Slide 1

Press Release

Washington Trust Reports Record Full-Year 2018 Earnings and Reaches $5 Billion in Assets

Company Release - 1/28/2019 4:05 PM ET

WESTERLY, R.I., Jan. 28, 2019 (GLOBE NEWSWIRE) -- Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced fourth quarter 2018 net income of $17.0 million, or $0.98 per diluted share, compared to net income of $17.5 million, or $1.01 per diluted share, reported for the third quarter of 2018.  Net income for the year ended December 31, 2018 totaled $68.4 million, or $3.93 per diluted share, compared to $45.9 million, or $2.64 per diluted share, reported for the prior year.  Earnings in 2017 were reduced by a non-cash charge to write down net deferred tax assets by $6.2 million, or $0.36 per diluted share, due to the enactment of the Tax Cuts and Jobs Act, which included the reduction of the federal corporate income tax rate from 35% to 21% effective January 1, 2018.

“Washington Trust reported record full-year 2018 earnings, reached $5 billion in total assets and posted all-time high levels of total deposits and loans,” stated Edward O. Handy III, Washington Trust Chairman and Chief Executive Officer.  “These achievements are testaments to our continued success in growing our key business lines and expanding our presence throughout the region.”

Selected highlights for fourth quarter and full-year 2018 include:

  • Returns on average equity and average assets for the fourth quarter were 15.61% and 1.40%, respectively.  Full-year returns on average equity and average assets were at 16.20% and 1.46%, respectively.

  • Total loans were up by $124 million, or 3%, from the end of the prior quarter and up by $306 million, or 9%, from a year ago.

  • Total deposits were up by $110 million, or 3%, from the end of the preceding quarter and up by $281 million, or 9%, from a year ago.

  • In December, Washington Trust declared a quarterly dividend of 47 cents per share, representing a 4 cent per share, or 9%, increase over the preceding quarter.  Full-year 2018 dividends declared amounted to $1.76 per share, representing an increase of 22 cents per share, or 14%, over last year.

Net Interest Income
Net interest income was $33.9 million for the fourth quarter of 2018, up by $429 thousand, or 1%, from the third quarter of 2018.  Income associated with loan payoffs and prepayment penalties in the fourth quarter of 2018 was $144 thousand, compared to $173 thousand in the prior quarter.  The net interest margin was 2.95% for the fourth quarter, down by 4 basis points from 2.99% reported in the preceding quarter.  Excluding income associated with loan payoffs and prepayment penalties, the net interest margin was 2.94% for the fourth quarter, down by 4 basis points from 2.98% reported in the preceding quarter.

Significant linked quarter changes included:

  • Average interest-earning assets increased by $124 million, largely due to loan growth and purchases of securities that were made in the latter portion of the fourth quarter.  The yield on interest-earning assets for the fourth quarter was 4.13%, up by 10 basis points from the preceding quarter.  Excluding the impact of income associated with loan payoffs and prepayment penalties, the yield on interest-earning assets was 4.11%, up by 9 basis points from the preceding quarter.  The yield benefited from increased market interest rates.

  • Average interest-bearing liabilities increased by $103 million, including increases of $66 million in average in-market deposits and $37 million in average wholesale funding balances (wholesale brokered time deposits and Federal Home Loan Bank advances).  The cost of interest-bearing liabilities for the fourth quarter was 1.45%, up by 17 basis points from the preceding quarter, reflecting higher rates paid on wholesale funding sources and promotional time certificates of deposit.  The increase in the cost of funds also reflected competitive pricing on money market accounts and interest-bearing demand deposits.

Noninterest Income
Noninterest income totaled $15.2 million for the fourth quarter of 2018, down modestly by $52 thousand from the third quarter of 2018.  Significant linked quarter changes included:

  • Wealth management revenues were $9.0 million for the fourth quarter of 2018, down by $442 thousand, or 5%, on a linked quarter basis.  The decrease was concentrated in asset-based revenues.  Wealth management assets under administration were $5.9 billion at December 31, 2018, down by $552 million, or 9%, from the balance at September 30, 2018.  Both the decline in asset-based revenues and wealth management assets under administration were attributable to financial market declines during the quarter.

