Washington Trust Reports First Quarter 2014 Earnings

Business Wire

WESTERLY, R.I.--(BUSINESS WIRE)--

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

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

Selected highlights for the first quarter of 2014 included:

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

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

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

As discussed above, the Corporation prepaid $99.3 million in FHLBB advances in early March 2014. These advances had a weighted average rate of 3.01% and a weighted average remaining term of thirty-six months. Other wholesale funding in the form of brokered time deposits as well as existing on-balance sheet liquidity were utilized as the funding source for the prepayments. The replacement wholesale funding amounted to $80 million, with an initial weighted average cost of 0.93% and a weighted average maturity of thirty-five months. The net impact of these transactions was a reduction in interest expense of approximately $170 thousand, which increased net interest margin by 2 basis points.

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

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

Noninterest Income
Noninterest income totaled $19.4 million for the first quarter of 2014, compared to $15.1 million for the fourth quarter of 2013. Excluding the $6.3 million gain on sale of business line recognized in the first quarter of 2014 and the $717 thousand other-than-temporary impairment charge recognized in the fourth quarter of 2013, noninterest income decreased by $2.7 million, or 17%, on a linked quarter basis. Significant linked quarter changes, on this basis, included the following:

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

Noninterest Expenses
Noninterest expenses totaled $29.3 million for the first quarter of 2014, compared to $24.0 million for the fourth quarter of 2013. Included in noninterest expenses were the following:

  • Debt prepayment penalty expense of $6.3 million was recognized in the first quarter of 2014.
  • Divestiture costs of $355 thousand were expensed in the first quarter of 2014, in connection with the sale of the merchant processing services business line. These costs included $291 thousand in salaries and employee benefit expenses and $64 thousand of legal expenses.
  • Charitable contribution expense (classified in other expenses) of $400 thousand was incurred in the fourth quarter of 2013.

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

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

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

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

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

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

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

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

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

Conference Call
Washington Trust will host a conference call to discuss first quarter results, business highlights and outlook on Monday, April 21, 2014 at 10:30 a.m. (Eastern Time). Individuals may dial in to the call at 1-888-317-6016. An audio replay of the call will be available by dialing 1-877-344-7529 and entering Conference Number 10042807; the audio replay will be available until 9:00 a.m. on May 2, 2014. A webcast of the call will be posted in the Investor Relations section of Washington Trust's web site, www.washtrust.com, shortly after the conclusion of the call and will be available through June 30, 2014.

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

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

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

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

 
 
Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS (unaudited)
(Dollars in thousands, except par value)       Mar 31,
2014
    Dec 31,
2013
Assets:          
Cash and due from banks $104,738 $81,939
Short-term investments 3,419 3,378
Mortgage loans held for sale, at fair value 10,409 11,636
Securities:
Available for sale, at fair value 361,000 392,903
Held to maturity, at amortized cost (fair value $29,180 in 2014 and $29,865 in 2013)       28,889       29,905  
Total securities 389,889 422,808
Federal Home Loan Bank stock, at cost 37,730 37,730
Loans:
Commercial 1,337,283 1,363,335
Residential real estate 810,393 772,674
Consumer       330,927       326,875  
Total loans 2,478,603 2,462,884
Less allowance for loan losses       27,043       27,886  
Net loans 2,451,560 2,434,998
Premises and equipment, net 25,909 25,402
Investment in bank-owned life insurance 57,118 56,673
Goodwill 58,114 58,114
Identifiable intangible assets, net 5,329 5,493
Other assets       49,931       50,696  
Total assets       $3,194,146       $3,188,867  
Liabilities:
Deposits:
Demand deposits $445,570 $440,785
NOW accounts 311,461 309,771
Money market accounts 704,434 666,646
Savings accounts 293,322 297,357
Time deposits       836,867       790,762  
Total deposits 2,591,654 2,505,321
Federal Home Loan Bank advances 203,429 288,082
Junior subordinated debentures 22,681 22,681
Other liabilities       40,524       43,137  
Total liabilities       2,858,288       2,859,221  
Shareholders’ Equity:

