cent per diluted share.

Net Interest Income
Net interest income totaled $23.8 million for the first quarter of 2014, compared to $23.5 million for the fourth quarter of 2013. The net interest margin was 3.34% for the first quarter of 2014, up by 10 basis points from the fourth quarter of 2013.

As discussed above, the Corporation prepaid $99.3 million in FHLBB advances in early March 2014. These advances had a weighted average rate of 3.01% and a weighted average remaining term of thirty-six months. Other wholesale funding in the form



Washington Trust
Page 2, April 21, 2014



of brokered time deposits as well as existing on-balance sheet liquidity were utilized as the funding source for the prepayments. The replacement wholesale funding amounted to $80 million, with an initial weighted average cost of 0.93% and a weighted average maturity of thirty-five months. The net impact of these transactions was a reduction in interest expense of approximately $170 thousand, which increased net interest margin by 2 basis points.

In addition, dividend income on the Corporation's investment in FHLBB stock increased by $107 thousand in the first quarter, which also increased net interest margin by 2 basis points.

The remaining 6 basis point linked quarter increase in the net interest margin was attributable to higher yields on residential mortgages, higher yields on consumer loans and a lower average cost of in-market time deposits.

Noninterest Income
Noninterest income totaled $19.4 million for the first quarter of 2014, compared to $15.1 million for the fourth quarter of 2013. Excluding the $6.3 million gain on sale of business line recognized in the first quarter of 2014 and the $717 thousand other-than-temporary impairment charge recognized in the fourth quarter of 2013, noninterest income decreased by $2.7 million, or 17%, on a linked quarter basis. Significant linked quarter changes, on this basis, included the following:
Wealth management revenues decreased by $745 thousand, or 9%, reflecting a decline of $770 thousand in transaction-based revenues due to an above-average level of insurance commission income in the fourth quarter of 2013.
Merchant processing fee revenue was down by $980 thousand, or 43%. As previously mentioned, the sale of this business line was consummated on March 1, 2014. See discussion below regarding the corresponding decrease in merchant processing expenses.
Net gains on loan sales and commissions on loans originated for others declined by $312 thousand, or 20%, reflecting lower levels of mortgage loan refinancing and sales activity due to higher market interest rates. In the first quarter of 2014, residential mortgage loans sold to the secondary market amounted to $57.0 million, compared to $65.9 million in the fourth quarter of 2013.
Net gains on interest rate swap contracts decreased by $466 thousand, or 65%, largely due to an above-average level of customer-related interest rate swap transactions in the fourth quarter of 2013.

Noninterest Expenses
Noninterest expenses totaled $29.3 million for the first quarter of 2014, compared to $24.0 million for the fourth quarter of 2013. Included in noninterest expenses were the following:
Debt prepayment penalty expense of $6.3 million was recognized in the first quarter of 2014.
Divestiture costs of $355 thousand were expensed in the first quarter of 2014, in connection with the sale of the merchant processing services business line. These costs included $291 thousand in salaries and employee benefit expenses and $64 thousand of legal expenses.
Charitable contribution expense (classified in other expenses) of $400 thousand was incurred in the fourth quarter of 2013.




Washington Trust
Page 3, April 21, 2014



Excluding these items, noninterest expenses for the first quarter of 2014 decreased by $1.3 million, or 6%, compared to the fourth quarter of 2013, largely due to a $886 thousand, or 46%, decline in merchant processing costs. See discussion above regarding the corresponding decrease in merchant processing fee revenue.

Income tax expense amounted to $4.3 million for the first quarter of 2014, compared to $4.4 million for the fourth quarter of 2013. The effective tax rate for the first quarter of 2014 was 31.7%, compared to 31.0% for the fourth quarter of 2013.

Asset Quality
Total nonaccrual loans amounted to $13.6 million, or 0.55% of total loans, at March 31, 2014, compared to $18.3 million, or 0.74%, at December 31, 2013. Total past due loans amounted to $18.0 million, or 0.73% of total loans, at March 31, 2014, compared to $21.9 million, or 0.89%, at December 31, 2013.

The loan loss provision charged to earnings in the first quarter of 2014 totaled $300 thousand, down from $400 thousand in the fourth quarter of 2013. Net charge-offs amounted to $1.1 million in the first quarter of 2014 and was largely comprised of a $853 thousand charge-off on one commercial mortgage relationship. Net charge-offs totaled $522 thousand in the fourth quarter of 2013. The allowance for loan losses was $27.0 million, or 1.09% of total loans, at March 31, 2014, compared to $27.9 million, or 1.13% of total loans, at December 31, 2013. The decline in the ratio of the allowance for loan losses to total loans reflects charge-offs and decline in specific reserves on impaired loans.

Loans
Total loans of $2.48 billion at March 31, 2014 increased by $15.7 million from the balance at December 31, 2013. In the first quarter of 2014, the residential real estate loan portfolio grew by $38 million, or 5%, while the commercial loan portfolio declined by $26 million, or 2%, largely due to payoffs of several larger commercial loans.

