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| 8-K - 8-K - WASHINGTON TRUST BANCORP INC | form8-k2020q2release.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 20, 2020
FOR IMMEDIATE RELEASE
Washington Trust Reports Second Quarter 2020 Earnings
WESTERLY, R.I., July 20, 2020 (PR NEWSWIRE)…Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced second quarter 2020 net income of $21.0 million, or $1.21 per diluted share, compared to net income of $11.9 million, or $0.68 per diluted share, reported for the first quarter of 2020.
“Washington Trust reported strong second quarter earnings, a testament to our success at executing a business continuity plan that allowed our employees to safely provide banking services and maintain a high level of personal customer service during the COVID-19 pandemic,” stated Edward O. Handy III, Washington Trust Chairman and Chief Executive Officer. “We assisted thousands of borrowers, depositors and wealth clients with their financial needs during these uncertain times and our second quarter performance demonstrated how our diversified business model enables us to generate earnings in a challenging environment. While there is still uncertainty regarding the severity and duration of the COVID-19 pandemic and its related economic effects, we believe that Washington Trust is well-positioned with strong capital and ample sources of liquidity to handle these challenges as we move forward during this unprecedented time.”
As the nation’s oldest community bank, Washington Trust remains steadfast in its commitment to our employees, customers and communities. The COVID-19 pandemic has caused an unprecedented disruption to the economy and the communities we serve. Washington Trust has responded by working with our valued customers to assist them in these difficult times by providing loan payment deferrals, participating in the Small Business Administration's ("SBA's") Paycheck Protection Program ("PPP") and providing other accommodations. Remote working arrangements continue for a significant portion of our workforce. In July, we reopened our branch lobbies to customer foot traffic while adhering to and promoting social distancing guidelines.
Selected financial highlights for the second quarter of 2020 include:
• | Returns on average equity and average assets for the second quarter were 16.51% and 1.46%, respectively, compared to 9.49% and 0.89%, respectively, in the preceding quarter. |
• | The provision for credit losses was $2.2 million in the second quarter, compared to $7.0 million in the preceding quarter. |
• | Mortgage banking revenues hit an all-time quarterly high, totaling $14.9 million for the second quarter, up by $8.8 million, or 144%, from the preceding quarter. |
• | Residential mortgage loan originations for portfolio or sale amounted to a quarterly record of $426 million in the second quarter of 2020, up by $134 million, or 46%, from the preceding quarter. |
• | Total loans amounted to $4.3 billion at June 30, 2020, up by $197 million, or 5%, from the end of the preceding quarter. Total loans were up by $557 million, or 15%, from a year ago. |
• | Total in-market deposits (total deposits less out-of-market wholesale brokered deposits) amounted to $3.6 billion, up by $299 million, or 9%, from the end of the preceding quarter, and up by $551 million, or 18%, from a year ago. |
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Washington Trust
July 20, 2020
Net Interest Income
Net interest income was $30.9 million for the second quarter of 2020, down by $1.7 million, or 5%, from the first quarter of 2020. The net interest margin was 2.31% for the second quarter, down by 30 basis points from 2.61% reported in the preceding quarter.
Significant linked quarter changes included:
• | Average interest-earning assets increased by $357 million, with increases of $261 million in average loans and $74 million in average cash and short-term investments balances. The yield on interest-earning assets for the second quarter was 3.18%, down by 58 basis points from the preceding quarter, reflecting the impact of lower market interest rates. |
• | Growth in average loans included an increase of $138 million in average balances of PPP loans, which are fully guaranteed by the SBA. The yield on PPP loans for the second quarter was 2.65%, which included the net amortization of deferred lender processing fees and deferred labor costs associated with the loan originations. |
• | Average interest-bearing liabilities increased by $208 million, with increases of $115 million in average wholesale funding balances and $94 million in average in-market deposits. Wholesale funding balances consist of wholesale brokered time deposits and borrowings from the Federal Home Loan Bank and the Federal Reserve. The cost of interest-bearing liabilities for the second quarter of 2020 was 1.08%, down by 33 basis points from the preceding quarter, due to lower market interest rates. |
• | Average noninterest-bearing demand deposit balances increased by $134 million from the preceding quarter. |
Noninterest Income
Noninterest income totaled $26.3 million for the second quarter of 2020, up by $6.4 million, or 32%, from the first quarter of 2020. Linked quarter changes included:
• | Mortgage banking revenues totaled $14.9 million for the second quarter of 2020, up by $8.8 million, or 144%, from the first quarter of 2020, with increases in both realized and unrealized gains associated with mortgage banking activities. Net realized gains increased on a linked quarter basis due to increases in sales volume and sales yield on loans sold to the secondary market. Mortgage loans sold to the secondary market hit an all-time quarterly high of $305 million in the second quarter of 2020, up by $143 million, or 88%, from the preceding quarter. Net unrealized gains also increased on a linked quarter basis, reflecting growth in the mortgage pipeline and a corresponding increase in the fair value of mortgage loan commitments as of June 30, 2020. |
• | Wealth management revenues amounted to $8.6 million for the second quarter of 2020, down by $84 thousand, or 1%, on a linked quarter basis. This included a decrease in asset-based revenues of $199 thousand, or 2%, correlating to the linked quarter decline in the average balance of wealth management assets under administration ("AUA"). The decrease in asset-based revenues was partially offset by an increase in transaction-based revenues of $115 thousand, or 34%. |
Wealth management AUA amounted to $6.1 billion at June 30, 2020, up by $801 million, or 15%, from March 31, 2020. The increase reflected net investment appreciation of $671.6 million and net client asset inflows of $129.5 million in the second quarter of 2020. The average balance of AUA for the second quarter of 2020 decreased by approximately $157 million, or 3%, from the average balance for the preceding quarter.
• | Loan related derivative income was $99 thousand in the second quarter of 2020, down by $2.4 million, or 96%, from the preceding quarter, reflecting a lower volume of commercial borrower interest rate swap transactions. |
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Washington Trust
July 20, 2020
• | Income from bank-owned life insurance totaled $791 thousand in the second quarter of 2020, up by $227 thousand, or 40%, from the preceding quarter. Included in the second quarter was a $229 thousand non-taxable gain due to the receipt of life insurance proceeds. |
Noninterest Expenses
Noninterest expenses totaled $28.5 million for the second quarter of 2020, down by $2.0 million, or 6%, from the first quarter of 2020. The linked quarter comparison of noninterest expenses was impacted by the following item:
• | In the first quarter of 2020, a contingency reserve of approximately $800 thousand, largely due to a potential loss associated with counterfeit checks drawn on a commercial customer's account, was included in other noninterest expenses. This matter was resolved in the second quarter of 2020 and resulted in a reduction of $170 thousand from the previously established reserve, which was recognized as a reduction of other noninterest expenses in the second quarter of 2020. |
Excluding the impact of the aforementioned item, noninterest expenses for the second quarter of 2020 decreased by approximately$1.0 million, or 3%, from the preceding quarter. Linked quarter changes included:
• | Salaries and employee benefits expense, our largest noninterest expense, amounted to $19.5 million, which was essentially flat compared to preceding quarter. Volume-related increases in mortgage commission expense were essentially offset with higher deferred labor (contra-expense) largely associated with PPP loan originations in the second quarter. |
• | Outsourced services expense was down by $216 thousand from the preceding quarter, largely due to lower volume-related third party processing costs associated with customer loan related derivative transactions. |
• | FDIC deposit insurance costs were up by $252 thousand from the preceding quarter, largely due to growth in average assets. |
• | The remaining decline in noninterest expenses reflects modest decreases across a variety of other noninterest expense categories. These categories included net occupancy, employee travel and entertainment and office supplies, which declined due to remote working conditions. Declines in other expense categories such as advertising and promotion and corporate sponsorships were timing-related. |
Income Tax
Income tax expense totaled $5.5 million for the second quarter of 2020, up by $2.4 million from the preceding quarter, largely due to a higher level of pre-tax income. The effective tax rate for the second quarter of 2020 was 20.9%, unchanged from the preceding quarter. Based on current federal and applicable state income tax statutes, the Corporation currently expects its full-year 2020 effective tax rate to be approximately 21.0%.
