Slide 1

Press Release

Washington Trust Reports First Quarter 2020 Earnings

Company Release - 4/27/2020 8:00 AM ET

WESTERLY, R.I., April 27, 2020 /PRNewswire/ -- Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced first quarter 2020 net income of $11.9 million, or $0.68 per diluted share, compared to net income of $15.5 million, or $0.89 per diluted share, reported for the fourth quarter of 2019.  Our results in the first quarter of 2020 reflect the adoption of the Current Expected Credit Losses ("CECL") accounting methodology, as well as the impact of the COVID-19 pandemic.

(PRNewsfoto/Washington Trust Bancorp, Inc.)

"Washington Trust reported good balance sheet growth during the quarter, while overall earnings were impacted by several extraordinary factors, including continued Federal Reserve interest rate cuts, the implementation of CECL, and the COVID-19 pandemic," stated Edward O. Handy III, Washington Trust Chairman and Chief Executive Officer.  "We believe our strong financial foundation, solid capital position, disciplined credit culture, and diversified business model will help us navigate through the challenging times ahead."

As the nation's oldest community bank, Washington Trust has managed through numerous economic cycles of varying intensity and has always been there for our employees, customers and communities during difficult financial times.  The COVID-19 pandemic has caused an unprecedented disruption to the economy and the communities we serve.  In response, we are committed to working with and supporting our customers experiencing financial difficulty due to the COVID-19 pandemic, including loan payment deferrals and participation in the Small Business Administration's Paycheck Protection Program.  In addition, we implemented our business continuity plans, which include remote working arrangements for the majority of our workforce, closing our branches and offering drive-through banking or special banking services by appointment only, and promoting social distancing.

Selected financial highlights for the first quarter of 2020 include:

  • Returns on average equity and average assets for the first quarter were 9.49% and 0.89%, respectively.
  • Total revenues (net interest income plus noninterest income) amounted to $52.5 million for the first quarter, up by $3.9 million, or 8%, from the preceding quarter.
  • Residential mortgage loans originated for portfolio or sale amounted to $292 million in the first quarter of 2020, up by $11 million from the preceding quarter and up by $154 million from the first quarter of 2019.
  • Total loans amounted to $4.1 billion at March 31, 2020, up by  $197 million, or 5%, from the end of the preceding quarter.  Total loans were up by $352 million, or 9%, from a year ago.
  • Total in-market deposits (total deposits less out-of-market wholesale brokered deposits) amounted to $3.3 billion,  up by $60 million, or 2%, from December 31, 2019 and up by $254 million, or 8%, from a year ago.
  • In March, Washington Trust declared a quarterly dividend of 51 cents per share.

Net Interest Income

Net interest income was $32.6 million for the first quarter of 2020, up by $608 thousand, or 2%, from the fourth quarter of 2019.  The net interest margin was 2.61% for the first quarter, unchanged from the preceding quarter.

Significant linked quarter changes included:

  • Average interest-earning assets increased by $164 million, with increases of $137 million in average loans and $31 million in average investment securities.  The yield on interest-earning assets for the first quarter was 3.76%, down by 10 basis points from the preceding quarter, reflecting the impact of lower market interest rates.
  • Average interest-bearing liabilities increased by $167 million, with increases of $49 million in average in-market deposits and $117 million in average wholesale funding balances (wholesale brokered time deposits and Federal Home Loan Bank advances).  The cost of interest-bearing liabilities for the first quarter of 2020 was 1.41%, down by 12 basis points from the preceding quarter, also due to lower market interest rates.

Noninterest Income

Noninterest income totaled $19.9 million for the first quarter of 2020, up by $3.3 million, or 20%, from the fourth quarter of 2019.  Significant linked quarter changes included:

  • Wealth management revenues amounted to $8.7 million for the first quarter of 2020, down by $205 thousand, or 2%, on a linked quarter basis.  Asset-based revenues decreased by $376 thousand, or 4%, from the preceding quarter.  This  decrease was partially offset by an increase of $171 thousand in transaction-based revenues on linked quarter basis, largely due to tax reporting and preparation fees, which are generally concentrated in the first half of the year.

Wealth management assets under administration amounted to $5.3 billion at March 31, 2020, down by $898 million, or 14%, from December 31, 2019.  Of this decrease, $773 million was related to the decline in financial markets in March. The average balance of assets under administration for the first quarter of 2020 decreased by approximately $239 million, or 4%, from the average balance for the preceding quarter.

  • Mortgage banking revenues totaled $6.1 million for the first quarter of 2020, up by $2.4 million, or 66%, from the fourth quarter of 2019.  The linked quarter change reflected an increase in the mortgage pipeline and a corresponding increase in the fair value of mortgage loan commitments and loans held for sale as of March 31, 2020.  The increase was partially offset by a lower sales volume and sales yield on loans sold to the secondary market.  Mortgage loans sold to the secondary market totaled $162 million in the first quarter of 2020, down by $15 million from the preceding quarter.

Mortgage banking revenues for the first quarter of 2020 increased by $3.5 million, or 130%, compared to the first quarter of 2019.  This reflected increases in both the sale volume and sales yield on loans sold to the secondary market, as well as an increase in the fair value of mortgage loan commitments and loans held for sale.  Mortgage loans sold to the secondary market were up by $70 million from the first quarter of 2019.