  • Mortgage banking revenues were $2.0 million for the fourth quarter of 2018, down by $646 thousand, or 25%, from the preceding quarter, largely due to a lower volume of loans sold and a lower sales yield on mortgage loans sold in the secondary market.

  • Loan related derivative income was $1.4 million for the fourth quarter of 2018, up by $1.1 million from the preceding quarter, due to a higher volume of commercial borrower loan related derivative transactions.

Noninterest Expenses
Noninterest expenses totaled $26.7 million for the fourth quarter of 2018, up by $620 thousand, or 2%, from the third quarter of 2018.  The linked quarter comparison of noninterest expenses was impacted by the following:

  • Included in other expenses were $833 thousand and $197 thousand, respectively, of write-down valuation adjustments on other real estate owned in the fourth quarter and third quarter of 2018.

  • In the fourth quarter of 2018, a reduction to noninterest expenses of $187 thousand was recognized, resulting from a nontaxable adjustment in the fair value of a contingent consideration liability that was initially recorded upon the completion of a 2015 acquisition.

  • In the third quarter of 2018, a one-time third-party vendor credit of $300 thousand was recognized as a reduction to outsourced services expense.

Excluding the impact of the aforementioned items, noninterest expenses for the fourth quarter of 2018 decreased by $129 thousand on a linked quarter basis.

Income tax expense totaled $4.5 million for the fourth quarter of 2018, down by $218 thousand from the preceding quarter.  The effective tax rate for the fourth quarter of 2018 was 21.0%, compared to 21.3% for the preceding quarter.  Based on current federal and applicable state income tax statutes, the Corporation currently expects its 2019 effective tax rate to be approximately 21.5%.

Investment Securities
The securities portfolio totaled $938 million at December 31, 2018, up by $115 million from the balance at September 30, 2018.  The increase reflected purchases of debt securities in the fourth quarter totaling $124 million, with a weighted average yield of 3.85%, as well as an increase in the fair value of available for sale securities.  These increases were partially offset by routine principal pay-downs on mortgage-backed securities and a called debt security.  Investment securities represented 19% of total assets at December 31, 2018, compared to 17% of total assets at September 30, 2018.

Loans
Total loans amounted to $3.7 billion at December 31, 2018, up by $124 million, or 3%, from the end of the third quarter.  Total commercial loans surpassed $2.0 billion at the end of 2018, increasing by $116 million, or 6%, in the fourth quarter, reflecting growth in the commercial real estate portfolio.  The residential real estate loan portfolio increased by $11 million, or 1%, from the balance at September 30, 2018, while total consumer loans declined by $3 million, or 1%, from the end of the third quarter.

Total loans rose by $306 million, or 9%, from the balance at the end of 2017, with growth of $190 million, or 10%, in the commercial loan portfolio and $133 million, or 11%, in the residential loan portfolio.

Deposits and Borrowings
Total deposits amounted to $3.5 billion at December 31, 2018, up by $110 million, or 3%, from the end of the preceding quarter.  Excluding the balances of wholesale brokered time deposits, total in-market deposits were up by $76 million, or 3%, largely due to growth in promotional time certificates of deposit.

Total deposits were up by $281 million, or 9%, from the balance at the end of 2017.  Excluding the balances of wholesale brokered time deposits, total in-market deposits were up by $202 million, or 7%, in 2018.

Federal Home Loan Bank advances amounted to $951 million at December 31, 2018, up by $122 million from the balance at September 30, 2018, to fund balance sheet growth.

Asset Quality
Total nonaccrual loans amounted to $11.7 million, or 0.32% of total loans, at December 31, 2018, compared to $10.8 million, or 0.30% of total loans, at September 30, 2018.  Total past due loans amounted to $13.6 million, or 0.37% of total loans, at December 31, 2018, compared to $13.5 million, or 0.38% of total loans, at September 30, 2018.