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

1,040 1,038
Paid-in capital 98,596 97,566
Retained earnings 236,999 232,595
Accumulated other comprehensive loss       (777 )     (1,553 )
Total shareholders’ equity       335,858       329,646  
Total liabilities and shareholders’ equity       $3,194,146       $3,188,867  
 
 
Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
         
(Dollars and shares in thousands, except per share amounts)
 
Three months ended March 31,       2014     2013
Interest income:
Interest and fees on loans $25,589 $25,223
Interest on securities: Taxable 2,942 2,845
Nontaxable 582 659
Dividends on Federal Home Loan Bank stock 142 38
Other interest income       35       28  
Total interest and dividend income       29,290       28,793  
Interest expense:
Deposits 2,969 3,194
Federal Home Loan Bank advances 2,241 2,737
Junior subordinated debentures 241 390
Other interest expense       3       5  
Total interest expense       5,454       6,326  
Net interest income 23,836 22,467
Provision for loan losses       300       600  
Net interest income after provision for loan losses       23,536       21,867  
Noninterest income:
Wealth management revenues 8,065 7,474
Merchant processing fees 1,291 1,977
Net gains on loan sales and commissions on loans originated for others 1,239 4,166
Service charges on deposit accounts 754 791
Card interchange fees 681 599
Income from bank-owned life insurance 445 467
Net gains on interest rate swap contracts 260 19
Equity in earnings (losses) of unconsolidated subsidiaries (43 ) 39
Gain on sale of business line 6,265
Other income       413       406  
Noninterest income, excluding other-than-temporary impairment losses 19,370 15,938
Total other-than-temporary impairment losses on securities (613 )
Portion of loss recognized in other comprehensive income (before tax)             (2,159 )
Net impairment losses recognized in earnings             (2,772 )
Total noninterest income       19,370       13,166  
Noninterest expense:
Salaries and employee benefits 14,558 15,442
Net occupancy 1,640 1,514
Equipment 1,236 1,244
Merchant processing costs 1,050 1,673
Outsourced services 1,044 841
Legal, audit and professional fees 618 608
FDIC deposit insurance costs 440 431
Advertising and promotion 232 355
Amortization of intangibles 164 173
Foreclosed property costs (22 ) 47
Debt prepayment penalties 6,294
Other expenses       2,038       1,856  
Total noninterest expense       29,292       24,184  
Income before income taxes 13,614 10,849
Income tax expense       4,316       3,428  
Net income       $9,298       $7,421  
 
Weighted average common shares outstanding - basic 16,626 16,401
Weighted average common shares outstanding - diluted 16,800 16,449
Per share information: Basic earnings per common share $0.56 $0.45
Diluted earnings per common share $0.55 $0.45
Cash dividends declared per share $0.29 $0.25
 
 
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
     
At or for the Quarters Ended
(Dollars and shares in thousands, except per share amounts)       Mar 31,
2014
    Dec 31,
2013
    Sep 30,
2013
    Jun 30,
2013
    Mar 31,
2013
Financial Data:                
Total assets $3,194,146 $3,188,867 $3,131,958 $3,061,307 $3,051,848
Total loans 2,478,603 2,462,884 2,353,766 2,384,980 2,325,045
Total securities 389,889 422,808 419,349 350,517 387,102
Total deposits 2,591,654 2,505,321 2,454,831 2,304,609 2,319,641
Total shareholders' equity 335,858 329,646 323,585 303,370 301,291
Net interest income 23,836 23,521 23,388 22,409 22,467
Provision for loan losses 300 400 700 700 600
Noninterest income, excluding OTTI losses 19,370 15,837 17,400 16,394 15,938
Net OTTI losses recognized in earnings (717 ) (2,772 )
Noninterest expense 29,292 24,048 25,548 25,005 24,184
Income tax expense 4,316 4,404 4,580 4,115 3,428
Net income 9,298 9,789 9,960 8,983 7,421
 
Share Data:
Basic earnings per common share $0.56 $0.59 $0.60 $0.54 $0.45
Diluted earnings per common share $0.55 $0.58 $0.59 $0.54 $0.45
Dividends declared per share $0.29 $0.27 $0.26 $0.25 $0.25
Book value per share $20.19 $19.84 $19.51 $18.40 $18.34
Tangible book value per share - Non-GAAP (1) $16.38 $16.01 $15.66 $14.52 $14.44
Market value per share $37.47 $37.22 $31.43 $28.52 $27.38
Shares outstanding at end of period 16,635 16,614 16,589 16,487 16,425
Weighted average common shares outstanding - basic 16,626 16,602 16,563 16,454 16,401
Weighted average common shares outstanding - diluted 16,800 16,770 16,696 16,581 16,449
 