  • Loan related derivative income was $2.5 million for the first quarter of 2020, up by $1.3 million, or 120%, reflecting higher gains on commercial borrower interest rate swap transactions.

Noninterest Expenses

Noninterest expenses totaled $30.5 million for the first quarter of 2020, up by $1.7 million, or 6%, from the fourth quarter of 2019.  The linked quarter comparison of noninterest expenses was impacted by the following:

  • In the first quarter of 2020, we established a contingency reserve of approximately $800 thousand largely due to a potential loss associated with counterfeit checks drawn on a commercial customer's account, which arose at the end of March and remains under investigation.  This was included in other noninterest expenses.
  • In the fourth quarter of 2019, a write-down adjustment on one other real estate owned ("OREO") property of $1.0 million was recognized and classified in other expenses.
  • In the fourth quarter of 2019, FDIC assessment credits of $235 thousand were recognized.  The credits were fully utilized in 2019, therefore no such credits were recognized in the first quarter of 2020.

Excluding the impact of the aforementioned items, noninterest expenses for the first quarter of 2020 increased by $1.7 million, or 6%, on a linked quarter basis, reflecting increases in salaries and employee benefits expense and outsourced services expense.  Salaries and employee benefits expense was up by $1.1 million, reflecting payroll tax resets associated with the start of the new calendar year and merit increases.  Outsourced services expense was up by $248 thousand from the preceding quarter, reflecting volume-related increases in third party processing costs largely related to customer loan related derivative transactions.

Income tax expense totaled $3.1 million for the first quarter of 2020, down by $1.2 million from the preceding quarter.  The effective tax rate for the first quarter of 2020 was 20.9%, compared to 21.8% for the preceding quarter.  Based on current federal and applicable state income tax statutes, the Corporation currently expects its full-year 2020 effective tax rate to be approximately 20.5%.

Investment Securities

The securities portfolio totaled $917 million at March 31, 2020, up by $18 million, or 2%, from December 31, 2019, reflecting purchases of U.S. government agency and U.S. government-sponsored debt securities, including mortgage-backed securities, as well as an increase in the fair value of available for sale securities.  These increases were partially offset by routine pay-downs on mortgage-backed securities and calls of debt securities.  First quarter 2020 purchases totaled $116 million, with a weighted average yield of 2.35%.  Securities represented 16% of total assets March 31, 2020 and 17% at December 31, 2019.

Loans

Total loans stood at $4.1 billion at March 31, 2020, up by $197 million, or 5% from the end of the preceding quarter.  Linked quarter changes included:

  • Commercial loans increased by $140 million, or 7%, from December 31, 2019, with net increases of $70 million in both the commercial real estate portfolio and the commercial and industrial portfolio.  In the first quarter of 2020, commercial loan originations and construction advances totaled approximately $169 million, and C&I line utilization increased by approximately $25 million.  These increases were partially offset by payoffs and paydowns.
  • Residential real estate loans increased by $61 million, or 4%, from December 31, 2019 and included purchases of $51 million of residential mortgage loans with a weighted average rate of 3.38%.  The purchased loans were individually evaluated to our underwriting standards and are predominantly secured by properties in Massachusetts.
  • The consumer loan portfolio decreased by $4 million from the balance at December 31, 2019.

Deposits and Borrowings

Total deposits amounted to $3.7 billion at March 31, 2020, up by $207 million, or 6%, from the end of the preceding quarter.  Included in total deposits are out-of-market wholesale brokered time deposits, which increased by $147 million from December 31, 2019.  Excluding wholesale brokered time deposits, in-market deposits at March 31, 2020 were up by $60 million, or 2%, from the end of the preceding quarter, reflecting modest growth across substantially all deposit categories.

Federal Home Loan Bank advances totaled $1.2 billion at March 31, 2020, up by $57 million from December 31, 2019.

Asset Quality

Nonperforming assets amounted to $17.9 million at March 31, 2020, down by $571 thousand from the end of the preceding quarter.  This decline reflected a $1.1 million decrease in OREO, partially offset by a $510 thousand increase in nonaccrual loans.  The decrease in OREO resulted from the first quarter sale of a commercial property essentially at its carrying value.

Asset quality metrics remained at stable levels in the first quarter of 2020.  Total nonaccrual loans amounted to $17.9 million, or 0.44% of total loans, at March 31, 2020, compared to $17.4 million, or 0.45% of total loans, at December 31, 2019.  Total past due loans amounted to $16.5 million, or 0.40% of total loans, at March 31, 2020, compared to $15.7 million, or 0.40% of total loans, at December 31, 2019.  Given the uncertain impact to the economy of the COVID-19 pandemic, Washington Trust continues to actively monitor asset quality as the potential exists for adverse events to impact asset quality trends.

Effective January 1, 2020, Washington Trust adopted Accounting Standards Update No. 2016-13, often referred to as CECL, which requires the measurement of expected lifetime credit losses for financial assets measured at amortized cost, as well as unfunded commitments that are considered off-balance sheet credit exposures.  CECL requires that the allowance for credit losses ("ACL") be calculated based on current expected credit losses over the full remaining expected life of the financial assets and also consider expected future changes in macroeconomic conditions.  Upon adoption of CECL, Washington Trust's ACL on loans (a contra-asset) increased by $6.5 million, or 24%, and the ACL on unfunded commitments (a liability) increased by $1.5 million, or 506%, as compared to December 31, 2019.  This increase in the ACL on loans and unfunded commitments upon the adoption of CECL resulted in a $6.1 million decrease to retained earnings, net of deferred tax balances of $1.9 million.

