Washington Trust Reports Second Quarter 2021 Earnings

·19 min read

WESTERLY, R.I., July 21, 2021 /PRNewswire/ -- Washington Trust Bancorp, Inc. (Nasdaq: WASH), parent company of The Washington Trust Company, today announced second quarter 2021 net income of $17.5 million, or $1.00 per diluted share, compared to net income of $20.5 million, or $1.17 per diluted share, for the first quarter of 2021.

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

"Washington Trust reported solid second quarter results, with strong performances across key business lines," stated Edward O. Handy III, Chairman and Chief Executive Officer. "Our wealth management division posted a record $7.4 billion in assets under administration and generated an all-time high $10.4 million in quarterly revenues. As the economic recovery continues, we have seen a revival of commercial lending activity."

Selected financial highlights for the second quarter of 2021 include:

  • Returns on average equity and average assets for the second quarter were 12.92% and 1.20%, respectively, compared to 15.55% and 1.45%, respectively, in the preceding quarter.

  • There was no provision for credit losses in the second quarter, compared to a negative $2.0 million in the preceding quarter.

  • Wealth management revenues were $10.4 million for the second quarter, up by $533 thousand, or 5%, from the preceding quarter, mainly due to growth in asset-based revenues. Wealth management assets under administration ("AUA") amounted to a record $7.4 billion at June 30, 2021.

  • Residential real estate loan origination volume was strong and totaled $489.4 million for the second quarter, up by $48.3 million, or 11%, from the preceding quarter and up by $63.2 million, or 15%, from the same period a year ago. While sales volume remained strong, mortgage banking revenues declined on a linked quarter basis reflecting lower sales yields in the secondary market.

  • Total loans amounted to $4.3 billion, up by $105 million, or 3%, from the end of the preceding quarter and up by $12 million, or 0.3%, from a year ago. Total loans excluding Paycheck Protection Program ("PPP") loans amounted to $4.2 billion, up by $187 million, or 5%, from the end of the preceding quarter and up by $77 million, or 2%, from a year ago.

  • In-market deposits (total deposits less out-of-market wholesale brokered deposits) amounted to $4.0 billion at June 30, 2021, down by $20 million, or 1%, from the end of the preceding quarter, and up by $421 million, or 12%, from a year ago.

Net Interest Income
Net interest income was $34.8 million for the second quarter of 2021, up by $1.9 million, or 6%, from the first quarter of 2021. The net interest margin was 2.55% for the second quarter, up by 4 basis points from the preceding quarter. Both net interest income and the net interest margin benefited from commercial loan prepayment fee income. Commercial loan prepayment fee income amounted to $717 thousand, or 5 basis points, in the second quarter of 2021, compared to $217 thousand, or 2 basis points, in the preceding quarter. Linked quarter changes included:

  • Average interest-earning assets increased by $140 million, with an increase of $114 million in average investment securities and an increase in average loans of $42 million. The yield on interest-earning assets for the second quarter was 2.85%, down by 5 basis points from the preceding quarter. Excluding the impact of commercial loan prepayment fee income for both periods, the yield on interest-earning assets for the second quarter was 2.79%, down by 9 basis points from 2.88% in the preceding quarter, mainly due to a lower yield on the average balances of investment securities and residential real estate loans.

  • Average interest-bearing liabilities increased by $111 million, with an increase of $113 million in average in-market deposits, partially offset by a decrease of $3 million in average wholesale funding balances. The cost of interest-bearing liabilities for the second quarter of 2021 was 0.38%, down by 12 basis points from the preceding quarter, reflecting the impact of lower market interest rates.

Noninterest Income
Noninterest income totaled $20.6 million for the second quarter of 2021, down by $5.4 million, or 21%, from the first quarter of 2021. As previously disclosed, included in other noninterest income in the first quarter of 2021 was income of $1.0 million associated with a settlement. Excluding the impact of the aforementioned item, noninterest income was down by $4.4 million, or 18%. Linked quarter changes included:

  • Wealth management revenues amounted to $10.4 million in the second quarter of 2021, up by $533 thousand, or 5%, on a linked quarter basis. This included an increase in asset-based revenues of $408 thousand, or 4%, and an increase in transaction-based revenues of $125 thousand, or 40%, from the preceding quarter. The linked quarter increase in transaction-based revenues was largely due to higher tax reporting and preparation fee income.