Investment Securities
The securities portfolio totaled $938 million at June 30, 2020, up by $21 million, or 2%, from March 31, 2020, reflecting purchases of U.S. government agency and U.S. government-sponsored debt securities, including mortgage-backed securities. This increase was partially offset by routine pay-downs on mortgage-backed securities, calls and maturities of debt securities, as well as a temporary decrease in the fair value of available for sale securities. Second quarter 2020 purchases totaled $132 million, with a weighted average yield of 1.88%. Securities represented 16% of total assets at both June 30, 2020 and March 31, 2020.
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Washington Trust
July 20, 2020
Loans
Total loans stood at $4.3 billion at June 30, 2020, up by $197 million, or 5% from the end of the preceding quarter. Linked quarter changes included:
• | Commercial loans increased by $210 million, or 9%, from March 31, 2020, with a net increase of $197 million in the commercial and industrial portfolio and a net increase of $13 million in the commercial real estate portfolio. Loan growth was due to the origination of PPP loans. As of June 30, 2020, there were 1,690 PPP loans with a carrying value of $212 million included in the commercial and industrial portfolio. |
• | Residential real estate loans decreased by $2 million from March 31, 2020. |
• | The consumer loan portfolio decreased by $11 million from the balance at March 31, 2020. |
Washington Trust continues to work with and support our customers experiencing financial difficulty due to the COVID-19 pandemic. Depending on the demonstrated need of the borrower, Washington Trust has provided loan payment deferrals for up to six months. As of June 30, 2020, we have executed 583 short-term deferments on loan balances of $652 million, which represented 15% of total loan balances as of June 30, 2020. In accordance with regulatory guidance and GAAP, eligible short-term deferments are not required to be classified as troubled debt restructured loans and will not be reported as past due provided that they are performing in accordance with the modified terms. See additional discussion under the Asset Quality section below.
Deposits and Borrowings
Total deposits amounted to $4.1 billion at June 30, 2020, up by $395 million, or 11%, from the end of the preceding quarter. Included in total deposits are out-of-market wholesale brokered time deposits, which increased by $97 million, or 22%, from March 31, 2020. Excluding wholesale brokered time deposits, in-market deposits at June 30, 2020 were up by $299 million, or 9%, from the end of the preceding quarter, largely due to increases in noninterest-bearing demand deposit balances and NOW account balances. Growth included PPP loan fundings made into customer accounts at Washington Trust. These funds are expected to decrease as customers use them for business needs.
Federal Home Loan Bank advances totaled $1.0 billion at June 30, 2020, down by $193 million from March 31, 2020.
In June 2020, Washington Trust began participating in the Federal Reserve's Paycheck Protection Program Liquidity Facility ("PPPLF"), which extends credit to depository institutions with a term of up to two years at a fixed interest rate of 0.35%. Only PPP loans can be pledged as collateral to access the facility. As of June 30, 2020, PPPLF borrowings amounted to $39 million.
Asset Quality
Nonperforming assets amounted to $16.0 million at June 30, 2020, down by $1.9 million from the end of the preceding quarter. This decline reflected a $1.9 million decrease in nonaccrual loans, largely in the residential real estate portfolio. At of June 30, 2020 there were no properties held in OREO.
Total nonaccrual loans amounted to $16.0 million, or 0.37% of total loans, at June 30, 2020, compared to $17.9 million, or 0.44% of total loans, at March 31, 2020. Total past due loans amounted to $14.7 million, or 0.34% of total loans, at June 30, 2020, compared to $16.5 million, or 0.40% of total loans, at March 31, 2020. Total troubled debt restructured ("TDR") loans amounted
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Washington Trust
July 20, 2020
to $6.5 million as of June 30, 2020, up by $5.6 million from March 31, 2020 due to 12 short-term deferments on loans that were delinquent before the pandemic and did not qualify for TDR regulatory relief. Approximately 80% of TDR balances at June 30, 2020 were in the residential and consumer loan portfolios. Given the continued uncertain impact to the economy of the COVID-19 pandemic, Washington Trust continues to actively monitor asset quality as the potential exists for adverse events to impact asset quality trends.
In the second quarter of 2020, a provision for credit losses of $2.2 million was charged to earnings, compared to a provision for credit losses of $7.0 million in the preceding quarter. The second quarter of 2020 provision for credit losses reflects management's assessment of loss exposure, including continued uncertainty regarding the severity and duration of the COVID-19 pandemic and related economic effects.
In the second quarter of 2020, net charge-offs of $308 thousand were recognized, compared to $623 thousand in the preceding quarter.
The allowance for credit losses ("ACL") on loans amounted to $41.4 million, or 0.97% of total loans, at June 30, 2020, compared to $39.7 million, or 0.97% of total loans, at March 31, 2020. The ACL on unfunded commitments, included in other liabilities on the Consolidated Balance Sheets, amounted to $2.2 million at June 30, 2020, compared to $2.0 million at March 31, 2020.
Capital and Dividends
Total shareholders' equity was $520.2 million at June 30, 2020, up by $11.6 million from March 31, 2020. This increase included net income of $21.0 million, which was partially offset by $8.9 million in dividend declarations.
Capital levels at June 30, 2020 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.78% at June 30, 2020, compared to 12.42% at March 31, 2020.
Book value per share amounted to $30.14 at June 30, 2020, compared to $29.48 at March 31, 2020.
The Board of Directors declared a quarterly dividend of 51 cents per share for the quarter ended June 30, 2020. The dividend was paid on July 10, 2020 to shareholders of record on July 1, 2020.
Conference Call
Washington Trust will host a conference call to discuss its second quarter results, business highlights and outlook on Tuesday, July 21, 2020 at 8:30 a.m. (Eastern Time). Individuals may dial in to the call at 1-888-243-4451. 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 10146147; the audio replay will be available through August 4, 2020. 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, 2020.
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Washington Trust
July 20, 2020
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: the negative impacts and disruptions of the COVID-19 pandemic and measures taken to contain its spread on our employees, customers, business operations, credit quality, financial position, liquidity and results of operations; the length and extent of the economic contraction as a result of the COVID-19 pandemic; continued deterioration in local, regional, national or international economic conditions or conditions affecting the banking or financial services industries, financial capital markets and the customers and communities we serve; changes in consumer behavior due to changing political, business and economic conditions, including increased unemployment, or legislative or regulatory initiatives; 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; decreases in the value of securities and other assets; reductions in loan demand; changes in loan collectibility, increases in defaults and charge-off rates; changes in the size and nature of our competition; changes in legislation or regulation and accounting principles, policies and guidelines; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; reputational risk relating to our participation in the Paycheck Protection Program and other pandemic-related legislative and regulatory initiatives and programs; 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, 2019, 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.