A loan loss provision totaling $800 thousand was recognized in the fourth quarter of 2018, compared to a loan loss provision of $350 thousand recognized in the preceding quarter.  These provisions were based on management's assessment of loss exposure, as well as loan loss allocations commensurate with growth and changes in the loan portfolio.  Net charge-offs totaled $237 thousand in the fourth quarter compared to $15 thousand in the preceding quarter.  The allowance for loan losses amounted to $27.1 million, or 0.74% of total loans, at December 31, 2018, compared to $26.5 million, or 0.75% of total loans, at September 30, 2018.

Capital and Dividends
Total shareholders' equity was $448 million at December 31, 2018, up by $20.3 million from September 30, 2018, including net income of $17.0 million, as well as an increase in the fair value of available for sale securities totaling $8.8 million and an increase of $2.4 million associated with the annual remeasurement of defined benefit pension plan obligations, both of which are net of tax and recognized in the accumulated other comprehensive income component of shareholders' equity.  These increases were partially offset by $8.2 million in dividend declarations made in the quarter.

Capital levels at December 31, 2018 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.56% at December 31, 2018, compared to 12.77% at September 30, 2018.  Book value per share amounted to $25.90 at December 31, 2018, compared to $24.75 at September 30, 2018.

The Board of Directors declared a quarterly dividend of 47 cents per share for the quarter ended December 31, 2018, an increase of 4 cents per share, or 9%, over the preceding quarter.  The dividend was paid on January 11, 2019 to shareholders of record on January 2, 2019.

Conference Call
Washington Trust will host a conference call to discuss its fourth quarter results, business highlights and outlook on Tuesday, January 29, 2019 at 8:30 a.m. (Eastern Time).  Individuals may dial in to the call at 1-877-407-9208.  An audio replay of the call will be available, shortly after the conclusion of the call, by dialing 1-844-512-2921 and entering the Replay PIN Number 13686319; the audio replay will be available through February 8, 2019.  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 March 31, 2019.

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: weakness in national, regional or international economic conditions or conditions affecting the banking or financial services industries or financial capital markets; volatility in national and international financial markets; reductions in net interest income resulting from interest rate volatility as well as changes in the balance and mix of loans and deposits; reductions in the market value or outflows 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 our competition; changes in legislation or regulation and accounting principles, policies and guidelines; occurrences of cyberattacks, hacking and identity theft; natural disasters; 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, 2017, 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)
      
 Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
Mar 31,
2018
Dec 31,
2017
Assets:     
Cash and due from banks$89,923 $72,934 $132,068 $85,680 $79,853 
Short-term investments 3,552  2,917  2,624  2,322  3,070 
Mortgage loans held for sale 20,996  22,571  35,207  19,269  26,943 
Securities:     
Available for sale, at fair value 927,810  812,647  776,693  787,842  780,954 
Held to maturity, at amortized cost 10,415  10,863  11,412  11,973  12,541 
Total securities 938,225  823,510  788,105  799,815  793,495 
Federal Home Loan Bank stock, at cost 46,068  44,525  46,281  41,127  40,517 
Loans:     
Total loans 3,680,360  3,556,203  3,490,230  3,387,406  3,374,071 
Less allowance for loan losses 27,072  26,509  26,174  25,864  26,488 
Net loans 3,653,288  3,529,694  3,464,056  3,361,542  3,347,583 
Premises and equipment, net 29,005  28,195  28,377  28,316  28,333 
Investment in bank-owned life insurance 80,463  79,891  79,319  73,782  73,267 
Goodwill 63,909  63,909  63,909  63,909  63,909 
Identifiable intangible assets, net 8,162  8,400  8,645  8,893  9,140 
Other assets 77,175  94,126  88,651  81,671  63,740 
Total assets$5,010,766 $4,770,672 $4,737,242 $4,566,326 $4,529,850 
Liabilities:     
Deposits:     
Noninterest-bearing deposits$603,216 $611,829 $577,656 $601,478 $578,410 
Interest-bearing deposits 2,920,832  2,802,519  2,743,955  2,654,956  2,664,297 
Total deposits 3,524,048  3,414,348  3,321,611  3,256,434  3,242,707 
Federal Home Loan Bank advances 950,722  828,392  901,053  808,677  791,356 
Junior subordinated debentures 22,681  22,681  22,681  22,681  22,681 
Other liabilities 65,131  77,342  70,326  65,453  59,822 
Total liabilities 4,562,582  4,342,763  4,315,671  4,153,245  4,116,566 
Shareholders’ Equity:     
Common stock 1,081  1,081  1,080  1,079  1,077 
Paid-in capital 119,888  119,220  118,883  118,172  117,961 
Retained earnings 355,524  346,685  336,670  326,505  317,756 
Accumulated other comprehensive loss (28,309) (39,077) (35,062) (32,675) (23,510)
Total shareholders’ equity 448,184  427,909  421,571  413,081  413,284 
Total liabilities and shareholders’ equity$5,010,766 $4,770,672 $4,737,242 $4,566,326 $4,529,850 



