Washington Trust Bancorp, Inc. (NASDAQ Global Select; symbol: WASH), parent company of The Washington Trust Company, today announced net income of $9.8 million, or 58 cents per diluted share, for the fourth quarter of 2013. These results compared to third quarter of 2013 net income of $10.0 million, or 59 cents per diluted share, and fourth quarter of 2012 net income of $9.0 million, or 55 cents per diluted share.

For the year ended December 31, 2013, net income totaled $36.2 million, or $2.16 per diluted share, up from the $35.1 million, or $2.13 per diluted share, reported for 2012. The returns on average equity and average assets for 2013 were 11.65% and 1.17%, respectively, compared to 11.97% and 1.16%, respectively, for 2012.

"Washington Trust's strong fourth quarter performance led to record full-year 2013 earnings," stated Joseph J. MarcAurele, Washington Trust Chairman and CEO. "We continued to build relationships with individuals and businesses throughout the region, which contributed to solid loan and deposit growth."

Selected highlights for the fourth quarter included:

  • Loan growth was strong in the fourth quarter, totaling $109.1 million, or 5%. Total loans amounted to $2.46 billion at December 31, 2013, up by 7% from a year ago.
  • Deposit growth continued in the fourth quarter with an increase of $50.5 million, or 2%, from the end of the third quarter. Total deposits reached $2.51 billion at December 31, 2013, up by 8% from a year ago.
  • Wealth management assets under administration grew by $186.4 million, or 4%, to $4.78 billion. Wealth management revenues rose by $1.2 million, or 15%, on a linked quarter basis.
  • Asset quality indicators continued to improve. Nonperforming assets were down by 4% and delinquencies were down 9% from September 30, 2013.
  • In December, the quarterly dividend was increased to 27 cents per share, representing the third quarterly dividend increase during 2013.

Net Interest Income

Net interest income totaled $23.5 million for the fourth quarter of 2013, up modestly from $23.4 million for the third quarter of 2013. The net interest margin for the fourth quarter of 2013 was 3.24%, compared to 3.29% for the third quarter of 2013. The yield on interest-earning assets declined by 10 basis points from the previous quarter largely due to lower yields on commercial loans. Meanwhile, the cost of funds improved by 4 basis points.

Noninterest Income

Noninterest income totaled $15.1 million for the fourth quarter of 2013, compared to $17.4 million for the third quarter of 2013. Included in noninterest income in the fourth quarter was an other-than-temporary impairment ("OTTI") charge of $717 thousand on a trust preferred collateralized debt obligation investment holding. The security has been sold in January 2014 with a realized loss equal to the impairment charge.

Excluding the OTTI charge, noninterest income declined by $1.6 million, or 9%, compared to the third quarter of 2013. Other significant linked quarter changes included the following:

  • Wealth management revenues totaled $8.8 million for the fourth quarter, up from the $7.6 million recognized in the previous quarter. This included:
    • An increase of $375 thousand, or 5%, in asset-based revenues, which totaled $7.7 million for the fourth quarter.
    • An increase of $805 thousand in transaction-based revenues, which totaled $1.1 million for the fourth quarter. This increase was largely due to an above-average level of insurance commission income. Transaction-based revenues were approximately $700 thousand higher than the average amount recognized for each of the previous three quarters.
  • Net gains on loan sales and commissions on loans originated for others declined by $2.3 million compared to the third quarter. Included in the previous quarter were gains of $977 thousand resulting from the sale of residential mortgage portfolio loans. Excluding the third quarter 2013 portfolio loan sale, these revenues declined by $1.4 million, reflecting continued declines in refinancing activity due to higher mortgage interest rates. Residential mortgage loans sold to the secondary market amounted to $65.9 million in the fourth quarter, compared to $114.4 million in the previous quarter.
  • Net gains on interest rate swap contracts increased by $672 thousand largely due to an above-average level of customer-related interest rate swap transactions in the fourth quarter of 2013. Net gains on interest rate swap contracts for the fourth quarter of 2013 were approximately $650 thousand higher than the average amount of net gains recognized for each of the first three quarters of 2013.
  • Merchant processing fee revenue was down by $1.1 million, or 32%, reflecting a seasonal decline in the volume of transactions processed for customers. See discussion below regarding the corresponding decrease in merchant processing expenses.

Noninterest Expenses

Noninterest expenses totaled $24.0 million for the fourth quarter of 2013, compared to $25.5 million for the previous quarter. Debt prepayment penalties of $1.1 million were incurred in the third quarter of 2013; there were none incurred in the fourth quarter. In addition, a charitable contribution expense (classified in other expenses) of $400 thousand was incurred in the fourth quarter of 2013; there was none incurred in the previous quarter.

Excluding these items, noninterest expenses for the fourth quarter of 2013 decreased by $755 thousand from the previous quarter. Significant changes, on this basis, included the following:

  • Salaries and employee benefits expenses were down by $212 thousand, or 1%, primarily as a result of a modification to the Corporation's defined benefit pension plans adopted in the third quarter.
  • Merchant processing expenses were down by $926 thousand, or 32%, on a linked quarter basis. This decline is consistent with the decline in merchant processing fee income described above.

Income tax expense amounted to $4.4 million for the fourth quarter of 2013, compared to $4.0 million for the previous quarter. The effective tax rate for the fourth quarter was 31.0%, compared to 31.5% for the third quarter. Based on current federal and applicable state income tax statutes, the Corporation currently expects the 2014 effective tax rate to be approximately 31.7%.

