Washington Trust Reports First Quarter 2021 Earnings

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WESTERLY, R.I., April 21, 2021 /PRNewswire/ -- Washington Trust Bancorp, Inc. (Nasdaq: WASH), parent company of The Washington Trust Company, today announced first quarter 2021 net income of $20.5 million, or $1.17 per diluted share, compared to net income of $18.6 million, or $1.07 per diluted share, for the fourth quarter of 2020.

(PRNewsfoto/Washington Trust Bancorp, Inc.)
(PRNewsfoto/Washington Trust Bancorp, Inc.)

"Washington Trust reported strong first quarter results, with an increase in profitability from the fourth quarter of 2020," stated Edward O. Handy III, Washington Trust Chairman and Chief Executive Officer. "Our team of employees have worked diligently throughout the COVID-19 pandemic to deliver quality service to our customers, and our results reflect the success of their hard work and dedication. We believe in our team and in our business model, and we are well-positioned to continue to navigate forward."

Selected financial highlights for the first quarter of 2021 include:

  • Returns on average equity and average assets for the first quarter were 15.55% and 1.45%, respectively, compared to 13.96% and 1.28%, respectively, in the preceding quarter.

  • The provision for credit losses was a negative $2.0 million in the first quarter, compared to a positive $1.8 million in the preceding quarter.

  • Mortgage banking revenues totaled $11.9 million for the first quarter, down by $2.2 million, or 15%, from the preceding quarter, but up by $5.8 million, or 96%, from the same period in 2020. First quarter mortgage originations and sales were down compared to the preceding quarter, however, both originations and sales were significantly higher than the first quarter a year ago.

  • Wealth management revenues were $9.9 million for the first quarter, up by $689 thousand, or 7%, from the preceding quarter. Wealth management assets under administration ("AUA") amounted to a record $7.0 billion at March 31, 2021.

  • Total loans amounted to $4.2 billion, down slightly from the end of the preceding quarter and up by $104 million, or 3%, from a year ago.

  • In-market deposits (total deposits less out-of-market wholesale brokered deposits) amounted to a record $4.0 billion at March 31, 2021, up by $227 million, or 6%, from the end of the preceding quarter, and up by $739 million, or 23%, from a year ago.

Net Interest Income

Net interest income was $32.9 million for the first quarter of 2021, up by $628 thousand, or 2%, from the fourth quarter of 2020. The net interest margin was 2.51% for the first quarter, up by 12 basis points from the preceding quarter. Both net interest income and the net interest margin benefited from accelerated net deferred fee amortization associated with Paycheck Protection Program ("PPP") loans that were forgiven by the Small Business Association ("SBA"). In the first quarter of 2021, accelerated net deferred fee amortization on PPP loans amounted to approximately $1.2 million, or 9 basis points, compared to $423 thousand, or 3 basis points, in the preceding quarter. Linked quarter changes included:

  • Average interest-earning assets decreased by $47 million, largely due to a decrease of $38 million in average loans. The yield on interest-earning assets for the first quarter was 2.90%, down by 2 basis points from the preceding quarter.

  • Average interest-bearing liabilities decreased by $95 million, resulting from a decrease of $183 million in average wholesale funding balances, partially offset by an increase of $88 million in average in-market deposits. The cost of interest-bearing liabilities for the first quarter of 2021 was 0.50%, down by 17 basis points from the preceding quarter, reflecting the impact of lower market interest rates.

Noninterest Income

Noninterest income totaled $26.0 million for the first quarter of 2021, down by $1.8 million, or 6%, from the fourth quarter of 2020. Included in other noninterest income in first quarter of 2021 was income of $1.0 million associated with a litigation settlement. As previously disclosed, included in other noninterest income in the fourth quarter of 2020 was a gain of $1.4 million associated with the sale of our limited partnership interest in a low-income housing tax credit investment. Excluding the impact of the aforementioned items, noninterest income was down by $1.4 million, or 5%. Linked quarter changes included:

  • Mortgage banking revenues totaled $11.9 million for the first quarter of 2021, down by $2.2 million, or 15%, from the fourth quarter of 2020. Mortgage loans sold to the secondary market amounted to $292 million in the first quarter of 2020, down by $26 million, or 8%, from the preceding quarter. Also included in mortgage banking revenues was a decrease in the fair value of mortgage loan commitments as of March 31, 2021.