    Wealth management AUA amounted to $7.4 billion at June 30, 2021, up by $392 million, or 6%, from March 31, 2021. The increase reflected net investment appreciation of $368 million and net client asset inflows of $24 million in the second quarter of 2021. The average balance of AUA for the second quarter of 2021 increased by approximately $359 million, or 5%, from the average balance for the preceding quarter.

  • Mortgage banking revenues totaled $6.0 million for the second quarter of 2021, down by $5.9 million, or 50%, from the first quarter of 2021, mainly due to a lower sales yield on loans sold to the secondary market. Mortgage loans sold to the secondary market amounted to $291 million in the second quarter of 2021, down by $1 million, or 1%, from the preceding quarter. Also included in mortgage banking revenues was a decrease in the fair value of mortgage loan commitments as of June 30, 2021.

  • Loan related derivative income was $1.2 million in the second quarter of 2021, up by $708 thousand from the preceding quarter, reflecting a higher volume of commercial borrower transactions.

Noninterest Expense
Noninterest expense totaled $33.0 million for the second quarter of 2021, down by $1.7 million, or 5%, from the first quarter of 2021. Debt prepayment penalty expense recognized on the prepayment of higher-yielding FHLB advances amounted to $895 thousand in the second quarter of 2021 and $3.3 million in the first quarter of 2021. Excluding the impact of debt prepayment penalty expense from both periods, noninterest expense was up by $739 thousand, or 2%, from the first quarter of 2021. Linked quarter changes included:

  • Salaries and employee benefits expense, our largest noninterest expense, amounted to $22.1 million for the second quarter of 2021, up by $555 thousand, or 3%, from the preceding quarter largely due to increases in performance-based compensation accruals.

  • Advertising and promotion expense was up by $338 thousand from the preceding quarter, largely due to timing of such activities.

Income Tax
Income tax expense totaled $4.9 million for the second quarter of 2021, down by $786 thousand from the preceding quarter, reflecting a lower level of pre-tax income. The effective tax rate for the second quarter of 2021 was 21.8%, compared to 21.7% 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 22.0%.

Investment Securities
The securities portfolio totaled $1.1 billion at June 30, 2021, up by $104 million, or 11%, from March 31, 2021, 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. Purchases of debt securities in the second quarter 2021 totaled $194 million, with a weighted average yield of 1.91%. Securities represented 18% of total assets at June 30, 2021, compared to 17% of total assets at March 31, 2021.

Loans
Total loans amounted to $4.3 billion at June 30, 2021, up by $105 million, from the end of the preceding quarter. Linked quarter changes included:

  • Commercial loans decreased by $25 million, or 1.0%, from March 31, 2021, which included a net reduction in PPP loans of $82 million. Excluding PPP loans, commercial loans increased by $57 million, or 3%, from March 31, 2021, reflecting commercial loan originations and construction advances totaling $162 million, partially offset by payoffs and pay-downs of $103 million.

  • Residential real estate loans increased by $133 million, or 9%, from March 31, 2021. The increase reflects a higher proportion of loans originated for portfolio, as well as purchases of $39 million of loans with a weighted average rate of 2.74%. The purchased loans were individually evaluated to our underwriting standards and are predominantly secured by properties in Massachusetts.

  • The consumer loan portfolio decreased by $2.8 million, or 1% from the balance at March 31, 2021.

Deposits and Borrowings
Total deposits amounted to $4.7 billion at June 30, 2021, up by $177 million, or 4%, from the end of the preceding quarter. Included in total deposits are out-of-market wholesale brokered time deposits, which increased by $197 million, or 37%, from March 31, 2021. Excluding wholesale brokered time deposits, in-market deposits at June 30, 2021 were down by $20 million, or 1%, from the end of the preceding quarter. This decrease reflected seasonal outflows of various institutional and governmental depositors based on their underlying business cycles, as well as outflows associated with utilization of PPP loan funds for customers' business needs.

FHLB advances totaled $409 million at June 30, 2021, down by $58 million from March 31, 2021.

Asset Quality
Nonperforming assets amounted to $10.5 million at June 30, 2021, down by $2.5 million from the end of the preceding quarter. Total nonaccrual loans amounted to $10.5 million, or 0.24% of total loans, at June 30, 2021, compared to $13.0 million, or 0.31% of total loans, at March 31, 2021.

Total past due loans amounted to $8.5 million, or 0.20% of total loans, at June 30, 2021, compared to $10.9 million, or 0.26% of total loans, at March 31, 2021.

Total troubled debt restructured loans ("TDR") amounted to $10.8 million as of June 30, 2021, down by $3.5 million from March 31, 2021, reflecting payoffs.