Asset Quality

Total nonaccrual loans amounted to $18.3 million, or 0.74% of total loans, at December 31, 2013, compared to $19.5 million, or 0.83%, at September 30, 2013. Total past due loans amounted to $21.9 million, or 0.89% of total loans, at December 31, 2013, compared to $24.0 million, or 1.02%, at September 30, 2013.

The loan loss provision charged to earnings in the fourth quarter of 2013 totaled $400 thousand compared to $700 thousand in the third quarter. Net charge-offs amounted to $522 thousand in the fourth quarter of 2013, compared to $576 thousand in the third quarter of 2013.

The allowance for loan losses was $27.9 million, or 1.13% of total loans, at December 31, 2013, compared to $28.0 million, or 1.19% of total loans, at September 30, 2013. The decline in the ratio of the allowance for loan losses to total loans reflects charge-offs, a decrease in specific reserves on impaired loans and overall improvement in asset and credit quality indicators.

Loans

Total loans of $2.46 billion at December 31, 2013 increased by $109.1 million, or 5%, from the balance at September 30, 2013 and by $168.9 million, or 7%, from a year ago. Significant changes included:

  • Commercial loan portfolio growth of $65.4 million, or 5.0%, in the fourth quarter and $110.9 million, or 9.0%, from a year ago, reflecting growth in both commercial real estate and commercial and industrial loan portfolios.
  • Residential real estate loan portfolio growth of $41.0 million, or 6%, in the fourth quarter and $55.0 million, or 8%, in the last twelve months.

Deposits

Total deposits of $2.51 billion at December 31, 2013 grew by $50.5 million, or 2%, from September 30, 2013, and by $192.7 million, or 8%, from a year ago. Significant changes included:

  • Demand deposit and NOW account growth of $29.2 million, or 4%, in the fourth quarter and $79.5 million, or 12%, from a year ago.
  • Money market and savings account growth of $47.6 million, or 5%, in the fourth quarter and $192.7 million, or 25%, in the last twelve months.
  • Time deposit balance decreases of $26.3 million, or 3%, in the fourth quarter and $79.5 million, or 9%, from a year ago.

Capital Management

Capital levels continued to exceed the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 13.29% at December 31, 2013, compared to 13.44% at September 30, 2013 and 13.26% at December 31, 2012.

Total shareholder's equity was $329.6 million at December 31, 2013, up by $6.1 million from September 30, 2013.

Dividends Declared

The Board of Directors declared a quarterly dividend of 27 cents per share for the quarter ended December 31, 2013. The dividend was paid on January 14, 2014 to shareholders of record on January 2, 2014.

Conference Call

Washington Trust will host a conference call to discuss fourth quarter results, business highlights and outlook on Wednesday, January 29, 2014 at 8:30 am (Eastern Time). Individuals may dial in to the call at 1-888-317-6016. An audio replay of the call will be available by dialing 1-877-344-7529 and entering Conference Number 10038876; the audio replay will be available until 9:00 a.m. on February 13, 2014. A webcast of the call will be posted in the Investor Relations section of Washington Trust's web site, www.washtrust.com, shortly after the conclusion of the call and will be available through March 31, 2014.

Background

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

Forward-Looking Statements

This press release contains statements that are "forward-looking statements". We may also make written or oral forward-looking statements in other documents we file with the SEC, in 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 the control of Washington Trust. These risks, uncertainties and other factors may cause the actual results, performance or achievements of Washington Trust to be materially different from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements.

Some of the factors that might cause these differences include the following: continued weakness in general national, regional or international economic conditions or conditions affecting the banking or financial services industries or financial capital markets, volatility and disruption in national and international financial markets, additional government intervention in the U.S. financial system, 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 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 Washington Trust's competition, changes in legislation or regulation and accounting principles, policies and guidelines, and changes in the assumptions used in making such forward-looking statements. In addition, the factors described under "Risk Factors" in Item 1A of our Annual Report on Form 10-K, as filed with the Securities and Exchange Commission and as updated by our Quarterly Reports on Form 10-Q, may result in these differences. You should carefully review all of these factors, and you should be aware that there may be other factors that could cause these differences. These forward-looking statements were based on information, plans and estimates at the date of this press release, and Washington Trust assumes no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

Supplemental Information - Explanation of Non-GAAP Financial Measures

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

 
Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS (unaudited)
(Dollars in thousands, except par value)      

Dec 31,
2013

     

Dec 31,
2012

Assets:            
Cash and due from banks $81,939 $73,474
Short-term investments 3,378 19,176
Mortgage loans held for sale, at fair value 11,636 50,056
Securities:
Available for sale, at fair value 392,903 375,498
Held to maturity, at amortized cost (fair value $29,865 in 2013 and $41,420 in 2012)       29,905         40,381  
Total securities 422,808 415,879
Federal Home Loan Bank stock, at cost 37,730 40,418
Loans:
Commercial 1,363,335 1,252,419
Residential real estate 772,674 717,681
Consumer       326,875         323,903  
Total loans 2,462,884 2,294,003
Less allowance for loan losses       27,886         30,873  
Net loans 2,434,998 2,263,130
Premises and equipment, net 25,402 27,232
Investment in bank-owned life insurance 56,673 54,823
Goodwill 58,114 58,114
Identifiable intangible assets, net 5,493 6,173
Other assets       50,696         63,409  
Total assets       $3,188,867         $3,071,884  
Liabilities:
Deposits:
Demand deposits $440,785 $379,889
NOW accounts 309,771 291,174
Money market accounts 666,646 496,402
Savings accounts 297,357 274,934
Time deposits       790,762         870,232  
Total deposits 2,505,321 2,312,631
Federal Home Loan Bank advances 288,082 361,172
Junior subordinated debentures 22,681 32,991
Other borrowings 178 1,212
Other liabilities       42,959         68,226  
Total liabilities       2,859,221         2,776,232  
Shareholders' Equity:

Common stock of $.0625 par value; authorized 30,000,000 shares; issued and outstanding 16,613,561 shares in 2013 and 16,379,771 shares in 2012

1,038 1,024
Paid-in capital 97,566 91,453
Retained earnings 232,595 213,674
Accumulated other comprehensive loss       (1,553 )       (10,499 )
Total shareholders' equity       329,646         295,652  
Total liabilities and shareholders' equity       $3,188,867         $3,071,884  
 
 
Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars and shares in thousands, except per share amounts)     Three Months       Twelve Months  

Periods ended December 31,

    2013     2012     2013     2012
Interest income:            
Interest and fees on loans       $25,649 $26,109 $102,481 $102,656
Interest on securities: Taxable 3,005 3,241 11,008 15,359
Nontaxable 618 664 2,553 2,699
Dividends on corporate stock and Federal Home Loan Bank stock 35 49 148 256
Other interest income     59       27       158       91  
Total interest and dividend income     29,366       30,090       116,348       121,061  
Interest expense:
Deposits 3,066 3,380 12,420 13,590
Federal Home Loan Bank advances 2,534 3,148 10,643 14,957
Junior subordinated debentures 241 394 1,484 1,570
Other interest expense     4       4       16       248  
Total interest expense     5,845       6,926       24,563       30,365  
Net interest income 23,521 23,164 91,785 90,696
Provision for loan losses     400       600       2,400       2,700  
Net interest income after provision for loan losses     23,121       22,564       89,385       87,996  
Noninterest income:
Wealth management revenues 8,810 7,790 31,825 29,641
Service charges on deposit accounts 820 837 3,256 3,193
Merchant processing fees 2,271 2,232 10,220 10,159
Card interchange fees 775 636 2,788 2,480
Income from bank-owned life insurance 458 479 1,850 2,448
Net gains on loan sales and commissions on loans originated for others 1,551 4,476 13,085 14,092
Net realized gains on securities -- 924 -- 1,223
Net gains on interest rate swap contracts 726 168 951 255
Equity in earnings (losses) of unconsolidated subsidiaries (42 ) 82 (107 ) 196
Other income     468       275       1,701       1,748  
Noninterest income, excluding other-than-temporary impairment losses 15,837 17,899 65,569 65,435
Total other-than-temporary impairment losses on securities 319 57 (294 ) (28 )
Portion of loss recognized in other comprehensive income (before tax)     (1,036 )     (69 )     (3,195 )     (193 )
Net impairment losses recognized in earnings     (717 )     (12 )     (3,489 )     (221 )
Total noninterest income     15,120       17,887       62,080       65,214  
Noninterest expense:
Salaries and employee benefits 14,428 15,661 60,052 59,786
Net occupancy 1,487 1,518 5,769 6,039
Equipment 1,189 1,222 4,847 4,640
Merchant processing costs 1,936 1,903 8,682 8,593
Outsourced services 1,072 900 3,662 3,560
Legal, audit and professional fees 639 641 2,330 2,240
FDIC deposit insurance costs 431 419 1,761 1,730
Advertising and promotion 321 435 1,464 1,730
Amortization of intangibles 164 173 680 728
Foreclosed property costs 36 158 258 762
Debt prepayment penalties -- 1,774 1,125 3,908
Other expenses     2,345       2,617       8,155       8,622  
Total noninterest expense     24,048       27,421       98,785       102,338  
Income before income taxes 14,193 13,030 52,680 50,872
Income tax expense     4,404       4,007       16,527       15,798  
Net income     $9,789       $9,023       $36,153       $35,074  
 
Weighted average common shares outstanding - basic 16,602 16,376 16,506 16,358
Weighted average common shares outstanding - diluted 16,770 16,425 16,664 16,401
Per share information: Basic earnings per common share $0.59 $0.55 $2.18 $2.13
Diluted earnings per common share $0.58 $0.55 $2.16 $2.13
Cash dividends declared per share $0.27 $0.24 $1.03 $0.94
 
 
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
      At or for the Quarters Ended  
(Dollars and shares in thousands, except per share amounts)       Dec 31,
2013 		    Sep 30,
2013 		    Jun 30,
2013 		    Mar 31,
2013 		    Dec 31,
2012
Financial Data:                
Total assets $3,188,867 $3,131,958 $3,061,307 $3,051,848 $3,071,884
Total loans 2,462,884 2,353,766 2,384,980 2,325,045 2,294,003
Total securities 422,808 419,349 350,517 387,102 415,879
Total deposits 2,505,321 2,454,831 2,304,609 2,319,641 2,312,631
Total shareholders' equity 329,646 323,585 303,370 301,291 295,652
Net interest income 23,521 23,388 22,409 22,467 23,164
Provision for loan losses 400 700 700 600 600
Noninterest income, excluding OTTI losses 15,837 17,400 16,394 15,938 17,899
Net OTTI losses recognized in earnings (717 ) -- -- (2,772 ) (12 )
Noninterest expenses 24,048 25,548 25,005 24,184 27,421
Income tax expense 4,404 4,580 4,115 3,428 4,007
Net income 9,789 9,960 8,983 7,421 9,023
 