  • Wealth management revenues amounted to $9.9 million in the first quarter of 2021, up by $689 thousand, or 7%, on a linked quarter basis. This included an increase in asset-based revenues of $517 thousand, or 6%, and an increase in transaction-based revenues of $172 thousand, or 123%, from the preceding quarter. The increase in transaction-based revenues was largely due to tax reporting and preparation fees, which are generally concentrated in the first half of the year.
    Wealth management AUA amounted to $7.0 billion at March 31, 2021, up by $182 million, or 3%, from December 31, 2020. The increase reflected net investment appreciation of $209 million, partially offset by net client asset outflows of $26 million in the first quarter of 2021. The average balance of AUA for the first quarter of 2021 increased by approximately $298 million, or 5%, from the average balance for the preceding quarter.

Noninterest Expense

Noninterest expense totaled $34.7 million for the first quarter of 2021, up by $604 thousand, or 2%, from the fourth quarter of 2020. In both the first quarter of 2021 and the fourth quarter of 2020, debt prepayment penalty expense was recognized resulting from paying off higher-yielding FHLB advances. Debt prepayment penalty expense was $3.3 million in the first quarter of 2021, compared to $1.4 million in the preceding quarter. Excluding the impact of debt prepayment penalty expense from both periods, noninterest expense was down by $1.3 million, or 4%, from the fourth quarter of 2020. Linked quarter changes included:

  • Salaries and employee benefits expense, our largest noninterest expense, amounted to $21.5 million for the first quarter of 2021, down by $548 thousand, or 2%, from the preceding quarter. The decline reflected lower incentive compensation and higher deferred labor (contra expense), which were partially offset by higher payroll taxes associated with the start of the new calendar year. Deferred labor increased by approximately $560 thousand on a linked quarter basis and was largely due to first quarter PPP loan originations.

  • Advertising and promotion expense was down by $418 thousand from the preceding quarter, largely due to timing of such activities.

  • Legal, audit and professional fees were down by $417 thousand from the preceding quarter, reflecting a decline in legal expenses.

Income Tax

Income tax expense totaled $5.7 million for the first quarter of 2021, up by $147 thousand from the preceding quarter, reflecting a higher level of pre-tax income. The effective tax rate for the first quarter of 2021 was 21.7%, compared to 22.9% in the preceding quarter. Based on current federal and applicable state income statutes, the Corporation currently expects its full-year 2021 effective tax rate to be approximately 22.3%.

Investment Securities

The securities portfolio totaled $948 million at March 31, 2021, up by $54 million, or 6%, from December 31, 2020, reflecting purchases of U.S. government agency and U.S. government-sponsored debt securities, including mortgage-backed securities, which were partially offset by routine pay-downs on mortgage-backed securities and calls of debt securities. Purchases of debt securities in the first quarter 2021 totaled $208 million, with a weighted average yield of 1.44%. Securities represented 17% of total assets at March 31, 2021, compared to 16% of total assets at December 31, 2020.

Loans

Total loans amounted to $4.2 billion at March 31, 2021, down by $1 million, from the end of the preceding quarter. Linked quarter changes included:

  • Commercial loans increased by $9 million, or 0.4%, from December 31, 2020. In the first quarter of 2021, commercial loan originations and construction advances totaled $160 million and included $97 million of PPP loan originations. This was largely offset by payoffs and pay-downs totaling $153 million, which included $66 million of PPP loans that were forgiven by the SBA. Commercial line utilization increased modestly by $2 million.

  • Residential real estate loans decreased by $10 million, or 1%, from December 31, 2020, reflecting continued elevated payoff and refinancing activity.

  • The consumer loan portfolio was essentially unchanged from the balance at December 31, 2020.

Deposits and Borrowings

Total deposits amounted to $4.5 billion at March 31, 2021, up by $171 million, or 4%, from the end of the preceding quarter. Included in total deposits are out-of-market wholesale brokered time deposits, which decreased by $56 million, or 9%, from December 31, 2020. Excluding wholesale brokered time deposits, in-market deposits at March 31, 2021 were up by $227 million, or 6%, from the end of the preceding quarter. This increase reflected a continuation of consumer behavior fostering excess liquidity across the banking industry, as well as temporary increases associated with PPP loan origination funds deposited to customer accounts at Washington Trust.

FHLB advances totaled $467 million at March 31, 2021, down by $127 million from December 31, 2020.

Asset Quality

Nonperforming assets amounted to $13.0 million at March 31, 2021, down by $214 thousand from the end of the preceding quarter. Total nonaccrual loans amounted to $13.0 million, or 0.31% of total loans, at March 31, 2021, compared to $13.2 million, or 0.31% of total loans, at December 31, 2020.

Total past due loans amounted to $10.9 million, or 0.26% of total loans, at March 31, 2021, compared to $12.4 million, or 0.30% of total loans, at December 31, 2020.

Total troubled debt restructured loans ("TDR") amounted to $14.3 million as of March 31, 2021, down by $1.4 million from December 31, 2020, reflecting payoffs.