In the first quarter of 2020, a provision for credit losses of $7.0 million was charged to earnings and was mainly attributable to the significant deterioration in the economic forecast due to the COVID-19 pandemic.  Continued uncertainty regarding the severity and duration of the pandemic and related economic effects will continue to affect the accounting for credit losses under CECL.  Under the previous incurred loss accounting methodology, no provision was recognized in the fourth quarter of 2019.

In the first quarter of 2020, net charge-offs of $623 thousand were recognized, compared to net recoveries of $17 thousand in the preceding quarter.

The ACL on loans amounted to $39.7 million, or 0.97% of total loans, at March 31, 2020, compared to $27.0 million, or 0.69% of total loans, at December 31, 2019.  The ACL on unfunded commitments, included in other liabilities on the Consolidated Balance Sheets, amounted to $2.0 million at March 31, 2020, compared to $293 thousand at December 31, 2019.

Capital and Dividends

Total shareholders' equity was $508.6 million at March 31, 2020, up by $5.1 million from December 31, 2019.  This included net income of $11.9 million and an increase of $12.2 million in the accumulated other comprehensive income component of shareholders' equity, largely reflecting the change in fair value of available for sale debt securities.  These increases were partially offset by $8.9 million in dividend declarations, the $6.1 million decrease to retained earnings due to the adoption of CECL and a net increase in treasury stock of $3.8 million.

In the first quarter of 2020, Washington Trust repurchased 124,863 shares, totaling $4.3 million, at an average price of $34.61 under its previously announced 2019 Stock Repurchase Program.  Due to the economic uncertainty resulting from COVID-19, Washington Trust suspended its 2019 Stock Repurchase Program effective March 25, 2020.

Capital levels at March 31, 2020 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.42% at March 31, 2020, compared to 12.94% at December 31, 2019.  Washington Trust has elected the CECL phase-in option provided by regulatory guidance, which delays the estimated impact of CECL on regulatory capital and phases it in over a three year period beginning in 2022.

Book value per share amounted to $29.48 at March 31, 2020, compared to $29.00 at December 31, 2019.

The Board of Directors declared a quarterly dividend of 51 cents per share for the quarter ended March 31, 2020.  The dividend was paid on April 9, 2020 to shareholders of record on April 1, 2020.

Conference Call

Washington Trust will host a conference call to discuss its first quarter results, business highlights and outlook on Monday, April 27, 2020 at 11:30 a.m. (Eastern Time).  Individuals may dial in to the call at 1-888-317-6016.  An audio replay of the call will be available, shortly after the conclusion of the call, by dialing 1-877-344-7529 and entering the Replay PIN Number 10142316; the audio replay will be available through May 11, 2020.  Also, a webcast of the call will be posted in the Investor Relations section of Washington Trust's web site, http://ir.washtrust.com, and will be available through June 30, 2020.

Background

Washington Trust Bancorp, Inc. is the parent of The Washington Trust Company.  Founded in 1800, Washington Trust is the oldest community bank in the nation, the largest state-chartered bank headquartered in Rhode Island and one of the Northeast's premier financial services companies.  Washington Trust offers a full range of financial services, including commercial banking, mortgage banking, personal banking and wealth management and trust services through its offices located in Rhode Island, Connecticut and Massachusetts.  The Corporation's common stock trades on NASDAQ under the symbol WASH.  Investor information is available on the Corporation's web site at http://ir.washtrust.com.

Forward-Looking Statements

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

Some of the factors that might cause these differences include the following: the negative impacts and disruptions of the COVID-19 pandemic and measures taken to contain its spread on our employees, customers, business operations, credit quality, financial position, liquidity and results of operations; the length and extent of the economic contraction as a result of the COVID-19 pandemic; continued deterioration in local, regional, national or international economic conditions or conditions affecting the banking or financial services industries, financial capital markets and the customers and communities we serve; changes in consumer behavior due to changing business and economic conditions or legislative or regulatory initiatives; continued volatility in national and international financial markets; reductions in net interest income resulting from interest rate volatility as well as changes in the balance and mix of loans and deposits; reductions in the market value or outflows of wealth management assets under administration; decreases in the value of securities and other assets; reductions in loan demand; changes in loan collectibility, increases in defaults and charge-off rates; changes in the size and nature of our competition; changes in legislation or regulation and accounting principles, policies and guidelines; operational risks including, but not limited to, cybersecurity breaches, fraud, natural disasters and future pandemics; reputational risk relating to our participation in the Paycheck Protection Program and other pandemic-related legislative and regulatory initiatives and programs; and changes in the assumptions used in making such forward-looking statements. In addition, the factors described under "Risk Factors" in Item 1A of our Annual Report on  Form 10-K for the fiscal year ended December 31, 2019, as updated by our Quarterly Reports on Form 10-Q and other filings submitted to the SEC, may result in these differences. You should carefully review all of these factors and you should be aware that there may be other factors that could cause these differences. These forward-looking statements were based on information, plans and estimates at the date of this report, and we assume no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

Supplemental Information - Explanation of Non-GAAP Financial Measures

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


 