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Washington Trust Bancorp, Inc. and Subsidiaries | |||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||||||
(Unaudited; Dollars in thousands) | |||||||||||||||
Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | |||||||||||
Assets: | |||||||||||||||
Cash and due from banks | $215,601 | $178,678 | $132,193 | $141,768 | $115,904 | ||||||||||
Short-term investments | 7,739 | 6,591 | 6,262 | 4,336 | 3,910 | ||||||||||
Mortgage loans held for sale, at fair value | 43,997 | 49,751 | 27,833 | 44,657 | 39,996 | ||||||||||
Available for sale debt securities, at fair value | 938,446 | 917,392 | 899,490 | 887,020 | 969,168 | ||||||||||
Federal Home Loan Bank stock, at cost | 50,017 | 53,576 | 50,853 | 45,030 | 49,759 | ||||||||||
Loans: | |||||||||||||||
Total loans | 4,287,641 | 4,090,396 | 3,892,999 | 3,778,106 | 3,730,339 | ||||||||||
Less: allowance for credit losses on loans | 41,441 | 39,665 | 27,014 | 26,997 | 27,398 | ||||||||||
Net loans | 4,246,200 | 4,050,731 | 3,865,985 | 3,751,109 | 3,702,941 | ||||||||||
Premises and equipment, net | 28,067 | 28,543 | 28,700 | 29,293 | 29,302 | ||||||||||
Operating lease right-of-use assets | 27,022 | 26,098 | 26,792 | 27,500 | 28,174 | ||||||||||
Investment in bank-owned life insurance | 83,056 | 83,053 | 82,490 | 81,920 | 81,351 | ||||||||||
Goodwill | 63,909 | 63,909 | 63,909 | 63,909 | 63,909 | ||||||||||
Identifiable intangible assets, net | 6,759 | 6,988 | 7,218 | 7,448 | 7,684 | ||||||||||
Other assets | 166,147 | 155,669 | 100,934 | 114,888 | 97,574 | ||||||||||
Total assets | $5,876,960 | $5,620,979 | $5,292,659 | $5,198,878 | $5,189,672 | ||||||||||
Liabilities: | |||||||||||||||
Deposits: | |||||||||||||||
Noninterest-bearing deposits | $815,770 | $622,893 | $609,924 | $619,839 | $587,326 | ||||||||||
Interest-bearing deposits | 3,285,666 | 3,083,421 | 2,888,958 | 2,966,314 | 2,917,296 | ||||||||||
Total deposits | 4,101,436 | 3,706,314 | 3,498,882 | 3,586,153 | 3,504,622 | ||||||||||
Federal Home Loan Bank advances | 1,005,051 | 1,198,534 | 1,141,464 | 956,786 | 1,060,960 | ||||||||||
Junior subordinated debentures | 22,681 | 22,681 | 22,681 | 22,681 | 22,681 | ||||||||||
Operating lease liabilities | 29,125 | 28,184 | 28,861 | 29,541 | 30,210 | ||||||||||
Other liabilities | 198,504 | 156,669 | 97,279 | 105,892 | 86,994 | ||||||||||
Total liabilities | 5,356,797 | 5,112,382 | 4,789,167 | 4,701,053 | 4,705,467 | ||||||||||
Shareholders’ Equity: | |||||||||||||||
Common stock | 1,085 | 1,085 | 1,085 | 1,084 | 1,083 | ||||||||||
Paid-in capital | 123,684 | 123,167 | 123,281 | 121,900 | 121,115 | ||||||||||
Retained earnings | 399,386 | 387,243 | 390,363 | 383,765 | 373,873 | ||||||||||
Accumulated other comprehensive income (loss) | (462 | ) | 929 | (11,237 | ) | (8,924 | ) | (11,866 | ) | ||||||
Treasury stock, at cost | (3,530 | ) | (3,827 | ) | — | — | — | ||||||||
Total shareholders’ equity | 520,163 | 508,597 | 503,492 | 497,825 | 484,205 | ||||||||||
Total liabilities and shareholders’ equity | $5,876,960 | $5,620,979 | $5,292,659 | $5,198,878 | $5,189,672 | ||||||||||
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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, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Jun 30, 2020 | Jun 30, 2019 | ||||||||||||||||
Interest income: | ||||||||||||||||||||||
Interest and fees on loans | $36,005 | $40,008 | $40,079 | $41,558 | $42,138 | $76,013 | $83,882 | |||||||||||||||
Interest on mortgage loans held for sale | 440 | 285 | 359 | 410 | 288 | 725 | 468 | |||||||||||||||
Taxable interest on debt securities | 5,477 | 5,834 | 5,817 | 6,318 | 7,006 | 11,311 | 14,232 | |||||||||||||||
Nontaxable interest on debt securities | — | — | — | 1 | 8 | — | 17 | |||||||||||||||
Dividends on Federal Home Loan Bank stock | 654 | 640 | 693 | 747 | 720 | 1,294 | 1,415 | |||||||||||||||
Other interest income | 36 | 349 | 435 | 493 | 399 | 385 | 739 | |||||||||||||||
Total interest and dividend income | 42,612 | 47,116 | 47,383 | 49,527 | 50,559 | 89,728 | 100,753 | |||||||||||||||
Interest expense: | ||||||||||||||||||||||
Deposits | 7,112 | 8,536 | 9,144 | 9,792 | 9,469 | 15,648 | 18,165 | |||||||||||||||
Federal Home Loan Bank advances | 4,382 | 5,765 | 6,015 | 6,512 | 6,980 | 10,147 | 13,641 | |||||||||||||||
Junior subordinated debentures | 171 | 213 | 230 | 245 | 252 | 384 | 505 | |||||||||||||||
Other interest expense | 2 | — | — | — | — | 2 | — | |||||||||||||||
Total interest expense | 11,667 | 14,514 | 15,389 | 16,549 | 16,701 | 26,181 | 32,311 | |||||||||||||||
Net interest income | 30,945 | 32,602 | 31,994 | 32,978 | 33,858 | 63,547 | 68,442 | |||||||||||||||
Provision for credit losses | 2,200 | 7,036 | — | 400 | 525 | 9,236 | 1,175 | |||||||||||||||
Net interest income after provision for credit losses | 28,745 | 25,566 | 31,994 | 32,578 | 33,333 | 54,311 | 67,267 | |||||||||||||||
Noninterest income: | ||||||||||||||||||||||
Wealth management revenues | 8,605 | 8,689 | 8,894 | 9,153 | 9,549 | 17,294 | 18,801 | |||||||||||||||
Mortgage banking revenues | 14,851 | 6,096 | 3,669 | 4,840 | 3,640 | 20,947 | 6,286 | |||||||||||||||
Card interchange fees | 1,031 | 947 | 1,100 | 1,099 | 1,018 | 1,978 | 2,015 | |||||||||||||||
Service charges on deposit accounts | 517 | 860 | 941 | 939 | 929 | 1,377 | 1,804 | |||||||||||||||
Loan related derivative income | 99 | 2,455 | 1,116 | 1,407 | 746 | 2,554 | 1,470 | |||||||||||||||
Income from bank-owned life insurance | 791 | 564 | 570 | 569 | 566 | 1,355 | 1,215 | |||||||||||||||
Net realized gains (losses) on securities | — | — | 27 | — | (80 | ) | — | (80 | ) | |||||||||||||
Other income | 426 | 316 | 301 | 335 | 385 | 742 | 609 | |||||||||||||||
Total noninterest income | 26,320 | 19,927 | 16,618 | 18,342 | 16,753 | 46,247 | 32,120 | |||||||||||||||
Noninterest expense: | ||||||||||||||||||||||
Salaries and employee benefits | 19,464 | 19,468 | 18,374 | 18,332 | 18,436 | 38,932 | 36,055 | |||||||||||||||
Outsourced services | 2,784 | 3,000 | 2,752 | 2,722 | 2,518 | 5,784 | 5,124 | |||||||||||||||
Net occupancy | 1,909 | 2,019 | 1,986 | 1,933 | 1,904 | 3,928 | 3,902 | |||||||||||||||
Equipment | 895 | 977 | 996 | 1,046 | 1,028 | 1,872 | 2,039 | |||||||||||||||
