Washington Trust Announces First Quarter 2011 Earnings Up 31% from First Quarter 2010

WESTERLY, R.I.--()--Washington Trust Bancorp, Inc. (NASDAQ Global Select®; symbol: WASH), parent company of The Washington Trust Company, today announced first quarter 2011 net income of $6.8 million, or 42 cents per diluted share, up by 31% from the $5.2 million, or 32 cents per diluted share, reported for the first quarter of 2010. As compared to the linked quarter, first quarter 2011 results declined by $411 thousand, or 2 cents per diluted share, reflecting decreased residential mortgage banking activity.

Joseph J. MarcAurele, Washington Trust Chairman, President and CEO, stated “Washington Trust posted solid results for the first quarter and I’m pleased with the momentum that we’ve maintained over the past several quarters. All of our lines of business performed well and we are excited about the growth opportunities presented by our new Burlington, Massachusetts, mortgage office and the East Providence branch office, which will open later this year.”

Financial Highlights:

  • Net interest margin continued an upward trend to 3.16%, compared to 3.05% for the fourth quarter of 2010 and 2.78% for the first quarter of 2010.
  • Wealth management revenues increased by $242 thousand, or 4%, on a linked quarter basis and by $774 thousand, or 12%, from the first quarter of 2010. Assets under administration increased by 4% in the quarter and by 6% in the last twelve months.
  • Due to an increase in market interest rates, residential mortgage refinancing and sales activity declined from the high levels experienced in latter half of 2010. Net gains on loan sales and commissions on loans originated for others declined by $1.6 million on a linked quarter basis and by $35 thousand from the first quarter of 2010.
  • Total loan growth amounted to $34 million, or 2%, in the first quarter of 2011, with commercial loan growth of $29 million.
  • Total deposits grew by $13 million, or 1%, in the first quarter of 2011, including a $46 million, or 20%, increase in demand deposits.
  • The overall level of nonperforming assets remained fairly stable in the quarter, with total nonperforming assets at 0.77% of total assets at March 31, 2011, compared to 0.79% at December 31, 2010.

Net Interest Income

Net interest income totaled $20.3 million for the first quarter of 2011, up by $74 thousand from the fourth quarter of 2010 and up by $2.3 million from the first quarter of 2010.

The net interest margin for the first quarter of 2011 was 3.16%, up by 11 basis points from the fourth quarter of 2010, reflecting a 7 basis point increase in the yield on interest-earning assets. The net interest margin increased by 38 basis points over the first quarter of 2010, due in large part to a reduction in funding costs.

Noninterest Income

Noninterest income totaled $11.7 million for the first quarter of 2011, down by $1.7 million, or 13%, on a linked quarter basis, primarily due to lower levels of residential mortgage refinancing and sales activity. On a year over year basis, noninterest income was up by $1.2 million, or 12%, reflecting increases in wealth management revenues and merchant processing fees.

Wealth management revenues for the first quarter of 2011 increased by $774 thousand, or 12%, over the first quarter of 2010. Wealth management assets under administration totaled $4.119 billion at March 31, 2011, up by $152 million, or 4%, from December 31, 2010 and up by $250 million, or 6%, from March 31, 2010.

Merchant processing fees for the first quarter of 2011 were up by $338 thousand, or 21%, from the first quarter of 2010 primarily due to growth in the volume of transactions processed for existing and new customers. Washington Trust also experienced a corresponding increase of $312 thousand, or 23%, in merchant processing costs (included in noninterest expenses), for third-party costs directly attributable to handling of merchant credit card transactions.

Noninterest Expenses

Noninterest expenses totaled $20.7 million for the first quarter of 2011. In the fourth quarter of 2010 Washington Trust made a $350 thousand contribution to its charitable foundation. Excluding this fourth quarter charitable contribution, noninterest expenses decreased by $706 thousand, or 3%, on a linked quarter basis, reflecting lower commissions and incentives and foreclosed property costs. On a year over year basis, noninterest expenses were up by $1.1 million, or 5%.

Income tax expense amounted to $3.0 million for the first quarter of 2011, compared to $3.2 million for the fourth quarter of 2010 and $2.1 million for the first quarter of 2010. The effective tax rate for the first quarter was 30.5%, compared to 30.4% for the fourth quarter of 2010 and 29.1% for the first quarter of 2010.