Since the beginning of the COVID-19 pandemic, Washington Trust has processed loan payment deferral modifications, or "deferments", on 652 loans totaling $727 million. The majority of these deferments qualified as eligible loan modifications under Section 4013 of the CARES Act, as amended, and therefore, were not required to be classified as TDRs and were not reported as past due. As of April 16, 2021, Washington Trust has active deferments remaining on 59 loans totaling $149.7 million, or 4% of the outstanding balance of total loans, excluding PPP loan balances.

The allowance for credit losses ("ACL") on loans amounted to $42.1 million, or 1.00% of total loans, at March 31, 2021, compared to $44.1 million, or 1.05% of total loans, at December 31, 2020. The ACL on unfunded commitments, included in other liabilities on the Consolidated Balance Sheets, amounted to $2.3 million at March 31, 2021 as compared to $2.4 million, at December 31, 2020.

In the first quarter of 2021, a negative provision for credit losses of $2.0 million was recognized in earnings, compared to a positive provision for credit losses of $1.8 million in the preceding quarter. The reduction in the provision for credit losses and the ACL reflected our current estimate of forecasted economic conditions and continued stable asset quality metrics. In the first quarter of 2021, net charge-offs of $18 thousand were recognized, compared to $118 thousand in the preceding quarter.

Capital and Dividends

Total shareholders' equity was $533.6 million at March 31, 2021, down by $596 thousand from December 31, 2020. The decline reflected a decrease of $12.6 million in the accumulated other comprehensive income component of shareholders' equity largely due to a temporary decline in the fair value of available for sale debt securities, as well as $9.1 million in dividend declarations. These decreases were partially offset by net income of $20.5 million.

Capital levels at March 31, 2021 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 13.85% at March 31, 2021, compared to 13.51% at December 31, 2020.

Book value per share amounted to $30.83 at March 31, 2021, compared to $30.94 at December 31, 2020.

The Board of Directors declared a quarterly dividend of 52 cents per share for the quarter ended March 31, 2021. The dividend was paid on April 9, 2021 to shareholders of record on April 1, 2021.

Conference Call

Washington Trust will host a conference call to discuss its first quarter results, business highlights and outlook on Thursday, April 22, 2021 at 8:30 a.m. (Eastern Time). Individuals may dial in to the call at 1-844-378-6480. 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 10154444; the audio replay will be available through May 6, 2021. 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 June 30, 2021.

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; changes in consumer behavior due to changing political, business and economic conditions, or legislative or regulatory initiatives; the possibility that future credits losses are higher than currently expected due to changes in economic assumptions or adverse economic developments; 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 collectability, 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, 2020, as updated by our Quarterly Reports on Form 10-Q and other filings submitted to the SEC, may result in these differences. You should carefully review all of these factors and you should be aware that there may be other factors that could cause these differences. These forward-looking statements were based on information, plans and estimates at the date of this report, and we assume no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

Supplemental Information - Explanation of Non-GAAP Financial Measures

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

Washington Trust Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; Dollars in thousands)








Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

Jun 30,
2020

Mar 31,
2020

Assets:






Cash and due from banks

$166,960


$194,143


$204,113


$215,601


$178,678


Short-term investments

3,783


8,125


7,902


7,739


6,591


Mortgage loans held for sale, at fair value

77,450


61,614


68,095


43,997


49,751


Available for sale debt securities, at fair value

948,094


894,571


913,850


938,446


917,392


Federal Home Loan Bank stock, at cost

24,772


30,285


37,469


50,017


53,576


Loans:






Total loans

4,194,666


4,195,990


4,282,047


4,287,641


4,090,396


Less: allowance for credit losses on loans

42,137


44,106


42,645


41,441


39,665


Net loans

4,152,529


4,151,884


4,239,402


4,246,200


4,050,731


Premises and equipment, net

28,953


28,870


27,711


28,067


28,543


Operating lease right-of-use assets

28,761


29,521


29,861


27,022


26,098


Investment in bank-owned life insurance

84,749


84,193


83,623


83,056


83,053


Goodwill

63,909


63,909


63,909


63,909


63,909


Identifiable intangible assets, net

6,079


6,305


6,530


6,759


6,988


Other assets

133,350


159,749


167,327


166,147


155,669


Total assets

$5,719,389


$5,713,169


$5,849,792


$5,876,960


$5,620,979


Liabilities:






Deposits:






Noninterest-bearing deposits

$932,999


$832,287


$840,444


$815,770


$622,893


Interest-bearing deposits

3,616,143


3,546,066


3,445,249


3,285,666


3,083,421


Total deposits

4,549,142


4,378,353


4,285,693


4,101,436


3,706,314


Federal Home Loan Bank advances

466,912


593,859


713,868


1,005,051


1,198,534


Payment Protection Program Lending Facility



105,746


38,900



Junior subordinated debentures

22,681


22,681


22,681


22,681


22,681


Operating lease liabilities

30,974


31,717


32,012


29,125


28,184


Other liabilities

116,081


152,364


162,099


159,604


156,669


Total liabilities

5,185,790


5,178,974


5,322,099


5,356,797


5,112,382


Shareholders' Equity:






Common stock

1,085


1,085


1,085


1,085


1,085


Paid-in capital

124,882


125,610


124,768


123,684


123,167


Retained earnings

429,598


418,246


408,773


399,386


387,243


Accumulated other comprehensive (loss) income

(20,006)


(7,391)


(3,403)


(462)


929


Treasury stock, at cost

(1,960)


(3,355)


(3,530)


(3,530)


(3,827)


Total shareholders' equity

533,599


534,195


527,693


520,163


508,597


Total liabilities and shareholders' equity

$5,719,389


$5,713,169


$5,849,792


$5,876,960


$5,620,979


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


Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

Jun 30,
2020

Mar 31,
2020

Interest income:






Interest and fees on loans

$34,159


$34,487


$34,925


$36,005


$40,008


Interest on mortgage loans held for sale

441


569


468


440


285


Taxable interest on debt securities

3,242


3,869


4,870


5,477


5,834


Dividends on Federal Home Loan Bank stock

133


414


532


654


640


Other interest income

33


35


39


36


349


Total interest and dividend income

38,008


39,374


40,834


42,612


47,116


Interest expense:






Deposits

3,663


4,632


5,532


7,112


8,536


Federal Home Loan Bank advances

1,380


2,305


3,354


4,382


5,765


Junior subordinated debentures

94


122


135


171


213


Other interest expense


72


159


2



Total interest expense

5,137


7,131


9,180


11,667


14,514


Net interest income

32,871


32,243


31,654


30,945


32,602


Provision for credit losses

(2,000)


1,781


1,325


2,200


7,036


Net interest income after provision for credit losses

34,871


30,462


30,329


28,745


25,566


Noninterest income:






Wealth management revenues

9,895


9,206


8,954


8,605


8,689


Mortgage banking revenues

11,927


14,077


12,353


14,851


6,096


Card interchange fees

1,133


1,148


1,161


1,031


947


Service charges on deposit accounts

609


767


598


517


860


Loan related derivative income

467


173


1,264


99


2,455


Income from bank-owned life insurance

556


569


567


791


564


Other income

1,387


1,787


571


426


316


Total noninterest income

25,974


27,727


25,468


26,320


19,927


Noninterest expense:






Salaries and employee benefits

21,527


22,075


21,892


19,464


19,468


Outsourced services

3,200


2,950


3,160


2,784


3,000


Net occupancy

2,128


2,083


2,012


1,909


2,019


Equipment

994


1,025


934


895


977


Legal, audit and professional fees

597


1,014


1,252


659


822


FDIC deposit insurance costs

345


330


392


674


422


Advertising and promotion

222


640


384


186


259


Amortization of intangibles

226


226


228


230


230


Debt prepayment penalties

3,335


1,413





Other expenses

2,139


2,353


2,090


1,677


3,256


Total noninterest expense

34,713


34,109


32,344


28,478


30,453


Income before income taxes

26,132


24,080


23,453


26,587


15,040


Income tax expense

5,661


5,514


5,131


5,547


3,139


Net income

$20,471


$18,566


$18,322


$21,040


$11,901








Net income available to common shareholders

$20,415


$18,524


$18,285


$21,000


$11,869








Weighted average common shares outstanding:






Basic

17,275


17,264


17,260


17,257


17,345


Diluted

17,431


17,360


17,317


17,292


17,441


Earnings per common share:






Basic

$1.18


$1.07


$1.06


$1.22


$0.68


Diluted

$1.17


$1.07


$1.06


$1.21


$0.68








Cash dividends declared per share

$0.52


$0.52


$0.51


$0.51


$0.51


Washington Trust Bancorp, Inc. and Subsidiaries

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited; Dollars and shares in thousands, except per share amounts)




Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

Jun 30,
2020

Mar 31,
2020

Share and Equity Related Data:






Book value per share

$30.83


$30.94


$30.57


$30.14


$29.48


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

$26.79


$26.87


$26.49


$26.04


$25.37


Market value per share

$51.63


$44.80


$30.66


$32.75


$36.56


Shares issued at end of period

17,363


17,363


17,363


17,363


17,363


Shares outstanding at end of period

17,306


17,265


17,260


17,260


17,252








Capital Ratios (2):