 
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; Dollars in thousands, except per share amounts)
         
 For the Three Months Ended For the Twelve Months Ended
 Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
Mar 31,
2018
Dec 31,
2017
 Dec 31,
2018
Dec 31,
2017
Interest income:        
Interest and fees on loans$40,588 $38,877 $37,101 $34,578 $33,459  $151,144 $127,962 
Taxable interest on securities 5,957  5,383  5,358  5,118  4,719   21,816  18,927 
Nontaxable interest on securities 9  9  20  23  24   61  249 
Dividends on Federal Home Loan Bank stock 669  634  550  516  481   2,369  1,774 
Other interest income 294  261  257  205  217   1,017  674 
Total interest and dividend income 47,517  45,164  43,286  40,440  38,900   176,407  149,586 
Interest expense:        
Deposits 7,953  6,546  5,254  4,422  4,136   24,175  15,064 
Federal Home Loan Bank advances 5,446  4,937  4,707  3,983  3,708   19,073  14,377 
Junior subordinated debentures 240  232  214  183  167   869  613 
Other interest expense              1 
Total interest expense 13,639  11,715  10,175  8,588  8,011   44,117  30,055 
Net interest income 33,878  33,449  33,111  31,852  30,889   132,290  119,531 
Provision for loan losses 800  350  400    200   1,550  2,600 
Net interest income after provision for loan losses 33,078  33,099  32,711  31,852  30,689   130,740  116,931 
Noninterest income:        
Wealth management revenues 9,012  9,454  9,602  10,273  9,914   38,341  39,346 
Mortgage banking revenues 1,978  2,624  2,941  2,838  3,097   10,381  11,392 
Service charges on deposit accounts 977  885  903  863  946   3,628  3,672 
Card interchange fees 977  983  961  847  904   3,768  3,502 
Income from bank-owned life insurance 572  572  537  515  537   2,196  2,161 
Loan related derivative income 1,374  278  668  141  470   2,461  3,214 
Other income 273  419  381  266  342   1,339  1,522 
Total noninterest income 15,163  15,215  15,993  15,743  16,210   62,114  64,809 
Noninterest expense:        
Salaries and employee benefits 16,918  17,283  17,304  17,772  17,194   69,277  68,891 
Outsourced services 2,510  1,951  2,350  1,873  1,960   8,684  6,920 
Net occupancy 1,946  2,013  1,930  2,002  1,859   7,891  7,521 
Equipment 983  1,080  1,069  1,180  1,198   4,312  5,358 
Legal, audit and professional fees 587  559  555  726  562   2,427  2,294 
FDIC deposit insurance costs 376  410  422  404  389   1,612  1,647 
Advertising and promotion 460  440  329  177  466   1,406  1,481 
Amortization of intangibles 239  245  247  248  248   979  1,035 
Change in fair value of contingent consideration (187)       (333)  (187) (643)
Other expenses 2,850  2,081  2,082  2,748  2,211   9,761  9,596 
Total noninterest expense 26,682  26,062  26,288  27,130  25,754   106,162  104,100 
Income before income taxes 21,559  22,252  22,416  20,465  21,145   86,692  77,640 
Income tax expense 4,523  4,741  4,742  4,254  13,163   18,260  31,715 
Net income$17,036 $17,511 $17,674 $16,211 $7,982  $68,432 $45,925 
         