Legal, audit and professional fees | 659 | 822 | 692 | 645 | 664 | 1,481 | 1,198 | |||||||||||||||
FDIC deposit insurance costs | 674 | 422 | 109 | (460 | ) | 540 | 1,096 | 969 | ||||||||||||||
Advertising and promotion | 186 | 259 | 402 | 368 | 525 | 445 | 764 | |||||||||||||||
Amortization of intangibles | 230 | 230 | 229 | 236 | 239 | 460 | 478 | |||||||||||||||
Other expenses | 1,677 | 3,256 | 3,215 | 2,048 | 2,297 | 4,933 | 4,586 | |||||||||||||||
Total noninterest expense | 28,478 | 30,453 | 28,755 | 26,870 | 28,151 | 58,931 | 55,115 | |||||||||||||||
Income before income taxes | 26,587 | 15,040 | 19,857 | 24,050 | 21,935 | 41,627 | 44,272 | |||||||||||||||
Income tax expense | 5,547 | 3,139 | 4,321 | 5,236 | 4,662 | 8,686 | 9,504 | |||||||||||||||
Net income | $21,040 | $11,901 | $15,536 | $18,814 | $17,273 | $32,941 | $34,768 | |||||||||||||||
Net income available to common shareholders | $21,000 | $11,869 | $15,502 | $18,778 | $17,238 | $32,869 | $34,699 | |||||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||||
Basic | 17,257 | 17,345 | 17,351 | 17,338 | 17,330 | 17,301 | 17,317 | |||||||||||||||
Diluted | 17,292 | 17,441 | 17,436 | 17,414 | 17,405 | 17,377 | 17,403 | |||||||||||||||
Earnings per common share: | ||||||||||||||||||||||
Basic | $1.22 | $0.68 | $0.89 | $1.08 | $0.99 | $1.90 | $2.00 | |||||||||||||||
Diluted | $1.21 | $0.68 | $0.89 | $1.08 | $0.99 | $1.89 | $1.99 | |||||||||||||||
Cash dividends declared per share | $0.51 | $0.51 | $0.51 | $0.51 | $0.51 | $1.02 | $0.98 | |||||||||||||||
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Washington Trust Bancorp, Inc. and Subsidiaries | |||||||||||||||
SELECTED FINANCIAL HIGHLIGHTS | |||||||||||||||
(Unaudited; Dollars and shares in thousands, except per share amounts) | |||||||||||||||
Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | |||||||||||
Share and Equity Related Data: | |||||||||||||||
Book value per share | $30.14 | $29.48 | $29.00 | $28.71 | $27.93 | ||||||||||
Tangible book value per share - Non-GAAP (1) | $26.04 | $25.37 | $24.90 | $24.60 | $23.80 | ||||||||||
Market value per share | $32.75 | $36.56 | $53.79 | $48.31 | $52.18 | ||||||||||
Shares issued at end of period | 17,363 | 17,363 | 17,363 | 17,338 | 17,336 | ||||||||||
Shares outstanding at end of period | 17,260 | 17,252 | 17,363 | 17,338 | 17,336 | ||||||||||
Capital Ratios (2): | |||||||||||||||
Tier 1 risk-based capital | 11.95 | % | 11.62 | % | 12.23 | % | 12.21 | % | 12.06 | % | |||||
Total risk-based capital | 12.78 | % | 12.42 | % | 12.94 | % | 12.94 | % | 12.80 | % | |||||
Tier 1 leverage ratio | 8.42 | % | 8.77 | % | 9.04 | % | 8.97 | % | 8.76 | % | |||||
Common equity tier 1 | 11.40 | % | 11.08 | % | 11.65 | % | 11.62 | % | 11.46 | % | |||||
Balance Sheet Ratios: | |||||||||||||||
Equity to assets | 8.85 | % | 9.05 | % | 9.51 | % | 9.58 | % | 9.33 | % | |||||
Tangible equity to tangible assets - Non-GAAP (1) | 7.74 | % | 7.89 | % | 8.28 | % | 8.32 | % | 8.06 | % | |||||
Loans to deposits (3) | 104.6 | % | 110.6 | % | 111.3 | % | 105.8 | % | 106.8 | % | |||||
For the Six Months Ended | |||||||||||||||
For the Three Months Ended | |||||||||||||||
Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Jun 30, 2020 | Jun 30, 2019 | |||||||||
Performance Ratios (4): | |||||||||||||||
Net interest margin (5) | 2.31 | % | 2.61 | % | 2.61 | % | 2.72 | % | 2.81 | % | 2.46 | % | 2.87 | % | |
Return on average assets (net income divided by average assets) | 1.46 | % | 0.89 | % | 1.18 | % | 1.44 | % | 1.34 | % | 1.18 | % | 1.37 | % | |
Return on average tangible assets - Non-GAAP (1) | 1.48 | % | 0.90 | % | 1.20 | % | 1.46 | % | 1.36 | % | 1.20 | % | 1.39 | % | |
Return on average equity (net income available for common shareholders divided by average equity) | 16.51 | % | 9.49 | % | 12.24 | % | 15.20 | % | 14.58 | % | 13.03 | % | 15.04 | % | |
Return on average tangible equity - Non-GAAP (1) | 19.15 | % | 11.05 | % | 14.26 | % | 17.79 | % | 17.17 | % | 15.14 | % | 17.78 | % | |
Efficiency ratio (6) | 49.7 | % | 58.0 | % | 59.2 | % | 52.4 | % | 55.6 | % | 53.7 | % | 54.8 | % | |
(1) | See the section labeled “SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures” at the end of this document. |
(2) | Estimated for June 30, 2020 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). |
-9-
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, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Jun 30, 2020 | Jun 30, 2019 | ||||||||||||||||
Wealth Management Results | ||||||||||||||||||||||
Wealth Management Revenues: | ||||||||||||||||||||||
Asset-based revenues | $8,156 | $8,355 | $8,731 | $9,013 | $9,141 | $16,511 | $18,062 | |||||||||||||||
Transaction-based revenues | 449 | 334 | 163 | 140 | 408 | 783 | 739 | |||||||||||||||
Total wealth management revenues | $8,605 | $8,689 | $8,894 | $9,153 | $9,549 | $17,294 | $18,801 | |||||||||||||||
Assets Under Administration (AUA): | ||||||||||||||||||||||
Balance at beginning of period | $5,337,733 | $6,235,801 | $6,126,327 | $6,478,890 | $6,350,128 | $6,235,801 | $5,910,814 | |||||||||||||||
Net investment appreciation (depreciation) & income | 671,602 | (772,735 | ) | 310,766 | 66,514 | 222,489 | (101,133 | ) | 742,546 | |||||||||||||
Net client asset inflows (outflows) | 129,510 | (125,333 | ) | (243,175 | ) | (419,077 | ) | (93,727 | ) | 4,177 | (174,470 | ) | ||||||||||
Other (1) | — | — | 41,883 | — | — | — | — | |||||||||||||||
Balance at end of period | $6,138,845 | $5,337,733 | $6,235,801 | $6,126,327 | $6,478,890 | $6,138,845 | $6,478,890 | |||||||||||||||
Percentage of AUA that are managed assets | 90% | 89% | 90% | 90% | 91% | 90% | 91% | |||||||||||||||
Mortgage Banking Results | ||||||||||||||||||||||
Mortgage Banking Revenues: | ||||||||||||||||||||||
Realized gains on loan sales, net (2) | $10,646 | $3,688 | $4,608 | $4,509 | $2,924 | $14,334 | $4,861 | |||||||||||||||
Unrealized gains (losses), net (3) | 4,415 | 2,325 | (1,025 | ) | 243 | 599 | 6,740 | 1,136 | ||||||||||||||
Loan servicing fee income, net (4) | (210 | ) | 83 | 86 | 88 | 117 | (127 | ) | 289 | |||||||||||||
Total mortgage banking revenues | $14,851 | $6,096 | $3,669 | $4,840 | $3,640 | $20,947 | $6,286 | |||||||||||||||
Residential Mortgage Loan Originations: | ||||||||||||||||||||||