Washington Trust has processed loan payment deferral modifications, or "deferments", on 654 loans totaling $728 million since the beginning of the second quarter of 2020, in response to the COVID-19 pandemic. The majority of these deferments qualified as eligible loan modifications under Section 4013 of the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"), as amended, and therefore, were not required to be classified as TDRs and were not reported as past due. As of June 30, 2021, active deferments remain on 22 loans totaling $93.4 million, or 2% of the outstanding balance of total loans excluding PPP loan balances. This is down from active deferments on 88 loans totaling $191.4 million, or 5% of the outstanding balance of total loans excluding PPP loan balances, as of March 31, 2021.

The allowance for credit losses ("ACL") on loans amounted to $41.9 million, or 0.97% of total loans, at June 30, 2021, compared to $42.1 million, or 1.00% of total loans, at March 31, 2021. The ACL on unfunded commitments, included in other liabilities on the Consolidated Balance Sheets, amounted to $2.3 million at June 30, 2021, unchanged from the balances at March 31, 2021.

In the second quarter of 2021, no provision for credit losses was recognized in earnings, compared to a provision for credit losses of negative $2.0 million in the preceding quarter. The provision for credit losses and the related ACL reflected our current estimate of forecasted economic conditions and continued stable asset quality metrics. In the second quarter of 2021, net charge-offs of $258 thousand were recognized, compared to $18 thousand in the preceding quarter.

Capital and Dividends
Total shareholders' equity was $547.9 million at June 30, 2021, up by $14.3 million from March 31, 2021. This increase included net income of $17.5 million, as well as an increase of $4.9 million in the accumulated other comprehensive income component of shareholders' equity largely due to a temporary increase in the fair value of available for sale debt securities, partially offset by $9.1 million in dividend declarations.

Capital levels at June 30, 2021 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 13.65% at June 30, 2021, compared to 13.85% at March 31, 2021.

Book value per share amounted to $31.63 at June 30, 2021, compared to $30.83 at March 31, 2021.

The Board of Directors declared a quarterly dividend of 52 cents per share for the quarter ended June 30, 2021. The dividend was paid on July 9, 2021 to shareholders of record on July 1, 2021.

Conference Call
Washington Trust will host a conference call to discuss its second quarter results, business highlights and outlook on Thursday, July 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 10158379; the audio replay will be available through August 5, 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 September 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)








Jun 30,

2021

Mar 31,

2021

Dec 31,

2020

Sep 30,

2020

Jun 30,

2020

Assets:






Cash and due from banks

$127,743


$166,960


$194,143


$204,113


$215,601


Short-term investments

4,463


3,783


8,125


7,902


7,739


Mortgage loans held for sale, at fair value

31,492


77,450


61,614


68,095


43,997


Available for sale debt securities, at fair value

1,052,577


948,094


894,571


913,850


938,446


Federal Home Loan Bank stock, at cost

22,757


24,772


30,285


37,469


50,017


Loans:






Total loans

4,299,800


4,194,666


4,195,990


4,282,047


4,287,641


Less: allowance for credit losses on loans

41,879


42,137


44,106


42,645


41,441


Net loans

4,257,921


4,152,529


4,151,884


4,239,402


4,246,200


Premises and equipment, net

29,031


28,953


28,870


27,711


28,067


Operating lease right-of-use assets

28,329


28,761


29,521


29,861


27,022


Investment in bank-owned life insurance

92,355


84,749


84,193


83,623


83,056


Goodwill

63,909


63,909


63,909


63,909


63,909


Identifiable intangible assets, net

5,853


6,079


6,305


6,530


6,759


Other assets

135,550


133,350


159,749


167,327


166,147


Total assets

$5,851,980


$5,719,389


$5,713,169


$5,849,792


$5,876,960


Liabilities:






Deposits:






Noninterest-bearing deposits

$901,801


$932,999


$832,287


$840,444


$815,770


Interest-bearing deposits

3,823,858


3,616,143


3,546,066


3,445,249


3,285,666


Total deposits

4,725,659


4,549,142


4,378,353


4,285,693


4,101,436


Federal Home Loan Bank advances

408,592


466,912


593,859


713,868


1,005,051


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

30,558


30,974


31,717


32,012


29,125


Other liabilities

116,634


116,081


152,364


162,099


159,604


Total liabilities

5,304,124


5,185,790


5,178,974


5,322,099


5,356,797


Shareholders' Equity:






Common stock

1,085


1,085


1,085


1,085


1,085


Paid-in capital

125,442


124,882


125,610


124,768


123,684


Retained earnings

437,927


429,598


418,246


408,773


399,386


Accumulated other comprehensive (loss) income

(15,128)