Tier 1 risk-based capital

12.99

%

12.61

%

12.23

%

11.95

%

11.62

%

Total risk-based capital

13.85

%

13.51

%

13.09

%

12.78

%

12.42

%

Tier 1 leverage ratio

9.11

%

8.95

%

8.77

%

8.42

%

8.77

%

Common equity tier 1

12.43

%

12.06

%

11.69

%

11.40

%

11.08

%







Balance Sheet Ratios:






Equity to assets

9.33

%

9.35

%

9.02

%

8.85

%

9.05

%

Tangible equity to tangible assets - Non-GAAP (1)

8.21

%

8.22

%

7.91

%

7.74

%

7.89

%

Loans to deposits (3)

93.0

%

96.2

%

100.5

%

104.6

%

110.6

%






For the Three Months Ended


Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

Jun 30,
2020

Mar 31,
2020

Performance Ratios (4):






Net interest margin (5)

2.51

%

2.39

%

2.31

%

2.31

%

2.61

%

Return on average assets (net income divided by average assets)

1.45

%

1.28

...

%

1.24

%

1.46

%

0.89

%

Return on average tangible assets - Non-GAAP (1)

1.47

%

1.30

%

1.26

%

1.48

%

0.90

%

Return on average equity (net income available for common shareholders
divided by average equity)

15.55

%

13.96

%

13.99

%

16.51

%

9.49

%

Return on average tangible equity - Non-GAAP (1)

17.91

%

16.10

%

16.19

%

19.15

%

11.05

%

Efficiency ratio (6)

59.0

%

56.9

%

56.6

%

49.7

%

58.0

%


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

(2) Estimated for March 31, 2021 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).

Washington Trust Bancorp, Inc. and Subsidiaries

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited; Dollars in thousands)




For the Three Months Ended


Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

Jun 30,
2020

Mar 31,
2020

Wealth Management Results






Wealth Management Revenues:






Asset-based revenues

$9,583


$9,066


$8,786


$8,156


$8,355


Transaction-based revenues

312


140


168


449


334


Total wealth management revenues

$9,895


$9,206


$8,954


$8,605


$8,689








Assets Under Administration (AUA):






Balance at beginning of period

$6,866,737


$6,395,652


$6,138,845


$5,337,733


$6,235,801


Net investment appreciation (depreciation) & income

208,953


540,189


335,209


671,602


(772,735)


Net client asset (outflows) inflows

(26,464)


(69,104)


(78,402)


129,510


(125,333)


Balance at end of period

$7,049,226


$6,866,737


$6,395,652


$6,138,845


$5,337,733








Percentage of AUA that are managed assets

91%


91%


90%


90%


89%








Mortgage Banking Results






Mortgage Banking Revenues:






Realized gains on loan sales, net (1)

$13,745


$13,394


$14,280


$10,646


$3,688


Unrealized (losses) gains, net (2)

(1,888)


813


(1,555)


4,415


2,325


Loan servicing fee income, net (3)

70


(130)


(372)


(210)


83


Total mortgage banking revenues

$11,927


$14,077


$12,353


$14,851


$6,096








Residential Mortgage Loan Originations:






Originations for retention in portfolio (4)

$131,791


$134,002


$132,726


$126,894


$108,498


Originations for sale to secondary market (5)

309,325


312,226


377,137


299,321


183,222


Total mortgage loan originations

$441,116


$446,228


$509,863


$426,215


$291,720








Residential Mortgage Loans Sold:






Sold with servicing rights retained

$226,645


$240,104


$317,920


$246,945


$44,498


Sold with servicing rights released (5)

65,374


78,072


36,250


58,279


117,693


Total mortgage loans sold

$292,019


$318,176


$354,170


$305,224


$162,191



(1) Includes gains on loan sales, commission income on loans originated for others, servicing right gains, and gains (losses) on forward loan commitments.

(2) Represents fair value adjustments on mortgage loans held for sale and forward loan commitments.

(3) Represents loan servicing fee income, net of servicing right amortization and valuation adjustments.

(4) Includes the full commitment amount of homeowner construction loans.

(5) Includes brokered loans (loans originated for others).

Washington Trust Bancorp, Inc. and Subsidiaries

END OF PERIOD LOAN COMPOSITION

(Unaudited; Dollars in thousands)




Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

Jun 30,
2020

Mar 31,
2020

Loans:






Commercial real estate (1)

$1,618,540


$1,633,024


$1,665,745


$1,630,998


$1,618,020


Commercial & industrial

840,585


817,408


822,269


852,445


655,157


Total commercial

2,459,125


2,450,432


2,488,014


2,483,443


2,273,177








Residential real estate (2)

1,457,490


1,467,312


1,506,726


1,508,223


1,510,472








Home equity

256,799


259,185


268,551


277,632


287,134


Other

21,252


19,061


18,756


18,343


19,613


Total consumer

278,051


278,246


287,307


295,975


306,747


Total loans

$4,194,666


$4,195,990


$4,282,047


$4,287,641


$4,090,396



(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.