Net income available to common shareholders$17,004 $17,475 $17,636 $16,173 $7,958  $68,288 $45,817 
         
Weighted average common shares outstanding:        
Basic 17,297  17,283  17,272  17,234  17,223   17,272  17,207 
Diluted 17,385  17,382  17,387  17,345  17,349   17,391  17,338 
Earnings per common share:        
Basic$0.98 $1.01 $1.02 $0.94 $0.46  $3.95 $2.66 
Diluted$0.98 $1.01 $1.01 $0.93 $0.46  $3.93 $2.64 
         
Cash dividends declared per share$0.47 $0.43 $0.43 $0.43 $0.39  $1.76 $1.54 


 
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited; Dollars in thousands, except per share amounts)
  
 Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
Mar 31,
2018
Dec 31,
2017
Share and Equity Related Data:     
Book value per share$25.90 $24.75 $24.40 $23.93 $23.99 
Tangible book value per share - Non-GAAP (1)$21.74 $20.57 $20.20 $19.71 $19.75 
Market value per share$47.53 $55.30 $58.10 $53.75 $53.25 
Shares issued and outstanding at end of period 17,302  17,290  17,278  17,262  17,227 
      
Capital Ratios (2):     
Tier 1 risk-based capital 11.81% 12.00% 11.84% 11.78% 11.65%
Total risk-based capital 12.56% 12.77% 12.61% 12.56% 12.45%
Tier 1 leverage ratio 8.89% 8.91% 8.87% 8.84% 8.79%
Common equity tier 1 11.20% 11.37% 11.20% 11.13% 10.99%
      
Balance Sheet Ratios:     
Equity to assets 8.94% 8.97% 8.90% 9.05% 9.12%
Tangible equity to tangible assets - Non-GAAP (1) 7.62% 7.57% 7.48% 7.57% 7.63%
Loans to deposits (3) 104.3% 104.0% 105.3% 103.8% 104.1%


   For the Twelve Months Ended
 For the Three Months Ended 
 Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
Mar 31,
2018
Dec 31,
2017
 Dec 31,
2018
Dec 31,
2017
Performance Ratios (4):        
Net interest margin (5)2.95%2.99%3.05%3.03%2.95% 3.01%2.93%
Return on average assets (net income divided by average assets)1.40%1.47%1.53%1.45%0.71% 1.46%1.04%
Return on average tangible assets - Non-GAAP (1)1.42%1.49%1.56%1.48%0.72% 1.48%1.06%
Return on average equity (net income available for common shareholders divided by average equity)15.61%16.26%16.99%15.96%7.56% 16.20%11.23%
Return on average tangible equity - Non-GAAP (1)18.75%19.59%20.58%19.40%9.17% 19.57%13.70%
Efficiency ratio (6)54.4%53.6%53.5%57.0%54.7% 54.6%56.5%

(1) See the section labeled “SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures” at the end of this document.
(2) Estimated for December 31, 2018 and actuals for the remaining 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).