Investment Securities
The securities portfolio declined by $32.9 million from December 31, 2013, primarily due to a call on a U.S. Government Agency security and principal payments received on mortgage-backed securities, which were not reinvested in the securities portfolio.

Deposits and Borrowings
Total deposits of $2.59 billion at March 31, 2014 increased by $86.3 million, or 3%, from December 31, 2013. This included a net increase of $73.3 million of out-of-market wholesale brokered certificates of deposits, which were utilized as replacement funding for the prepayment of FHLBB advances in the first quarter of 2014. FHLBB advances declined by $84.7 million from December 31, 2013.

Capital Management
Capital levels continued to exceed the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 13.56% at March 31, 2014, compared to 13.29% at December 31, 2013. Total shareholder's equity was $335.9 million at March 31, 2014, up by $6.2 million from December 31, 2013.




Washington Trust
Page 4, April 21, 2014



Dividends Declared
The Board of Directors declared a quarterly dividend of 29 cents per share for the quarter ended March 31, 2014. The dividend was paid on April 11, 2014 to shareholders of record on April 1, 2014.

Conference Call
Washington Trust will host a conference call to discuss first quarter results, business highlights and outlook on Monday, April 21, 2014 at 10:30 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 by dialing 1-877-344-7529 and entering Conference Number 10042807; the audio replay will be available until 9:00 a.m. on May 2, 2014. A webcast of the call will be posted in the Investor Relations section of Washington Trust's web site, www.washtrust.com, shortly after the conclusion of the call and will be available through June 30, 2014.

Background
Washington Trust Bancorp, Inc. is the parent of The Washington Trust Company, a state-chartered bank headquartered in Westerly, Rhode Island. Founded in 1800, Washington Trust is the oldest community bank in the nation and is the largest independent bank headquartered in Rhode Island. Washington Trust offers a full range of financial services, including commercial banking, small business banking, personal banking, and wealth management and trust services through its offices located in Rhode Island, Connecticut and Massachusetts. The Corporation’s common stock trades on NASDAQ OMX® under the symbol WASH. Investor information is available on the Corporation’s web site: www.washtrustbancorp.com.

Forward-Looking Statements
This press release contains statements that are “forward-looking statements”. We may also make written or oral forward-looking statements in other documents we file with the SEC, in press releases and other written materials, and in oral statements made by our officers, directors or employees. You can identify forward-looking statements by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “outlook,” “will,” “should,” and other expressions that predict or indicate future events and trends and which do not relate to historical matters. You should not rely on forward-looking statements, because they involve known and unknown risks, uncertainties and other factors, some of which are beyond the control of Washington Trust. These risks, uncertainties and other factors may cause the actual results, performance or achievements of Washington Trust to be materially different from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements.

Some of the factors that might cause these differences include the following: continued weakness in national, regional or local economies, reductions in net interest income resulting from a sustained low interest rate environment as well as changes in the balance and mix of loans and deposits; reductions in the market value of wealth management assets under administration; changes in the value of securities and other assets; reductions in loan demand, changes in loan collectibility, default and charge-off rates; changes in the size and nature of Corporation's competition; changes in legislation or regulation and accounting principles, policies and guidelines; and changes in the assumptions used in making such forward-looking statements. In addition, the factors described under “Risk Factors” in Item 1A of our Annual Report on Form 10-K, as filed with the SEC and as updated by our Quarterly Reports on Form 10-Q and other SEC filings, may result in these differences. You should carefully review all of these factors, and you should be aware that there may be other factors that could cause these differences. These forward-looking statements were based on information, plans and estimates at the date of this press release, and we assume no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

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








Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS (unaudited)
(Dollars in thousands, except par value)
 
Mar 31,
2014
 
Dec 31,
2013
Assets:
 
 
 
 
Cash and due from banks
 

$104,738

 

$81,939

Short-term investments
 
3,419

 
3,378

Mortgage loans held for sale, at fair value
 
10,409

 
11,636

Securities:
 
 
 
 
Available for sale, at fair value
 
361,000

 
392,903

Held to maturity, at amortized cost (fair value $29,180 in 2014 and $29,865 in 2013)
 
28,889

 
29,905

Total securities
 
389,889

 
422,808

Federal Home Loan Bank stock, at cost
 
37,730

 
37,730

Loans:
 
 
 
 
Commercial
 
1,337,283

 
1,363,335

Residential real estate
 
810,393

 
772,674

Consumer
 
330,927

 
326,875

Total loans
 
2,478,603

 
2,462,884

Less allowance for loan losses
 
27,043

 
27,886

Net loans
 
2,451,560

 
2,434,998

Premises and equipment, net
 
25,909

 
25,402

Investment in bank-owned life insurance
 
57,118

 
56,673

Goodwill
 
58,114

 
58,114

Identifiable intangible assets, net
 
5,329

 
5,493

Other assets
 
49,931

 
50,696

Total assets
 

$3,194,146

 