Originations for retention in portfolio | $126,894 | $108,498 | $120,882 | $105,075 | $69,736 | $235,392 | $121,433 | |||||||||||||||
Originations for sale to secondary market (5) | 299,321 | 183,222 | 160,175 | 189,979 | 162,123 | 482,543 | 247,949 | |||||||||||||||
Total mortgage loan originations | $426,215 | $291,720 | $281,057 | $295,054 | $231,859 | $717,935 | $369,382 | |||||||||||||||
Residential Mortgage Loans Sold: | ||||||||||||||||||||||
Sold with servicing rights retained | $246,945 | $44,498 | $42,612 | $25,766 | $18,292 | $291,443 | $27,782 | |||||||||||||||
Sold with servicing rights released (5) | 58,279 | 117,693 | 134,091 | 159,210 | 119,122 | 175,972 | 201,711 | |||||||||||||||
Total mortgage loans sold | $305,224 | $162,191 | $176,703 | $184,976 | $137,414 | $467,415 | $229,493 | |||||||||||||||
(1) | Represents the classification of certain non-fee generating assets as AUA due to a reporting change in the fourth quarter of 2019. |
(2) | Includes gains on loan sales, commission income on loans originated for others, servicing right gains, and gains (losses) on forward loan commitments. |
(3) | Represents fair value adjustments on mortgage loans held for sale and forward loan commitments. |
(4) | Represents loan servicing fee income, net of servicing right amortization and valuation adjustments. |
(5) | Includes brokered loans (loans originated for others). |
-10-
Washington Trust Bancorp, Inc. and Subsidiaries | |||||||||||||||
END OF PERIOD LOAN AND DEPOSIT COMPOSITION | |||||||||||||||
(Unaudited; Dollars in thousands) | |||||||||||||||
Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | |||||||||||
Loans: | |||||||||||||||
Commercial real estate (1) | $1,630,998 | $1,618,020 | $1,547,572 | $1,517,320 | $1,482,836 | ||||||||||
Commercial & industrial | 852,445 | 655,157 | 585,289 | 566,426 | 583,873 | ||||||||||
Total commercial | 2,483,443 | 2,273,177 | 2,132,861 | 2,083,746 | 2,066,709 | ||||||||||
Residential real estate (2) | 1,508,223 | 1,510,472 | 1,449,090 | 1,378,518 | 1,352,113 | ||||||||||
Home equity | 277,632 | 287,134 | 290,874 | 294,250 | 288,078 | ||||||||||
Other | 18,343 | 19,613 | 20,174 | 21,592 | 23,439 | ||||||||||
Total consumer | 295,975 | 306,747 | 311,048 | 315,842 | 311,517 | ||||||||||
Total loans | $4,287,641 | $4,090,396 | $3,892,999 | $3,778,106 | $3,730,339 | ||||||||||
(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, 2020 | |||||||||||||||
Outstanding Balance | Deferments | ||||||||||||||
Count | Balance | % of Total | Count | Balance | % of Outstanding Balance | ||||||||||
Commercial Real Estate Portfolio Segmentation: | |||||||||||||||
Multi-family dwelling | 141 | $526,009 | 32 | % | 20 | $34,318 | 7 | % | |||||||
Retail | 133 | 327,139 | 20 | 43 | 124,071 | 38 | |||||||||
Office | 76 | 288,671 | 18 | 15 | 74,099 | 26 | |||||||||
Hospitality | 40 | 144,988 | 9 | 31 | 117,665 | 81 | |||||||||
Healthcare | 16 | 120,181 | 7 | 5 | 64,326 | 54 | |||||||||
Industrial and warehouse | 26 | 96,549 | 6 | — | — | — | |||||||||
Commercial mixed use | 21 | 41,892 | 3 | 6 | 3,089 | 7 | |||||||||
Other | 44 | 85,569 | 5 | 12 | 29,838 | 35 | |||||||||
Total commercial real estate loans | 497 | $1,630,998 | 100 | % | 132 | $447,406 | 27 | % | |||||||
Commercial & Industrial Portfolio Segmentation: | |||||||||||||||
Healthcare and social assistance | 262 | $188,725 | 22 | % | 6 | $15,384 | 8 | % | |||||||
Manufacturing | 152 | 91,364 | 11 | 4 | 2,505 | 3 | |||||||||
Educational services | 59 | 73,172 | 9 | 4 | 7,329 | 10 | |||||||||
Owner occupied and other real estate | 278 | 71,516 | 8 | 21 | 5,128 | 7 | |||||||||
Retail | 206 | 67,461 | 8 | 5 | 2,693 | 4 | |||||||||
Professional, scientific and technical | 270 | 48,452 | 6 | 1 | 41 | — | |||||||||
Accommodation and food services | 278 | 45,257 | 5 | 18 | 12,252 | 27 | |||||||||
Finance and insurance | 106 | 38,213 | 4 | — | — | — | |||||||||
Entertainment and recreation | 94 | 35,626 | 4 | 11 | 13,045 | 37 | |||||||||
Transportation and warehousing | 46 | 30,208 | 4 | 5 | 1,414 | 5 | |||||||||
Information | 34 | 29,575 | 3 | — | — | — | |||||||||
Public administration | 25 | 23,534 | 3 | 1 | 98 | — | |||||||||
Other | 764 | 109,342 | 13 | 24 | 14,533 | 13 | |||||||||
Total commercial & industrial loans | 2,574 | $852,445 | 100 | % | 100 | $74,422 | 9 | % | |||||||
-11-
Washington Trust Bancorp, Inc. and Subsidiaries | |||||||||||
END OF PERIOD LOAN AND DEPOSIT COMPOSITION | |||||||||||
(Unaudited; Dollars in thousands) | |||||||||||
June 30, 2020 | December 31, 2019 | ||||||||||
Balance | % of Total | Balance | % of Total | ||||||||
Commercial Real Estate Loans by Property Location: | |||||||||||
Connecticut | $639,961 | 39 | % | $616,484 | 40 | % | |||||
Massachusetts | 492,703 | 30 | 458,029 | 30 | |||||||
Rhode Island | 420,197 | 26 | 394,929 | 25 | |||||||
Subtotal | 1,552,861 | 95 | 1,469,442 | 95 | |||||||
All other states | 78,137 | 5 | 78,130 | 5 | |||||||
Total commercial real estate loans | $1,630,998 | 100 | % | $1,547,572 | 100 | % | |||||
Residential Real Estate Loans by Property Location: | |||||||||||
Massachusetts | $1,006,616 | 67 | % | $932,726 | 64 | % | |||||
Rhode Island | 349,143 | 23 | 356,392 | 25 | |||||||
Connecticut | 131,856 | 9 | 140,574 | 10 | |||||||
Subtotal | 1,487,615 | 99 | 1,429,692 | 99 | |||||||
All other states | 20,608 | 1 | 19,398 | 1 | |||||||
Total residential real estate loans | $1,508,223 | 100 | % | $1,449,090 | 100 | % | |||||
Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | |||||||||||
Deposits: | |||||||||||||||
Noninterest-bearing demand deposits | $815,770 | $622,893 | $609,924 | $619,839 | $587,326 | ||||||||||
Interest-bearing demand deposits | 158,343 | 178,391 | 159,938 | 152,200 | 128,355 | ||||||||||
NOW accounts | 617,792 | 528,650 | 520,295 | 478,462 | 484,615 | ||||||||||
Money market accounts | 834,954 | 784,893 | 765,899 | 749,122 | 654,719 | ||||||||||
Savings accounts | 417,195 | 382,509 | 373,503 | 362,868 | 365,069 | ||||||||||
Time deposits (in-market) | 728,801 | 776,992 | 784,481 | 792,941 | 801,501 | ||||||||||
In-market deposits | 3,572,855 | 3,274,328 | 3,214,040 | 3,155,432 | 3,021,585 | ||||||||||
Wholesale brokered time deposits | 528,581 | 431,986 | 284,842 | 430,721 | 483,037 | ||||||||||