(20,006)


(7,391)


(3,403)


(462)


Treasury stock, at cost

(1,470)


(1,960)


(3,355)


(3,530)


(3,530)


Total shareholders' equity

547,856


533,599


534,195


527,693


520,163


Total liabilities and shareholders' equity

$5,851,980


$5,719,389


$5,713,169


$5,849,792


$5,876,960


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,

2021

Mar 31,

2021

Dec 31,

2020

Sep 30,

2020

Jun 30,

2020


Jun 30,

2021

Jun 30,

2020

Interest income:









Interest and fees on loans

$34,820


$34,159


$34,487


$34,925


$36,005



$68,979


$76,013


Interest on mortgage loans held for sale

405


441


569


468


440



846


725


Taxable interest on debt securities

3,441


3,242


3,869


4,870


5,477



6,683


11,311


Dividends on Federal Home Loan Bank stock

110


133


414


532


654



243


1,294


Other interest income

32


33


35


39


36



65


385


Total interest and dividend income

38,808


38,008


39,374


40,834


42,612



76,816


89,728


Interest expense:









Deposits

2,961


3,663


4,632


5,532


7,112



6,624


15,648


Federal Home Loan Bank advances

1,001


1,380


2,305


3,354


4,382



2,381


10,147


Junior subordinated debentures

92


94


122


135


171



186


384


Other interest expense



72


159


2




2


Total interest expense

4,054


5,137


7,131


9,180


11,667



9,191


26,181


Net interest income

34,754


32,871


32,243


31,654


30,945



67,625


63,547


Provision for credit losses


(2,000)


1,781


1,325


2,200



(2,000)


9,236


Net interest income after provision for credit losses

34,754


34,871


30,462


30,329


28,745



69,625


54,311


Noninterest income:









Wealth management revenues

10,428


9,895


9,206


8,954


8,605



20,323


17,294


Mortgage banking revenues

5,994


11,927


14,077


12,353


14,851



17,921


...

20,947


Card interchange fees

1,316


1,133


1,148


1,161


1,031



2,449


1,978


Service charges on deposit accounts

635


609


767


598


517



1,244


1,377


Loan related derivative income

1,175


467


173


1,264


99



1,642


2,554


Income from bank-owned life insurance

607


556


569


567


791



1,163


1,355


Other income

438


1,387


1,787


571


426



1,825


742


Total noninterest income

20,593


25,974


27,727


25,468


26,320



46,567


46,247


Noninterest expense:









Salaries and employee benefits

22,082


21,527


22,075


21,892


19,464



43,609


38,932


Outsourced services

3,217


3,200


2,950


3,160


2,784



6,417


5,784


Net occupancy

2,042


2,128


2,083


2,012


1,909



4,170


3,928


Equipment

975


994


1,025


934


895



1,969


1,872


Legal, audit and professional fees

678


597


1,014


1,252


659



1,275


1,481


FDIC deposit insurance costs

374


345


330


392


674



719


1,096


Advertising and promotion

560


222


640


384


186



782


445


Amortization of intangibles

225


226


226


228


230



451


460


Debt prepayment penalties

895


3,335


1,413





4,230



Other expenses

1,964


2,139


2,353


2,090


1,677



4,103


4,933


Total noninterest expense

33,012


34,713


34,109


32,344


28,478



67,725


58,931


Income before income taxes

22,335


26,132


24,080


23,453


26,587



48,467


41,627


Income tax expense

4,875


5,661


5,514


5,131


5,547



10,536


8,686


Net income

$17,460


$20,471


$18,566


$18,322


$21,040



$37,931


$32,941











Net income available to common shareholders

$17,408


$20,415


$18,524


$18,285


$21,000



$37,823


$32,869











Weighted average common shares outstanding:









Basic

17,314


17,275


17,264


17,260


17,257



17,295


17,301


Diluted

17,436


17,431


17,360


17,317


17,292



17,445


17,377


Earnings per common share:









Basic

$1.01


$1.18


$1.07


$1.06


$1.22



$2.19


$1.90


Diluted

$1.00


$1.17


$1.07


$1.06


$1.21



$2.17


$1.89











Cash dividends declared per share

$0.52


$0.52


$0.52


$0.51


$0.51



$1.04


$1.02


Washington Trust Bancorp, Inc. and Subsidiaries

SELECTED FINANCIAL HIGHLIGHTS

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




Jun 30,

2021

Mar 31,

2021

Dec 31,

2020

Sep 30,

2020

Jun 30,

2020

Share and Equity Related Data:






Book value per share

$31.63


$30.83


$30.94


$30.57


$30.14


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

$27.60


$26.79


$26.87


$26.49


$26.04


Market value per share

$51.35


$51.63


$44.80


$30.66


$32.75


Shares issued at end of period

17,363


17,363


17,363


17,363


17,363


Shares outstanding at end of period

17,320


17,306


17,265


17,260


17,260








Capital Ratios (2):






Tier 1 risk-based capital

12.82

%

12.99

%

12.61

%

12.23

%

11.95

%

Total risk-based capital

13.65

%

13.85

%

13.51

%

13.09

%

12.78

%

Tier 1 leverage ratio

9.07

%

9.11

%

8.95

%

8.77

%

8.42

%

Common equity tier 1

12.28

%

12.43

%

12.06

%

11.69

%

11.40

%







Balance Sheet Ratios:






Equity to assets

9.36

%

9.33

%

9.35

%

9.02

%

8.85

%

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

8.27

%

8.21

%

8.22

%

7.91

%

7.74

%

Loans to deposits (3)

90.8

%

93.0

%

96.2

%

100.5

%

104.6

%




For the Six Months Ended


For the Three Months Ended



Jun 30,

2021

Mar 31,

2021

Dec 31,

2020

Sep 30,

2020

Jun 30,

2020


Jun 30,

2021

Jun 30,

2020

Performance Ratios (4):









Net interest margin (5)

2.55

%

2.51

%

2.39

%

2.31

%

2.31

%


2.53

%

2.46

%

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

1.20

%

1.45

%

1.28

%

1.24

%

1.46

%


1.32

%

1.18

%

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

1.22

%

1.47

%

1.30

%

1.26

%

1.48

%


1.34

%

1.20

%

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

12.92

%

15.55

%

13.96

%

13.99

%

16.51

%


14.22

%

13.03

%

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

14.84

%

17.91

%

16.10

%

16.19

%

19.15

%


16.35

%

15.14

%

Efficiency ratio (6)

59.6

%

59.0

%

56.9

%

56.6

%

49.7

%


59.3

%

53.7

%



(1)

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

(2)

Estimated for June 30, 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


For the Six Months Ended


Jun 30,

2021

Mar 31,

2021

Dec 31,

2020

Sep 30,

2020

Jun 30,

2020


Jun 30,

2021

Jun 30,

2020

Wealth Management Results









Wealth Management Revenues:









Asset-based revenues

$9,991


$9,583


$9,066


$8,786


$8,156



$19,574


$16,511


Transaction-based revenues

437


312


140


168


449



749


783


Total wealth management revenues

$10,428


$9,895


$9,206


$8,954


$8,605



$20,323


$17,294











Assets Under Administration (AUA):









Balance at beginning of period

$7,049,226


$6,866,737


$6,395,652


$6,138,845


$5,337,733



$6,866,737


$6,235,801


Net investment appreciation (depreciation) & income

368,383


208,953


540,189


335,209


671,602



577,336


(101,133)


Net client asset inflows (outflows)

23,910


(26,464)


(69,104)


(78,402)


129,510



(2,554)


4,177


Balance at end of period

$7,441,519


$7,049,226


$6,866,737


$6,395,652


$6,138,845



$7,441,519


$6,138,845











Percentage of AUA that are managed assets

92%


91%


91%


90%


90%



92%


90%











Mortgage Banking Results









Mortgage Banking Revenues:









Realized gains on loan sales, net (1)

$8,562


$13,745


$13,394


$14,280


$10,646



$22,307


$14,334


Unrealized (losses) gains, net (2)

(2,543)


(1,888)


813


(1,555)


4,415



(4,431)


6,740


Loan servicing fee income, net (3)

(25)


70


(130)


(372)


(210)



45


(127)


Total mortgage banking revenues

$5,994


$11,927


$14,077


$12,353


$14,851



$17,921


$20,947











Residential Mortgage Loan Originations:









Originations for retention in portfolio (4)

$244,821


$131,791


$134,002


$132,726


$126,894



$376,612


$235,392


Originations for sale to secondary market (5)

244,562


309,325


312,226


377,137


299,321



553,887


482,543


Total mortgage loan originations

$489,383


$441,116


$446,228


$509,863


$426,215



$930,499


$717,935











Residential Mortgage Loans Sold:









Sold with servicing rights retained

$235,280


$226,645


$240,104


$317,920


$246,945



$461,925


$291,443


Sold with servicing rights released (5)