$3,188,867

Liabilities:
 
 
 
 
Deposits:
 
 
 
 
Demand deposits
 

$445,570

 

$440,785

NOW accounts
 
311,461

 
309,771

Money market accounts
 
704,434

 
666,646

Savings accounts
 
293,322

 
297,357

Time deposits
 
836,867

 
790,762

Total deposits
 
2,591,654

 
2,505,321

Federal Home Loan Bank advances
 
203,429

 
288,082

Junior subordinated debentures
 
22,681

 
22,681

Other liabilities
 
40,524

 
43,137

Total liabilities
 
2,858,288

 
2,859,221

Shareholders’ Equity:
 
 
 
 
Common stock of $.0625 par value; authorized 30,000,000 shares; issued and outstanding 16,634,985 shares in 2014 and 16,613,561 shares in 2013
 
1,040

 
1,038

Paid-in capital
 
98,596

 
97,566

Retained earnings
 
236,999

 
232,595

Accumulated other comprehensive loss
 
(777
)
 
(1,553
)
Total shareholders’ equity
 
335,858

 
329,646

Total liabilities and shareholders’ equity
 

$3,194,146

 

$3,188,867








Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
 
 
(Dollars and shares in thousands, except per share amounts)
 
 
 
 
 
Three months ended March 31,
2014
 
2013
Interest income:
 
 
 
Interest and fees on loans
 

$25,589

 

$25,223

Interest on securities:
Taxable
2,942

 
2,845

 
Nontaxable
582

 
659

Dividends on Federal Home Loan Bank stock
142

 
38

Other interest income
35

 
28

Total interest and dividend income
29,290

 
28,793

Interest expense:


 


Deposits
2,969

 
3,194

Federal Home Loan Bank advances
2,241

 
2,737

Junior subordinated debentures
241

 
390

Other interest expense
3

 
5

Total interest expense
5,454

 
6,326

Net interest income
23,836

 
22,467

Provision for loan losses
300

 
600

Net interest income after provision for loan losses
23,536

 
21,867

Noninterest income:


 


Wealth management revenues
8,065

 
7,474

Merchant processing fees
1,291

 
1,977

Net gains on loan sales and commissions on loans originated for others
1,239

 
4,166

Service charges on deposit accounts
754

 
791

Card interchange fees
681

 
599

Income from bank-owned life insurance
445

 
467

Net gains on interest rate swap contracts
260

 
19

Equity in earnings (losses) of unconsolidated subsidiaries
(43
)
 
39

Gain on sale of business line
6,265

 

Other income
413

 
406

Noninterest income, excluding other-than-temporary impairment losses
19,370

 
15,938

Total other-than-temporary impairment losses on securities

 
(613
)
Portion of loss recognized in other comprehensive income (before tax)

 
(2,159
)
Net impairment losses recognized in earnings

 
(2,772
)
Total noninterest income
19,370

 
13,166

Noninterest expense:


 


Salaries and employee benefits
14,558

 
15,442

Net occupancy
1,640

 
1,514

Equipment
1,236

 
1,244

Merchant processing costs
1,050

 
1,673

Outsourced services
1,044

 
841

Legal, audit and professional fees
618

 
608

FDIC deposit insurance costs
440

 
431

Advertising and promotion
232

 
355

Amortization of intangibles
164

 
173

Foreclosed property costs
(22
)
 
47

Debt prepayment penalties
6,294

 

Other expenses
2,038

 
1,856

Total noninterest expense
29,292

 
24,184

Income before income taxes
13,614

 
10,849

Income tax expense
4,316

 
3,428

Net income

$9,298

 

$7,421

 
 
 
 
Weighted average common shares outstanding - basic
16,626

 
16,401

Weighted average common shares outstanding - diluted
16,800

 
16,449

Per share information:
Basic earnings per common share

$0.56

 

$0.45

 
Diluted earnings per common share

$0.55

 

$0.45

 
Cash dividends declared per share

$0.29

 

$0.25







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)
Mar 31,
2014
Dec 31,
2013
Sep 30,
2013
Jun 30,
2013
Mar 31,
2013
Financial Data:
 
 
 
 
 
Total assets

$3,194,146


$3,188,867


$3,131,958


$3,061,307


$3,051,848

Total loans
2,478,603

2,462,884

2,353,766

2,384,980

2,325,045

Total securities
389,889

422,808

419,349

350,517

387,102

Total deposits
2,591,654

2,505,321

2,454,831

2,304,609

2,319,641

Total shareholders' equity
335,858

329,646

323,585

303,370

301,291

Net interest income
23,836

23,521

23,388

22,409

22,467

Provision for loan losses
300

400

700

700

600

Noninterest income, excluding OTTI losses
19,370

15,837

17,400

16,394

15,938

Net OTTI losses recognized in earnings

(717
)