March 31, 2021


December 31, 2020


Count

Balance

% of Total


Count

Balance

% of Total

Commercial Real Estate Portfolio Segmentation:








Multi-family dwelling

135


$506,813


31

%


137


$524,874


32

%

Retail

131


345,679


21



136


339,569


21


Office

74


292,087


18



73


290,756


18


Hospitality

39


168,094


10



40


157,720


10


Healthcare

15


116,779


7



15


109,321


7


Industrial and warehouse

23


77,537


5



28


97,055


6


Commercial mixed use

20


41,702


3



22


42,405


3


Other

37


69,849


5



38


71,324


3


Commercial real estate loans

474


$1,618,540


100

%


489


$1,633,024


100

%









Commercial & Industrial Portfolio Segmentation:








Healthcare and social assistance

299


$196,555


23

%


253


$200,217


24

%

Manufacturing

161


89,118


11



146


88,802


11


Owner occupied and other real estate

277


76,704


9



268


74,309


9


Accommodation and food services

359


69,380


8



271


47,020


6


Educational services

65


67,694


8



53


64,969


8


Retail

201


57,128


7



192


63,895


8


Professional, scientific and technical

277


39,957


5



265


39,295


5


Finance and insurance

90


31,185


4



106


26,244


3


Entertainment and recreation

112


30,241


4



91


29,415


4


Information

36


29,005


3



32


28,394


3


Transportation and warehousing

46


23,727


3



42


24,061


3


Public administration

24


19,700


2



26


23,319


3


Other

919


110,191


13



772


107,468


13


Commercial & industrial loans

2,866


$840,585


100

%


2,517


$817,408


100

%

Washington Trust Bancorp, Inc. and Subsidiaries

SUPPLEMENTAL LOAN PORTFOLIO INFORMATION

(Unaudited; Dollars in thousands)










March 31, 2021


April 16, 2021


Count

Balance

% of Outstanding Balance, excl PPP loans (1)


Count

Balance

% of Outstanding Balance, excl PPP loans (1)

Loan Deferments by Portfolio:








Commercial Real Estate Deferments by Segment:








Hospitality

16


$69,406


41

%


12


$51,357


31

%

Retail

3


20,600


6



3


20,600


6


Healthcare

1


18,345


16



1


18,385


16


Office

1


1,833


1



1


1,833


1


Other

7


27,749


40



7


27,749


40


Subtotal - commercial real estate deferments

28


137,933


9



24


119,924


7


Commercial & Industrial Deferments by Segment:








Healthcare and social assistance

5


19,855


13



3


12,949


9


Transportation and warehousing

3


814


4






Entertainment and recreation

2


424


2






Owner occupied and other real estate

1


326


1






Accommodation and food services

1


304


1



1


304


1


Other

5


7,693


12






Subtotal - commercial & industrial deferments

17


29,416


5



4


13,253


2


Total commercial deferments

45


167,349


8



28


133,177


6


Residential real estate deferments

38


23,350


2



26


15,813


1


Consumer deferments

5


687




5


687



Total loan deferments

88


$191,386


5

%


59


$149,677


4

%


(1) Percent of respective outstanding portfolio segment balance, excluding PPP loans, as of March 31, 2021.


March 31, 2021


December 31, 2020


Count

Balance

% of Total


Count

Balance

% of Total

PPP Loans By Industry:








Accommodation and food services

299


$46,873


21

%


209


$23,678


12

%

Healthcare and social assistance

224


44,902


20



173


47,354


24


Manufacturing

100


22,564


10



89


23,321


12


Professional, scientific and technical

235


21,444


9



220


20,031


10


Retail

143


12,209


5



134


12,107


6


Educational services

43


11,243


5



32


9,681


5


Owner occupied and other real estate

123


9,658


4



115


9,241


5


Entertainment and recreation

85


4,797


2



61


3,386


2


Information

24


3,325


1



20


2,478


1


Transportation and warehousing

23


2,088


1



21


2,059


1


Finance and insurance

37


1,102




55


2,000


1


Public administration

5


421




4


483



Other

724


47,957


22



573


43,961


21


Total PPP loans (included in the commercial & industrial loan portfolio)