 
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited; Dollars in thousands)
     
 For the Three Months Ended For the Twelve Months Ended
 Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
Mar 31,
2018
Dec 31,
2017
 Dec 31,
2018
Dec 31,
2017
Wealth Management Results        
Wealth Management Revenues:        
Asset-based revenues$8,930 $9,322 $9,136 $9,955 $9,686  $37,343 $38,125 
Transaction-based revenues 82  132  466  318  228   998  1,221 
Total wealth management revenues$9,012 $9,454 $9,602 $10,273 $9,914  $38,341 $39,346 
         
Assets Under Administration (AUA):        
Balance at beginning of period$6,462,340 $6,220,155 $6,343,720 $6,714,637 $6,587,899  $6,714,637 $6,063,293 
Net investment (depreciation) appreciation & income (534,847) 232,245  133,450  (32,024) 163,681   (201,176) 817,577 
Net client asset flows (16,679) 9,940  (257,015) (338,893) (36,943)  (602,647) (166,233)
Balance at end of period$5,910,814 $6,462,340 $6,220,155 $6,343,720 $6,714,637  $5,910,814 $6,714,637 
         
Percentage of AUA that are managed assets 90% 91% 92% 92% 93%  90% 93%
         
Mortgage Banking Results        
Mortgage Banking Revenues:        
Gains & commissions on loan sales, net (1)$1,798 $2,485 $2,786 $2,679 $2,987  $9,748 $10,991 
Residential mortgage servicing fee income, net 180  139  155  159  110   633  401 
Total mortgage banking revenues$1,978 $2,624 $2,941 $2,838 $3,097  $10,381 $11,392 
         
Residential Mortgage Loan Originations:        
Originations for retention in portfolio$58,515 $80,751 $128,479 $67,840 $75,595  $335,585 $318,674 
Originations for sale to secondary market (2) 96,792  119,832  122,693  87,720  143,834   427,037  533,878 
Total mortgage loan originations$155,307 $200,583 $251,172 $155,560 $219,429  $762,622 $852,552 
         
Residential Mortgage Loans Sold:        
Sold with servicing rights retained$16,577 $24,422 $24,367 $33,575 $39,769  $98,941 $129,358 
Sold with servicing rights released (2) 81,985  107,694  81,054  63,265  105,416   333,998  407,514 
Total mortgage loans sold$98,562 $132,116 $105,421 $96,840 $145,185  $432,939 $536,872 

(1) Includes gains on loan sales, commissions on loans originated for others, servicing right gains, fair value adjustments on loans held for sale, and fair value adjustments and gains on forward loan commitments.
(2) Also includes loans originated in a broker capacity.

 
END OF PERIOD LOAN AND DEPOSIT COMPOSITION
(Unaudited; Dollars in thousands)
  
 Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
Mar 31,
2018
Dec 31,
2017
Loans:     
Commercial real estate (1)$1,392,408 $1,240,350 $1,218,643 $1,217,278 $1,210,495 
Commercial & industrial 620,704  656,882  632,029  603,830  612,334 
Total commercial 2,013,112  1,897,232  1,850,672  1,821,108  1,822,829 
      
Residential real estate (2) 1,360,387  1,349,340  1,327,418  1,249,890  1,227,248 
      
Home equity 280,626  282,331  283,744  285,723  292,467 
Other 26,235  27,300  28,396  30,685  31,527 
Total consumer 306,861  309,631  312,140  316,408  323,994 
Total loans$3,680,360 $3,556,203 $3,490,230 $3,387,406 $3,374,071 

(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.

    
 December 31, 2018 December 31, 2017
 Balance% of Total Balance% of Total
Commercial Real Estate Loans by Property Location:     
Rhode Island$377,249 27% $360,834 30%
Connecticut 570,116 41   461,230 38 
Massachusetts 356,615 26   309,013 26 
Subtotal 1,303,980 94   1,131,077 94 
All other states 88,428 6   79,418 6 
Total commercial real estate loans$1,392,408 100% $1,210,495 100%
      
Residential Real Estate Loans by Property Location:     
Rhode Island$352,141 26% $343,340 28%
Connecticut 141,775 10   140,843 12 
Massachusetts 849,435 63   726,712 59 
Subtotal 1,343,351 99   1,210,895 99 
All other states 17,036 1   16,353 1 
Total residential real estate loans$1,360,387 100% $1,227,248 100%


