WASHINGTON TRUST BANCORP INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - 8-K - WASHINGTON TRUST BANCORP INC	form8-k2017q2earningsrelease.htm

Exhibit 99.1

NASDAQ: WASH

Contact: Elizabeth B. Eckel

Senior Vice President, Marketing

Telephone: (401) 348-1309

E-mail: ebeckel@washtrust.com

Date: July 24, 2017

FOR IMMEDIATE RELEASE

Washington Trust Reports Record Second Quarter 2017 Earnings

WESTERLY, R.I., July 24, 2017 (GLOBE NEWSWIRE)…Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced second quarter 2017 net income of $13.2 million, or $0.76 per diluted share, up by 12% from the $11.8 million, or $0.68 per diluted share, reported for the first quarter of 2017.

“Washington Trust’s momentum continued into the second quarter of 2017, as we achieved record earnings,” stated Joseph J. MarcAurele, Washington Trust Chairman and Chief Executive Officer. “As a result of our consistent performance, strong capital position and attractive dividend yield, we continue to be recognized as one of the region’s high-performing financial institutions.”

Selected highlights for the second quarter of 2017 include:


•	Returns on average equity and average assets were strong at 13.06% and 1.21%, respectively. Comparable amounts for the first quarter of 2017 were 11.87% and 1.08%, respectively.


•	Wealth management assets under administration at the end of the quarter totaled $6.4 billion and second quarter revenues amounted to $9.9 million. These were record highs for Washington Trust.


•	Mortgage banking revenues totaled $2.9 million for the second quarter of 2017, up by 25% on a linked quarter basis.


•	Total loans stood at $3.2 billion at June 30, 2017, down by 1% from the preceding quarter and up by 4% from a year ago.


•	Total deposits amounted to $3.0 billion at June 30, 2017, down by 3% in the quarter and up by 8% from a year ago.

Net Interest Income

Net interest income totaled $29.9 million for the second quarter of 2017, up by $1.2 million, or 4%, from the first quarter. Included in net interest income in the second quarter was loan prepayment fee income of $549 thousand, compared to $135 thousand in the first quarter. Excluding the impact of loan prepayment fee income in each period, net interest income was up by $811 thousand, or 3%, on a linked quarter basis. The net interest margin was 2.97% for the second quarter of 2017, up by 10 basis points from the preceding quarter. Excluding the impact of the loan prepayment fee income in each period, the net interest margin was 2.92%, up by 6 basis points from the first quarter of 2017. Significant linked quarter changes included:

•

Average interest-earning assets decreased by $17 million, primarily due to payoffs in the commercial real estate loan portfolio. The yield on interest-earning assets for the second quarter was 3.68%, up by 12 basis points from the preceding quarter. Excluding the impact of loan prepayment fee income in each period, the yield on interest-earning assets was 3.62%, up by 8 basis points from the preceding quarter, due to higher short-term market rates of interest.

Washington Trust

Page 2, July 24, 2017


•	Average interest-bearing liabilities decreased by $39 million, reflecting declines in both in-market interest-bearing deposits and wholesale funding balances. The cost of interest-bearing funds was 0.87%, up by 4 basis points from the preceding quarter.

Loans

Total loans amounted to $3.2 billion at June 30, 2017, down by $25 million, or 1%, from the end of preceding quarter. Commercial loans decreased by $64 million, or 4%, on a linked quarter basis, with a $79 million decline in the commercial real estate portfolio resulting from payoffs and a $15 million increase in the commercial and industrial loan portfolio. Residential loan portfolio balances increased by $37 million, or 3%, from the balance at March 31, 2017. The consumer loan portfolio increased by $2 million, or 1%, from the end of the preceding quarter.

Investment Securities

The investment securities portfolio amounted to $763 million at June 30, 2017, down by $6 million, or 1%, from the balance at March 31, 2017. Investment securities represented 17% of total assets as of June 30, 2017.

Deposits and Borrowings

Total deposits amounted to $3.0 billion at June 30, 2017, down by $94 million, or 3%, from the balance at March 31, 2017. Included in total deposits were wholesale brokered time deposit balances of $401 million, which increased by $19 million from the end of preceding quarter. Excluding wholesale brokered time deposits, in-market deposits decreased by $113 million, or 4%, in the quarter, reflecting seasonal outflows of various institutional and governmental depositors based on the their underlying business cycles.

FHLBB advances amounted to $870 million at June 30, 2017, up by $71 million from the balance at March 31, 2017.

Noninterest Income

Noninterest income totaled $16.8 million for the second quarter of 2017, up by $2.3 million, or 16%, from the preceding quarter. Significant linked quarter changes included:


•	Wealth management revenues increased by $465 thousand, or 5%. This included increases of $154 thousand in asset-based revenues and $311 thousand in transaction-based revenues. The increase in transaction-based revenues was largely attributable to tax preparation fees, which are generally concentrated in the second quarter.