Total deposits | $4,101,436 | $3,706,314 | $3,498,882 | $3,586,153 | $3,504,622 | ||||||||||
-12-
Washington Trust Bancorp, Inc. and Subsidiaries | |||||||||||||||
CREDIT & ASSET QUALITY DATA | |||||||||||||||
(Unaudited; Dollars in thousands) | |||||||||||||||
Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | |||||||||||
Asset Quality Ratios: | |||||||||||||||
Nonperforming assets to total assets | 0.27 | % | 0.32 | % | 0.35 | % | 0.37 | % | 0.29 | % | |||||
Nonaccrual loans to total loans | 0.37 | % | 0.44 | % | 0.45 | % | 0.39 | % | 0.34 | % | |||||
Total past due loans to total loans | 0.34 | % | 0.40 | % | 0.40 | % | 0.38 | % | 0.48 | % | |||||
Allowance for credit losses on loans to nonaccrual loans | 258.73 | % | 221.37 | % | 155.18 | % | 181.16 | % | 212.93 | % | |||||
Allowance for credit losses on loans to total loans | 0.97 | % | 0.97 | % | 0.69 | % | 0.71 | % | 0.73 | % | |||||
Nonperforming Assets: | |||||||||||||||
Commercial real estate | $431 | $450 | $603 | $684 | $926 | ||||||||||
Commercial & industrial | — | 290 | 657 | — | — | ||||||||||
Total commercial | 431 | 740 | 1,260 | 684 | 926 | ||||||||||
Residential real estate | 13,850 | 15,423 | 14,297 | 12,531 | 10,610 | ||||||||||
Home equity | 1,648 | 1,667 | 1,763 | 1,599 | 1,243 | ||||||||||
Other consumer | 88 | 88 | 88 | 88 | 88 | ||||||||||
Total consumer | 1,736 | 1,755 | 1,851 | 1,687 | 1,331 | ||||||||||
Total nonaccrual loans | 16,017 | 17,918 | 17,408 | 14,902 | 12,867 | ||||||||||
Other real estate owned | — | 28 | 1,109 | 4,142 | 2,142 | ||||||||||
Total nonperforming assets | $16,017 | $17,946 | $18,517 | $19,044 | $15,009 | ||||||||||
Past Due Loans (30 days or more past due): | |||||||||||||||
Commercial real estate | $431 | $1,275 | $1,433 | $684 | $3,670 | ||||||||||
Commercial & industrial | 3 | 310 | 1 | 1 | 1 | ||||||||||
Total commercial | 434 | 1,585 | 1,434 | 685 | 3,671 | ||||||||||
Residential real estate | 12,499 | 12,293 | 11,429 | 11,599 | 11,237 | ||||||||||
Home equity | 1,633 | 2,482 | 2,696 | 1,973 | 2,904 | ||||||||||
Other consumer | 106 | 115 | 130 | 99 | 102 | ||||||||||
Total consumer | 1,739 | 2,597 | 2,826 | 2,072 | 3,006 | ||||||||||
Total past due loans | $14,672 | $16,475 | $15,689 | $14,356 | $17,914 | ||||||||||
Accruing loans 90 days or more past due | $— | $— | $— | $— | $— | ||||||||||
Nonaccrual loans included in past due loans | $10,553 | $11,385 | $11,477 | $9,797 | $8,581 | ||||||||||
-13-
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, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Jun 30, 2020 | Jun 30, 2019 | ||||||||||||||||
Nonaccrual Loan Activity: | ||||||||||||||||||||||
Balance at beginning of period | $17,918 | $17,408 | $14,902 | $12,867 | $12,365 | $17,408 | $11,707 | |||||||||||||||
Additions to nonaccrual status | 237 | 1,729 | 2,766 | 5,672 | 1,620 | 1,966 | 3,544 | |||||||||||||||
Loans returned to accruing status | (154 | ) | (393 | ) | — | (597 | ) | (118 | ) | (547 | ) | (973 | ) | |||||||||
Loans charged-off | (325 | ) | (635 | ) | (132 | ) | (966 | ) | (819 | ) | (960 | ) | (922 | ) | ||||||||
Loans transferred to other real estate owned | — | (28 | ) | — | (2,000 | ) | — | (28 | ) | — | ||||||||||||
Payments, payoffs and other changes | (1,659 | ) | (163 | ) | (128 | ) | (74 | ) | (181 | ) | (1,822 | ) | (489 | ) | ||||||||
Balance at end of period | $16,017 | $17,918 | $17,408 | $14,902 | $12,867 | $16,017 | $12,867 | |||||||||||||||
Allowance for Credit Losses on Loans: | ||||||||||||||||||||||
Balance at beginning of period | $39,665 | $27,014 | $26,997 | $27,398 | $27,644 | $27,014 | $27,072 | |||||||||||||||
Adoption of CECL accounting standard (Topic 326) | — | 6,501 | — | — | — | 6,501 | — | |||||||||||||||
Provision for credit losses on loans (1) | 2,084 | 6,773 | — | 400 | 525 | 8,857 | 1,175 | |||||||||||||||
Charge-offs | (326 | ) | (635 | ) | (132 | ) | (966 | ) | (819 | ) | (961 | ) | (922 | ) | ||||||||
Recoveries | 18 | 12 | 149 | 165 | 48 | 30 | 73 | |||||||||||||||
Balance at end of period | $41,441 | $39,665 | $27,014 | $26,997 | $27,398 | $41,441 | $27,398 | |||||||||||||||
Allowance for Credit Losses on Unfunded Commitments: | ||||||||||||||||||||||
Balance at beginning of period | $2,039 | $293 | $317 | $302 | $242 | $293 | $289 | |||||||||||||||
Adoption of CECL accounting standard (Topic 326) | — | 1,483 | — | — | — | 1,483 | — | |||||||||||||||
Provision for credit losses on unfunded commitments (2) | 116 | 263 | (24 | ) | 15 | 60 | 379 | 13 | ||||||||||||||
Balance at end of period (3) | $2,155 | $2,039 | $293 | $317 | $302 | $2,155 | $302 | |||||||||||||||
(1) | Included in provision for credit losses in the Consolidated Statements of Income. |
(2) | Included in provision for credit losses in the Consolidated Statements of Income for the three months ended March 31, 2020. For periods prior to 2020, included in other noninterest expense in the Consolidated Statements of Income. |
(3) | Included in other liabilities in the Consolidated Balance Sheets. |
For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||||
Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Jun 30, 2020 | Jun 30, 2019 | ||||||||||||||||
Net Loan Charge-Offs (Recoveries): | ||||||||||||||||||||||
Commercial real estate | $19 | $153 | ($44 | ) | $947 | $— | $172 | $— | ||||||||||||||
Commercial & industrial | 284 | 290 | (15 | ) | (122 | ) | (16 | ) | 574 | (10 | ) | |||||||||||
Total commercial | 303 | 443 | (59 | ) | 825 | (16 | ) | 746 | (10 | ) | ||||||||||||
Residential real estate | — | — | — | — | 486 | — | 486 | |||||||||||||||
Home equity | (5 | ) | 172 | 17 | (36 | ) | 289 | 167 | 337 | |||||||||||||
Other consumer | 10 | 8 | 25 | 12 | 12 | 18 | 36 | |||||||||||||||
Total consumer | 5 | 180 | 42 | (24 | ) | 301 | 185 | 373 | ||||||||||||||
Total | $308 | $623 | ($17 | ) | $801 | $771 | $931 | $849 | ||||||||||||||
Net charge-offs to average loans (annualized) | 0.03 | % | 0.06 | % | — | % | 0.08 | % | 0.08 | % | 0.04 | % | 0.05 | % | ||||||||
-14-
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, 2020 | March 31, 2020 | 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 | $187,306 | $36 | 0.08 | % | $113,344 | $349 | 1.24 | % | $73,962 | ($313 | ) | (1.16 | )% | |||||||||||||