Asset Quality

Nonperforming assets (nonaccrual loans, nonaccrual investment securities and property acquired through foreclosure or repossession) amounted to $22.3 million, or 0.77% of total assets, at March 31, 2011. Nonperforming assets declined by $666 thousand from the balance of $23.0 million, or 0.79% of total assets, at December 31, 2010, due to a $1.5 million decrease in property acquired through foreclosure or repossession, which was offset, in part, by an $869 thousand net increase in nonaccrual loans.

At March 31, 2011, total past due loans amounted to $27.3 million, or 1.34% of total loans, up by $2.0 million from the $25.3 million, or 1.27% of total loans, at December 31, 2010. The net increase in past due loans included one commercial real estate loan 37 days past due with a carrying value of $1.2 million that was also classified as a troubled debt restructured loan at March 31, 2011. In April, payments were received on this loan, bringing it current with its restructured terms.

At March 31, 2011, loans classified as troubled debt restructurings totaled $21.1 million, down by $1.3 million from the $22.4 million balance at December 31, 2010, reflecting payoffs and declassification from troubled debt restructuring status.

The loan loss provision charged to earnings amounted to $1.5 million for the first quarter of 2011, unchanged from the fourth quarter 2010 and first quarter 2010 levels. Net charge-offs remained relatively stable and amounted to $974 thousand in the first quarter of 2011 compared to $1.1 million in the fourth quarter of 2010 and $1.2 million in the first quarter of 2010. The allowance for loan losses was $29.1 million, or 1.43% of total loans, at March 31, 2011, compared to 1.43% of total loans at December 31, 2010.

Loans

Total loans grew by $34 million, or 2%, in the first quarter and totaled $2 billion at March 31, 2011. The growth was primarily in the commercial loan portfolio which increased by $29 million in the first quarter.

Deposits

Total deposits amounted to $2 billion at March 31, 2011, up by $13 million, or 1%, from the balance at December 31, 2010, including a $46 million increase in demand deposits.

Capital Management

Capital levels remain comfortably above the regulatory minimums to be considered well capitalized, with total risk-based capital ratio of 12.92% at March 31, 2011 and 12.79% at December 31, 2010. Total shareholder’s equity was $273.9 million at March 31, 2011, up by $5.0 million from the balance at December 31, 2010.

Dividends Declared

The Board of Directors declared a quarterly dividend of 22 cents per share for the quarter ended March 31, 2011. This was an increase of one cent per share over the most recent dividend rate. The dividend was paid on April 14, 2011 to shareholders of record on March 31, 2011.

Conference Call

Washington Trust will host a conference call on Monday, April 25, 2011 at 10:00 a.m. Eastern Time to discuss first quarter results. This call is being webcast and can be accessed through the Investor Relations section of the Washington Trust web site, www.washtrust.com. Individuals may dial in to the call at 1-877-317-6789. The international dial-in number is 1-412-317-6789 and the Canada dial-in number is 1-866-605-3852. A replay of the call will be posted in this same location on the web site shortly after the conclusion of the call. To listen to a replay of the conference call, dial 1-877-344-7529. For international access, dial 1-412-317-0088. The Conference Number for either replay is 449909. The replay will be available until 9:00 a.m. on May 10, 2011.

Background

Washington Trust Bancorp, Inc. is the parent of The Washington Trust Company, a Rhode Island state-chartered bank founded in 1800. Washington Trust offers personal banking, business banking and wealth management services through its offices in Rhode Island, eastern Massachusetts and southeastern Connecticut. Washington Trust Bancorp, Inc.’s common stock trades on the NASDAQ Global Select® 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 certain 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, changes 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, 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 such as the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, 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, 2010, 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)
   