Wealth management assets under administration increased by $160 million, reflecting financial market appreciation in the second quarter. Managed assets represented 93% of total wealth management assets at June 30, 2017.


•	Mortgage banking revenues increased by $579 thousand, or 25%, resulting from an increase of residential mortgage loans sold in the secondary market. Residential mortgage loans sold to the secondary market amounted to $137 million in the second quarter, compared to $107 million in the preceding quarter.


•	Loan related derivative income increased by $996 thousand from the $148 thousand reported for the first quarter, due to higher volume of commercial borrower loan related derivative transactions occurring in the second quarter.

Washington Trust

Page 3, July 24, 2017

Noninterest Expenses

Noninterest expenses totaled $26.3 million for the second quarter of 2017, up by $1.0 million, or 4%, from the first quarter. Included in the first quarter was a $310 thousand reduction in noninterest expenses resulting from the downward adjustment in the fair value of the contingent consideration liability initially recognized upon the completion of a 2015 acquisition. Excluding this first quarter adjustment, noninterest expenses were up by $710 thousand, or 3%, on a linked quarter basis. Salaries and employee benefit costs, the largest component of noninterest expenses, increased by $563 thousand, or 3%, from the preceding quarter, reflecting an increase in commissions expense due to an increase in mortgage banking activities. The linked quarter change in noninterest expenses also included a $253 thousand increase in outsourced services, which was primarily due to higher volume of loan related derivative transaction execution costs.

Income tax expense amounted to $6.5 million for the second quarter of 2017, up by $784 thousand from the preceding quarter. The effective tax rate for the second quarter of 2017 was 33.0%, compared to 32.7% for the first quarter of 2017. Excess tax benefits on the settlement of share-based awards, which are recorded as a reduction to income tax expense, totaled $155 thousand for the second quarter, compared to $195 thousand in the preceding quarter. Excluding the impact of the excess tax benefits recognized in each period, the effective tax rate was 33.8% for the second quarter of 2017, unchanged from the first quarter. Prior to 2017, excess tax benefits on the settlement of share-based awards were recognized as additional paid in capital in shareholders' equity and did not impact income tax expense or the effective tax rate.

Asset Quality

Total past due loans amounted to $21.1 million, or 0.66% of total loans, at June 30, 2017, compared to $20.9 million, or 0.65% of total loans, at March 31, 2017. Total nonaccrual loans amounted to $20.2 million, or 0.63% of total loans, at June 30, 2017, down from $22.1 million, or 0.69% of total loans, at March 31, 2017.

A loan loss provision totaling $700 thousand was charged to earnings in the second quarter of 2017, compared to a loan loss provision of $400 thousand in the preceding quarter. The loan loss provision was based on management's assessment of loss exposure, as well as loan loss allocations commensurate with changes in the loan portfolio during the quarter. Net charge-offs amounted to $484 thousand in the second quarter of 2017, including a $400 thousand charge-off associated with one commercial real estate relationship. The allowance for loan losses was $26.7 million, or 0.83% of total loans, at June 30, 2017, compared to $26.4 million, or 0.82% of total loans, at March 31, 2017.

Capital and Dividends

Total shareholders' equity was $406 million at June 30, 2017, up by $8 million from March 31, 2017. Capital levels at June 30, 2017 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.78% at June 30, 2017, compared to 12.38% at March 31, 2017. Book value per share amounted to $23.59 at June 30, 2017, up from $23.14 at March 31, 2017.

The Board of Directors declared a quarterly dividend of 38 cents per share for the quarter ended June 30, 2017. The dividend was paid on July 14, 2017 to shareholders of record on July 3, 2017.

Washington Trust

Page 4, July 24, 2017

Conference Call

Washington Trust will host a conference call to discuss its second quarter results, business highlights and outlook on Tuesday, July 25, 2017 at 8:30 a.m. (Eastern Time). Individuals may dial in to the call at 1-877-407-9208. An audio replay of the call will be available, shortly after the conclusion of the call, by dialing 1-844-512-2921 and entering the Replay PIN Number 13665498; the audio replay will be available through August 4, 2017. Also, a webcast of the call will be posted in the Investor Relations section of Washington Trust's web site, www.washtrustbancorp.com, and will be available through September 30, 2017.