2,065


$228,583


100

%


1,706


$199,780


100

%









Average PPP loan size


$111





$117



Net unamortized fees on PPP loans


$5,747





$3,893



Washington Trust Bancorp, Inc. and Subsidiaries

END OF PERIOD LOAN AND DEPOSIT COMPOSITION

(Unaudited; Dollars in thousands)








March 31, 2021


December 31, 2020


Balance

% of Total


Balance

% of Total

Commercial Real Estate Loans by Property Location:






Connecticut

$641,757


40

%


$649,919


40

%

Massachusetts

456,379


28



468,947


29


Rhode Island

435,779


27



431,133


26


Subtotal

1,533,915


95



1,549,999


95


All other states

84,625


5



83,025


5


Total commercial real estate loans

$1,618,540


100

%


$1,633,024


100

%







Residential Real Estate Loans by Property Location:






Massachusetts

$985,925


68

%


$994,800


68

%

Rhode Island

332,846


23



331,713


23


Connecticut

117,068


8



122,102


8


Subtotal

1,435,839


99



1,448,615


99


All other states

21,651


1



18,697


1


Total residential real estate loans

$1,457,490


100

%


$1,467,312


100

%


Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

Jun 30,
2020

Mar 31,
2020

Deposits:






Noninterest-bearing demand deposits

$932,999


$832,287


$840,444


$815,770


$622,893


Interest-bearing demand deposits

171,571


174,290


170,198


158,343


178,391


NOW accounts

745,376


698,706


644,909


617,792


528,650


Money market accounts

950,413


910,167


877,536


834,954


784,893


Savings accounts

511,759


466,507


439,383


417,195


382,509


Time deposits (in-market)

701,524


704,855


729,058


728,801


776,992


In-market deposits

4,013,642


3,786,812


3,701,528


3,572,855


3,274,328


Wholesale brokered time deposits

535,500


591,541


584,165


528,581


431,986


Total deposits

$4,549,142


$4,378,353


$4,285,693


$4,101,436


$3,706,314


Washington Trust Bancorp, Inc. and Subsidiaries

CREDIT & ASSET QUALITY DATA

(Unaudited; Dollars in thousands)




Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

Jun 30,
2020

Mar 31,
2020

Asset Quality Ratios:






Nonperforming assets to total assets

0.23

%

0.23

%

0.25

%

0.27

%

0.32

%

Nonaccrual loans to total loans

0.31

%

0.31

%

0.34

%

0.37

%

0.44

%

Total past due loans to total loans

0.26

%

0.30

%

0.24

%

0.34

%

0.40

%

Allowance for credit losses on loans to nonaccrual loans

324.56

%

334.21

%

289.31

%

258.73

%

221.37

%

Allowance for credit losses on loans to total loans

1.00

%

1.05

%

1.00

%

0.97

%

0.97

%







Nonperforming Assets:






Commercial real estate

$—


$—


$431


$431


$450


Commercial & industrial





290


Total commercial



431


431


740


Residential real estate

11,748


11,981


12,792


13,850


15,423


Home equity

1,147


1,128


1,429


1,648


1,667


Other consumer

88


88


88


88


88


Total consumer

1,235


1,216


1,517


1,736


1,755


Total nonaccrual loans

12,983


13,197


14,740


16,017


17,918


Other real estate owned





28


Total nonperforming assets

$12,983


$13,197


$14,740


$16,017


$17,946








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






Commercial real estate

$—


$265


$431


$431


$1,275


Commercial & industrial

1


3


21


3


310


Total commercial

1


268


452


434


1,585


Residential real estate

9,661


10,339


8,081


12,499


12,293


Home equity

1,131


1,667


1,753


1,633


2,482


Other consumer

119


118


108


106


115


Total consumer

1,250


1,785


1,861


1,739


2,597


Total past due loans

$10,912


$12,392


$10,394


$14,672


$16,475








Accruing loans 90 days or more past due

$—


$—


$—


$—


$—


Nonaccrual loans included in past due loans

$8,356


$8,521


$8,799


$10,553


$11,385








Troubled Debt Restructurings:






Accruing TDRs

$12,358


$13,340


$5,709


$5,473


$373


Nonaccrual TDRs

1,935


2,345


2,894


998


490


Total TDRs

$14,293


$15,685


$8,603


$6,471


$863


Washington Trust Bancorp, Inc. and Subsidiaries

CREDIT & ASSET QUALITY DATA

(Unaudited; Dollars in thousands)


For the Three Months Ended


Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

Jun 30,
2020

Mar 31,
2020

Nonaccrual Loan Activity:






Balance at beginning of period

$13,197


$14,740


$16,017


$17,918


$17,408


Additions to nonaccrual status

734


707


971


237


1,729


Loans returned to accruing status

(3)


(1,112)


(1,623)


(154)