Mortgage loans held for sale | 53,443 | 440 | 3.31 | 31,087 | 285 | 3.69 | 22,356 | 155 | (0.38 | ) | ||||||||||||||||
Taxable debt securities | 904,792 | 5,477 | 2.43 | 905,293 | 5,833 | 2.59 | (501 | ) | (356 | ) | (0.16 | ) | ||||||||||||||
FHLB stock | 51,967 | 654 | 5.06 | 51,962 | 640 | 4.95 | 5 | 14 | 0.11 | |||||||||||||||||
Commercial real estate | 1,635,431 | 12,580 | 3.09 | 1,582,956 | 16,097 | 4.09 | 52,475 | (3,517 | ) | (1.00 | ) | |||||||||||||||
Commercial & industrial | 791,672 | 6,739 | 3.42 | 607,499 | 6,556 | 4.34 | 184,173 | 183 | (0.92 | ) | ||||||||||||||||
Total commercial | 2,427,103 | 19,319 | 3.20 | 2,190,455 | 22,653 | 4.16 | 236,648 | (3,334 | ) | (0.96 | ) | |||||||||||||||
Residential real estate | 1,497,665 | 14,330 | 3.85 | 1,469,282 | 14,283 | 3.91 | 28,383 | 47 | (0.06 | ) | ||||||||||||||||
Home equity | 282,470 | 2,382 | 3.39 | 285,832 | 3,101 | 4.36 | (3,362 | ) | (719 | ) | (0.97 | ) | ||||||||||||||
Other | 18,956 | 229 | 4.86 | 19,855 | 249 | 5.04 | (899 | ) | (20 | ) | (0.18 | ) | ||||||||||||||
Total consumer | 301,426 | 2,611 | 3.48 | 305,687 | 3,350 | 4.41 | (4,261 | ) | (739 | ) | (0.93 | ) | ||||||||||||||
Total loans | 4,226,194 | 36,260 | 3.45 | 3,965,424 | 40,286 | 4.09 | 260,770 | (4,026 | ) | (0.64 | ) | |||||||||||||||
Total interest-earning assets | 5,423,702 | 42,867 | 3.18 | 5,067,110 | 47,393 | 3.76 | 356,592 | (4,526 | ) | (0.58 | ) | |||||||||||||||
Noninterest-earning assets | 365,990 | 327,838 | 38,152 | |||||||||||||||||||||||
Total assets | $5,789,692 | $5,394,948 | $394,744 | |||||||||||||||||||||||
Liabilities and Shareholders' Equity: | ||||||||||||||||||||||||||
Interest-bearing demand deposits | $162,388 | $142 | 0.35 | % | $155,416 | $500 | 1.29 | % | $6,972 | ($358 | ) | (0.94 | )% | |||||||||||||
NOW accounts | 570,739 | 84 | 0.06 | 505,282 | 69 | 0.05 | 65,457 | 15 | 0.01 | |||||||||||||||||
Money market accounts | 821,063 | 1,370 | 0.67 | 795,268 | 2,092 | 1.06 | 25,795 | (722 | ) | (0.39 | ) | |||||||||||||||
Savings accounts | 403,286 | 67 | 0.07 | 374,374 | 62 | 0.07 | 28,912 | 5 | — | |||||||||||||||||
Time deposits (in-market) | 746,750 | 3,507 | 1.89 | 780,355 | 4,049 | 2.09 | (33,605 | ) | (542 | ) | (0.20 | ) | ||||||||||||||
Total interest-bearing in-market deposits | 2,704,226 | 5,170 | 0.77 | 2,610,695 | 6,772 | 1.04 | 93,531 | (1,602 | ) | (0.27 | ) | |||||||||||||||
Wholesale brokered time deposits | 559,822 | 1,942 | 1.40 | 391,822 | 1,764 | 1.81 | 168,000 | 178 | (0.41 | ) | ||||||||||||||||
Total interest-bearing deposits | 3,264,048 | 7,112 | 0.88 | 3,002,517 | 8,536 | 1.14 | 261,531 | (1,424 | ) | (0.26 | ) | |||||||||||||||
FHLB advances | 1,068,034 | 4,382 | 1.65 | 1,123,754 | 5,765 | 2.06 | (55,720 | ) | (1,383 | ) | (0.41 | ) | ||||||||||||||
Junior subordinated debentures | 22,681 | 171 | 3.03 | 22,681 | 213 | 3.78 | — | (42 | ) | (0.75 | ) | |||||||||||||||
Other borrowings | 2,565 | 2 | 0.31 | — | — | — | 2,565 | 2 | 0.31 | |||||||||||||||||
Total interest-bearing liabilities | 4,357,328 | 11,667 | 1.08 | 4,148,952 | 14,514 | 1.41 | 208,376 | (2,847 | ) | (0.33 | ) | |||||||||||||||
Noninterest-bearing demand deposits | 745,050 | 610,872 | 134,178 | |||||||||||||||||||||||
Other liabilities | 175,563 | 132,000 | 43,563 | |||||||||||||||||||||||
Shareholders' equity | 511,751 | 503,124 | 8,627 | |||||||||||||||||||||||
Total liabilities and shareholders' equity | $5,789,692 | $5,394,948 | $394,744 | |||||||||||||||||||||||
Net interest income (FTE) | $31,200 | $32,879 | ($1,679 | ) | ||||||||||||||||||||||
Interest rate spread | 2.10 | % | 2.35 | % | (0.25 | )% | ||||||||||||||||||||
Net interest margin | 2.31 | % | 2.61 | % | (0.30 | )% | ||||||||||||||||||||
Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:
For the Three Months Ended | Jun 30, 2020 | Mar 31, 2020 | Quarter Change | ||||||
Commercial loans | $254 | $278 | ($24 | ) | |||||
Total | $254 | $278 | ($24 | ) | |||||
-15-
Washington Trust Bancorp, Inc. and Subsidiaries | ||||||||||||||||||||||||
CONSOLIDATED AVERAGE BALANCE SHEETS (FTE Basis) | ||||||||||||||||||||||||
(Unaudited; Dollars in thousands) | ||||||||||||||||||||||||
For the Six Months Ended | June 30, 2020 | June 30, 2019 | 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 | $150,325 | $385 | 0.52 | % | $64,713 | $739 | 2.30 | % | $85,612 | ($354 | ) | (1.78 | )% | |||||||||||
Mortgage loans for sale | 42,265 | 725 | 3.45 | 22,588 | 468 | 4.18 | 19,677 | 257 | (0.73 | ) | ||||||||||||||
Taxable debt securities | 905,043 | 11,311 | 2.51 | 998,738 | 14,232 | 2.87 | (93,695 | ) | (2,921 | ) | (0.36 | ) | ||||||||||||
Nontaxable debt securities | — | — | — | 870 | 21 | 4.87 | (870 | ) | (21 | ) | (4.87 | ) | ||||||||||||
Total securities | 905,043 | 11,311 | 2.51 | 999,608 | 14,253 | 2.88 | (94,565 | ) | (2,942 | ) | (0.37 | ) | ||||||||||||
FHLB stock | 51,964 | 1,294 | 5.01 | 48,288 | 1,415 | 5.91 | 3,676 | (121 | ) | (0.90 | ) | |||||||||||||
Commercial mortgages | ||||||||||||||||||||||||
Construction & development | ||||||||||||||||||||||||
Commercial real estate | 1,609,193 | 28,677 | 3.58 | 1,446,923 | 34,388 | 4.79 | 162,270 | (5,711 | ) | (1.21 | ) | |||||||||||||
Commercial & industrial | 699,586 | 13,294 | 3.82 | 612,568 | 15,026 | 4.95 | 87,018 | (1,732 | ) | (1.13 | ) | |||||||||||||
Total commercial | 2,308,779 | 41,971 | 3.66 | 2,059,491 | 49,414 | 4.84 | 249,288 | (7,443 | ) | (1.18 | ) | |||||||||||||
Residential real estate | 1,483,473 | 28,613 | 3.88 | 1,354,330 | 27,371 | 4.08 | 129,143 | 1,242 | (0.20 | ) | ||||||||||||||
Home equity | 284,151 | 5,483 | 3.88 | 281,404 | 7,142 | 5.12 | 2,747 | (1,659 | ) | (1.24 | ) | |||||||||||||
Other | 19,406 | 478 | 4.95 | 24,905 | 609 | 4.93 | (5,499 | ) | (131 | ) | 0.02 | |||||||||||||
Total consumer | 303,557 | 5,961 | 3.95 | 306,309 | 7,751 | 5.10 | (2,752 | ) | (1,790 | ) | (1.15 | ) | ||||||||||||
Total loans | 4,095,809 | 76,545 | 3.76 | 3,720,130 | 84,536 | 4.58 | 375,679 | (7,991 | ) | (0.82 | ) | |||||||||||||
Total interest-earning assets | 5,245,406 | 90,260 | 3.46 | 4,855,327 | 101,411 | 4.21 | 390,079 | (11,151 | ) | (0.75 | ) | |||||||||||||
Noninterest-earning assets | 346,914 | 278,714 | 68,200 | |||||||||||||||||||||