      
 Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
Mar 31,
2018
Dec 31,
2017
Deposits:     
Noninterest-bearing demand deposits$603,216 $611,829 $577,656 $601,478 $578,410 
Interest-bearing demand deposits 178,733  151,322  136,640  83,249  82,728 
NOW accounts 466,568  468,578  481,905  470,112  466,605 
Money market accounts 646,878  650,976  604,954  693,748  731,345 
Savings accounts 373,545  372,425  375,983  376,608  368,524 
Time deposits (in-market) 778,105  715,635  698,286  625,965  617,368 
In-market deposits 3,047,045  2,970,765  2,875,424  2,851,160  2,844,980 
Wholesale brokered time deposits 477,003  443,583  446,187  405,274  397,727 
Total deposits$3,524,048 $3,414,348 $3,321,611 $3,256,434 $3,242,707 



 
CREDIT & ASSET QUALITY DATA
(Unaudited; Dollars in thousands)
  
 Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
Mar 31,
2018
Dec 31,
2017
Asset Quality Ratios:     
Nonperforming assets to total assets 0.28% 0.29% 0.32% 0.30% 0.34%
Nonaccrual loans to total loans 0.32% 0.30% 0.34% 0.31% 0.45%
Total past due loans to total loans 0.37% 0.38% 0.48% 0.57% 0.59%
Allowance for loan losses to nonaccrual loans 231.25% 245.25% 222.85% 245.83% 174.14%
Allowance for loan losses to total loans 0.74% 0.75% 0.75% 0.76% 0.79%
      
Nonperforming Assets:     
Commercial real estate$925 $ $ $ $4,954 
Commercial & industrial   122  397  397  283 
Total commercial 925  122  397  397  5,237 
Residential real estate 9,346  9,063  10,206  9,340  9,414 
Home equity 1,436  1,624  1,133  771  544 
Other consumer     9  13  16 
Total consumer 1,436  1,624  1,142  784  560 
Total nonaccrual loans 11,707  10,809  11,745  10,521  15,211 
Other real estate owned 2,142  2,974  3,206  3,206  131 
Total nonperforming assets$13,849 $13,783 $14,951 $13,727 $15,342 
      
Past Due Loans (30 days or more past due):     
Commercial real estate$1,080 $931 $ $ $4,960 
Commercial & industrial   142  2,851  3,295  4,076 
Total commercial 1,080  1,073  2,851  3,295  9,036 
Residential real estate 10,520  9,398  11,243  11,806  7,855 
Home equity 1,989  2,939  2,585  4,235  3,141 
Other consumer 33  109  16  22  43 
Total consumer 2,022  3,048  2,601  4,257  3,184 
Total past due loans$13,622 $13,519 $16,695 $19,358 $20,075 
      
Accruing loans 90 days or more past due$ $ $ $ $ 
Nonaccrual loans included in past due loans$8,613 $6,425 $8,575 $7,066 $11,788 


 
CREDIT & ASSET QUALITY DATA
(Unaudited; Dollars in thousands)
 
 For the Three Months Ended For the Twelve Months Ended
 Dec 31,
2018
Sep 30,
2018
Jun 30,
2018
Mar 31,
2018
Dec 31,
2017
 Dec 31,
2018
Dec 31,
2017
Nonaccrual Loan Activity:        
Balance at beginning of period$10,809 $11,745 $10,521 $15,211 $18,511  $15,211 $22,058 
Additions to nonaccrual status 2,918  2,179  2,457  1,210  462   8,764  6,515 
Loans returned to accruing status (1,500) (361) (475) (344) (1,316)  (2,680) (4,052)
Loans charged-off (298) (96) (103) (690) (1,047)  (1,187) (2,462)
Loans transferred to other real estate owned       (3,074)    (3,074) (576)
Payments, payoffs and other changes (222) (2,658) (655) (1,792) (1,399)  (5,327) (6,272)
Balance at end of period$11,707 $10,809 $11,745 $10,521 $15,211  $11,707 $15,211 
         