(393)


Loans charged-off

(64)


(246)


(111)


(325)


(635)


Loans transferred to other real estate owned


(285)




(28)


Payments, payoffs and other changes

(881)


(607)


(514)


(1,659)


(163)


Balance at end of period

$12,983


$13,197


$14,740


$16,017


$17,918








Allowance for Credit Losses on Loans:






Balance at beginning of period

$44,106


$42,645


$41,441


$39,665


$27,014


Adoption of CECL accounting standard (Topic 326)





6,501


Provision for credit losses on loans (1)

(1,951)


1,579


1,300


2,084


6,773


Charge-offs

(64)


(245)


(111)


(326)


(635)


Recoveries

46


127


15


18


12


Balance at end of period

$42,137


$44,106


$42,645


$41,441


$39,665








Allowance for Credit Losses on Unfunded Commitments:





Balance at beginning of period

$2,382


$2,180


$2,155


$2,039


$293


Adoption of CECL accounting standard (Topic 326)





1,483


Provision for credit losses on unfunded commitments (1)

(49)


202


25


116


263


Balance at end of period (2)

$2,333


$2,382


$2,180


$2,155


$2,039


(1) Included in provision for credit losses in the Consolidated Statements of Income.

(2) Included in other liabilities in the Consolidated Balance Sheets.


For the Three Months Ended


Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

Jun 30,
2020

Mar 31,
2020

Net Loan Charge-Offs (Recoveries):






Commercial real estate

$—


$133


$—


$19


$153


Commercial & industrial

1


(12)



284


290


Total commercial

1


121



303


443


Residential real estate

17


(20)


99




Home equity

(2)


9


(4)


(5)


172


Other consumer

2


8


1


10


8


Total consumer


17


(3)


5


180


Total

$18


$118


$96


$308


$623








Net charge-offs to average loans (annualized)

%

0.01

%

0.01

%

0.03

%

0.06

%

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

March 31, 2021


December 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

$154,895


$33


0.09

%


$172,731


$35


0.08

%


($17,836)


($2)


0.01

%

Mortgage loans held for sale

61,408


441


2.91



71,113


569


3.18



(9,705)


(128)


(0.27)


Taxable debt securities

915,864


3,242


1.44



892,112


3,869


1.73



23,752


(627)


(0.29)


FHLB stock

28,867


133


1.87



33,320


414


4.94



(4,453)


(281)


(3.07)


Commercial real estate

1,625,859


11,359


2.83



1,658,809


11,905


2.86



(32,950)


(546)


(0.03)


Commercial & industrial

839,740


7,866


3.80



818,611


7,174


3.49



21,129


692


0.31


Total commercial

2,465,599


19,225


3.16



2,477,420


19,079


3.06



(11,821)


146


0.10


Residential real estate

1,454,323


12,817


3.57



1,475,699


13,206


3.56



(21,376)


(389)


0.01


Home equity

257,733


2,122


3.34



264,811


2,229


3.35



(7,078)


(107)


(0.01)


Other

20,106


241


4.86



18,209


226


4.94



1,897


15


(0.08)


Total consumer

277,839


2,363


3.45



283,020


2,455


3.45



(5,181)


(92)



Total loans

4,197,761


34,405


3.32



4,236,139


34,740


3.26



(38,378)


(335)


0.06


Total interest-earning assets

5,358,795


38,254


2.90



5,405,415


39,627


2.92



(46,620)


(1,373)


(0.02)


Noninterest-earning assets

353,136





362,848





(9,712)




Total assets

$5,711,931





$5,768,263





($56,332)




Liabilities and Shareholders' Equity:












Interest-bearing demand deposits

$183,989


$96


0.21

%


$161,664


$81


0.20

%


$22,325


$15


0.01

%

NOW accounts

697,964


102


0.06



664,055


115


0.07



33,909


(13)


(0.01)


Money market accounts

909,890


714


0.32



903,607


963


0.42



6,283


(249)


(0.10)


Savings accounts

489,851


69


0.06



455,933


70


0.06



33,918


(1)



Time deposits (in-market)

703,580


2,238


1.29



711,838


2,566


1.43



(8,258)


(328)


(0.14)


Total interest-bearing in-market deposits

2,985,274


3,219


0.44



2,897,097


3,795


0.52



88,177


(576)


(0.08)


Wholesale brokered time deposits

579,149


444


0.31



589,272


837


0.57



(10,123)


(393)


(0.26)


Total interest-bearing deposits

3,564,423


3,663


0.42



3,486,369


4,632


0.53



78,054


(969)


(0.11)


FHLB advances

542,684


1,380


1.03



634,081


2,305


1.45



(91,397)


(925)


(0.42)