Key Ratios:
Return on average assets 1.17 % 1.24 % 1.29 % 1.18 % 0.98 %
Return on average tangible assets - Non-GAAP (1) 1.20 % 1.26 % 1.31 % 1.21 % 1.01 %
Return on average equity 11.10 % 11.98 % 12.82 % 11.84 % 9.91 %
Return on average tangible equity - Non-GAAP (1) 13.70 % 14.80 % 16.13 % 15.01 % 12.62 %
Tier 1 risk-based capital 12.42 % 12.12 % 12.23 % 11.85 % 12.25 %
Total risk-based capital 13.56 % 13.29 % 13.44 % 13.06 % 13.50 %
Tier 1 leverage ratio 9.56 % 9.41 % 9.41 % 9.32 % 9.53 %
Equity to assets 10.51 % 10.34 % 10.33 % 9.91 % 9.87 %
Tangible equity to tangible assets - Non-GAAP (1) 8.70 % 8.51 % 8.47 % 7.99 % 7.94 %
(i) - estimated
 
Wealth Management Revenues:
Trust and investment management fees $6,685 $6,637 $6,291 $6,230 $6,066
Mutual fund fees       1,081       1,104       1,075       1,077       1,022  
Asset-based revenues 7,766 7,741 7,366 7,307 7,088
Transaction-based revenues       299       1,069       263       605       386  
Total wealth management revenues       $8,065       $8,810       $7,629       $7,912       $7,474  
 
Wealth Management Assets under Administration:
Balance at beginning of period $4,781,958 $4,595,594 $4,433,574 $4,420,076 $4,199,640
Net investment appreciation (depreciation) & income 44,335 248,727 190,931 (20,956 ) 213,979
Net client cash flows       (19,912 )     (62,363 )     (28,911 )     34,454       6,457  
Balance at end of period       $4,806,381       $4,781,958       $4,595,594       $4,433,574       $4,420,076  
 

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

 
 
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
     
For the Quarters Ended
        Mar 31,
2014
    Dec 31,
2013
    Sep 30,
2013
    Jun 30,
2013
    Mar 31,
2013
Average Yield / Rate (taxable equivalent basis):                
Assets:
Commercial loans 4.43 % 4.52 % 4.67 % 4.58 % 4.70 %
Residential real estate loans, including mortgage loans held for sale 4.15 % 4.09 % 4.06 % 4.14 % 4.26 %
Consumer loans 3.83 % 3.77 % 3.78 % 3.81 % 3.84 %
Total loans 4.26 % 4.28 % 4.35 % 4.34 % 4.44 %
Cash, federal funds sold and other short-term investments 0.23 % 0.22 % 0.21 % 0.22 % 0.21 %
FHLBB stock 1.53 % 0.37 % 0.38 % 0.42 % 0.39 %
Taxable debt securities 3.47 % 3.40 % 3.44 % 3.52 % 3.56 %
Nontaxable debt securities 5.98 % 5.88 % 5.87 % 5.94 % 5.98 %
Total securities 3.84 % 3.78 % 3.88 % 3.97 % 3.98 %
Total interest-earning assets 4.08 % 4.02 % 4.12 % 4.17 % 4.24 %
Liabilities:
Interest-bearing demand deposits % % % % %
NOW accounts 0.06 % 0.06 % 0.06 % 0.06 % 0.06 %
Money market accounts 0.36 % 0.34 % 0.31 % 0.29 % 0.29 %
Savings accounts 0.06 % 0.06 % 0.06 % 0.07 % 0.07 %
Time deposits 1.15 % 1.19 % 1.23 % 1.25 % 1.28 %
FHLBB advances 3.37 % 3.49 % 3.25 % 3.29 % 3.21 %
Junior subordinated debentures 4.31 % 4.22 % 4.22 % 7.82 % 4.79 %
Other 7.03 % 2.52 % 4.50 % 5.87 % 1.77 %
Total interest-bearing liabilities 0.93 % 0.98 % 1.01 % 1.11 % 1.11 %
 