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 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; 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; increasing occurrences of cyberattacks, hacking and identity theft; 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, 2016, 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 in thousands)

	Jun 30, 2017			Mar 31, 2017			Dec 31, 2016			Sep 30, 2016			Jun 30, 2016
Assets:
Cash and due from banks		$117,608			$111,941			$106,185			$126,752			$116,658
Short-term investments	2,324			2,039			1,612			2,420			3,255
Mortgage loans held for sale	32,784			25,414			29,434			45,162			38,554
Securities:
Available for sale, at fair value	749,486			754,720			739,912			564,256			401,749
Held to maturity, at amortized cost	13,942			14,721			15,633			16,848			17,917
Total securities	763,428			769,441			755,545			581,104			419,666
Federal Home Loan Bank stock, at cost	44,640			43,714			43,129			37,249			34,303
Loans:
Commercial	1,698,389			1,762,499			1,771,666			1,757,215			1,732,220
Residential real estate	1,168,105			1,131,210			1,122,748			1,079,887			1,005,036
Consumer	333,606			331,151			339,957			344,253			343,628
Total loans	3,200,100			3,224,860			3,234,371			3,181,355			3,080,884
Less allowance for loan losses	26,662			26,446			26,004			25,649			25,826
Net loans	3,173,438			3,198,414			3,208,367			3,155,706			3,055,058
Premises and equipment, net	28,508			28,853			29,020			29,433			29,590
Investment in bank-owned life insurance	72,183			71,642			71,105			70,557			65,036
Goodwill	63,909			64,059			64,059			64,059			64,059
Identifiable intangible assets, net	9,642			9,898			10,175			10,493			10,814
Other assets	67,065			63,348			62,484			81,099			80,088
Total assets		$4,375,529			$4,388,763			$4,381,115			$4,204,034			$3,917,081
Liabilities:
Deposits:
Demand deposits		$587,813			$596,974			$585,960			$566,027			$512,307
NOW accounts	448,617			454,344			427,707			404,827			414,532
Money market accounts	666,047			762,233			730,075			794,905			675,896
Savings accounts	364,002			362,281			358,397			357,966			342,579
Time deposits	954,710			939,739			961,613			913,649			844,036
Total deposits	3,021,189			3,115,571			3,063,752			3,037,374			2,789,350
Federal Home Loan Bank advances	869,733			798,741			848,930			671,615			640,010
Junior subordinated debentures	22,681			22,681			22,681			22,681			22,681
Other liabilities	55,884			53,985			54,948			77,037			76,708
Total liabilities	3,969,487			3,990,978			3,990,311			3,808,707			3,528,749
Shareholders’ Equity:
Common stock	1,076			1,075			1,073			1,069			1,068
Paid-in capital	116,484			116,200			115,123			113,290			112,314
Retained earnings	306,151			299,555			294,365			288,613			282,666
Accumulated other comprehensive loss	(17,669		)	(19,045		)	(19,757		)	(7,645		)	(7,716		)
Total shareholders’ equity	406,042			397,785			390,804			395,327			388,332
Total liabilities and shareholders’ equity		$4,375,529			$4,388,763			$4,381,115			$4,204,034			$3,917,081

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CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; Dollars in thousands, except per share amounts)
																For the Six Months Ended
	For the Three Months Ended
	Jun 30, 2017			Mar 31, 2017			Dec 31, 2016			Sep 30, 2016			Jun 30, 2016			Jun 30, 2017			Jun 30, 2016
Interest income:
Interest and fees on loans		$31,642			$30,352			$30,738			$29,633			$29,122			$61,994			$59,120
Taxable interest on securities	4,844			4,709			3,703			3,024			2,487			9,553			4,857
Nontaxable interest on securities	72			112			157			218			280			184			607
Dividends on Federal Home Loan Bank stock	439			387			362			288			231			826			441
Other interest income	156			104			95			93			70			260			134
Total interest and dividend income	37,153			35,664			35,055			33,256			32,190			72,817			65,159
Interest expense:
Deposits	3,591			3,502			3,445			3,110			2,981			7,093			5,949
Federal Home Loan Bank advances	3,509			3,344			2,886			2,641			2,313			6,853			4,465
Junior subordinated debentures	149			138			135			125			119			287			231
Other interest expense	—			1			1			1			1			1			3
Total interest expense	7,249			6,985			6,467			5,877			5,414			14,234			10,648
Net interest income	29,904			28,679			28,588			27,379			26,776			58,583			54,511
Provision for loan losses	700			400			2,900			1,800			450			1,100			950
Net interest income after provision for loan losses	29,204			28,279			25,688			25,579			26,326			57,483			53,561
Noninterest income:
Wealth management revenues	9,942			9,477			9,291			9,623			9,481			19,419			18,655
Mortgage banking revenues	2,919			2,340			4,541			3,734			2,710			5,259			4,908
Service charges on deposit accounts	901			883			945			915			935			1,784			1,842
Card interchange fees	902			802			858			870			860			1,704			1,657
Income from bank-owned life insurance	542			536			549			521			1,090			1,078			1,589
Loan related derivative income	1,144			148			912			1,178			508			1,292			1,153
Equity in losses of unconsolidated subsidiaries	(89		)	(88		)	(89		)	(88		)	(89		)	(177		)	(177		)
Other income	545			412			313			508			419			957			921
Total noninterest income	16,806			14,510			17,320			17,261			15,914			31,316			30,548
Noninterest expense:
Salaries and employee benefits	17,358			16,795			16,528			16,908			17,405			34,153			33,785
Net occupancy	1,767			1,967			1,775			1,766			1,803			3,734			3,610
Equipment	1,313			1,467			1,556			1,648			1,503			2,780			3,004
Outsourced services	1,710			1,457			1,311			1,254			1,294			3,167			2,657
Legal, audit and professional fees	582			616			597			691			662			1,198			1,291
FDIC deposit insurance costs	469			481			390			504			491			950			984
Advertising and promotion	362			237			403			370			420			599			685
Amortization of intangibles	257			277			318			321			322			534			645
Debt prepayment penalties	—			—			—			—			—			—			431
Change in fair value of contingent consideration	—			(310		)	—			(939		)	16			(310		)	41
Other expenses	2,488			2,299			2,095			2,127			2,114			4,787			4,347
Total noninterest expense	26,306			25,286			24,973			24,650			26,030			51,592			51,480
Income before income taxes	19,704			17,503			18,035			18,190			16,210			37,207			32,629
Income tax expense	6,505			5,721			5,873			5,863			5,153			12,226			10,637
Net income		$13,199			$11,782			$12,162			$12,327			$11,057			$24,981			$21,992