March 31, December 31,
(Dollars in thousands, except par value)   2011   2010
Assets:
Cash and due from banks $68,113 $85,971
Other short-term investments 6,296 6,765
Mortgage loans held for sale 2,985 13,894
Securities available for sale, at fair value;
amortized cost $560,752 in 2011 and $578,897 in 2010 576,158 594,100
Federal Home Loan Bank stock, at cost 42,008 42,008
Loans:
Commercial and other 1,056,388 1,027,065
Residential real estate 649,157 645,020
Consumer   324,092   323,553
Total loans 2,029,637 1,995,638
Less allowance for loan losses   29,109   28,583
Net loans 2,000,528 1,967,055
Premises and equipment, net 26,010 26,069
Investment in bank-owned life insurance 52,320 51,844
Goodwill 58,114 58,114
Identifiable intangible assets, net 7,614 7,852
Other assets   52,126   55,853
Total assets   $2,892,272   $2,909,525
Liabilities:
Deposits:
Demand deposits $274,798 $228,437
NOW accounts 228,502 241,974
Money market accounts 387,923 396,455
Savings accounts 223,599 220,888
Time deposits   934,024   948,576
Total deposits 2,048,846 2,036,330
Federal Home Loan Bank advances 469,235 498,722
Junior subordinated debentures 32,991 32,991
Other borrowings 21,467 23,359
Other liabilities   45,848   49,259
Total liabilities   2,618,387   2,640,661
Shareholders’ Equity:
Common stock of $.0625 par value; authorized 30,000,000 shares;
issued 16,233,587 shares in 2011 and 16,171,618 shares in 2010 1,015 1,011
Paid-in capital 86,348 84,889
Retained earnings 182,136 178,939
Accumulated other comprehensive income   4,386   4,025
Total shareholders’ equity   273,885   268,864
Total liabilities and shareholders’ equity   $2,892,272   $2,909,525
 

Washington Trust Bancorp, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME (unaudited)
  Three Months Ended
March 31,   March 31,
(Dollars and shares in thousands, except per share amounts)   2011   2010
Interest income:
Interest and fees on loans $24,259 $23,968
Interest on securities:
Taxable 4,773 6,051
Nontaxable 769 769
Dividends on corporate stock and Federal Home Loan Bank stock 67 55
Other interest income   24     21  
Total interest income   29,892     30,864  
Interest expense:
Deposits 4,202 5,769
Federal Home Loan Bank advances 4,732 6,219
Junior subordinated debentures 390 630
Other interest expense   241     242  
Total interest expense   9,565     12,860  
Net interest income 20,327 18,004
Provision for loan losses   1,500     1,500  
Net interest income after provision for loan losses   18,827     16,504  
Noninterest income:
Wealth management services:
Trust and investment advisory fees 5,676 5,017
Mutual fund fees 1,123 1,110
Financial planning, commissions and other service fees   281     179  
Wealth management services 7,080 6,306
Service charges on deposit accounts 932 849
Merchant processing fees 1,944 1,606
Card interchange fees 487 389
Income from bank-owned life insurance 476 439
Net gains on loan sales and commissions on loans originated for others 525 560
Net realized loss on securities (29 ) –
Net gains on interest rate swap contracts 76 68
Equity in losses of unconsolidated subsidiaries (144 ) (52 )
Other income   383     365  
Noninterest income, excluding other-than-temporary impairment losses 11,730 10,530
Total other-than-temporary impairment losses on securities (54 ) (2 )
Portion of loss recognized in other comprehensive income (before taxes)   21     (61 )
Net impairment losses recognized in earnings   (33 )   (63 )
Total noninterest income   11,697     10,467  
Noninterest expense:
Salaries and employee benefits 11,828 11,501
Net occupancy 1,321 1,224
Equipment 1,049 997
Merchant processing costs 1,669 1,357
Outsourced services 872 840
FDIC deposit insurance costs 723 794
Legal, audit and professional fees 492 518
Advertising and promotion 353 364
Amortization of intangibles 238 291
Foreclosed property costs 166 36
Other expenses   2,029     1,755  
Total noninterest expense   20,740     19,677  
Income before income taxes 9,784 7,294
Income tax expense   2,984     2,122  
Net income   $6,800     $5,172  
Weighted average common shares outstanding – basic 16,197.2 16,057.7
Weighted average common shares outstanding – diluted 16,229.8 16,063.9
Per share information: Basic earnings per common share $0.42 $0.32
Diluted earnings per common share $0.42 $0.32
Cash dividends declared per share $0.22 $0.21
 

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)