55,278


65,374


78,072


36,250


58,279



120,652


175,972


Total mortgage loans sold

$290,558


$292,019


$318,176


$354,170


$305,224



$582,577


$467,415




(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)




Jun 30,

2021

Mar 31,

2021

Dec 31,

2020

Sep 30,

2020

Jun 30,

2020

Loans:






Commercial real estate (1)

$1,669,624


$1,618,540


$1,633,024


$1,665,745


$1,630,998


Commercial & industrial

764,509


840,585


817,408


822,269


852,445


Total commercial

2,434,133


2,459,125


2,450,432


2,488,014


2,483,443








Residential real estate (2)

1,590,389


1,457,490


1,467,312


1,506,726


1,508,223








Home equity

254,802


256,799


259,185


268,551


277,632


Other

20,476


21,252


19,061


18,756


18,343


Total consumer

275,278


278,051


278,246


287,307


295,975


Total loans

$4,299,800


$4,194,666


$4,195,990


$4,282,047


$4,287,641



(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, 2021


December 31, 2020


Count

Balance

% of Total


Count

Balance

% of Total

Commercial Real Estate Portfolio Segmentation:








Multi-family dwelling

133


$536,928


32

%


137


$524,874


32

%

Retail

127


342,983


21



136


339,569


21


Office

66


256,030


15



73


290,756


18


Hospitality

38


173,715


10



40


157,720


10


Healthcare

15


134,689


8



15


109,321


7


Industrial and warehouse

33


108,842


7



28


97,055


6


Commercial mixed use

21


40,980


2



22


42,405


3


Other

39


75,457


5



38


71,324


3


Commercial real estate loans

472


$1,669,624


100

%


489


$1,633,024


100

%









Commercial & Industrial Portfolio Segmentation:








Healthcare and social assistance

224


$198,099


26

%


253


$200,217


24

%

Accommodation and food services

284


74,272


10



271


47,020


6


Manufacturing

123


68,908


9



146


88,802


11


Owner occupied and other real estate

230


68,480


9



268


74,309


9


Retail

162


56,969


7



192


63,895


8


Educational services

46


50,872


7



53


64,969


8


Entertainment and recreation

95


35,823


5



91


29,415


4


Finance and insurance

81


31,071


4



106


26,244


3


Information

26


26,542


3



32


28,394


3


Transportation and warehousing

45


22,967


3



42


24,061


3


Public administration

25


18,984


2



26


23,319


3


Professional, scientific and technical

207


18,595


2



265


39,295


5


Other

724


92,927


13



772


107,468


13


Commercial & industrial loans

2,272


$764,509


100

%


2,517


$817,408


100

%

Washington Trust Bancorp, Inc. and Subsidiaries

SUPPLEMENTAL LOAN PORTFOLIO INFORMATION

(Unaudited; Dollars in thousands)










June 30, 2021


December 31, 2020


Count

Balance

% of Total


Count

Balance

% of Total

PPP Loans By Industry:








Accommodation and food services

230


$37,089


25

%


209


$23,678


12

%

Healthcare and social assistance

155


28,902


20



173


47,354


24


Professional, scientific and technical

170


11,409


8



220


20,031


10


Retail

103


10,117


7



134


12,107


6


Manufacturing

70


9,844


7



89


23,321


12


Entertainment and recreation

65


3,839


3



61


3,386


2


Educational services

28


3,352


2



32


9,681


5


Owner occupied and other real estate

80


3,349


2



115


9,241


5


Information

15


2,912


2



20


2,478


1


Transportation and warehousing

20


1,937


1



21


2,059


1


Finance and insurance

27


759


1



55


2,000


1


Public administration

6


445




4


483



Other

544


33,016


22



573


43,961


21


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

1,513


$146,970


100

%


1,706


$199,780


100

%









Average PPP loan size


$97





$117



Net unamortized fees on PPP loans


$4,874





$3,893












June 30, 2021


March 31, 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

14


$87,363


5

%


28


$137,933


9

%

Commercial & industrial deferments





17


29,416


5


Total commercial deferments

14


87,363


5



45


167,349


8










Residential real estate deferments

8


6,027




38


23,350


2










Total consumer deferments





5


687



Total loan deferments

22


$93,390


2

%


88


$191,386


5

%



(1)

Percent of respective outstanding portfolio segment balance excluding balance of PPP loans for each respective period.