Share Data:
Basic earnings per common share $0.59 $0.60 $0.54 $0.45 $0.55
Diluted earnings per common share $0.58 $0.59 $0.54 $0.45 $0.55
Dividends declared per share $0.27 $0.26 $0.25 $0.25 $0.24
Book value per share $19.84 $19.51 $18.40 $18.34 $18.05
Tangible book value per share - Non-GAAP (1) $16.01 $15.66 $14.52 $14.44 $14.13
Market value per share $37.22 $31.43 $28.52 $27.38 $26.31
Shares outstanding at end of period 16,614 16,589 16,487 16,425 16,380
Weighted average common shares outstanding - basic 16,602 16,563 16,454 16,401 16,376
Weighted average common shares outstanding - diluted 16,770 16,696 16,581 16,449 16,425
 
Key Ratios:
Return on average assets 1.24 % 1.29 % 1.18 % 0.98 % 1.19 %
Return on average tangible assets - Non-GAAP (1) 1.26 % 1.31 % 1.21 % 1.01 % 1.21 %
Return on average equity 11.98 % 12.82 % 11.84 % 9.91 % 12.01 %
Return on average tangible equity - Non-GAAP (1) 14.80 % 16.13 % 15.01 % 12.62 % 15.29 %
 
Capital Ratios:
Tier 1 risk-based capital 12.12% (i) 12.23 % 11.85 % 12.25 % 12.01 %
Total risk-based capital 13.29% (i) 13.44 % 13.06 % 13.50 % 13.26 %
Tier 1 leverage ratio 9.41% (i) 9.41 % 9.32 % 9.53 % 9.30 %
Equity to assets 10.34 % 10.33 % 9.91 % 9.87 % 9.62 %
Tangible equity to tangible assets - Non-GAAP (1) 8.51 % 8.47 % 7.99 % 7.94 % 7.69 %
(i) - estimated
 
Wealth Management Assets under Administration:
Balance at beginning of period $4,595,594 $4,433,574 $4,420,076 $4,199,640 $4,242,520

Net investment appreciation (depreciation) & income

248,727 190,931 (20,956 ) 213,979 (5,887 )
Net client cash flows       (62,363 )     (28,911 )     34,454       6,457       (36,993 )
Balance at end of period       $4,781,958       $4,595,594       $4,433,574       $4,420,076       $4,199,640  

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

 
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
     

Years Ended

 
(Dollars and shares in thousands, except per share amounts)       Dec 31,
2013 		    Dec 31,
2012
Financial Data:    
Net interest income $91,785 $90,696
Provision for loan losses 2,400 2,700
Noninterest income, excluding OTTI losses 65,569 65,435
Net OTTI losses recognized in earnings (3,489 ) (221 )
Noninterest expenses 98,785 102,338
Income tax expense 16,527 15,798
Net income 36,153 35,074
 
Share Data:
Basic earnings per common share $2.18 $2.13
Diluted earnings per common share $2.16 $2.13
Dividends declared per share $1.03 $0.94
 
Weighted average common shares outstanding - basic 16,506 16,358
Weighted average common shares outstanding - diluted 16,664 16,401
 
Key Ratios:
Return on average assets 1.17 % 1.16 %
Return on average tangible assets - Non-GAAP (1) 1.20 % 1.18 %
Return on average equity 11.65 % 11.97 %
Return on average tangible equity - Non-GAAP (1) 14.68 % 15.35 %
 
Asset Quality Data:
Allowance for Loan Losses:
Balance at beginning of period $30,873 $29,802
Provision charged to earnings 2,400 2,700
Charge-offs (6,022 ) (2,335 )
Recoveries       635       706  
Balance at end of period       $27,886       $30,873  
 
Net Loan Charge-Offs (Recoveries):
Commercial mortgages $4,833 $43
Other commercial 205 1,076
Residential real estate mortgages 125 257
Consumer       224       253  
Total       $5,387       $1,629  
 
Net charge-offs to average loans (annualized) 0.27 % 0.07 %
 
Wealth Management Assets Under Administration:
Balance at beginning of period $4,199,640 $3,900,061
Net investment appreciation & income 632,681 315,799
Net client cash flows       (50,363 )     (16,220 )
Balance at end of period       $4,781,958       $4,199,640  