  Mar. 31,
2011 		  Dec. 31,
2010 		  Sept. 30,
2010 		  June 30,
2010 		  Mar. 31,
2010
Financial Data:        
Total assets $2,892,272 $2,909,525 $2,909,003 $2,929,853 $2,896,425
Total loans 2,029,637 1,995,638 2,011,148 1,972,498 1,937,524
Total securities 576,158 594,100 577,161 675,938 716,964
Total deposits 2,048,846 2,036,330 2,056,754 1,949,905 1,961,188
Total shareholders’ equity 273,885 268,864 267,109 265,411 259,529
Net interest income 20,327 20,253 20,101 18,833 18,004
Provision for loan losses 1,500 1,500 1,500 1,500 1,500
Noninterest income, excluding other-than-temporary
impairment losses 11,730 13,408 13,439 11,513 10,530
Net impairment losses recognized in earnings (33 ) - - (354 ) (63 )
Noninterest expenses 20,740 21,796 22,855 20,983 19,677
Income tax expense 2,984 3,154 2,815 2,211 2,122
Net income 6,800 7,211 6,370 5,298 5,172
 
Share Data:
Basic earnings per common share $0.42 $0.44 $0.39 $0.33 $0.32
Diluted earnings per common share $0.42 $0.44 $0.39 $0.33 $0.32
Dividends declared per share $0.22 $0.21 $0.21 $0.21 $0.21
Book value per share $16.87 $16.63 $16.55 $16.46 $16.14
Tangible book value per share – Non-GAAP (1) $12.82 $12.55 $12.45 $12.34 $11.99
Market value per share $23.74 $21.88 $19.12 $17.04 $18.64
 
Shares outstanding at end of period 16,233.6 16,171.6 16,135.4 16,120.7 16,079.1
Weighted average common shares outstanding–basic 16,197.2 16,160.6 16,131.4 16,104.6 16,057.7
Weighted average common shares outstanding–diluted 16,229.8 16,182.7 16,136.3 16,111.3 16,063.9
 
Key Ratios:
Return on average assets 0.94 % 0.99 % 0.87 % 0.73 % 0.71 %
Return on average tangible assets – Non-GAAP (1) 0.96 % 1.01 % 0.89 % 0.74 % 0.73 %
Return on average equity 10.04 % 10.70 % 9.53 % 8.05 % 8.00 %
Return on average tangible equity – Non-GAAP (1) 13.26 % 14.17 % 12.67 % 10.78 % 10.80 %
 
Capital Ratios:
Tier 1 risk-based capital 11.65

% (i)

11.53 % 11.24 % 11.22 % 11.24 %
Total risk-based capital 12.92

% (i)

12.79 % 12.50 % 12.47 % 12.50 %
Tier 1 leverage ratio 8.49

% (i)

8.25 % 8.04 % 7.94 % 7.89 %
Equity to assets 9.47 % 9.24 % 9.18 % 9.06 % 8.96 %
Tangible equity to tangible assets – Non-GAAP(1) 7.36 % 7.14 % 7.07 % 6.95 % 6.81 %
(i) – estimated
 
Wealth Management Assets under
Administration (2):
Balance at beginning of period $3,967,207 $3,744,632 $3,626,871 $3,869,502 $3,735,646
Net investment appreciation (depreciation) & income 145,563 227,168 243,141 (250,445 ) 99,121
Net customer cash flows 6,437 (4,593 ) (19,611 ) 7,814 34,735
Other (3)   –     –     (105,769 )   –     –  
Balance at end of period   $4,119,207     $3,967,207     $3,744,632     $3,626,871     $3,869,502  
 

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

(2) Prior period amounts have been reclassified to conform to current period presentation.

(3) In the third quarter of 2010, the contractual nature of a client relationship changed, which reduced the frequency and scope of wealth management services performed by Washington Trust. While Washington Trust still maintains a consulting relationship with the client, management no longer considers these assets to be wealth management assets under administration. This change in reported assets under administration did not result in any change to the reported amount of wealth management revenues.