Allowance for Loan Losses:        
Balance at beginning of period$26,509 $26,174 $25,864 $26,488 $27,308  $26,488 $26,004 
Provision charged to earnings 800  350  400    200   1,550  2,600 
Charge-offs (298) (96) (103) (690) (1,047)  (1,187) (2,462)
Recoveries 61  81  13  66  27   221  346 
Balance at end of period$27,072 $26,509 $26,174 $25,864 $26,488  $27,072 $26,488 
         
Net Loan Charge-Offs (Recoveries):        
Commercial real estate$ $ $ $602 $932  $602 $1,785 
Commercial & industrial (13) (70) (3) (23) 43   (109) 167 
Total commercial (13) (70) (3) 579  975   493  1,952 
Residential real estate 156  68  5    32   229  35 
Home equity 65  (2) 73  28  (2)  164  46 
Other consumer 29  19  15  17  15   80  83 
Total consumer 94  17  88  45  13   244  129 
Total$237 $15 $90 $624 $1,020  $966 $2,116 
         
Net charge-offs to average loans (annualized) 0.03% % 0.01% 0.07% 0.12%  0.03% 0.06%
                       

The following table presents average balance and interest rate information.  Tax-exempt income is converted to a FTE basis using the statutory federal income tax rate adjusted for applicable state income taxes net of the related federal tax benefit.  Unrealized gains (losses) on available for sale securities and fair value adjustments on mortgage loans held for sale are excluded from the average balance and yield calculations.  Nonaccrual and renegotiated loans, as well as interest recognized on these loans are included in amounts presented for loans.  Certain previously reported amounts have been reclassified to conform to current year's presentation.

 
CONSOLIDATED AVERAGE BALANCE SHEETS (FTE Basis)
(Unaudited; Dollars in thousands)
            
For the Three Months EndedDecember 31, 2018 September 30, 2018 Quarter Change
 Average
Balance
InterestYield/
Rate
 Average
Balance
InterestYield/
Rate
 Average
Balance
InterestYield/
Rate
Assets:           
Cash, federal funds sold and short-term investments$51,584 $294 2.26% $52,218 $261 1.98% ($634)$33 0.28%
Mortgage loans held for sale 24,178  289 4.74   34,571  384 4.41   (10,393) (95)0.33 
Taxable debt securities 877,186  5,957 2.69   825,302  5,383 2.59   51,884  574 0.10 
Nontaxable debt securities 935  12 5.09   935  11 4.67     1 0.42 
Total securities 878,121  5,969 2.70   826,237  5,394 2.59   51,884  575 0.11 
FHLB stock 44,662  669 5.94   45,181  634 5.57   (519) 35 0.37 
Commercial real estate 1,309,957  15,500 4.69   1,233,230  13,931 4.48   76,727  1,569 0.21 
Commercial & industrial 636,156  7,732 4.82   642,005  7,720 4.77   (5,849) 12 0.05 
Total commercial 1,946,113  23,232 4.74   1,875,235  21,651 4.58   70,878  1,581 0.16 
Residential real estate 1,348,993  13,516 3.98   1,331,304  13,362 3.98   17,689  154  
Home equity 280,085  3,553 5.03   284,080  3,469 4.84   (3,995) 84 0.19 
Other 26,679  329 4.89   27,635  344 4.94   (956) (15)(0.05)
Total consumer 306,764  3,882 5.02   311,715  3,813 4.85   (4,951) 69 0.17 
Total loans 3,601,870  40,630 4.48   3,518,254  38,826 4.38   83,616  1,804 0.10 
Total interest-earning assets 4,600,415  47,851 4.13   4,476,461  45,499 4.03   123,954  2,352 0.10 
Noninterest-earning assets 239,743     248,437     (8,694)  
Total assets$4,840,158    $4,724,898    $115,260   
Liabilities and Shareholders' Equity:           
Interest-bearing demand deposits$148,840 $636 1.70% $134,632 $465 1.37% $14,208 $171 0.33%
NOW accounts 455,052  207 0.18   458,143  104 0.09   (3,091) 103