Washington Trust Bancorp, Inc. and Subsidiaries

END OF PERIOD LOAN AND DEPOSIT COMPOSITION

(Unaudited; Dollars in thousands)








June 30, 2021


December 31, 2020


Balance

% of Total


Balance

% of Total

Commercial Real Estate Loans by Property Location:






Connecticut

$635,974


38

%


$649,919


40

%

Massachusetts

471,426


28



468,947


29


Rhode Island

470,341


28



431,133


26


Subtotal

1,577,741


94



1,549,999


95


All other states

91,883


6



83,025


5


Total commercial real estate loans

$1,669,624


100

%


$1,633,024


100

%







Residential Real Estate Loans by Property Location:






Massachusetts

$1,097,453


69

%


$994,800


68

%

Rhode Island

343,035


22



331,713


23


Connecticut

129,142


8



122,102


8


Subtotal

1,569,630


99



1,448,615


99


All other states

20,759


1



18,697


1


Total residential real estate loans

$1,590,389


100

%


$1,467,312


100

%


Jun 30,

2021

Mar 31,

2021

Dec 31,

2020

Sep 30,

2020

Jun 30,

2020

Deposits:






Noninterest-bearing demand deposits

$901,801


$932,999


$832,287


$840,444


$815,770


Interest-bearing demand deposits

174,165


171,571


174,290


170,198


158,343


NOW accounts

774,693


745,376


698,706


644,909


617,792


Money market accounts

941,511


950,413


910,167


877,536


834,954


Savings accounts

524,155


511,759


466,507


439,383


417,195


Time deposits (in-market)

677,061


701,524


704,855


729,058


728,801


In-market deposits

3,993,386


4,013,642


3,786,812


3,701,528


3,572,855


Wholesale brokered time deposits

732,273


535,500


591,541


584,165


528,581


Total deposits

$4,725,659


$4,549,142


$4,378,353


$4,285,693


$4,101,436


Washington Trust Bancorp, Inc. and Subsidiaries

CREDIT & ASSET QUALITY DATA

(Unaudited; Dollars in thousands)




Jun 30,

2021

Mar 31,

2021

Dec 31,

2020

Sep 30,

2020

Jun 30,

2020

Asset Quality Ratios:






Nonperforming assets to total assets

0.18

%

0.23

%

0.23

%

0.25

%

0.27

%

Nonaccrual loans to total loans

0.24

%

0.31

%

0.31

%

0.34

%

0.37

%

Total past due loans to total loans

0.20

%

0.26

%

0.30

%

0.24

%

0.34

%

Allowance for credit losses on loans to nonaccrual loans

399.57

%

324.56

%

334.21

%

289.31

%

258.73

%

Allowance for credit losses on loans to total loans

0.97

%

1.00

%

1.05

%

1.00

%

0.97

%







Nonperforming Assets:






Commercial real estate

$—


$—


$—


$431


$431


Commercial & industrial

539






Total commercial

539




431


431


Residential real estate

8,926


11,748


11,981


12,792


13,850


Home equity

1,016


1,147


1,128


1,429


1,648


Other consumer


88


88


88


88


Total consumer

1,016


1,235


1,216


1,517


1,736


Total nonaccrual loans

10,481


12,983


13,197


14,740


16,017


Other real estate owned






Total nonperforming assets

$10,481


$12,983


$13,197


$14,740


$16,017








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






Commercial real estate

$—


$—


$265


$431


$431


Commercial & industrial

540


1


3


21


3


Total commercial

540


1


268


452


434


Residential real estate

6,656


9,661


10,339


8,081


12,499


Home equity

1,231


1,131


1,667


1,753


1,633


Other consumer

28


119


118


108


106


Total consumer

1,259


1,250


1,785


1,861


1,739


Total past due loans

$8,455


$10,912


$12,392


$10,394


$14,672








Accruing loans 90 days or more past due

$—


$—


$—


$—


$—


Nonaccrual loans included in past due loans

$5,773


$8,356


$8,521


$8,799


$10,553








Troubled Debt Restructurings:






Accruing TDRs

$8,541


$12,358


$13,340


$5,709


$5,473


Nonaccrual TDRs

2,278


1,935


2,345


2,894


998


Total TDRs

$10,819


$14,293


$15,685


$8,603


$6,471


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,

2021

Mar 31,

2021

Dec 31,

2020

Sep 30,

2020

Jun 30,

2020


Jun 30,

2021

Jun 30,

2020

Nonaccrual Loan Activity:









Balance at beginning of period

$12,983


$13,197


$14,740


$16,017


$17,918



$13,197


$17,408


Additions to nonaccrual status

537


734


707


971


237



1,271


1,966


Loans returned to accruing status

(874)