 

Washington Trust Bancorp, Inc. and Subsidiaries

SELECTED FINANCIAL HIGHLIGHTS (unaudited)
 
  For the Quarters Ended
    Mar. 31,
2011 		  Dec. 31,
2010 		  Sept. 30,
2010 		  June 30,
2010 		  Mar. 31,
2010
Average Yield / Rate (taxable equivalent basis):        
Assets:
Commercial and other loans 5.28% 5.22% 5.29% 5.23% 5.31%
Residential real estate loans, including
mortgage loans held for sale 4.79% 4.76% 4.94% 5.05% 5.19%
Consumer loans 3.93% 3.96% 3.99% 4.00% 3.99%
Total loans 4.91% 4.87% 4.97% 4.97% 5.05%
Cash, federal funds sold
and other short-term investments 0.22% 0.21% 0.20% 0.17% 0.24%
FHLBB stock 0.31% –% –% –% –%
Taxable debt securities 3.93% 3.79% 3.93% 3.93% 4.10%
Nontaxable debt securities 5.95% 5.76% 5.76% 5.82% 5.89%
Corporate stocks 8.07% 7.42% 7.72% 7.60% 7.58%
Total securities 4.23% 4.08% 4.19% 4.17% 4.33%
Total interest-earning assets 4.61% 4.54% 4.63% 4.64% 4.72%
Liabilities:
NOW accounts 0.10% 0.12% 0.12% 0.12% 0.13%
Money market accounts 0.33% 0.34% 0.40% 0.56% 0.61%
Savings accounts 0.14% 0.14% 0.14% 0.17% 0.18%
Time deposits 1.61% 1.65% 1.74% 1.94% 2.13%
FHLBB advances 4.04% 4.13% 4.16% 4.08% 4.26%
Junior subordinated debentures 4.79% 5.15% 5.82% 5.43% 7.74%
Other 4.23% 4.43% 4.59% 4.63% 4.68%
Total interest-bearing liabilities 1.67% 1.70% 1.84% 2.00% 2.17%
 
Interest rate spread (taxable equivalent basis) 2.94% 2.84% 2.79% 2.64% 2.55%
Net interest margin (taxable equivalent basis) 3.16% 3.05% 3.01% 2.86% 2.78%
 
At March 31, 2011
(Dollars in thousands)   Amortized
Cost (1) 		  Unrealized
Gains 		  Unrealized
Losses 		  Fair
Value
Securities Available for Sale:      
Obligations of U.S. government-sponsored enterprises $29,408 $3,495 $ − $32,903
Mortgage-backed securities issued by U.S. government
agencies and U.S. government-sponsored enterprises 400,471 17,870 (753) 417,588
States and political subdivisions 79,450 2,420 (227) 81,643
Trust preferred securities:
Individual name issuers 30,610 − (5,533) 25,077
Collateralized debt obligations 4,428 − (3,676) 752
Corporate bonds 13,872 1,206 (3) 15,075
Common stocks 659 147 − 806
Perpetual preferred stocks   1,854   460   −   2,314
Total securities available for sale   $560,752   $25,598   $(10,192)   $576,158
 

(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)   3/31/2011   12/31/2010   9/30/2010   6/30/2010   3/31/2010
Loans:
Commercial: Mortgages $551,069 $518,623 $522,355 $510,315 $493,102
Construction & development 34,615 47,335 62,820 67,215 77,787
    Other   470,704   461,107   464,294   441,827   427,870
Total commercial 1,056,388 1,027,065 1,049,469 1,019,357 998,759
Residential real estate: Mortgages 636,916 634,739 622,975 610,245 597,481
    Homeowner construction   12,241   10,281   10,593   12,368   11,577
Total residential real estate 649,157 645,020 633,568 622,613 609,058
Consumer: Home equity lines 221,003 218,288 218,898 218,440 213,841
Home equity loans 48,337 50,624 54,923 57,682 59,390
    Other   54,752   54,641   54,290   54,406   56,476
    Total consumer   324,092   323,553   328,111   330,528   329,707
    Total loans   $2,029,637   $1,995,638   $2,011,148   $1,972,498   $1,937,524
  At March 31, 2011
(Dollars in thousands)   Balance   % of Total
Commercial Real Estate Loans by Property Location:  
Rhode Island, Connecticut, Massachusetts $531,708 90.8%
New York, New Jersey, Pennsylvania 40,469 6.9%
New Hampshire 11,801 2.0%
Other   1,706   0.3%
Total commercial real estate loans (1)   $585,684   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 March 31, 2011
(Dollars in thousands)   Balance   % of Total
Residential Mortgages by Property Location:  
Rhode Island, Connecticut, Massachusetts $619,932 95.5%
New York, Virginia, New Jersey, Maryland, Pennsylvania, District of Columbia 13,319 2.1%
Ohio 7,489 1.2%
California, Washington, Oregon 3,464 0.5%
Colorado, New Mexico, Utah 2,102 0.3%
Georgia 1,674 0.3%
New Hampshire 702 0.1%
Wyoming   475   0.0%
Total residential mortgages   $649,157   100.0%
         