Interest rate spread (taxable equivalent basis) 3.15 % 3.04 % 3.11 % 3.06 % 3.13 %
Net interest margin (taxable equivalent basis) 3.34 % 3.24 % 3.29 % 3.26 % 3.32 %
 
 
      At March 31, 2014
Amortized     Unrealized     Unrealized     Fair
(Dollars in thousands)       Cost (1)     Gains     Losses     Value
Securities Available for Sale:
Obligations of U.S. government-sponsored enterprises $39,487 $391 $— $39,878
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises 218,882 8,753 (89 ) 227,546
Obligations of states and political subdivisions 59,826 2,110 61,936
Individual name issuer trust preferred debt securities 30,724 (5,344 ) 25,380
Corporate bonds       6,124       144       (8 )     6,260
Total securities available for sale       355,043       11,398       (5,441 )     361,000
Held to Maturity:
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises       28,889       291             29,180
Total securities held to maturity       28,889       291             29,180
Total securities       $383,932       $11,689       ($5,441 )     $390,180
 

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

 
 
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
     
Period End Balances At
(Dollars in thousands)       Mar 31,
2014
    Dec 31,
2013
    Sep 30,
2013
    Jun 30,
2013
    Mar 31,
2013
Loans:                
Commercial:       Mortgages $788,836 $796,249 $727,375 $758,437 $729,968
Construction & development 24,696 36,289 51,951 39,449 34,179
        Other       523,751       530,797       518,566       512,228       513,000
Total commercial 1,337,283 1,363,335 1,297,892 1,310,114 1,277,147
Residential real estate: Mortgages 784,623 749,163 711,427 728,158 702,418
        Homeowner construction       25,770       23,511       20,265       20,713       21,943
Total residential real estate 810,393 772,674 731,692 748,871 724,361
Consumer: Home equity lines 233,728 231,362 227,063 228,367 226,640
Home equity loans 41,991 40,212 41,158 41,312 40,134
        Other       55,208       55,301       55,961       56,316       56,763
        Total consumer       330,927       326,875       324,182       325,995       323,537
        Total loans       $2,478,603       $2,462,884       $2,353,766       $2,384,980       $2,325,045
 
 
      At March 31, 2014
(Dollars in thousands)       Balance     % of Total
Commercial Real Estate Loans by Property Location:    
Rhode Island, Connecticut, Massachusetts $768,970 94.5 %
New York, New Jersey 35,884 4.4 %
New Hampshire       8,678       1.1 %
Total commercial real estate loans (1)       $813,532       100.0 %
 

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

     
 
At March 31, 2014
(Dollars in thousands)       Balance     % of Total
Residential Mortgages by Property Location:    
Rhode Island, Connecticut, Massachusetts $788,659 97.2 %
New Hampshire 9,066 1.1 %
New York, Virginia, New Jersey, Maryland, Pennsylvania, District of Columbia 6,898 0.9 %
Ohio 2,426 0.3 %
Washington, Oregon 1,350 0.2 %
Georgia 1,077 0.1 %
New Mexico 466 0.1 %
Other       451       0.1 %
Total residential mortgages       $810,393       100.0 %
 
 
      Period End Balances At
(Dollars in thousands)       Mar 31,
2014
    Dec 31,
2013
    Sep 30,
2013
    Jun 30,
2013
    Mar 31,
2013
Deposits:                
Demand deposits $445,570 $440,785 $420,075 $358,797 $375,156
NOW accounts 311,461 309,771 301,250 301,096 294,136
Money market accounts 704,434 666,646 623,631 540,012 503,414
Savings accounts 293,322 297,357 292,765 293,405 284,983
Time deposits       836,867       790,762       817,110       811,299       861,952
Total deposits       $2,591,654       $2,505,321       $2,454,831       $2,304,609       $2,319,641
 
Out-of-market brokered certificates of deposits included in time deposits $171,275 $98,009 $106,231 $96,177 $103,045
In-market deposits, excluding out-of-market brokered certificates of deposit $2,420,379 $2,407,312 $2,348,600 $2,208,432 $2,216,596
 