Net income available to common shareholders:
Basic		$13,170			$11,755			$12,137			$12,302			$11,035			$24,925			$21,945
Diluted		$13,170			$11,755			$12,137			$12,302			$11,035			$24,925			$21,945
Weighted average common shares outstanding:
Basic	17,206			17,186			17,142			17,090			17,067			17,196			17,045
Diluted	17,316			17,293			17,245			17,203			17,194			17,312			17,185
Earnings per common share:
Basic		$0.77			$0.68			$0.71			$0.72			$0.65			$1.45			$1.29
Diluted		$0.76			$0.68			$0.70			$0.72			$0.64			$1.44			$1.28

Cash dividends declared per share		$0.38			$0.38			$0.37			$0.37			$0.36			$0.76			$0.72

-6-



SELECTED FINANCIAL HIGHLIGHTS
(Unaudited; Dollars in thousands, except per share amounts)

	Jun 30, 2017			Mar 31, 2017			Dec 31, 2016			Sep 30, 2016			Jun 30, 2016
Share and Equity Related Data:
Book value per share		$23.59			$23.14			$22.76			$23.11			$22.73
Tangible book value per share - Non-GAAP (1)		$19.32			$18.83			$18.44			$18.75			$18.35
Market value per share		$51.55			$49.30			$56.05			$40.22			$37.92
Shares issued and outstanding at end of period	17,210			17,193			17,171			17,107			17,081

Capital Ratios:
Tier 1 risk-based capital	11.92% (i)			11.54		%	11.44		%	11.48		%	11.57		%
Total risk-based capital	12.78% (i)			12.38		%	12.26		%	12.31		%	12.43		%
Tier 1 leverage ratio	8.78% (i)			8.58		%	8.67		%	8.95		%	9.21		%
Common equity tier 1	11.23% (i)			10.86		%	10.75		%	10.77		%	10.84		%
Equity to assets	9.28		%	9.06		%	8.92		%	9.40		%	9.91		%
Tangible equity to tangible assets - Non-GAAP (1)	7.73		%	7.51		%	7.35		%	7.77		%	8.16		%
(i) - estimated



											For the Six Months Ended
	For the Three Months Ended										For the Six Months Ended
	Jun 30, 2017		Mar 31, 2017		Dec 31, 2016		Sep 30, 2016		Jun 30, 2016		Jun 30, 2017		Jun 30, 2016
Performance Ratios:
Net interest margin (FTE)	2.97	%	2.87	%	2.89	%	2.94	%	3.05	%	2.92	%	3.15	%
Return on average assets	1.21	%	1.08	%	1.14	%	1.21	%	1.14	%	1.15	%	1.15	%
Return on average tangible assets - Non-GAAP (1)	1.23	%	1.10	%	1.16	%	1.24	%	1.17	%	1.17	%	1.17	%
Return on average equity	13.06	%	11.87	%	12.26	%	12.57	%	11.50	%	12.47	%	11.50	%
Return on average tangible equity - Non-GAAP (1)	15.98	%	14.59	%	15.09	%	15.53	%	14.28	%	15.29	%	14.31	%


(1)	See the section labeled “SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures” at the end of this document.