Period End Balances At
(Dollars in thousands)   3/31/2011   12/31/2010   9/30/2010   6/30/2010   3/31/2010
Deposits:
Demand deposits $274,798 $228,437 $242,455 $225,494 $204,317
NOW accounts 228,502 241,974 236,775 234,014 196,905
Money market accounts 387,923 396,455 408,828 378,004 397,896
Savings accounts 223,599 220,888 210,271 209,616 202,236
Time deposits   934,024   948,576   958,425   902,777   959,834
Total deposits   $2,048,846   $2,036,330   $2,056,754   $1,949,905   $1,961,188
 
Out-of-market brokered certificates of deposits
included in time deposits $51,778 $52,347 $69,385 $94,641 $88,748
In-market deposits, excluding out of market
brokered certificates of deposit $1,997,068 $1,983,983 $1,987,369 $1,855,264 $1,872,440
 

Washington Trust Bancorp, Inc. and Subsidiaries

SELECTED FINANCIAL HIGHLIGHTS (unaudited)
       
Period End Balances At
(Dollars in thousands)   Mar. 31,
2011 		  Dec. 31,
2010 		  Sept. 30,
2010 		  June 30,
2010 		  Mar. 31,
2010
Nonperforming Assets:  
Commercial mortgages $6,068 $6,624 $6,426 $6,680 $8,933
Commercial construction and development – – – – –
Other commercial 4,445 5,259 6,256 8,418 8,225
Residential real estate mortgages 8,265 6,414 6,080 6,850 6,395
Consumer   601   213   824   789   827
Total nonaccrual loans $19,379 $18,510 $19,586 $22,737 $24,380
Nonaccrual investment securities 752 806 841 872 1,154
Property acquired through foreclosure or repossession   2,163   3,644   2,612   2,338   1,974
Total nonperforming assets   $22,294   $22,960   $23,039   $25,947   $27,508
 
Total past due loans to total loans 1.34% 1.27% 1.24% 1.45% 1.55%
Nonperforming assets to total assets 0.77% 0.79% 0.79% 0.89% 0.95%
Nonaccrual loans to total loans 0.95% 0.93% 0.97% 1.15% 1.26%
Allowance for loan losses to nonaccrual loans 150.21% 154.42% 143.80% 123.08% 113.66%
Allowance for loan losses to total loans 1.43% 1.43% 1.40% 1.42% 1.43%
 
Troubled Debt Restructured Loans:
Accruing troubled debt restructured loans
Commercial mortgages $10,071 $11,736 $11,812 $6,176 $5,813
Other commercial 4,554 4,594 2,498 2,224 1,217
Residential real estate mortgages 2,724 2,863 2,870 2,234 2,622
Consumer   417   509   817   997   1,398
Accruing troubled debt restructured loans   17,766   19,702   17,997   11,631   11,050
Nonaccrual troubled debt restructured loans
Commercial mortgages 826 1,302 1,473 986 2,238
Other commercial 526 431 213 301 247
Residential real estate mortgages 1,785 948 823 381 887
Consumer   199   41   43   43   44
Nonaccrual troubled debt restructured loans   3,336   2,722   2,552   1,711   3,416
Total troubled debt restructured loans   $21,102   $22,424   $20,549   $13,342   $14,466
 

Washington Trust Bancorp, Inc. and Subsidiaries

SELECTED FINANCIAL HIGHLIGHTS (unaudited)
         
Period End Balances At
(Dollars in thousands)   Mar. 31,
2011 		  Dec. 31,
2010 		  Sept. 30,
2010 		  June 30,
2010 		  Mar. 31,
2010
Past Due Loans:
Loans 30–59 Days Past Due
Commercial mortgages $3,223 $2,185 $1,685 $3,898 $2,302
Other commercial loans 2,474 1,862 2,632 3,284 2,362
Residential real estate mortgages 2,986 3,073 2,828 2,680 1,549
Consumer loans   1,735   2,005   2,218   3,364   2,019
Loans 30–59 days past due   $10,418   $9,125   $9,363   $13,226   $8,232
 