(2,772
)
Noninterest expense
29,292

24,048

25,548

25,005

24,184

Income tax expense
4,316

4,404

4,580

4,115

3,428

Net income
9,298

9,789

9,960

8,983

7,421

 
 
 
 
 
 
Share Data:
 
 
 
 
 
Basic earnings per common share

$0.56


$0.59


$0.60


$0.54


$0.45

Diluted earnings per common share

$0.55


$0.58


$0.59


$0.54


$0.45

Dividends declared per share

$0.29


$0.27


$0.26


$0.25


$0.25

Book value per share

$20.19


$19.84


$19.51


$18.40


$18.34

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

$16.38


$16.01


$15.66


$14.52


$14.44

Market value per share

$37.47


$37.22


$31.43


$28.52


$27.38

Shares outstanding at end of period
16,635

16,614

16,589

16,487

16,425

Weighted average common shares outstanding - basic
16,626

16,602

16,563

16,454

16,401

Weighted average common shares outstanding - diluted
16,800

16,770

16,696

16,581

16,449

 
 
 
 
 
 
Key Ratios:
 
 
 
 
 
Return on average assets
1.17
%
1.24
%
1.29
%
1.18
%
0.98
%
Return on average tangible assets - Non-GAAP (1)
1.20
%
1.26
%
1.31
%
1.21
%
1.01
%
Return on average equity
11.10
%
11.98
%
12.82
%
11.84
%
9.91
%
Return on average tangible equity - Non-GAAP (1)
13.70
%
14.80
%
16.13
%
15.01
%
12.62
%
Tier 1 risk-based capital
12.42
%
12.12
%
12.23
%
11.85
%
12.25
%
Total risk-based capital
13.56
%
13.29
%
13.44
%
13.06
%
13.50
%
Tier 1 leverage ratio
9.56
%
9.41
%
9.41
%
9.32
%
9.53
%
Equity to assets
10.51
%
10.34
%
10.33
%
9.91
%
9.87
%
Tangible equity to tangible assets - Non-GAAP (1)
8.70
%
8.51
%
8.47
%
7.99
%
7.94
%
(i) - estimated
 
 
 
 
 
 
 
 
 
 
 
Wealth Management Revenues:
 
 
 
 
 
Trust and investment management fees

$6,685


$6,637


$6,291


$6,230


$6,066

Mutual fund fees
1,081

1,104

1,075

1,077

1,022

   Asset-based revenues
7,766

7,741

7,366

7,307

7,088

Transaction-based revenues
299

1,069

263

605

386

Total wealth management revenues

$8,065


$8,810


$7,629


$7,912


$7,474

 
 
 
 
 
 
Wealth Management Assets under Administration:
 
 
 
 
 
Balance at beginning of period

$4,781,958


$4,595,594


$4,433,574


$4,420,076


$4,199,640

Net investment appreciation (depreciation) & income
44,335

248,727

190,931

(20,956
)
213,979

Net client cash flows
(19,912
)
(62,363
)
(28,911
)
34,454

6,457

Balance at end of period

$4,806,381


$4,781,958


$4,595,594


$4,433,574


$4,420,076

(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
 
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
 
Mar 31,
2013
Average Yield / Rate (taxable equivalent basis):
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
Commercial loans
4.43
%
 
4.52
%
 
4.67
%
 
4.58
%
 
4.70
%
Residential real estate loans, including mortgage loans held for sale
4.15
%
 
4.09
%
 
4.06
%
 
4.14
%
 
4.26
%
Consumer loans
3.83
%
 
3.77
%
 
3.78
%
 
3.81
%
 
3.84
%
Total loans
4.26
%
 
4.28
%
 
4.35
%
 
4.34
%
 
4.44
%
Cash, federal funds sold and other short-term investments
0.23
%
 
0.22
%
 
0.21
%
 
0.22
%
 
0.21
%
FHLBB stock
1.53
%
 
0.37
%
 
0.38
%
 
0.42
%
 
0.39
%
Taxable debt securities
3.47
%
 
3.40
%
 
3.44
%
 
3.52
%
 
3.56
%
Nontaxable debt securities
5.98
%
 
5.88
%
 
5.87
%
 
5.94
%
 
5.98
%
Total securities
3.84
%
 
3.78
%
 
3.88
%
 
3.97
%
 
3.98
%
Total interest-earning assets
4.08
%
 
4.02
%
 
4.12
%
 
4.17
%
 
4.24
%
Liabilities:
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
%
 
%
 
%
 
%
 
%
NOW accounts
0.06
%
 
0.06
%
 
0.06
%
 
0.06
%
 
0.06
%
Money market accounts
0.36
%
 
0.34
%
 
0.31
%
 
0.29
%
 
0.29
%
Savings accounts
0.06
%
 
0.06
%
 
0.06
%
 
0.07
%
 
0.07
%
Time deposits
1.15
%
 
1.19
%
 
1.23
%
 
1.25
%
 
1.28
%
FHLBB advances
3.37
%
 
3.49
%
 
3.25
%
 
3.29
%
 
3.21
%
Junior subordinated debentures
4.31
%
 
4.22
%
 
4.22
%
 
7.82
%
 
4.79
%
Other
7.03
%
 
2.52
%
 
4.50
%
 
5.87
%
 
1.77
%
Total interest-bearing liabilities
0.93
%
 
0.98
%
 
1.01
%
 
1.11
%
 
1.11
%
 
 
 