-7-



SELECTED FINANCIAL HIGHLIGHTS
(Unaudited; Dollars in thousands)
																For the Six Months Ended
	For the Three Months Ended															For the Six Months Ended
	Jun 30, 2017			Mar 31, 2017			Dec 31, 2016			Sep 30, 2016			Jun 30, 2016			Jun 30, 2017			Jun 30, 2016
Wealth Management Results
Wealth Management Revenues:
Trust and investment management fees		$8,781			$8,518			$8,283			$8,358			$8,195			$17,299			$16,260
Mutual fund fees	620			729			771			812			812			1,349			1,655
Asset-based revenues	9,401			9,247			9,054			9,170			9,007			18,648			17,915
Transaction-based revenues	541			230			237			453			474			771			740
Total wealth management revenues		$9,942			$9,477			$9,291			$9,623			$9,481			$19,419			$18,655

Assets Under Administration:
Balance at beginning of period		$6,243,301			$6,063,293			$6,056,859			$5,905,019			$5,878,967			$6,063,293			$5,844,636
Net investment appreciation (depreciation) & income	162,924			220,423			(8,506		)	192,518			71,447			383,347			93,835
Net client asset flows	(2,724		)	(40,415		)	14,940			(40,678		)	(45,395		)	(43,139		)	(33,452		)
Balance at end of period		$6,403,501			$6,243,301			$6,063,293			$6,056,859			$5,905,019			$6,403,501			$5,905,019

Mortgage Banking Results
Mortgage Banking Revenues:
Gains & commissions on loan sales, net		$2,784			$2,268			$4,455			$3,744			$2,804			$5,052			$4,938
Residential mortgage servicing fee income, net	135			72			86			(10		)	(94		)	207			(30		)
Total mortgage banking revenues		$2,919			$2,340			$4,541			$3,734			$2,710			$5,259			$4,908

Residential Mortgage Loan Originations:
Originations for retention in portfolio		$94,794			$57,907			$72,533			$90,308			$54,080			$152,701			$101,626
Originations for sale to secondary market (1)	144,491			102,441			185,626			170,673			154,043			246,932			244,501
Total mortgage loan originations		$239,285			$160,348			$258,159			$260,981			$208,123			$399,633			$346,127

Residential Mortgage Loans Sold:
Sold with servicing rights retained		$29,198			$22,567			$48,545			$44,611			$45,804			$51,766			$72,258
Sold with servicing rights released (1)	108,246			84,345			151,506			119,572			93,239			192,590			172,746
Total mortgage loans sold		$137,444			$106,912			$200,051			$164,183			$139,043			$244,356			$245,004


(1)	Also includes loans originated in a broker capacity.

-8-



END OF PERIOD LOAN AND DEPOSIT COMPOSITION
(Unaudited; Dollars in thousands)

	Jun 30, 2017		Mar 31, 2017		Dec 31, 2016		Sep 30, 2016		Jun 30, 2016
Commercial:
Mortgages		$1,009,096		$1,076,648		$1,074,186		$1,086,175		$1,074,747
Construction & development	112,177		123,841		121,371		98,735		81,812
Commercial & industrial	577,116		562,010		576,109		572,305		575,661
Total commercial	1,698,389		1,762,499		1,771,666		1,757,215		1,732,220
Residential Real Estate:
Mortgages	1,143,416		1,100,435		1,094,824		1,052,829		978,399
Homeowner construction	24,689		30,775		27,924		27,058		26,637
Total residential real estate	1,168,105		1,131,210		1,122,748		1,079,887		1,005,036
Consumer:
Home equity lines	263,934		258,695		264,200		265,238		260,541
Home equity loans	35,173		36,050		37,272		38,264		39,572
Other	34,499		36,406		38,485		40,751		43,515
Total consumer	333,606		331,151		339,957		344,253		343,628
Total loans		$3,200,100		$3,224,860		$3,234,371		$3,181,355		$3,080,884



	June 30, 2017				December 31, 2016
	Balance		% of Total		Balance		% of Total
Commercial Real Estate Loans by Property Location:
Rhode Island, Connecticut, Massachusetts		$1,048,992	93.6	%		$1,105,539	92.5	%
New York, New Jersey, Pennsylvania	59,508		5.3	%	77,038		6.4	%
New Hampshire	12,773		1.1	%	12,980		1.1	%
Total commercial real estate loans (1)		$1,121,273	100.0	%		$1,195,557	100.0	%

Residential Mortgages by Property Location:
Rhode Island, Connecticut, Massachusetts		$1,151,846	98.6	%		$1,106,366	98.6	%
New Hampshire, Vermont, Maine	11,871		1.0	%	11,445		1.0	%
New York, Virginia, New Jersey, Maryland, Pennsylvania	2,208		0.2	%	2,648		0.2	%
Ohio	903		0.1	%	997		0.1	%
Other	1,277		0.1	%	1,292		0.1	%
Total residential mortgages		$1,168,105	100.0	%		$1,122,748	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.