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

 
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
      For the Quarters Ended  
        Dec 31,
2013 		    Sep 30,
2013 		    Jun 30,
2013 		    Mar 31,
2013 		    Dec 31,
2012
Average Yield / Rate (taxable equivalent basis):                
Assets:
Commercial loans 4.52 % 4.67 % 4.58 % 4.70   % 4.90 %
Residential real estate loans, including mortgage loans held for sale 4.09 % 4.06 % 4.14 % 4.26 % 4.23 %
Consumer loans 3.77 % 3.78 % 3.81 % 3.84 % 3.86 %
Total loans 4.28 % 4.35 % 4.34 % 4.44 % 4.53 %
Cash, federal funds sold and other short-term investments 0.22 % 0.21 % 0.22 % 0.21 % 0.26 %
FHLBB stock 0.37 % 0.38 % 0.42 % 0.39 % 0.48 %
Taxable debt securities 3.40 % 3.44 % 3.52 % 3.56 % 3.49 %
Nontaxable debt securities 5.88 % 5.87 % 5.94 % 5.98 % 5.89 %
Corporate stocks -- % -- % -- % -- % -- %
Total securities 3.78 % 3.88 % 3.97 % 3.98 % 3.86 %
Total interest-earning assets 4.02 % 4.12 % 4.17 % 4.24 % 4.31 %
Liabilities:
Interest-bearing demand deposits -- % -- % -- % -- % -- %
NOW accounts 0.06 % 0.06 % 0.06 % 0.06 % 0.07 %
Money market accounts 0.34 % 0.31 % 0.29 % 0.29 % 0.28 %
Savings accounts 0.06 % 0.06 % 0.07 % 0.07 % 0.09 %
Time deposits 1.19 % 1.23 % 1.25 % 1.28 % 1.32 %
FHLBB advances 3.49 % 3.25 % 3.29 % 3.21 % 3.27 %
Junior subordinated debentures 4.22 % 4.22 % 7.82 % 4.79 % 4.75 %
Other 2.52 % 4.50 % 5.87 % 1.77 % 5.51 %
Total interest-bearing liabilities 0.98 % 1.01 % 1.11 % 1.11 % 1.19 %
 
Interest rate spread (taxable equivalent basis) 3.04 % 3.11 % 3.06 % 3.13 % 3.12 %
Net interest margin (taxable equivalent basis) 3.24 % 3.29 % 3.26 % 3.32 % 3.33 %
   
 
At December 31, 2013
Amortized     Unrealized   Unrealized   Fair
(Dollars in thousands)       Cost (1)     Gains     Losses     Value
Securities Available for Sale:
Obligations of U.S. government-sponsored enterprises $54,474 $720 ($79 ) $55,115

Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises

230,387 8,369 (401 ) 238,355
States and political subdivisions 60,659 2,200 -- 62,859
Trust preferred securities:
Individual name issuers 30,715 -- (6,031 ) 24,684
Collateralized debt obligations 547 -- -- 547
Corporate bonds       11,128       231       (16 )     11,343
Total securities available for sale       387,910       11,520       (6,527 )     392,903
Held to Maturity:

Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises

      29,905       14       (54 )     29,865
Total securities held to maturity       29,905       14       (54 )     29,865
Total securities       $417,815       $11,534       ($6,581 )     $422,768

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

 
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
    Period End Balances At
(Dollars in thousands)     Dec 31,
2013 		    Sep 30,
2013 		    Jun 30,
2013 		    Mar 31,
2013 		    Dec 31,
2012
Loans:                
Commercial:     Mortgages $796,249 $727,375 $758,437 $729,968   $710,813
Construction & development 36,289 51,951 39,449 34,179 27,842
      Other     530,797       518,566       512,228       513,000         513,764
Total commercial 1,363,335 1,297,892 1,310,114 1,277,147 1,252,419
Residential real estate: Mortgages 749,163 711,427 728,158 702,418 692,798
      Homeowner construction     23,511       20,265       20,713       21,943         24,883
Total residential real estate 772,674 731,692 748,871 724,361 717,681
Consumer: Home equity lines 231,362 227,063 228,367 226,640 226,861
Home equity loans 40,212 41,158 41,312 40,134 39,329
      Other     55,301       55,961       56,316       56,763         57,713
      Total consumer     326,875       324,182       325,995       323,537         323,903
      Total loans     $2,462,884       $2,353,766       $2,384,980       $2,325,045         $2,294,003
 
 
    At December 31, 2013
(Dollars in thousands)     Balance     % of Total
Commercial Real Estate Loans by Property Location:    
Rhode Island, Connecticut, Massachusetts $791,682 95.1 %
New York, New Jersey 32,126 3.9 %
New Hampshire     8,730       1.0 %
Total commercial real estate loans (1)     $832,538       100.0 %
 

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

 
    At December 31, 2013
(Dollars in thousands)     Balance     % of Total
Residential Mortgages by Property Location:    
Rhode Island, Connecticut, Massachusetts $751,932 97.3 %
New Hampshire 7,900 1.0 %
New York, Virginia, New Jersey, Maryland, Pennsylvania, District of Columbia 6,972 0.9 %
Ohio 2,509 0.3 %
Washington, Oregon 1,356 0.2 %
Georgia 1,083 0.1 %
New Mexico 468 0.1 %
Other     454       0.1 %
Total residential mortgages     $772,674       100.0 %
 
 
      Period End Balances At
(Dollars in thousands)       Dec 31,
2013 		    Sep 30,
2013 		    Jun 30,
2013 		    Mar 31,
2013 		    Dec 31,
2012
Deposits:                
Demand deposits $440,785 $420,075 $358,797 $375,156 $379,889
NOW accounts 309,771 301,250 301,096 294,136 291,174
Money market accounts 666,646 623,631 540,012 503,414 496,402
Savings accounts 297,357 292,765 293,405 284,983 274,934
Time deposits       790,762       817,110       811,299       861,952       870,232
Total deposits       $2,505,321       $2,454,831       $2,304,609       $2,319,641       $2,312,631
 