Total assets | $5,592,320 | $5,134,041 | $458,279 | |||||||||||||||||||||
Liabilities and Shareholders' Equity: | ||||||||||||||||||||||||
Interest-bearing demand deposits | $158,902 | $642 | 0.81 | % | $147,522 | $1,311 | 1.79 | % | $11,380 | ($669 | ) | (0.98 | )% | |||||||||||
NOW accounts | 538,010 | 154 | 0.06 | 458,563 | 159 | 0.07 | 79,447 | (5 | ) | (0.01 | ) | |||||||||||||
Money market accounts | 808,166 | 3,462 | 0.86 | 652,671 | 3,440 | 1.06 | 155,495 | 22 | (0.20 | ) | ||||||||||||||
Savings accounts | 388,831 | 128 | 0.07 | 367,826 | 131 | 0.07 | 21,005 | (3 | ) | — | ||||||||||||||
Time deposits (in-market) | 763,552 | 7,556 | 1.99 | 793,012 | 7,719 | 1.96 | (29,460 | ) | (163 | ) | 0.03 | |||||||||||||
Total interest-bearing in-market deposits | 2,657,461 | 11,942 | 0.90 | 2,419,594 | 12,760 | 1.06 | 237,867 | (818 | ) | (0.16 | ) | |||||||||||||
Wholesale brokered time deposits | 475,822 | 3,706 | 1.57 | 490,680 | 5,405 | 2.22 | (14,858 | ) | (1,699 | ) | (0.65 | ) | ||||||||||||
Total interest-bearing deposits | 3,133,283 | 15,648 | 1.00 | 2,910,274 | 18,165 | 1.26 | 223,009 | (2,517 | ) | (0.26 | ) | |||||||||||||
FHLB advances | 1,095,894 | 10,147 | 1.86 | 1,039,037 | 13,641 | 2.65 | 56,857 | (3,494 | ) | (0.79 | ) | |||||||||||||
Junior subordinated debentures | 22,681 | 384 | 3.40 | 22,681 | 505 | 4.49 | — | (121 | ) | (1.09 | ) | |||||||||||||
Other borrowings | 1,282 | 2 | 0.31 | — | — | — | 1,282 | 2 | 0.31 | |||||||||||||||
Total interest-bearing liabilities | 4,253,140 | 26,181 | 1.24 | 3,971,992 | 32,311 | 1.64 | 281,148 | (6,130 | ) | (0.40 | ) | |||||||||||||
Noninterest-bearing demand deposits | 677,961 | 607,569 | 70,392 | |||||||||||||||||||||
Other liabilities | 153,781 | 89,133 | 64,648 | |||||||||||||||||||||
Shareholders' equity | 507,438 | 465,347 | 42,091 | |||||||||||||||||||||
Total liabilities and shareholders' equity | $5,592,320 | $5,134,041 | $458,279 | |||||||||||||||||||||
Net interest income (FTE) | $64,079 | $69,100 | ($5,021 | ) | ||||||||||||||||||||
Interest rate spread | 2.22 | % | 2.57 | % | (0.35 | )% | ||||||||||||||||||
Net interest margin | 2.46 | % | 2.87 | % | (0.41 | )% | ||||||||||||||||||
Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:
For the Six Months Ended | Jun 30, 2020 | Jun 30, 2019 | Change | ||||||
Commercial loans | $532 | $654 | ($122 | ) | |||||
Nontaxable debt securities | — | 4 | (4 | ) | |||||
Total | $532 | $658 | ($126 | ) | |||||
-16-
Washington Trust Bancorp, Inc. and Subsidiaries | |||||||||||||||
SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures | |||||||||||||||
(Unaudited; Dollars in thousands, except per share amounts) | |||||||||||||||
Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | |||||||||||
Tangible Book Value per Share: | |||||||||||||||
Total shareholders' equity, as reported | $520,163 | $508,597 | $503,492 | $497,825 | $484,205 | ||||||||||
Less: | |||||||||||||||
Goodwill | 63,909 | 63,909 | 63,909 | 63,909 | 63,909 | ||||||||||
Identifiable intangible assets, net | 6,759 | 6,988 | 7,218 | 7,448 | 7,684 | ||||||||||
Total tangible shareholders' equity | $449,495 | $437,700 | $432,365 | $426,468 | $412,612 | ||||||||||
Shares outstanding, as reported | 17,260 | 17,252 | 17,363 | 17,338 | 17,336 | ||||||||||
Book value per share - GAAP | $30.14 | $29.48 | $29.00 | $28.71 | $27.93 | ||||||||||
Tangible book value per share - Non-GAAP | $26.04 | $25.37 | $24.90 | $24.60 | $23.80 | ||||||||||
Tangible Equity to Tangible Assets: | |||||||||||||||
Total tangible shareholders' equity | $449,495 | $437,700 | $432,365 | $426,468 | $412,612 | ||||||||||
Total assets, as reported | $5,876,960 | $5,620,979 | $5,292,659 | $5,198,878 | $5,189,672 | ||||||||||
Less: | |||||||||||||||
Goodwill | 63,909 | 63,909 | 63,909 | 63,909 | 63,909 | ||||||||||
Identifiable intangible assets, net | 6,759 | 6,988 | 7,218 | 7,448 | 7,684 | ||||||||||
Total tangible assets | $5,806,292 | $5,550,082 | $5,221,532 | $5,127,521 | $5,118,079 | ||||||||||
Equity to assets - GAAP | 8.85 | % | 9.05 | % | 9.51 | % | 9.58 | % | 9.33 | % | |||||
Tangible equity to tangible assets - Non-GAAP | 7.74 | % | 7.89 | % | 8.28 | % | 8.32 | % | 8.06 | % | |||||
For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||||
Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Jun 30, 2020 | Jun 30, 2019 | ||||||||||||||||
Return on Average Tangible Assets: | ||||||||||||||||||||||
Net income, as reported | $21,040 | $11,901 | $15,536 | $18,814 | $17,273 | $32,941 | $34,768 | |||||||||||||||
Total average assets, as reported | $5,789,692 | $5,394,948 | $5,227,035 | $5,181,016 | $5,171,562 | $5,592,320 | $5,134,041 | |||||||||||||||
Less average balances of: | ||||||||||||||||||||||
Goodwill | 63,909 | 63,909 | 63,909 | 63,909 | 63,909 | 63,909 | 63,909 | |||||||||||||||
Identifiable intangible assets, net | 6,871 | 7,100 | 7,330 | 7,562 | 7,800 | 6,985 | 7,919 | |||||||||||||||
Total average tangible assets | $5,718,912 | $5,323,939 | $5,155,796 | $5,109,545 | $5,099,853 | $5,521,426 | $5,062,213 | |||||||||||||||
Return on average assets - GAAP | 1.46 | % | 0.89 | % | 1.18 | % | 1.44 | % | 1.34 | % | 1.18 | % | 1.37 | % | ||||||||
Return on average tangible assets - Non-GAAP | 1.48 | % | 0.90 | % | 1.20 | % | 1.46 | % | 1.36 | % | 1.20 | % | 1.39 | % | ||||||||
Return on Average Tangible Equity: | ||||||||||||||||||||||
Net income available to common shareholders, as reported | $21,000 | $11,869 | $15,502 | $18,778 | $17,238 | $32,869 | $34,699 | |||||||||||||||
Total average equity, as reported | $511,751 | $503,124 | $502,614 | $490,197 | $474,353 | $507,438 | $465,347 | |||||||||||||||
Less average balances of: | ||||||||||||||||||||||
Goodwill | 63,909 | 63,909 | 63,909 | 63,909 | 63,909 | 63,909 | 63,909 | |||||||||||||||
Identifiable intangible assets, net | 6,871 | 7,100 | 7,330 | 7,562 | 7,800 | 6,985 | 7,919 | |||||||||||||||
Total average tangible equity | $440,971 | $432,115 | $431,375 | $418,726 | $402,644 | $436,544 | $393,519 | |||||||||||||||
Return on average equity - GAAP | 16.51 | % | 9.49 | % | 12.24 | % | 15.20 | % | 14.58 | % | 13.03 | % | 15.04 | % | ||||||||
Return on average tangible equity - Non-GAAP | 19.15 | % | 11.05 | % | 14.26 | % | 17.79 | % | 17.17 | % | 15.14 | % | 17.78 | % | ||||||||
-17-