(3)


(1,112)


(1,623)


(154)



(877)


(547)


Loans charged-off

(317)


(64)


(246)


(111)


(325)



(381)


(960)


Loans transferred to other real estate owned



(285)






(28)


Payments, payoffs and other changes

(1,848)


(881)


(607)


(514)


(1,659)



(2,729)


(1,822)


Balance at end of period

$10,481


$12,983


$13,197


$14,740


$16,017



$10,481


$16,017











Allowance for Credit Losses on Loans:









Balance at beginning of period

$42,137


$44,106


$42,645


$41,441


$39,665



$44,106


$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



(1,951)


8,857


Charge-offs

(317)


(64)


(245)


(111)


(326)



(381)


(961)


Recoveries

59


46


127


15


18



105


30


Balance at end of period

$41,879


$42,137


$44,106


$42,645


$41,441



$41,879


$41,441











Allowance for Credit Losses on Unfunded Commitments:








Balance at beginning of period

$2,333


$2,382


$2,180


$2,155


$2,039



$2,382


$293


Adoption of CECL accounting standard (Topic 326)








1,483


Provision for credit losses on unfunded commitments (1)


(49)


202


25


116



(49)


379


Balance at end of period (2)

$2,333


$2,333


$2,382


$2,180


$2,155



$2,333


$2,155




(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


For the Six Months
Ended


Jun 30,

2021

Mar 31,

2021

Dec 31,

2020

Sep 30,

2020

Jun 30,

2020


Jun 30,

2021

Jun 30,

2020

Net Loan Charge-Offs (Recoveries):









Commercial real estate

$—


$—


$133


$—


$19



$—


$172


Commercial & industrial

302


1


(12)



284



303


574


Total commercial

302


1


121



303



303


746


Residential real estate

(47)


17


(20)


99




(30)



Home equity

(4)


(2)


9


(4)


(5)



(6)


167


Other consumer

7


2


8


1


10



9


18


Total consumer

3



17


(3)


5



3


185


Total

$258


$18


$118


$96


$308



$276


$931











Net charge-offs to average loans (annualized)

0.02

%

%

0.01

%

0.01

%

0.03

%


0.01

%

0.04

%

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, 2021


March 31, 2021


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

$146,313


$32


0.09

%


$154,895


$33


0.09

%


($8,582)


($1)


%

Mortgage loans held for sale

57,473


405


2.83



61,408


441


2.91



(3,935)


(36)


(0.08)


Taxable debt securities

1,029,933


3,441


1.34



915,864


3,242


1.44



114,069


199


(0.10)


FHLB stock

25,128


110


1.76



28,867


133


1.87



(3,739)


(23)


(0.11)


Commercial real estate

1,639,515


11,701


2.86



1,625,859


11,359


2.83



13,656


342


0.03


Commercial & industrial

807,598


8,113


4.03



839,740


7,866


3.80



(32,142)


247


0.23


Total commercial

2,447,113


19,814


3.25



2,465,599


19,225


3.16



(18,486)


589


0.09


Residential real estate

1,514,487


12,920


3.42



1,454,323


12,817


3.57



60,164


103


(0.15)


Home equity

257,257


2,056


3.21



257,733


2,122


3.34



(476)


(66)


(0.13)


Other

20,979


253


4.84



20,106


241


4.86



873


12


(0.02)


Total consumer

278,236


2,309


3.33



277,839


2,363


3.45



397


(54)


(0.12)


Total loans

4,239,836


35,043


3.32



4,197,761


34,405


3.32



42,075


638



Total interest-earning assets

5,498,683


39,031


2.85



5,358,795


38,254


2.90



139,888


777


(0.05)


Noninterest-earning assets

334,742





353,136





(18,394)




Total assets

$5,833,425





$5,711,931





$121,494




Liabilities and Shareholders' Equity:












Interest-bearing demand deposits

$182,465


$49


0.11

%


$183,989


$96


0.21

%


($1,524)


($47)


(0.10)

%

NOW accounts

760,294


119


0.06



697,964


102


0.06



62,330


17



Money market accounts

951,194


552


0.23



909,890


714


0.32



41,304


(162)


(0.09)


Savings accounts

518,072


72


0.06



489,851


69


0.06



28,221


3



Time deposits (in-market)

686,590


1,889


1.10



703,580


2,238


1.29



(16,990)


(349)


(0.19)


Total interest-bearing in-market deposits

3,098,615


2,681


0.35



2,985,274