Loans 60–89 Days Past Due
Commercial mortgages $1,626 $514 $ – $19 $2,390
Other commercial loans 315 953 492 1,195 519
Residential real estate mortgages 1,345 1,477 430 861 1,035
Consumer loans   335   448   420   195   202
Loans 60-89 days past due   $3,621   $3,392   $1,342   $2,270   $4,146
 
Loans 90 Days or more Past Due
Commercial mortgages $5,242 $5,322 $4,952 $3,695 $8,374
Other commercial loans 2,524 3,376 4,240 2,919 3,142
Residential real estate mortgages 5,165 4,041 4,696 5,942 5,559
Consumer loans   317   11   277   634   635
Loans 90 days or more past due   $13,248   $12,750   $14,165   $13,190   $17,710
 
Total Past Due Loans
Commercial mortgages $10,091 $8,021 $6,637 $7,612 $13,066
Other commercial loans 5,313 6,191 7,364 7,398 6,023
Residential real estate mortgages 9,496 8,591 7,954 9,483 8,143
Consumer loans   2,387   2,464   2,915   4,193   2,856
Total past due loans   $27,287   $25,267   $24,870   $28,686   $30,088
 
Nonaccrual loans included in past due loans $16,456 $14,894 $15,870 $17,881 $19,223
 
For the Quarters Ended
(Dollars in thousands)   Mar. 31,
2011 		  Dec. 31,
2010 		  Sept. 30,
2010 		  June 30,
2010 		  Mar. 31,
2010
Allowance for Loan Losses:        
Balance at beginning of period $28,583 $28,165 $27,985 $27,711 $27,400
Provision charged to earnings 1,500 1,500 1,500 1,500 1,500
Charge-offs (1,051 ) (1,396 ) (1,468 ) (1,263 ) (1,275 )
Recoveries   77     314     148     37     86  
Balance at end of period   $29,109     $28,583     $28,165     $27,985     $27,711  
 
Net Loan Charge-Offs (Recoveries):
Commercial mortgages $333 $226 $(96 ) $531 $491
Other commercial 509 695 1,026 558 508
Residential real estate mortgages 118 (99 ) 301 90 121
Consumer   14     260     89     47     69  
Total   $974     $1,082     $1,320     $1,226     $1,189  

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 March 31,     2011     2010
(Dollars in thousands)     Average
Balance 		    Interest     Yield/
Rate 		    Average
Balance 		    Interest     Yield/
Rate
Assets:
Commercial and other loans $1,037,379 $13,505 5.28% $985,807 $12,904 5.31%
Residential real estate loans, including
mortgage loans held for sale 651,277 7,700 4.79% 615,507 7,874 5.19%
Consumer loans     324,046     3,144     3.93%     329,312     3,239     3.99%
Total loans 2,012,702 24,349 4.91% 1,930,626 24,017 5.05%
Cash, federal funds sold
and other short-term investments 43,945 24 0.22% 35,770 21 0.24%
FHLBB stock 42,008 32 0.31% 42,008 – –%
 
Taxable debt securities 492,213 4,773 3.93% 598,171 6,051 4.10%
Nontaxable debt securities 79,452 1,166 5.95% 79,582 1,156 5.89%
Corporate stocks     2,513     50     8.07%     4,013     75     7.58%
Total securities     574,178     5,989     4.23%     682,766     7,282     4.33%
Total interest-earning assets 2,672,833 30,394 4.61% 2,691,170 31,320 4.72%
Non interest-earning assets     211,785                 204,986            
Total assets     $2,884,618                 $2,896,156            
Liabilities and Shareholders’ Equity:
NOW accounts $224,977 $58 0.10% $194,471 $64 0.13%
Money market accounts 399,312 323 0.33% 409,214 617 0.61%
Savings accounts 220,352 75 0.14% 196,880 85 0.18%
Time deposits 946,431 3,746 1.61% 951,453 5,003 2.13%
FHLBB advances 475,370 4,732 4.04% 591,974 6,219 4.26%
Junior subordinated debentures 32,991 390 4.79% 32,991 630 7.74%
Other     23,123     241     4.23%     20,986     242     4.68%
Total interest-bearing liabilities 2,322,556 9,565 1.67% 2,397,969 12,860 2.17%
Demand deposits 249,503 200,203
Other liabilities 41,568 39,506
Shareholders’ equity     270,991                 258,478            
Total liabilities and shareholders’ equity     $2,884,618                 $2,896,156            
Net interest income (FTE)           $20,829                 $18,460      
Interest rate spread 2.94% 2.55%
Net interest margin 3.16% 2.78%