 
...
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
     
Period End Balances At
(Dollars in thousands)       Mar 31,
2014
      Dec 31,
2013
      Sep 30,
2013
      Jun 30,
2013
      Mar 31,
2013
Asset Quality Data:                        
Nonperforming Assets:
Commercial mortgages $2,293 $7,492 $8,956 $9,976 $14,953
Commercial construction and development
Other commercial 1,198 1,291 1,248 1,400 3,122
Residential real estate mortgages 8,975 8,315 8,095 7,526 6,699
Consumer       1,108         1,204         1,204         1,124         901  
Total nonaccrual loans 13,574 18,302 19,503 20,026 25,675
Nonaccrual investment securities 547 425 397 404
Property acquired through foreclosure or repossession       750         932         594         1,230         2,625  
Total nonperforming assets       $14,324         $19,781         $20,522         $21,653         $28,704  
 
Total past due loans to total loans 0.73 % 0.89 % 1.02 % 1.09 % 1.13 %
Nonperforming assets to total assets 0.45 % 0.62 % 0.66 % 0.71 % 0.94 %
Nonaccrual loans to total loans 0.55 % 0.74 % 0.83 % 0.84 % 1.10 %
Allowance for loan losses to nonaccrual loans 199.23 % 152.37 % 143.61 % 139.24 % 121.28 %
Allowance for loan losses to total loans 1.09 % 1.13 % 1.19 % 1.17 % 1.34 %
 
Troubled Debt Restructured Loans:
Accruing troubled debt restructured loans:
Commercial mortgages $22,796 $22,800 $23,892 $19,018 $9,600
Other commercial 989 1,265 1,576 2,602 6,554
Residential real estate mortgages 1,467 1,442 870 876 1,599
Consumer       233         236         239         242         244  
Accruing troubled debt restructured loans       25,485         25,743         26,577         22,738         17,997  
Nonaccrual troubled debt restructured loans:
Commercial mortgages
Other commercial 369 542 547 590 721
Residential real estate mortgages 447 144 155
Consumer       29         38         40         42         42  
Nonaccrual troubled debt restructured loans       845         580         587         776         918  
Total troubled debt restructured loans       $26,330         $26,323         $27,164         $23,514         $18,915  
 
 
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
     
Period End Balances At
(Dollars in thousands)       Mar 31,
2014
    Dec 31,
2013
    Sep 30,
2013
    Jun 30,
2013
    Mar 31,
2013
Past Due Loans:                
Loans 30-59 Days Past Due:
Commercial mortgages $— $— $— $— $—
Other commercial loans 3,351 276 2,648 505 689
Residential real estate mortgages 2,232 4,040 2,624 4,051 3,891
Consumer loans       1,365       1,322       1,013       1,588       1,534
Loans 30-59 days past due       $6,948       $5,638       $6,285       $6,144       $6,114
 
Loans 60-89 Days Past Due:
Commercial mortgages $15 $— $730 $536 $193
Other commercial loans 127 302 8 34 341
Residential real estate mortgages 1,265 1,285 1,960 1,697 1,451
Consumer loans       658       166       328       689       461
Loans 60-89 days past due       $2,065       $1,753       $3,026       $2,956       $2,446
 
Loans 90 Days or more Past Due:
Commercial mortgages $2,238 $7,492 $8,226 $8,895 $9,852
Other commercial loans 428 731 929 3,428 2,961
Residential real estate mortgages 5,634 5,633 4,843 4,266 4,327
Consumer loans       701       656       693       415       484
Loans 90 days or more past due       $9,001       $14,512       $14,691       $17,004       $17,624
 
Total Past Due Loans:
Commercial mortgages $2,253 $7,492 $8,956 $9,431 $10,045
Other commercial loans 3,906 1,309 3,585 3,967 3,991
Residential real estate mortgages 9,131 10,958 9,427 10,014 9,669
Consumer loans       2,724       2,144       2,034       2,692       2,479
Total past due loans       $18,014       $21,903       $24,002       $26,104       $26,184
 
Accruing loans 90 days or more past due $— $— $— $2,431 $—
Nonaccrual loans included in past due loans $11,487 $15,591 $17,275 $17,208 $19,000
 