	Jun 30, 2017		Mar 31, 2017		Dec 31, 2016		Sep 30, 2016		Jun 30, 2016
Deposits:
Non-interest bearing demand deposits		$533,147		$534,792		$521,165		$520,860		$476,848
Interest-bearing demand deposits	54,666		62,182		64,795		45,167		35,459
NOW accounts	448,617		454,344		427,707		404,827		414,532
Money market accounts	666,047		762,233		730,075		794,905		675,896
Savings accounts	364,002		362,281		358,397		357,966		342,579
Time deposits (in-market)	553,783		557,312		549,376		554,669		549,935
Wholesale brokered time deposits	400,927		382,427		412,237		358,980		294,101
Total deposits		$3,021,189		$3,115,571		$3,063,752		$3,037,374		$2,789,350

-9-



CREDIT & ASSET QUALITY DATA
(Unaudited; Dollars in thousands)

	Jun 30, 2017			Mar 31, 2017			Dec 31, 2016			Sep 30, 2016			Jun 30, 2016
Asset Quality Ratios:
Nonperforming assets to total assets	0.49		%	0.54		%	0.53		%	0.59		%	0.48		%
Nonaccrual loans to total loans	0.63		%	0.69		%	0.68		%	0.75		%	0.56		%
Total past due loans to total loans	0.66		%	0.65		%	0.76		%	0.67		%	0.56		%
Allowance for loan losses to nonaccrual loans	132.00		%	119.52		%	117.89		%	107.09		%	149.73		%
Allowance for loan losses to total loans	0.83		%	0.82		%	0.80		%	0.81		%	0.84		%

Nonperforming Assets:
Commercial mortgages		$6,422			$7,809			$7,811			$10,357			$4,054
Commercial construction & development	—			—			—			—			—
Commercial & industrial	1,232			1,129			1,337			1,744			1,204
Residential real estate mortgages	11,815			12,253			11,736			10,140			10,409
Consumer	729			936			1,174			1,709			1,581
Total nonaccrual loans	20,198			22,127			22,058			23,950			17,248
Other real estate owned	1,342			1,410			1,075			1,045			1,515
Total nonperforming assets		$21,540			$23,537			$23,133			$24,995			$18,763

Past Due Loans (30 days or more past due):
Commercial mortgages		$6,422			$7,806			$8,708			$10,352			$4,062
Commercial & industrial	4,009			1,046			1,154			1,047			1,978
Residential real estate mortgages	8,857			10,533			12,226			8,291			8,893
Consumer loans	1,832			1,547			2,334			1,565			2,201
Total past due loans		$21,120			$20,932			$24,422			$21,255			$17,134

Accruing loans 90 days or more past due		$—			$—			$—			$—			$—
Nonaccrual loans included in past due loans		$14,490			$18,081			$18,602			$18,796			$13,211



																For the Six Months Ended
	For the Three Months Ended
	Jun 30, 2017			Mar 31, 2017			Dec 31, 2016			Sep 30, 2016			Jun 30, 2016			Jun 30, 2017			Jun 30, 2016
Nonaccrual Loan Activity:
Balance at beginning of period		$22,127			$22,058			$23,950			$17,248			$17,425			$22,058			$21,047
Additions to nonaccrual status	1,946			2,138			2,105			9,750			2,072			4,084			3,424
Loans returned to accruing status	(779		)	(547		)	(718		)	(592		)	—			(1,325		)	(206		)
Loans charged-off	(642		)	(79		)	(2,622		)	(2,055		)	(860		)	(721		)	(2,335		)
Loans transferred to other real estate owned	—			(478		)	(30		)	—			(435		)	(576		)	(1,045		)
Payments, payoffs and other changes	(2,454		)	(965		)	(627		)	(401		)	(954		)	(3,322		)	(3,637		)
Balance at end of period		$20,198			$22,127			$22,058			$23,950			$17,248			$20,198			$17,248

Allowance for Loan Losses:
Balance at beginning of period		$26,446			$26,004			$25,649			$25,826			$26,137			$26,004			$27,069
Provision charged to earnings	700			400			2,900			1,800			450			1,100			950
Charge-offs	(642		)	(79		)	(2,622		)	(2,055		)	(860		)	(721		)	(2,335		)
Recoveries	158			121			77			78			99			279			142
Balance at end of period		$26,662			$26,446			$26,004			$25,649			$25,826			$26,662			$25,826

Net Loan Charge-Offs (Recoveries):
Commercial mortgages		$318			$—			$2,510			$1,936			$65			$318			$1,314
Commercial & industrial	115			(105		)	(20		)	(43		)	684			10			666
Residential real estate mortgages	8			(4		)	6			47			2			4			136
Consumer	43			67			49			37			10			110			77
Total		$484			($42	)		$2,545			$1,977			$761			$442			$2,193

Net charge-offs to average loans (annualized)	0.06		%	(0.01		%)	0.31		%	0.25		%	0.10		%	0.03		%	0.14		%

-10-

The following table presents average balance and interest rate information. Tax-exempt income is converted to a fully taxable equivalent (FTE) 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.