 
 
 
 
 
 
 
Interest rate spread (taxable equivalent basis)
3.15
%
 
3.04
%
 
3.11
%
 
3.06
%
 
3.13
%
Net interest margin (taxable equivalent basis)
3.34
%
 
3.24
%
 
3.29
%
 
3.26
%
 
3.32
%

 
 
At March 31, 2014
 
 
Amortized
 
Unrealized
 
Unrealized
 
Fair
(Dollars in thousands)
 
Cost (1)
 
Gains
 
Losses
 
Value
Securities Available for Sale:
 
 
 
 
 
 
 
 
Obligations of U.S. government-sponsored enterprises
 

$39,487

 

$391

 

$—

 

$39,878

Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises
 
218,882

 
8,753

 
(89
)
 
227,546

Obligations of states and political subdivisions
 
59,826

 
2,110

 

 
61,936

Individual name issuer trust preferred debt securities
 
30,724

 

 
(5,344
)
 
25,380

Corporate bonds
 
6,124

 
144

 
(8
)
 
6,260

Total securities available for sale
 
355,043

 
11,398

 
(5,441
)
 
361,000

Held to Maturity:
 
 
 
 
 
 
 
 
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises
 
28,889

 
291

 

 
29,180

Total securities held to maturity
 
28,889

 
291

 

 
29,180

Total securities
 

$383,932

 

$11,689

 

($5,441
)
 

$390,180

(1)
Net of other-than-temporary impairment losses recognized in earnings.






Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
 
Period End Balances At
(Dollars in thousands)
Mar 31,
2014
Dec 31,
2013
Sep 30,
2013
Jun 30,
2013
Mar 31,
2013
Loans:
 
 
 
 
 
Commercial:
Mortgages

$788,836


$796,249


$727,375


$758,437


$729,968

 
Construction & development
24,696

36,289

51,951

39,449

34,179

 
Other
523,751

530,797

518,566

512,228

513,000

 
Total commercial
1,337,283

1,363,335

1,297,892

1,310,114

1,277,147

Residential real estate:
Mortgages
784,623

749,163

711,427

728,158

702,418

 
Homeowner construction
25,770

23,511

20,265

20,713

21,943

 
Total residential real estate
810,393

772,674

731,692

748,871

724,361

Consumer:
Home equity lines
233,728

231,362

227,063

228,367

226,640

 
Home equity loans
41,991

40,212

41,158

41,312

40,134

 
Other
55,208

55,301

55,961

56,316

56,763

 
Total consumer
330,927

326,875

324,182

325,995

323,537

 
Total loans

$2,478,603


$2,462,884


$2,353,766


$2,384,980


$2,325,045

 
At March 31, 2014
(Dollars in thousands)
Balance

% of Total
Commercial Real Estate Loans by Property Location:
 
 
Rhode Island, Connecticut, Massachusetts

$768,970

94.5
%
New York, New Jersey
35,884

4.4
%
New Hampshire
8,678

1.1
%
Total commercial real estate loans (1)

$813,532

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 March 31, 2014
(Dollars in thousands)
Balance
% of Total
Residential Mortgages by Property Location:
 
 
Rhode Island, Connecticut, Massachusetts

$788,659

97.2
%
New Hampshire
9,066

1.1
%
New York, Virginia, New Jersey, Maryland, Pennsylvania, District of Columbia
6,898

0.9
%
Ohio
2,426

0.3
%
Washington, Oregon
1,350

0.2
%
Georgia
1,077

0.1
%
New Mexico
466

0.1
%
Other
451

0.1
%
Total residential mortgages

$810,393

100.0
%
 
 
Period End Balances At
(Dollars in thousands)
 
Mar 31,
2014
Dec 31,
2013
Sep 30,
2013
Jun 30,
2013
Mar 31,
2013
Deposits:
 
 
 
 
 
 
Demand deposits
 

$445,570


$440,785


$420,075


$358,797


$375,156

NOW accounts
 
311,461

309,771

301,250

301,096

294,136

Money market accounts
 
704,434

666,646

623,631

540,012

503,414

Savings accounts
 
293,322

297,357

292,765

293,405

284,983

Time deposits
 
836,867

790,762

817,110

811,299

861,952

Total deposits
 

$2,591,654


$2,505,321


$2,454,831


$2,304,609


$2,319,641

 
 
 
 
 
 
 
Out-of-market brokered certificates of deposits included in time deposits
 

$171,275


$98,009


$106,231


$96,177


$103,045

In-market deposits, excluding out-of-market brokered certificates of deposit
 

$2,420,379


$2,407,312


$2,348,600


$2,208,432


$2,216,596







Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
 
Period End Balances At
(Dollars in thousands)
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
 