 
      For the Quarters Ended
(Dollars in thousands)       Mar 31,
2014
    Dec 31,
2013
    Sep 30,
2013
    Jun 30,
2013
    Mar 31,
2013
Allowance for Loan Losses:                
Balance at beginning of period $27,886 $28,008 $27,884 $31,139 $30,873
Provision charged to earnings 300 400 700 700 600
Charge-offs (1,223 ) (703 ) (770 ) (4,175 ) (374 )
Recoveries       80       181       194       220       40  
Balance at end of period       $27,043       $27,886       $28,008       $27,884       $31,139  
 
Net Loan Charge-Offs (Recoveries):
Commercial mortgages $939 $309 $602 $3,814 $108
Other commercial 170 73 (2 ) 63 71
Residential real estate mortgages 7 80 36 9
Consumer       27       60       (24 )     42       146  
Total       $1,143       $522       $576       $3,955       $334  
 
 

The following tables present average balance and interest rate information. Tax-exempt income is converted to a fully taxable equivalent basis using the statutory federal income tax rate adjusted for applicable state income taxes, net of the related federal tax benefit. For dividends on corporate stocks, the 70% federal dividends received deduction is also used in the calculation of tax equivalency. Unrealized gains (losses) on available for sale securities are excluded from the average balance and yield calculations. Nonaccrual and renegotiated loans, as well as interest earned on these loans (to the extent recognized in the Consolidated Statements of Income) are included in amounts presented for loans.

Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS (unaudited)
     
Three Months Ended
March 31, 2014       December 31, 2013       March 31, 2013
Average Balance     Interest     Yield/

Rate

      Average Balance     Interest     Yield/

Rate

      Average Balance     Interest     Yield/

Rate

(Dollars in thousands)                                        
Assets:  
Commercial loans $1,336,798 $14,601 4.43 % $1,310,584 $14,944 4.52 % $1,243,716 $14,421 4.70 %
Residential real estate loans, including mortgage loans held for sale 802,412 8,208 4.15 % 771,272 7,947 4.09 % 755,528 7,937 4.26 %
Consumer loans       327,793       3,097       3.83 %       323,778       3,078       3.77 %       322,668       3,053       3.84 %
Total loans 2,467,003 25,906 4.26 % 2,405,634 25,969 4.28 % 2,321,912 25,411 4.44 %
Cash, federal funds sold and short-term investments 62,246 35 0.23 % 104,718 59 0.22 % 53,734 28 0.21 %
FHLBB stock 37,730 142 1.53 % 37,730 35 0.37 % 39,790 38 0.39 %
Taxable debt securities 344,009 2,942 3.47 % 350,821 3,005 3.40 % 323,730 2,845 3.56 %
Nontaxable debt securities       59,958       884       5.98 %       63,524       941       5.88 %       68,064       1,004       5.98 %
Total securities       403,967       3,826       3.84 %       414,345       3,946       3.78 %       391,794       3,849       3.98 %
Total interest-earning assets 2,970,946 29,909 4.08 % 2,962,427 30,009 4.02 % 2,807,230 29,326 4.24 %
Noninterest-earning assets       203,335                     200,615                     210,338              
Total assets       $3,174,281                     $3,163,042                     $3,017,568              
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits $10,767 $— % $10,877 $— % $— $— %
NOW accounts 304,201 47 0.06 % 300,113 48 0.06 % 283,004 45 0.06 %
Money market accounts 685,142 609 0.36 % 653,731 560 0.34 % 495,453 351 0.29 %
Savings accounts 292,809 45 0.06 % 293,434 47 0.06 % 279,536 46 0.07 %
Time deposits 797,458 2,268 1.15 % 802,979 2,411 1.19 % 869,576 2,752 1.28 %
FHLBB advances 269,989 2,241 3.37 % 288,212 2,534 3.49 % 345,270 2,738 3.22 %
Junior subordinated debentures 22,681 241 4.31 % 22,681 241 4.22 % 32,991 390 4.79 %
Other       173       3       7.03 %       629       4       2.52 %       1,146       4       1.42 %
Total interest-bearing liabilities 2,383,220 5,454 0.93 % 2,372,656 5,845 0.98 % 2,306,976 6,326 1.11 %
Demand deposits 422,975 425,316 360,851
Other liabilities 33,057 38,204 50,305
Shareholders' equity       335,029                     326,866                     299,436              
Total liabilities and shareholders' equity       $3,174,281                     $3,163,042                     $3,017,568              
Net interest income (FTE)             $24,455                     $24,164                     $23,000        
Interest rate spread                   3.15 %                   3.04 %                   3.13 %
Net interest margin                   3.34 %                   3.24 %                   3.32 %
 