CONSOLIDATED AVERAGE BALANCE SHEETS (FTE Basis)
(Unaudited; Dollars in thousands)

For the Three Months Ended	June 30, 2017							March 31, 2017					June 30, 2016
	Average Balance		Interest			Yield/ Rate		Average Balance		Interest		Yield/ Rate	Average Balance		Interest		Yield/ Rate

Assets:
Commercial mortgages		$1,037,327		$9,821		3.80			$1,079,171		$9,444	3.55		$1,019,290		$8,992	3.55
Construction & development	126,212		1,211			3.85		127,861		1,113		3.53	117,204		985		3.38
Commercial & industrial	574,775		6,607			4.61		573,801		6,157		4.35	591,893		6,408		4.35
Total commercial loans	1,738,314			$17,639		4.07		1,780,833			$16,714	3.81	1,728,387			$16,385	3.81
Residential real estate loans, including loans held for sale	1,162,895		11,088			3.82		1,152,468		10,868		3.82	1,024,653		9,980		3.92
Consumer loans	332,053		3,464			4.18		335,054		3,323		4.02	342,866		3,311		3.88
Total loans	3,233,262		32,191			3.99		3,268,355		30,905		3.83	3,095,906		29,676		3.86
Cash, federal funds sold and short-term investments	60,428		156			1.04		56,195		104		0.75	69,839		70		0.40
FHLBB stock	44,362		439			3.97		43,622		387		3.60	31,723		231		2.93
Taxable debt securities	773,280		4,844			2.51		755,955		4,709		2.53	396,428		2,487		2.52
Nontaxable debt securities	7,076		109			6.18		11,521		173		6.09	28,531		433		6.10
Total securities	780,356		4,953			2.55		767,476		4,882		2.58	424,959		2,920		2.76
Total interest-earning assets	4,118,408		37,739			3.68		4,135,648		36,278		3.56	3,622,427		32,897		3.65
Noninterest-earning assets	236,056							229,823					247,081
Total assets		$4,354,464							$4,365,471					$3,869,508
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits		$54,675		($8	)	(0.06	)		$56,782		$15	0.11		$42,952		$7	0.07
NOW accounts	437,282		57			0.05		420,622		50		0.05	403,136		53		0.05
Money market accounts	711,711		640			0.36		754,501		599		0.32	710,075		459		0.26
Savings accounts	361,545		52			0.06		357,894		51		0.06	338,504		49		0.06
Time deposits (in-market)	559,442		1,460			1.05		554,855		1,418		1.04	542,621		1,345		1.00
Wholesale brokered time deposits	392,734		1,390			1.42		397,274		1,369		1.40	302,707		1,068		1.42
FHLBB advances	817,349		3,509			1.72		831,614		3,344		1.63	587,395		2,313		1.58
Junior subordinated debentures	22,681		149			2.63		22,681		138		2.47	22,681		119		2.11
Other	13		—			—		27		1		15.02	66		1		6.09
Total interest-bearing liabilities	3,357,432		7,249			0.87		3,396,250		6,985		0.83	2,950,137		5,414		0.74
Demand deposits	543,781							527,215					473,731
Other liabilities	49,013							44,889					60,923
Shareholders' equity	404,238							397,117					384,717
Total liabilities and shareholders' equity		$4,354,464							$4,365,471					$3,869,508
Net interest income (FTE)				$30,490							$29,293					$27,483
Interest rate spread						2.81						2.73					2.91
Net interest margin						2.97						2.87					3.05

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



For the Three Months Ended	Jun 30, 2017		Mar 31, 2017		Jun 30, 2016
Commercial loans		$549		$553		$554
Nontaxable debt securities	37		61		153
Total		$586		$614		$707

-11-




CONSOLIDATED AVERAGE BALANCE SHEETS (FTE Basis)
(Unaudited; Dollars in thousands)

For the Six Months Ended	June 30, 2017					June 30, 2016
	Average Balance		Interest		Yield/ Rate	Average Balance		Interest		Yield/ Rate

Assets:
Commercial mortgages		$1,058,139		$19,264	3.67		$976,619		$17,207	3.54
Construction & development	127,031		2,324		3.69	123,209		2,093		3.42
Commercial & industrial	574,286		12,765		4.48	598,203		14,089		4.74
Total commercial loans	1,759,456		34,353		3.94	1,698,031		33,389		3.95
Residential real estate loans, including loans held for sale	1,157,710		21,956		3.82	1,027,956		20,135		3.94
Consumer loans	333,545		6,787		4.10	343,193		6,704		3.93
Total loans	3,250,711		63,096		3.91	3,069,180		60,228		3.95
Cash, federal funds sold and short-term investments	58,323		260		0.90	69,164		134		0.39
FHLBB stock	43,994		826		3.79	28,660		441		3.09
Taxable debt securities	764,666		9,553		2.52	377,744		4,857		2.59
Nontaxable debt securities	9,286		282		6.12	30,922		940		6.11
Total securities	773,952		9,835		2.56	408,666		5,797		2.85
Total interest-earning assets	4,126,980		74,017		3.62	3,575,670		66,600		3.75
Noninterest-earning assets	232,957					243,597
Total assets		$4,359,937					$3,819,267
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits		$55,722		$7	0.03		$46,828		$20	0.09
NOW accounts	428,998		108		0.05	394,812		110		0.06
Money market accounts	732,988		1,239		0.34	748,354		975		0.26
Savings accounts	359,730		102		0.06	333,339		96		0.06
Time deposits (in-market)	557,161		2,878		1.04	540,328		2,659		0.99
Wholesale brokered time deposits	394,992		2,759		1.41	299,754		2,089		1.40
FHLBB advances	824,442		6,853		1.68	520,207		4,465		1.73
Junior subordinated debentures	22,681		287		2.55	22,681		231		2.05
Other	20		1		10.08	73		3		8.26
Total interest-bearing liabilities	3,376,734		14,234		0.85	2,906,376		10,648		0.74
Demand deposits	535,544					472,757
Other liabilities	46,962					57,605
Shareholders' equity	400,697					382,529
Total liabilities and shareholders' equity		$4,359,937					$3,819,267
Net interest income (FTE)				$59,783					$55,952
Interest rate spread					2.77					3.01
Net interest margin					2.92					3.15