Mar 31,
2013
Asset Quality Data:
 
 
 
 
 
 
 
 
 
Nonperforming Assets:
 
 
 
 
 
 
 
 
 
Commercial mortgages

$2,293

 

$7,492

 

$8,956

 

$9,976

 

$14,953

Commercial construction and development

 

 

 

 

Other commercial
1,198

 
1,291

 
1,248

 
1,400

 
3,122

Residential real estate mortgages
8,975

 
8,315

 
8,095

 
7,526

 
6,699

Consumer
1,108

 
1,204

 
1,204

 
1,124

 
901

Total nonaccrual loans
13,574

 
18,302

 
19,503

 
20,026

 
25,675

Nonaccrual investment securities

 
547

 
425

 
397

 
404

Property acquired through foreclosure or repossession
750

 
932

 
594

 
1,230

 
2,625

Total nonperforming assets

$14,324

 

$19,781

 

$20,522

 

$21,653

 

$28,704

 
 
 
 
 
 
 
 
 
 
Total past due loans to total loans
0.73
%
 
0.89
%
 
1.02
%
 
1.09
%
 
1.13
%
Nonperforming assets to total assets
0.45
%
 
0.62
%
 
0.66
%
 
0.71
%
 
0.94
%
Nonaccrual loans to total loans
0.55
%
 
0.74
%
 
0.83
%
 
0.84
%
 
1.10
%
Allowance for loan losses to nonaccrual loans
199.23
%
 
152.37
%
 
143.61
%
 
139.24
%
 
121.28
%
Allowance for loan losses to total loans
1.09
%
 
1.13
%
 
1.19
%
 
1.17
%
 
1.34
%
 
 
 
 
 
 
 
 
 
 
Troubled Debt Restructured Loans:
 
 
 
 
 
 
 
 
 
Accruing troubled debt restructured loans:
 
 
 
 
 
 
 
 
 
Commercial mortgages

$22,796

 

$22,800

 

$23,892

 

$19,018

 

$9,600

Other commercial
989

 
1,265

 
1,576

 
2,602

 
6,554

Residential real estate mortgages
1,467

 
1,442

 
870

 
876

 
1,599

Consumer
233

 
236

 
239

 
242

 
244

Accruing troubled debt restructured loans
25,485

 
25,743

 
26,577

 
22,738

 
17,997

Nonaccrual troubled debt restructured loans:
 
 
 
 
 
 
 
 
 
Commercial mortgages

 

 

 

 

Other commercial
369

 
542

 
547

 
590

 
721

Residential real estate mortgages
447

 

 

 
144

 
155

Consumer
29

 
38

 
40

 
42

 
42

Nonaccrual troubled debt restructured loans
845

 
580

 
587

 
776

 
918

Total troubled debt restructured loans

$26,330

 

$26,323

 

$27,164

 

$23,514

 

$18,915








Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
 
Period End Balances At
(Dollars in thousands)
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
 
Mar 31,
2013
Past Due Loans:
 
 
 
 
 
 
 
 
 
Loans 30-59 Days Past Due:
 
 
 
 
 
 
 
 
 
Commercial mortgages

$—

 

$—

 

$—

 

$—

 

$—

Other commercial loans
3,351

 
276

 
2,648

 
505

 
689

Residential real estate mortgages
2,232

 
4,040

 
2,624

 
4,051

 
3,891

Consumer loans
1,365

 
1,322

 
1,013

 
1,588

 
1,534

Loans 30-59 days past due

$6,948

 

$5,638

 

$6,285

 

$6,144

 

$6,114

 
 
 
 
 
 
 
 
 
 
Loans 60-89 Days Past Due:
 
 
 
 
 
 
 
 
 
Commercial mortgages

$15

 

$—

 

$730

 

$536

 

$193

Other commercial loans
127

 
302

 
8

 
34

 
341

Residential real estate mortgages
1,265

 
1,285

 
1,960

 
1,697

 
1,451

Consumer loans
658

 
166

 
328

 
689

 
461

Loans 60-89 days past due

$2,065

 

$1,753

 

$3,026

 

$2,956

 

$2,446

 
 
 
 
 
 
 
 
 
 
Loans 90 Days or more Past Due:
 
 
 
 
 
 
 
 
 
Commercial mortgages

$2,238

 

$7,492

 

$8,226

 

$8,895

 

$9,852

Other commercial loans
428

 
731

 
929

 
3,428

 
2,961

Residential real estate mortgages
5,634

 
5,633

 
4,843

 
4,266

 
4,327

Consumer loans
701

 
656

 
693

 
415

 
484

Loans 90 days or more past due

$9,001

 

$14,512

 

$14,691

 

$17,004

 

$17,624

 
 
 
 
 
 
 
 
 
 
Total Past Due Loans:
 
 
 
 
 
 
 
 
 