Out-of-market brokered certificates of deposits included in time deposits

$98,009 $106,231 $96,177 $103,045 $102,636

In-market deposits, excluding out-of-market brokered certificates of deposit

$2,407,312 $2,348,600 $2,208,432 $2,216,596 $2,209,995
 
 
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
      Period End Balances At  
(Dollars in thousands)       Dec 31,
2013 		    Sep 30,
2013 		    Jun 30,
2013 		    Mar 31,
2013 		    Dec 31,
2012
Asset Quality Data:                
Nonperforming Assets:
Commercial mortgages $7,492 $8,956 $9,976 $14,953 $10,681
Commercial construction and development -- -- -- -- --
Other commercial 1,291 1,248 1,400 3,122 4,412
Residential real estate mortgages 8,315 8,095 7,526 6,699 6,158
Consumer       1,204       1,204       1,124       901       1,292  
Total nonaccrual loans $18,302 $19,503 $20,026 $25,675 $22,543
Nonaccrual investment securities 547 425 397 404 843
Property acquired through foreclosure or repossession       932       594       1,230       2,625       2,047  
Total nonperforming assets       $19,781       $20,522       $21,653       $28,704       $25,433  
 
Total past due loans to total loans 0.89 % 1.02 % 1.09 % 1.13 % 1.22 %
Nonperforming assets to total assets 0.62 % 0.66 % 0.71 % 0.94 % 0.83 %
Nonaccrual loans to total loans 0.74 % 0.83 % 0.84 % 1.10 % 0.98 %
Allowance for loan losses to nonaccrual loans 152.37 % 143.61 % 139.24 % 121.28 % 136.95 %
Allowance for loan losses to total loans 1.13 % 1.19 % 1.17 % 1.34 % 1.35 %
 
Troubled Debt Restructured Loans:
Accruing troubled debt restructured loans:
Commercial mortgages $22,800 $23,892 $19,018 $9,600 $9,569
Other commercial 1,265 1,576 2,602 6,554 6,577
Residential real estate mortgages 1,442 870 876 1,599 1,123
Consumer       236       239       242       244       154  
Accruing troubled debt restructured loans       25,743       26,577       22,738       17,997       17,423  
Nonaccrual troubled debt restructured loans:
Commercial mortgages -- -- -- -- --
Other commercial 542 547 590 721 2,063
Residential real estate mortgages -- -- 144 155 688
Consumer       38       40       42       42       44  
Nonaccrual troubled debt restructured loans       580       587       776       918       2,795  
Total troubled debt restructured loans       $26,323       $27,164       $23,514       $18,915       $20,218  
 
 
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
      Period End Balances At
(Dollars in thousands)       Dec 31,
2013 		    Sep 30,
2013 		    Jun 30,
2013 		    Mar 31,
2013 		    Dec 31,
2012
Past Due Loans:                
Loans 30-59 Days Past Due:
Commercial mortgages $-- $-- $-- $-- $373
Other commercial loans 276 2,648 505 689 260
Residential real estate mortgages 4,040 2,624 4,051 3,891 4,840
Consumer loans       1,322       1,013       1,588       1,534       1,134
Loans 30-59 days past due       $5,638       $6,285       $6,144       $6,114       $6,607
 
Loans 60-89 Days Past Due:
Commercial mortgages $-- $730 $536 $193 $408
Other commercial loans 302 8 34 341 296
Residential real estate mortgages 1,285 1,960 1,697 1,451 1,951
Consumer loans       166       328       689       461       385
Loans 60-89 days past due       $1,753       $3,026       $2,956       $2,446       $3,040
 
Loans 90 Days or more Past Due:
Commercial mortgages $7,492 $8,226 $8,895 $9,852 $10,300
Other commercial loans 731 929 3,428 2,961 3,647
Residential real estate mortgages 5,633 4,843 4,266 4,327 3,658
Consumer loans       656       693       415       484       844
Loans 90 days or more past due       $14,512       $14,691       $17,004       $17,624       $18,449
 
Total Past Due Loans:
Commercial mortgages $7,492 $8,956 $9,431 $10,045 $11,081
Other commercial loans 1,309 3,585 3,967 3,991 4,203
Residential real estate mortgages 10,958 9,427 10,014 9,669 10,449
Consumer loans       2,144       2,034       2,692       2,479       2,363
Total past due loans       $21,903       $24,002       $26,104       $26,184       $28,096
 
Accruing loans 90 days or more past due $-- $-- $2,431 $-- $--
Nonaccrual loans included in past due loans $15,591 $17,275 $17,208 $19,000 $20,979
 
 
      For the Quarters Ended  
(Dollars in thousands)       Dec 31,
2013 		    Sep 30,
2013 		    Jun 30,
2013 		    Mar 31,
2013 		    Dec 31,
2012
Allowance for Loan Losses:                
Balance at beginning of period $28,008 $27,884 $31,139 $30,873 $30,752
Provision charged to earnings 400 700 700 600 600
Charge-offs (703 ) (770 ) (4,175 ) (374 ) (534 )
Recoveries       181       194       220       40       55  
Balance at end of period       $27,886       $28,008       $27,884       $31,139       $30,873  
 
Net Loan Charge-Offs (Recoveries):
Commercial mortgages $309 $602 $3,814 $108 $212
Other commercial 73 (2 ) 63 71 225
Residential real estate mortgages 80 -- 36 9 39
Consumer       60       (24 )     42       146       3  
Total       $522       $576       $3,955       $334       $479  
 