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

-12-



SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures
(Unaudited; Dollars in thousands, except per share amounts)

	Jun 30, 2017			Mar 31, 2017			Dec 31, 2016			Sep 30, 2016			Jun 30, 2016
Tangible Book Value per Share:
Total shareholders' equity, as reported		$406,042			$397,785			$390,804			$395,327			$388,332
Less:
Goodwill	63,909			64,059			64,059			64,059			64,059
Identifiable intangible assets, net	9,642			9,898			10,175			10,493			10,814
Total tangible shareholders' equity		$332,491			$323,828			$316,570			$320,775			$313,459

Shares outstanding, as reported	17,210			17,193			17,171			17,107			17,081

Book value per share - GAAP		$23.59			$23.14			$22.76			$23.11			$22.73
Tangible book value per share - Non-GAAP		$19.32			$18.83			$18.44			$18.75			$18.35

Tangible Equity to Tangible Assets:
Total tangible shareholders' equity		$332,491			$323,828			$316,570			$320,775			$313,459

Total assets, as reported		$4,375,529			$4,388,763			$4,381,115			$4,204,034			$3,917,081
Less:
Goodwill	63,909			64,059			64,059			64,059			64,059
Identifiable intangible assets, net	9,642			9,898			10,175			10,493			10,814
Total tangible assets		$4,301,978			$4,314,806			$4,306,881			$4,129,482			$3,842,208

Equity to assets - GAAP	9.28		%	9.06		%	8.92		%	9.40		%	9.91		%
Tangible equity to tangible assets - Non-GAAP	7.73		%	7.51		%	7.35		%	7.77		%	8.16		%



	For the Three Months Ended															For the Six Months Ended
	Jun 30, 2017			Mar 31, 2017			Dec 31, 2016			Sep 30, 2016			Jun 30, 2016			Jun 30, 2017			Jun 30, 2016
Return on Average Tangible Assets:
Net income, as reported		$13,199			$11,782			$12,162			$12,327			$11,057			$24,981			$21,992

Total average assets, as reported		$4,354,464			$4,365,471			$4,272,883			$4,062,688			$3,869,508			$4,359,937			$3,819,267
Less average balances of:
Goodwill	64,058			64,059			64,059			64,059			64,059			64,059			64,059
Identifiable intangible assets, net	9,767			10,027			10,330			10,650			10,972			9,896			11,133
Total average tangible assets		$4,280,639			$4,291,385			$4,198,494			$3,987,979			$3,794,477			$4,285,982			$3,744,075

Return on average assets - GAAP	1.21		%	1.08		%	1.14		%	1.21		%	1.14		%	1.15		%	1.15		%
Return on average tangible assets - Non-GAAP	1.23		%	1.10		%	1.16		%	1.24		%	1.17		%	1.17		%	1.17		%

Return on Average Tangible Equity:
Net income, as reported		$13,199			$11,782			$12,162			$12,327			$11,057			$24,981			$21,992

Total average equity, as reported		$404,238			$397,117			$396,741			$392,233			$384,717			$400,697			$382,529
Less average balances of:
Goodwill	64,058			64,059			64,059			64,059			64,059			64,059			64,059
Identifiable intangible assets, net	9,767			10,027			10,330			10,650			10,972			9,896			11,133
Total average tangible equity		$330,413			$323,031			$322,352			$317,524			$309,686			$326,742			$307,337

Return on average equity - GAAP	13.06		%	11.87		%	12.26		%	12.57		%	11.50		%	12.47		%	11.50		%
Return on average tangible equity - Non-GAAP	15.98		%	14.59		%	15.09		%	15.53		%	14.28		%	15.29		%	14.31		%

-13-

For the Six Months Ended

Jun 30, 2017

Jun 30, 2016

Commercial loans

Nontaxable debt securities