Commercial mortgages

$2,253

 

$7,492

 

$8,956

 

$9,431

 

$10,045

Other commercial loans
3,906

 
1,309

 
3,585

 
3,967

 
3,991

Residential real estate mortgages
9,131

 
10,958

 
9,427

 
10,014

 
9,669

Consumer loans
2,724

 
2,144

 
2,034

 
2,692

 
2,479

Total past due loans

$18,014

 

$21,903

 

$24,002

 

$26,104

 

$26,184

 
 
 
 
 
 
 
 
 
 
Accruing loans 90 days or more past due

$—

 

$—

 

$—

 

$2,431

 

$—

Nonaccrual loans included in past due loans

$11,487

 

$15,591

 

$17,275

 

$17,208

 

$19,000


 
For the Quarters Ended
(Dollars in thousands)
Mar 31,
2014
 
Dec 31,
2013
 
Sep 30,
2013
 
Jun 30,
2013
 
Mar 31,
2013
Allowance for Loan Losses:
 
 
 
 
 
 
 
 
 
Balance at beginning of period

$27,886

 

$28,008

 

$27,884

 

$31,139

 

$30,873

Provision charged to earnings
300

 
400

 
700

 
700

 
600

Charge-offs
(1,223
)
 
(703
)
 
(770
)
 
(4,175
)
 
(374
)
Recoveries
80

 
181

 
194

 
220

 
40

Balance at end of period

$27,043

 

$27,886

 

$28,008

 

$27,884

 

$31,139

 
 
 
 
 
 
 
 
 
 
Net Loan Charge-Offs (Recoveries):
 
 
 
 
 
 
 
 
 
Commercial mortgages

$939

 

$309

 

$602

 

$3,814

 

$108

Other commercial
170

 
73

 
(2
)
 
63

 
71

Residential real estate mortgages
7

 
80

 

 
36

 
9

Consumer
27

 
60

 
(24
)
 
42

 
146

Total

$1,143

 

$522

 

$576

 

$3,955

 

$334







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
 
 
March 31, 2014
 
December 31, 2013
 
March 31, 2013
 
 
Average Balance
Interest
Yield/
Rate
 
Average Balance
Interest
Yield/
Rate
 
Average Balance
Interest
Yield/
 Rate
(Dollars in thousands)
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Commercial loans
 

$1,336,798


$14,601

4.43
%
 

$1,310,584


$14,944

4.52
%
 

$1,243,716


$14,421

4.70
%
Residential real estate loans, including mortgage loans held for sale
 
802,412

8,208

4.15
%
 
771,272

7,947

4.09
%
 
755,528

7,937

4.26
%
Consumer loans
 
327,793

3,097

3.83
%
 
323,778

3,078

3.77
%
 
322,668

3,053

3.84
%
Total loans
 
2,467,003

25,906

4.26
%
 
2,405,634

25,969

4.28
%
 
2,321,912

25,411

4.44
%
Cash, federal funds sold and short-term investments
 
62,246

35

0.23
%
 
104,718

59

0.22
%
 
53,734

28

0.21
%
FHLBB stock
 
37,730

142

1.53
%
 
37,730

35

0.37
%
 
39,790

38

0.39
%
Taxable debt securities
 
344,009

2,942

3.47
%
 
350,821

3,005

3.40
%
 
323,730

2,845

3.56
%
Nontaxable debt securities
 
59,958

884

5.98
%
 
63,524

941

5.88
%
 
68,064

1,004

5.98
%
Total securities
 
403,967

3,826

3.84
%
 
414,345

3,946

3.78
%
 
391,794

3,849

3.98
%
Total interest-earning assets
 
2,970,946

29,909

4.08
%
 
2,962,427

30,009

4.02
%
 
2,807,230

29,326

4.24
%
Noninterest-earning assets
 
203,335

 
 
 
200,615

 
 
 
210,338

 
 
Total assets
 

$3,174,281

 
 
 

$3,163,042

 
 
 

$3,017,568

 
 
Liabilities and Shareholders' Equity:
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
 

$10,767


$—

%
 

$10,877


$—

%
 

$—


$—

%
NOW accounts
 
304,201

47

0.06
%
 
300,113

48

0.06
%
 
283,004

45

0.06
%
Money market accounts
 
685,142

609

0.36
%
 
653,731

560

0.34
%
 
495,453

351

0.29
%
Savings accounts
 
292,809

45

0.06
%
 
293,434

47

0.06
%
 
279,536

46

0.07
%
Time deposits
 
797,458

2,268

1.15
%
 
802,979

2,411

1.19
%
 
869,576

2,752

1.28
%
FHLBB advances
 
269,989

2,241

3.37
%
 
288,212

2,534

3.49
%
 
345,270

2,738

3.22
%
Junior subordinated debentures
 
22,681

241

4.31
%
 
22,681

241

4.22
%
 
32,991

390

4.79
%
Other
 
173

3

7.03
%
 
629

4

2.52
%
 
1,146

4

1.42
%
Total interest-bearing liabilities
 
2,383,220

5,454

0.93
%
 
2,372,656

5,845

0.98
%
 
2,306,976

6,326

1.11
%
Demand deposits
 
422,975

 
 