Washington Trust Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; Dollars in thousands)








Mar 31,
2020

Dec 31,
2019

Sep 30,
2019

Jun 30,
2019

Mar 31,
2019

Assets:






Cash and due from banks

$178,678


$132,193


$141,768


$115,904


$88,242


Short-term investments

6,591


6,262


4,336


3,910


3,317


Mortgage loans held for sale, at fair value

49,751


27,833


44,657


39,996


14,608


Available for sale debt securities, at fair value

917,392


899,490


887,020


969,168


994,881


Federal Home Loan Bank stock, at cost

53,576


50,853


45,030


49,759


48,025


Loans:






Total loans

4,090,396


3,892,999


3,778,106


3,730,339


3,738,469


Less: allowance for credit losses on loans

39,665


27,014


26,997


27,398


27,644


Net loans

4,050,731


3,865,985


3,751,109


3,702,941


3,710,825


Premises and equipment, net

28,543


28,700


29,293


29,302


29,822


Operating lease right-of-use assets

26,098


26,792


27,500


28,174


28,249


Investment in bank-owned life insurance

83,053


82,490


81,920


81,351


80,786


Goodwill

63,909


63,909


63,909


63,909


63,909


Identifiable intangible assets, net

6,988


7,218


7,448


7,684


7,923


Other assets

155,669


100,934


114,888


97,574


84,142


Total assets

$5,620,979


$5,292,659


$5,198,878


$5,189,672


$5,154,729


Liabilities:






Deposits:






Noninterest-bearing deposits

$622,893


$609,924


$619,839


$587,326


$577,319


Interest-bearing deposits

3,083,421


2,888,958


2,966,314


2,917,296


2,926,941


Total deposits

3,706,314


3,498,882


3,586,153


3,504,622


3,504,260


Federal Home Loan Bank advances

1,198,534


1,141,464


956,786


1,060,960


1,056,129


Junior subordinated debentures

22,681


22,681


22,681


22,681


22,681


Operating lease liabilities

28,184


28,861


29,541


30,210


30,187


Other liabilities

156,669


97,279


105,892


86,994


71,629


Total liabilities

5,112,382


4,789,167


4,701,053


4,705,467


4,684,886


Shareholders' Equity:






Common stock

1,085


1,085


1,084


1,083


1,082


Paid-in capital

123,167


123,281


121,900


121,115


120,743


Retained earnings

387,243


390,363


383,765


373,873


365,521


Accumulated other comprehensive income (loss)

929


(11,237)


(8,924)


(11,866)


(17,503)


Treasury stock, at cost

(3,827)






Total shareholders' equity

508,597


503,492


497,825


484,205


469,843


Total liabilities and shareholders' equity

$5,620,979


$5,292,659


$5,198,878


$5,189,672


$5,154,729


 

 


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,
2020

Dec 31,
2019

Sep 30,
2019

Jun 30,
2019

Mar 31,
2019

Interest income:






Interest and fees on loans

$40,008


$40,079


$41,558


$42,138


$41,744


Interest on mortgage loans held for sale

285


359


410


288


180


Taxable interest on debt securities

5,834


5,817


6,318


7,006


7,226


Nontaxable interest on debt securities



1


8


9


Dividends on Federal Home Loan Bank stock

640


693


747


720


695


Other interest income

349


435


493


399


340


Total interest and dividend income

47,116


47,383


49,527


50,559


50,194


Interest expense:






Deposits

8,536


9,144


9,792


9,469


8,696


Federal Home Loan Bank advances

5,765


6,015


6,512


6,980


6,661


Junior subordinated debentures

213


230


245


252


253


Total interest expense

14,514


15,389


16,549


16,701


15,610


Net interest income

32,602


31,994


32,978


33,858


34,584


Provision for credit losses

7,036



400


525


650


Net interest income after provision for credit losses

25,566


31,994


32,578


33,333


33,934


Noninterest income:






Wealth management revenues

8,689


8,894


9,153


9,549


9,252


Mortgage banking revenues

6,096


3,669


4,840


3,640


2,646


Card interchange fees

947


1,100


1,099


1,018


997


Service charges on deposit accounts

860


941


939


929


875


Loan related derivative income

2,455


1,116


1,407


746


724


Income from bank-owned life insurance

564


570


569


566


649


Net realized losses on securities


27



(80)



Other income

316


301


335


385


224


Total noninterest income

19,927


16,618


18,342


16,753


15,367


Noninterest expense:






Salaries and employee benefits

19,468


18,374


18,332


18,436


17,619


Outsourced services

3,000


2,752


2,722


2,518


2,606


Net occupancy

2,019


1,986


1,933


1,904


1,998


Equipment

977


996


1,046


1,028


1,011


Legal, audit and professional fees

822


692


645


664


534


FDIC deposit insurance costs

422


109


(460)


540


429


Advertising and promotion

259


402


368


525


239


Amortization of intangibles

230


229


236


239


239


Other expenses

3,256


3,215


2,048


2,297


2,289


Total noninterest expense

30,453


28,755


26,870


28,151


26,964


Income before income taxes

15,040


19,857


24,050


21,935


22,337


Income tax expense

3,139


4,321


5,236


4,662


4,842


Net income

$11,901


$15,536


$18,814


$17,273


$17,495








Net income available to common shareholders

$11,869


$15,502


$18,778


$17,238


$17,461








Weighted average common shares outstanding:






  Basic

17,345


17,351


17,338


17,330


17,304


  Diluted

17,441


17,436


17,414


17,405


17,401


Earnings per common share:






  Basic

$0.68


$0.89


$1.08


$0.99


$1.01


  Diluted

$0.68


$0.89


$1.08


$0.99


$1.00








Cash dividends declared per share

$0.51


$0.51


$0.51


$0.51


$0.47


 

 

Washington Trust Bancorp, Inc. and Subsidiaries

SELECTED FINANCIAL HIGHLIGHTS

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




Mar 31,
2020

Dec 31,
2019

Sep 30,
2019

Jun 30,
2019

Mar 31,
2019

Share and Equity Related Data:






Book value per share

$29.48


$29.00


$28.71


$27.93


$27.15


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

$25.37


$24.90


$24.60


$23.80


$23.00


Market value per share

$36.56


$53.79


$48.31


$52.18


$48.15


Shares issued at end of period

17,363


17,363


17,338


17,336


17,305


Shares outstanding at end of period

17,252


17,363


17,338


17,336


17,305








Capital Ratios (2):






Tier 1 risk-based capital

11.62

%

12.23

%

12.21

%

12.06

%

11.84

%

Total risk-based capital

12.42

%

12.94

%

12.94

%

12.80

%

12.59

%

Tier 1 leverage ratio

8.77

%

9.04

%

8.97

%

8.76

%

8.69

%

Common equity tier 1

11.08

%

11.65

%

11.62

%

11.46

%

11.25

%







Balance Sheet Ratios:






Equity to assets

9.05

%

9.51

%

9.58

%

9.33

%

9.11

%

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

7.89

%

8.28

%

8.32

%

8.06

%

7.83

%

Loans to deposits (3)

110.6

%

111.3

%

105.8

%

106.8

%

106.3

%















For the Three Months Ended


Mar 31,
2020

Dec 31,
2019

Sep 30,
2019

Jun 30,
2019

Mar 31,
2019

Performance Ratios (4):






Net interest margin (5)

2.61

%

2.61

%

2.72

%

2.81

%

2.93

%

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

0.89

%

1.18

%

1.44

%

1.34

%

1.39

%

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

0.90

%

1.20

%

1.46

%

1.36

%

1.41

%

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

9.49

%

12.24

%

15.20

%

14.58

%

15.52

%

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

11.05

%

14.26

%

17.79

%

17.17

%

18.43

%

Efficiency ratio (6)

58.0

%

59.2

%

52.4

%

55.6

%

54.0

%


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

(2)  Estimated for March 31, 2020 and actuals for prior periods.

(3)  Period-end balances of net loans and mortgage loans held for sale as a percentage of total deposits.

(4)  Annualized based on the actual number of days in the period.

(5)  Fully taxable equivalent (FTE) net interest income as a percentage of average-earnings assets.

(6)  Total noninterest expense as percentage of total revenues (net interest income and noninterest income).

 

 


Washington Trust Bancorp, Inc. and Subsidiaries

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited; Dollars in thousands)




For the Three Months Ended


Mar 31,
2020

Dec 31,
2019

Sep 30,
2019

Jun 30,
2019

Mar 31,
2019

Wealth Management Results






Wealth Management Revenues:






Asset-based revenues

$8,355


$8,731


$9,013


$9,141


$8,921


Transaction-based revenues

334


163


140


408


331


Total wealth management revenues

$8,689


$8,894


$9,153


$9,549


$9,252








Assets Under Administration (AUA):






Balance at beginning of period

$6,235,801


$6,126,327


$6,478,890


$6,350,128


$5,910,814


Net investment appreciation (depreciation) & income

(772,735)


310,766


66,514


222,489


520,057


Net client asset flows

(125,333)


(243,175)


(419,077)


(93,727)


(80,743)


Other (1)


41,883





Balance at end of period

$5,337,733


$6,235,801


$6,126,327


$6,478,890


$6,350,128








Percentage of AUA that are managed assets

89%


90%


90%


91%


91%








Mortgage Banking Results






Mortgage Banking Revenues:






Gains & commissions on loan sales, net (2)

$6,013


$3,583


$4,752


$3,523


$2,474


Loan servicing fee income, net (3)

83


86


88


117


172


Total mortgage banking revenues

$6,096


$3,669


$4,840


$3,640


$2,646








Residential Mortgage Loan Originations:






Originations for retention in portfolio

$108,498


$120,882


$105,075


$69,736


$51,697


Originations for sale to secondary market (4)

183,222


160,175


189,979


162,123


85,826


Total mortgage loan originations

$291,720


$281,057


$295,054


$231,859


$137,523








Residential Mortgage Loans Sold:






Sold with servicing rights retained

$44,498


$42,612


$25,766


$18,292


$9,490


Sold with servicing rights released (4)

117,693


134,091


159,210


119,122


82,589


Total mortgage loans sold

$162,191


$176,703


$184,976


$137,414


$92,079



(1)  Represents the classification of certain non-fee generating assets as AUA due to a reporting change in the fourth quarter of 2019.

(2)  Includes gains on loan sales, commission income on loans originated for others, servicing right gains, fair value adjustments on mortgage loans held for sale, and fair value adjustments and gains (losses) on forward loan commitments.