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

 
Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS (unaudited)
      Three Months Ended  
        December 31, 2013     September 30, 2013     December 31, 2012

Average
Balance

    Interest    

Yield/
Rate

   

Average
Balance

    Interest    

Yield/
Rate

   

Average
Balance

    Interest    

Yield/
Rate

(Dollars in thousands)                                  
Assets:    
Commercial loans $1,310,584 $14,944 4.52 % $1,297,705 $15,274 4.67 % $1,227,120 $15,121 4.90 %

Residential real estate loans, including mortgage loans held for sale

771,272 7,947 4.09 % 780,323 7,991 4.06 % 757,764 8,049 4.23 %
Consumer loans       323,778       3,078       3.77 %     323,398       3,083       3.78 %     322,476       3,131       3.86 %
Total loans 2,405,634 25,969 4.28 % 2,401,426 26,348 4.35 % 2,307,360 26,301 4.53 %

Cash, federal funds sold and short-term investments

104,718 59 0.22 % 87,048 47 0.21 % 42,056 27 0.26 %
FHLBB stock 37,730 35 0.37 % 37,730 36 0.38 % 40,418 49 0.48 %
 
Taxable debt securities 350,821 3,005 3.40 % 297,532 2,582 3.44 % 369,736 3,241 3.49 %
Nontaxable debt securities 63,524 941 5.88 % 64,836 960 5.87 % 68,198 1,010 5.89 %
Corporate stocks       --       --       -- %     --       --       -- %     --       --       -- %
Total securities       414,345       3,946       3.78 %     362,368       3,542       3.88 %     437,934       4,251       3.86 %
Total interest-earning assets 2,962,427 30,009 4.02 % 2,888,572 29,973 4.12 % 2,827,768 30,628 4.31 %
Noninterest-earning assets       200,615                   209,656                   216,996              
Total assets       $3,163,042                   $3,098,228                   $3,044,764              
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits $10,877 $-- -- % $6,688 $-- -- % $-- $-- -- %
NOW accounts 300,113 48 0.06 % 293,634 45 0.06 % 276,572 49 0.07 %
Money market accounts 653,731 560 0.34 % 591,860 456 0.31 % 473,747 338 0.28 %
Savings accounts 293,434 47 0.06 % 295,821 47 0.06 % 271,716 60 0.09 %
Time deposits 802,979 2,411 1.19 % 811,850 2,516 1.23 % 886,355 2,933 1.32 %
FHLBB advances 288,212 2,534 3.49 % 328,705 2,693 3.25 % 382,465 3,148 3.27 %
Junior subordinated debentures 22,681 241 4.22 % 22,681 241 4.22 % 32,991 394 4.75 %
Other       629       4       2.52 %     353       4       4.50 %     289       4       5.51 %
Total interest-bearing liabilities 2,372,656 5,845 0.98 % 2,351,592 6,002 1.01 % 2,324,135 6,926 1.19 %
Demand deposits 425,316 384,665 362,060
Other liabilities 38,204 51,186 58,139
Shareholders' equity       326,866                   310,785                   300,430              
Total liabilities and shareholders' equity       $3,163,042                   $3,098,228                   $3,044,764              
Net interest income (FTE)             $24,164                   $23,971                   $23,702        
Interest rate spread 3.04 % 3.11 % 3.12 %
Net interest margin                   3.24 %                 3.29 %                 3.33 %
 

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

 
(Dollars in thousands)             Three Months Ended
             

Dec 31,
2013

   

Sep 30,
2013

   

Dec 31,
2012

Commercial loans $320     $252     $192
Nontaxable debt securities 323 331 346
Corporate stocks             --       --       --
Total             $643       $583       $538
 
 
Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS (unaudited)

Years ended December 31,

      2013     2012
     

Average
Balance

    Interest    

Yield/
Rate

   

Average
Balance

    Interest    

Yield/
Rate

(Dollars in thousands)                        
Assets:  
Commercial loans $1,286,029 $59,387 4.62 % $1,177,268 $58,823 5.00 %

Residential real estate loans, including mortgage loans held for sale

767,450 31,752 4.14 % 733,178 31,974 4.36 %
Consumer loans       323,847       12,304       3.80 %     320,828       12,428       3.87 %
Total loans 2,377,326 103,443 4.35 % 2,231,274 103,225 4.63 %
Cash, federal funds sold and short-term investments 72,726 158 0.22 % 41,359 91 0.22 %
FHLBB stock 38,238 148 0.39 % 40,713 207 0.51 %
 
Taxable debt securities 316,440 11,008 3.48 % 431,024 15,359 3.56 %
Nontaxable debt securities 65,708 3,889 5.92 % 69,838 4,115 5.89 %
Corporate stocks       --       --       -- %     910       68       7.47 %
Total securities       382,148       14,897       3.90 %     501,772       19,542       3.89 %
Total interest-earning assets 2,870,438 118,646 4.13 % 2,815,118 123,065 4.37 %
Noninterest-earning assets       208,463                   221,031              
Total assets       $3,078,901                   $3,036,149              
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits $4,461 $-- -- % $-- $-- -- %
NOW accounts 291,705 183 0.06 % 259,595 175 0.07 %
Money market accounts 569,534 1,749 0.31 % 430,262 1,078 0.25 %
Savings accounts 288,892 186 0.06 % 261,795 276 0.11 %
Time deposits 831,729 10,302 1.24 % 893,474 12,061 1.35 %
FHLBB advances 322,118 10,643 3.30 % 466,424 14,957 3.21 %
Junior subordinated debentures 27,398 1,484 5.42 % 32,991 1,570 4.76 %
Other       581       16       2.75 %     5,093       248       4.87 %
Total interest-bearing liabilities 2,336,418 24,563 1.05 % 2,349,634 30,365 1.29 %
Demand deposits 384,323 338,046
Other liabilities 47,961 55,382
Shareholders' equity       310,199                   293,087              
Total liabilities and shareholders' equity       $3,078,901                   $3,036,149              
Net interest income (FTE)             $94,083                   $92,700        
Interest rate spread 3.08 % 3.08 %
Net interest margin                   3.28 %                 3.29 %
 