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

     
 
(Dollars in thousands) Three Months Ended
        Mar 31, 2014     Dec 31, 2013     Mar 31, 2013
Commercial loans $317     $320     $188
Nontaxable debt securities       302       323       345
Total       $619       $643       $533
 
 
Washington Trust Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION - Non-GAAP Financial Measures (unaudited)
      At or for the Quarters Ended
(Dollars in thousands, except per share amounts)       Mar 31,
2014
    Dec 31,
2013
    Sep 30,
2013
    Jun 30,
2013
    Mar 31,
2013
Calculation of Tangible Book Value per Share:                
Total shareholders' equity at end of period $335,858 $329,646 $323,585 $303,370 $301,291
Less:
Goodwill 58,114 58,114 58,114 58,114 58,114
Identifiable intangible assets, net       5,329       5,493       5,657       5,827       6,000  
Total tangible shareholders' equity at end of period       $272,415       $266,039       $259,814       $239,429       $237,177  
 
Shares outstanding at end of period       16,635       16,614       16,589       16,487       16,425  
 
Book value per share - GAAP       $20.19       $19.84       $19.51       $18.40       $18.34  
Tangible book value per share - Non-GAAP       $16.38       $16.01       $15.66       $14.52       $14.44  
 
Calculation of Tangible Equity to Tangible Assets:
Total tangible shareholders' equity at end of period       $272,415       $266,039       $259,814       $239,429       $237,177  
 
Total assets at end of period $3,194,146 $3,188,867 $3,131,958 $3,061,307 $3,051,848
Less:
Goodwill 58,114 58,114 58,114 58,114 58,114
Identifiable intangible assets, net       5,329       5,493       5,657       5,827       6,000  
Total tangible assets at end of period       $3,130,703       $3,125,260       $3,068,187       $2,997,366       $2,987,734  
 
Equity to assets - GAAP       10.51 %     10.34 %     10.33 %     9.91 %     9.87 %
Tangible equity to tangible assets - Non-GAAP       8.70 %     8.51 %     8.47 %     7.99 %     7.94 %
 
Calculation of Return on Average Tangible Assets:
Net income       $9,298       $9,789       $9,960       $8,983       $7,421  
 
Total average assets $3,174,281 $3,163,042 $3,098,228 $3,034,956 $3,017,583
Less:
Average goodwill 58,114 58,114 58,114 58,114 58,114
Average identifiable intangible assets, net       5,410       5,573       5,739       5,912       6,085  
Total average tangible assets       $3,110,757       $3,099,355       $3,034,375       $2,970,930       $2,953,384  
 
Return on average assets - GAAP       1.17 %     1.24 %     1.29 %     1.18 %     0.98 %
Return on average tangible assets - Non-GAAP       1.20 %     1.26 %     1.31 %     1.21 %     1.01 %
 
Calculation of Return on Average Tangible Equity:
Net income       $9,298       $9,789       $9,960       $8,983       $7,421  
 
Total average shareholders' equity $335,029 $326,866 $310,785 $303,402 $299,436
Less:
Average goodwill 58,114 58,114 58,114 58,114 58,114
Average identifiable intangible assets, net       5,410       5,573       5,739       5,912       6,085  
Total average tangible shareholders' equity       $271,505       $263,179       $246,932       $239,376       $235,237  
 
Return on average shareholders' equity - GAAP       11.10 %     11.98 %     12.82 %     11.84 %     9.91 %
Return on average tangible shareholders' equity - Non-GAAP       13.70 %     14.80 %     16.13 %     15.01 %     12.62 %

Contact:
Washington Trust Bancorp, Inc.
Elizabeth B. Eckel, 401-348-1309
Senior Vice President, Marketing
ebeckel@washtrust.com

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