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

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

 

 


Washington Trust Bancorp, Inc. and Subsidiaries

END OF PERIOD LOAN AND DEPOSIT COMPOSITION

(Unaudited; Dollars in thousands)




Mar 31,
2020

Dec 31,
2019

Sep 30,
2019

Jun 30,
2019

Mar 31,
2019

Loans:






Commercial real estate (1)

$1,618,020


$1,547,572


$1,517,320


$1,482,836


$1,463,682


Commercial & industrial

655,157


585,289


566,426


583,873


610,608


Total commercial

2,273,177


2,132,861


2,083,746


2,066,709


2,074,290








Residential real estate (2)

1,510,472


1,449,090


1,378,518


1,352,113


1,359,072








Home equity

287,134


290,874


294,250


288,078


279,938


Other

19,613


20,174


21,592


23,439


25,169


Total consumer

306,747


311,048


315,842


311,517


305,107


Total loans

$4,090,396


$3,892,999


$3,778,106


$3,778,106


$3,738,469



(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, 2020


December 31, 2019


Balance

% of Total


Balance

% of Total

Commercial Real Estate Loans by Property Type:






Multi-family dwelling

$475,934


29

%


$430,502


28

%

Retail

310,652


19



314,661


20


Office

293,964


18



294,910


19


Hospitality

136,818


8



128,867


8


Healthcare

114,597


7



110,409


7


Industrial and warehouse

86,418


5



82,432


5


Commercial mixed use

74,834


5



73,895


5


Other

124,803


9



111,896


8


Total commercial real estate loans

$1,618,020


100

%


$1,547,572


100

%







Commercial & Industrial Loans by Industry Segmentation:






Healthcare and social assistance

$137,832


21

%


$138,857


24

%

Manufacturing

65,753


10



53,561


9


Retail

58,899


9



43,386


7


Educational services

56,303


9



56,556


10


Owner occupied and other real estate

51,261


8



46,033


8


Accommodation and food services

44,244


7



16,562


3


Finance and insurance

36,941


6



28,501


5


Entertainment and recreation

32,120


5



30,807


5


Professional, scientific and technical

30,776


5



37,599


6


Information

25,420


4



22,162


4


Public administration

23,597


4



25,107


4


Transportation and warehousing

23,159


4



20,960


4


Other

68,852


8



65,198


11


Total commercial & industrial loans

$655,157


100

%


$585,289


100

%

 

 

Washington Trust Bancorp, Inc. and Subsidiaries

END OF PERIOD LOAN AND DEPOSIT COMPOSITION

(Unaudited; Dollars in thousands)








March 31, 2020


December 31, 2019


Balance

% of Total


Balance

% of Total

Commercial Real Estate Loans by Property Location:






Rhode Island

$423,884


26

%


$394,929


25

%

Connecticut

634,498


39



616,484


40


Massachusetts

482,037


30



458,029


30


Subtotal

1,540,419


95



1,469,442


95


All other states

77,601


5



78,130


5


Total commercial real estate loans

$1,618,020


100

%


$1,547,572


100

%







Residential Real Estate Loans by Property Location:






Rhode Island

$355,916


24

%


$356,392


25

%

Connecticut

138,988


9



140,574


10


Massachusetts

995,594


66



932,726


64


Subtotal

1,490,498


99



1,429,692


99


All other states

19,974


1



19,398


1


Total residential real estate loans

$1,510,472


100

%


$1,449,090


100

%

 

 


Mar 31,
2020

Dec 31,
2019

Sep 30,
2019

Jun 30,
2019

Mar 31,
2019

Deposits:






Noninterest-bearing demand deposits

$622,893


$609,924


$619,839


$587,326


$577,319


Interest-bearing demand deposits

178,391


159,938


152,200


128,355


162,598


NOW accounts

528,650


520,295


478,462


484,615


471,682


Money market accounts

784,893


765,899


749,122


654,719


644,949


Savings accounts

382,509


373,503


362,868


365,069


371,248


Time deposits (in-market)

776,992


784,481


792,941


801,501


792,470


In-market deposits

3,274,328


3,214,040


3,155,432


3,021,585


3,020,266


Wholesale brokered time deposits

431,986


284,842


430,721


483,037


483,994


Total deposits

$3,706,314


$3,498,882


$3,586,153


$3,504,622


$3,504,260


 

 

Washington Trust Bancorp, Inc. and Subsidiaries

CREDIT & ASSET QUALITY DATA

(Unaudited; Dollars in thousands)




Mar 31,
2020

Dec 31,
2019

Sep 30,
2019

Jun 30,
2019

Mar 31,
2019

Asset Quality Ratios:






Nonperforming assets to total assets

0.32

%

0.35

%

0.37

%

0.29

%

0.28

%

Nonaccrual loans to total loans

0.44

%

0.45

%

0.39

%

0.34

%

0.33

%

Total past due loans to total loans

0.40

%

0.40

%

0.38

%

0.48

%

0.39

%

Allowance for credit losses on loans to nonaccrual loans

221.37

%

155.18

%

181.16

%

212.93

%

223.57

%

Allowance for credit losses on loans to total loans

0.97

%

0.69

%

0.71

%

0.73

%

0.74

%







Nonperforming Assets:






Commercial real estate

$450


$603


$684


$926


$926


Commercial & industrial

290


657





Total commercial

740


1,260


684


926


926


Residential real estate

15,423


14,297


12,531


10,610


10,032


Home equity

1,667


1,763


1,599


1,243


1,407


Other consumer

88


88


88


88



Total consumer

1,755


1,851


1,687


1,331


1,407


Total nonaccrual loans

17,918


17,408


14,902


12,867


12,365


Other real estate owned

28


1,109


4,142


2,142


2,142


Total nonperforming assets

$17,946


$18,517


$19,044


$15,009


$14,507








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






Commercial real estate

$1,275


$1,433


$684


$3,670


$926


Commercial & industrial

310


1


1


1


1


Total commercial

1,585


1,434


685


3,671


927


Residential real estate

12,293


11,429


11,599


11,237


10,849


Home equity

2,482


2,696


1,973


2,904


2,911


Other consumer

115


130


99


102


13


Total consumer

2,597


2,826


2,072


3,006


2,924


Total past due loans

$16,475


$15,689


$14,356


$17,914


$14,700








Accruing loans 90 days or more past due

$—


$—


$—


$—


$—


Nonaccrual loans included in past due loans

$11,385


$11,477


$9,797


$8,581


$8,563


 

 

Washington Trust Bancorp, Inc. and Subsidiaries

CREDIT & ASSET QUALITY DATA

(Unaudited; Dollars in thousands)


For the Three Months Ended


Mar 31,
2020

Dec 31,
2019

Sep 30,
2019

Jun 30,
2019

Mar 31,
2019

Nonaccrual Loan Activity:






Balance at beginning of period

$17,408


$14,902


$12,867


$12,365


$11,707


Additions to nonaccrual status

1,729


2,766


5,672


1,620


1,924


Loans returned to accruing status

(393)



(597)


(118)


(855)


Loans charged-off

(635)


(132)


(966)


(819)


(103)


Loans transferred to other real estate owned

(28)



(2,000)




Payments, payoffs and other changes

(163)


(128)


(74)


(181)


(308)


Balance at end of period

$17,918


$17,408


$14,902


$12,867


$12,365








Allowance for Credit Losses on Loans:






Balance at beginning of period

$27,014


$26,997


$27,398


$27,644


$27,072


Adoption of CECL accounting standard (Topic 326)

6,501






Provision for credit losses on loans (1)

6,773



400


525


650


Charge-offs

(635)


(132)


(966)


(819)


(103)


Recoveries

12


149


165


48


25


Balance at end of period

$39,665


$27,014


$26,997


$27,398


$27,644








Allowance for Credit Losses on Unfunded Commitments:






Balance at beginning of period

$293


$317


$302


$242


$289


Adoption of CECL accounting standard (Topic 326)

1,483






Provision for credit losses on unfunded commitments (2)

263


(24)


15


60


(47)


Balance at end of period (3)

$2,039


$293


$317


$302


$242













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








(2)   Included in provision for credit losses in the Consolidated Statements of Income for the three months ended March 31, 2020. 
For periods prior to 2020, included in other noninterest expense in the Consolidated Statements of Income.




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












For the Three Months Ended


Mar 31,
2020

Dec 31,
2019

Sep 30,
2019

Jun 30,
2019

Mar 31,
2019

Net Loan Charge-Offs (Recoveries):






Commercial real estate

$153


($44)


$947


$—


$—


Commercial & industrial

290


(15)


(122)


(16)


6


Total commercial

443


(59)


825


(16)


6


Residential real estate




486



Home equity

172


17


(36)


289


48


Other consumer

8


25


12


12


24


Total consumer

180


42


(24)


301


72


Total

$623


($17)


$801


$771


$78








Net charge-offs to average loans (annualized)

0.06

%

%

0.08

%

0.08

%

0.01

%

 

 


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, 2020


December 31, 2019


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

$113,344


$349


1.24

%


$115,458


$435


1.49

%


($2,114)


($86)


(0.25)

%

Mortgage loans held for sale

31,087


285


3.69



38,494


359


3.70



(7,407)


(74)


(0.01)


Taxable debt securities

905,293


5,833


2.59



874,770


5,817


2.64



30,523


16


(0.05)


FHLB stock

51,962


640


4.95



46,501


693


5.91



5,461


(53)


(0.96)


Commercial real estate

1,582,956


16,097


4.09



1,538,627


16,491


4.25



44,329


(394)


(0.16)


Commercial & industrial

607,499


6,556


4.34



576,590


6,572


4.52



30,909


(16)


(0.18)


Total commercial

2,190,455


22,653


4.16



2,115,217


23,063


4.33



75,238


(410)


(0.17)


Residential real estate

1,469,282


14,283


3.91



1,399,144


13,833


3.92



70,138


450


(0.01)


Home equity

285,832


3,101


4.36



293,029


3,254


4.41



(7,197)


(153)


(0.05)


Other

19,855


249


5.04



20,589


250


4.82



(734)


(1)


0.22


Total consumer

305,687


3,350


4.41



313,618


3,504


4.43



(7,931)


(154)


(0.02)


Total loans

3,965,424


40,286


4.09



3,827,979


40,400


4.19



137,445


(114)


(0.10)


Total interest-earning assets

5,067,110


47,393


3.76



4,903,202


47,704


3.86



163,908


(311)


(0.10)