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

 
(Dollars in thousands)                

Years ended December 31,

            2013     2012
Commercial loans $962 $569
Nontaxable debt securities 1,336 1,416
Corporate stocks             --       19
Total             $2,298       $2,004
 
 
Washington Trust Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION - Non-GAAP Financial Measures (unaudited)
      At or for the Quarters Ended  
(Dollars in thousands, except per share amounts)      

Dec 31,
2013

    Sep 30,
2013 		    Jun 30,
2013 		    Mar 31,
2013 		    Dec 31,
2012
Calculation of Tangible Book Value per Share:                
Total shareholders' equity at end of period $329,646 $323,585 $303,370 $301,291 $295,652
Less:
Goodwill 58,114 58,114 58,114 58,114 58,114
Identifiable intangible assets, net       5,493       5,657       5,827       6,000       6,173  
Total tangible shareholders' equity at end of period       $266,039       $259,814       $239,429       $237,177       $231,365  
 
Shares outstanding at end of period       16,614       16,589       16,487       16,425       16,380  
 
Book value per share - GAAP       $19.84       $19.51       $18.40       $18.34       $18.05  
Tangible book value per share - Non-GAAP       $16.01       $15.66       $14.52       $14.44       $14.12  
 
Calculation of Tangible Equity to Tangible Assets:
Total tangible shareholders' equity at end of period       $266,039       $259,814       $239,429       $237,177       $231,365  
 
Total assets at end of period $3,188,867 $3,131,958 $3,061,307 $3,051,848 $3,071,884
Less:
Goodwill 58,114 58,114 58,114 58,114 58,114
Identifiable intangible assets, net       5,493       5,657       5,827       6,000       6,173  
Total tangible assets at end of period       $3,125,260       $3,068,187       $2,997,366       $2,987,734       $3,007,597  
 
Equity to assets - GAAP       10.34 %     10.33 %     9.91 %     9.87 %     9.62 %
Tangible equity to tangible assets - Non-GAAP       8.51 %     8.47 %     7.99 %     7.94 %     7.69 %
 
Calculation of Return on Average Tangible Assets:
Net income       $9,789       $9,960       $8,983       $7,421       $9,023  
 
Total average assets $3,163,042 $3,098,228 $3,034,956 $3,017,583 $3,044,764
Less:
Average goodwill 58,114 58,114 58,114 58,114 58,114
Average identifiable intangible assets, net       5,573       5,739       5,912       6,085       6,257  
Total average tangible assets       $3,099,355       $3,034,375       $2,970,930       $2,953,384       $2,980,393  
 
Return on average assets - GAAP       1.24 %     1.29 %     1.18 %     0.98 %     1.19 %
Return on average tangible assets - Non-GAAP       1.26 %     1.31 %     1.21 %     1.01 %     1.21 %
 
Calculation of Return on Average Tangible Equity:
Net income       $9,789       $9,960       $8,983       $7,421       $9,023  
 
Total average shareholders' equity $326,866 $310,785 $303,402 $299,436 $300,430
Less:
Average goodwill 58,114 58,114 58,114 58,114 58,114
Average identifiable intangible assets, net       5,573       5,739       5,912       6,085       6,257  
Total average tangible shareholders' equity       $263,179       $246,932       $239,376       $235,237       $236,059  
 
Return on average shareholders' equity - GAAP       11.98 %     12.82 %     11.84 %     9.91 %     12.01 %
Return on average tangible shareholders' equity - Non-GAAP       14.80 %     16.13 %     15.01 %     12.62 %     15.29 %
 
 
Washington Trust Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION - Non-GAAP Financial Measures (unaudited)
     

Years Ended

(Dollars in thousands)      

Dec 31,
2013

    Dec 31,
2012
Calculation of return on average tangible assets:    
Net income       $36,153       $35,074  
 
Total average assets $3,078,901 $3,036,149
Less:
Average goodwill 58,114 58,114
Average identifiable intangible assets, net       5,826       6,528  
Total average tangible assets       $3,014,961       $2,971,507  
 
Return on average assets - GAAP       1.17 %     1.16 %
Return on average tangible assets - Non-GAAP       1.20 %     1.18 %
 
 
Calculation of return on average tangible equity:
Net income       $36,153       $35,074  
 
Total average shareholders' equity $310,199 $293,087
Less:
Average goodwill 58,114 58,114
Average identifiable intangible assets, net       5,826       6,528  
Total average tangible shareholders' equity       $246,259       $228,445  
 
Return on average shareholders' equity - GAAP       11.65 %     11.97 %
Return on average tangible shareholders' equity - Non-GAAP       14.68 %     15.35 %
 

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