 
425,316

 
 
 
360,851

 
 
Other liabilities
 
33,057

 
 
 
38,204

 
 
 
50,305

 
 
Shareholders' equity
 
335,029

 
 
 
326,866

 
 
 
299,436

 
 
Total liabilities and shareholders' equity
 

$3,174,281

 
 
 

$3,163,042

 
 
 

$3,017,568

 
 
Net interest income (FTE)
 
 

$24,455

 
 
 

$24,164

 
 
 

$23,000

 
Interest rate spread
 
 
 
3.15
%
 
 
 
3.04
%
 
 
 
3.13
%
Net interest margin
 
 
 
3.34
%
 
 
 
3.24
%
 
 
 
3.32
%

Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:
(Dollars in thousands)
Three Months Ended
 
Mar 31, 2014
 
Dec 31, 2013
 
Mar 31, 2013
Commercial loans

$317

 

$320

 

$188

Nontaxable debt securities
302

 
323

 
345

Total

$619

 

$643

 

$533







Washington Trust Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION - Non-GAAP Financial Measures (unaudited)
 
At or for the Quarters Ended
(Dollars in thousands, except per share amounts)
Mar 31,
2014
Dec 31,
2013
Sep 30,
2013
Jun 30,
2013
Mar 31,
2013
Calculation of Tangible Book Value per Share:
 
 
 
 
 
Total shareholders' equity at end of period

$335,858


$329,646


$323,585


$303,370


$301,291

Less:
 
 
 
 
 
Goodwill
58,114

58,114

58,114

58,114

58,114

Identifiable intangible assets, net
5,329

5,493

5,657

5,827

6,000

Total tangible shareholders' equity at end of period

$272,415


$266,039


$259,814


$239,429


$237,177

 
 
 
 
 
 
Shares outstanding at end of period
16,635

16,614

16,589

16,487

16,425

 
 
 
 
 
 
Book value per share - GAAP

$20.19


$19.84


$19.51


$18.40


$18.34

Tangible book value per share - Non-GAAP

$16.38


$16.01


$15.66


$14.52


$14.44

 
 
 
 
 
 
Calculation of Tangible Equity to Tangible Assets:
 
 
 
 
 
Total tangible shareholders' equity at end of period

$272,415


$266,039


$259,814


$239,429


$237,177

 
 
 
 
 
 
Total assets at end of period

$3,194,146


$3,188,867


$3,131,958


$3,061,307


$3,051,848

Less:
 
 
 
 
 
Goodwill
58,114

58,114

58,114

58,114

58,114

Identifiable intangible assets, net
5,329

5,493

5,657

5,827

6,000

Total tangible assets at end of period

$3,130,703


$3,125,260


$3,068,187


$2,997,366


$2,987,734

 
 
 
 
 
 
Equity to assets - GAAP
10.51
%
10.34
%
10.33
%
9.91
%
9.87
%
Tangible equity to tangible assets - Non-GAAP
8.70
%
8.51
%
8.47
%
7.99
%
7.94
%
 
 
 
 
 
 
Calculation of Return on Average Tangible Assets:
 
 
 
 
 
Net income

$9,298


$9,789


$9,960


$8,983


$7,421

 
 
 
 
 
 
Total average assets

$3,174,281


$3,163,042


$3,098,228


$3,034,956


$3,017,583

Less:
 
 
 
 
 
Average goodwill
58,114

58,114

58,114

58,114

58,114

Average identifiable intangible assets, net
5,410

5,573

5,739

5,912

6,085

Total average tangible assets

$3,110,757


$3,099,355


$3,034,375


$2,970,930


$2,953,384

 
 
 
 
 
 
Return on average assets - GAAP
1.17
%
1.24
%
1.29
%
1.18
%
0.98
%
Return on average tangible assets - Non-GAAP
1.20
%
1.26
%
1.31
%
1.21
%
1.01
%
 
 
 
 
 
 
Calculation of Return on Average Tangible Equity:
 
 
 
 
 
Net income

$9,298


$9,789


$9,960


$8,983


$7,421

 
 
 
 
 
 
Total average shareholders' equity

$335,029


$326,866


$310,785


$303,402


$299,436

Less:
 
 
 
 
 
Average goodwill
58,114

58,114

58,114

58,114

58,114

Average identifiable intangible assets, net
5,410

5,573

5,739

5,912

6,085

Total average tangible shareholders' equity

$271,505


$263,179


$246,932


$239,376


$235,237

 
 
 
 
 
 
Return on average shareholders' equity - GAAP
11.10
%
11.98
%
12.82
%
11.84
%
9.91
%
Return on average tangible shareholders' equity - Non-GAAP
13.70
%
14.80
%
16.13
%
15.01
%
12.62
%