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

   
(Dollars in thousands)
 
Three months ended March 31,   2011   2010
Commercial and other loans $90 $49
Nontaxable debt securities 397 387
Corporate stocks   15   20
Total   $502   $456
                   

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)     Mar. 31,
2011 		    Dec. 31,
2010 		    Sept. 30,
2010 		    June 30,
2010 		    Mar. 31,
2010
Calculation of Tangible Book Value per Share:
Total shareholders’ equity at end of period $273,885 $268,864 $267,109 $265,411 $259,529
Less:
Goodwill 58,114 58,114 58,114 58,114 58,114
Identifiable intangible assets, net     7,614     7,852     8,089     8,362     8,652
Total tangible shareholders’ equity at end of period     $208,157     $202,898     $200,906     $198,935     $192,763
 
Shares outstanding at end of period     16,233.6     16,171.6     16,135.4     16,120.7     16,079.1
 
Book value per share – GAAP     $16.87     $16.63     $16.55     $16.46     $16.14
Tangible book value per share – Non-GAAP     $12.82     $12.55     $12.45     $12.34     $11.99
 
Calculation of Tangible Equity to Tangible Assets:
Total tangible shareholders’ equity at end of period     $208,157     $202,898     $200,906     $198,935     $192,763
 
Total assets at end of period $2,892,272 $2,909,525 $2,909,003 $2,929,853 $2,896,425
Less:
Goodwill 58,114 58,114 58,114 58,114 58,114
Identifiable intangible assets, net     7,614     7,852     8,089     8,362     8,652
Total tangible assets at end of period     $2,826,544     $2,843,559     $2,842,800     $2,863,377     $2,829,659
 
Equity to assets - GAAP     9.47%     9.24%     9.18%     9.06%     8.96%
Tangible equity to tangible assets – Non-GAAP     7.36%     7.14%     7.07%     6.95%     6.81%
 
Calculation of Return on Average Tangible Assets:
Net income     $6,800     $7,211     $6,370     $5,298     $5,172
 
Total average assets $2,884,618 $2,912,770 $2,931,816 $2,920,838 $2,896,156
Less:
Average goodwill 58,114 58,114 58,114 58,114 58,114
Average identifiable intangible assets, net     7,730     7,967     8,216     8,503     8,794
Total average tangible assets     $2,818,774     $2,846,689     $2,865,486     $2,854,221     $2,829,248
 
Return on average assets - GAAP     0.94%     0.99%     0.87%     0.73%     0.71%
Return on average tangible assets – Non-GAAP     0.96%     1.01%     0.89%     0.74%     0.73%
 
Calculation of Return on Average Tangible Equity:
Net income     $6,800     $7,211     $6,370     $5,298     $5,172
 
Total average shareholders’ equity $270,991 $269,570 $267,431 $263,138 $258,478
Less:
Average goodwill 58,114 58,114 58,114 58,114 58,114
Average identifiable intangible assets, net     7,730     7,967     8,216     8,503     8,794
Total average tangible shareholders’ equity     $205,147     $203,489     $201,101     $196,521     $191,570
 
Return on average shareholders’ equity - GAAP     10.04%     10.70%     9.53%     8.05%     8.00%
Return on average tangible shareholders’ equity –
Non-GAAP 		    13.26%     14.17%     12.67%     10.78%     10.80%

Contacts

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

Release Summary

WASH announced first quarter 2011 net income of $6.8 million, or 42 cents per diluted share, up by 31% from the $5.2 million, or 32 cents per diluted share, reported for the first quarter of 2010.

Contacts

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