Noninterest-earning assets

327,838





323,833





4,005




Total assets

$5,394,948





$5,227,035





$167,913




Liabilities and Shareholders' Equity:












Interest-bearing demand deposits

$155,416


$500


1.29

%


$146,408


$578


1.57

%


$9,008


($78)


(0.28)

%

NOW accounts

505,282


69


0.05



489,374


82


0.07



15,908


(13)


(0.02)


Money market accounts

795,268


2,092


1.06



769,860


2,179


1.12



25,408


(87)


(0.06)


Savings accounts

374,374


62


0.07



365,977


68


0.07



8,397


(6)



Time deposits (in-market)

780,355


4,049


2.09



789,864


4,157


2.09



(9,509)


(108)



Total interest-bearing in-market deposits

2,610,695


6,772


1.04



2,561,483


7,064


1.09



49,212


(292)


(0.05)


Wholesale brokered time deposits

391,822


1,764


1.81



392,001


2,080


2.11



(179)


(316)


(0.30)


Total interest-bearing deposits

3,002,517


8,536


1.14



2,953,484


9,144


1.23



49,033


(608)


(0.09)


FHLB advances

1,123,754


5,765


2.06



1,006,246


6,015


2.37



117,508


(250)


(0.31)


Junior subordinated debentures

22,681


213


3.78



22,681


230


4.02




(17)


(0.24)


Total interest-bearing liabilities

4,148,952


14,514


1.41



3,982,411


15,389


1.53



166,541


(875)


(0.12)


Noninterest-bearing demand deposits

610,872





618,406





(7,534)




Other liabilities

132,000





123,604





8,396




Shareholders' equity

503,124





502,614





510




Total liabilities and shareholders' equity

$5,394,948





$5,227,035





$167,913




Net interest income (FTE)


$32,879





$32,315





$564



Interest rate spread



2.35

%




2.33

%




0.02

%

Net interest margin



2.61

%




2.61

%




%
















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























For the Three Months Ended















Mar 31,
2020

Dec 31, 2019

Quarter Change

Commercial loans















$278


$321


($43)


Total















$278


$321


($43)



 

 


Washington Trust Bancorp, Inc. and Subsidiaries

SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures

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




Mar 31,
2020

Dec 31,
2019

Sep 30,
2019

Jun 30,
2019

Mar 31,
2019

Tangible Book Value per Share:






Total shareholders' equity, as reported

$508,597


$503,492


$497,825


$484,205


$469,843


Less:






Goodwill

63,909


63,909


63,909


63,909


63,909


Identifiable intangible assets, net

6,988


7,218


7,448


7,684


7,923


Total tangible shareholders' equity

$437,700


$432,365


$426,468


$412,612


$398,011








Shares outstanding, as reported

17,252


17,363


17,338


17,336


17,305








Book value per share - GAAP

$29.48


$29.00


$28.71


$27.93


$27.15


Tangible book value per share - Non-GAAP

$25.37


$24.90


$24.60


$23.80


$23.00








Tangible Equity to Tangible Assets:






Total tangible shareholders' equity

$437,700


$432,365


$426,468


$412,612


$398,011








Total assets, as reported

$5,620,979


$5,292,659


$5,198,878


$5,189,672


$5,154,729


Less:






Goodwill

63,909


63,909


63,909


63,909


63,909


Identifiable intangible assets, net

6,988


7,218


7,448


7,684


7,923


Total tangible assets

$5,550,082


$5,221,532


$5,127,521


$5,118,079


$5,082,897








Equity to assets - GAAP

9.05

%

9.51

%

9.58

%

9.33

%

9.11

%

Tangible equity to tangible assets - Non-GAAP

7.89

%

8.28

%

8.32

%

8.06

%

7.83

%






For the Three Months Ended


Mar 31,
2020

Dec 31,
2019

Sep 30,
2019

Jun 30,
2019

Mar 31,
2019

Return on Average Tangible Assets:






Net income, as reported

$11,901


$15,536


$18,814


$17,273


$17,495








Total average assets, as reported

$5,394,948


$5,227,035


$5,181,016


$5,171,562


$5,096,103


Less average balances of:






Goodwill

63,909


63,909


63,909


63,909


63,909


Identifiable intangible assets, net

7,100


7,330


7,562


7,800


8,040


Total average tangible assets

$5,323,939


$5,155,796


$5,109,545


$5,099,853


$5,024,154








Return on average assets - GAAP

0.89

%

1.18

%

1.44

%

1.34

%

1.39

%

Return on average tangible assets - Non-GAAP

0.90

%

1.20

%

1.46

%

1.36

%

1.41

%







Return on Average Tangible Equity:






Net income available to common shareholders, as reported

$11,869


$15,502


$18,778


$17,238


$17,461








Total average equity, as reported

$503,124


$502,614


$490,197


$474,353


$456,241


Less average balances of:






Goodwill

63,909


63,909


63,909


63,909


63,909


Identifiable intangible assets, net

7,100


7,330


7,562


7,800


8,040


Total average tangible equity

$432,115


$431,375


$418,726


$402,644


$384,292








Return on average equity - GAAP

9.49

%

12.24

%

15.20

%

14.58

%

15.52

%

Return on average tangible equity - Non-GAAP

11.05

%

14.26

%

17.79

%

17.17

%

18.43

%

 

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SOURCE Washington Trust Bancorp, Inc.