Washington Trust Announces Record Earnings for Fourth Quarter and Full Year 2012
Washington Trust Announces Record Earnings for Fourth Quarter and Full Year
2012
Diluted Earnings Per Share up 17% over 2011
Business Wire
WESTERLY, R.I. -- January 30, 2013
Washington Trust Bancorp, Inc. (NASDAQ Global Select; symbol: WASH), parent
company of The Washington Trust Company, today announced fourth quarter 2012
net income of $9.0 million, or $0.55 per diluted share. On a diluted earnings
per share basis, fourth quarter 2012 results were up by $.01, or 2%, from
third quarter 2012 and by $.08, or 17%, from fourth quarter 2011.
For the year ended December 31, 2012, net income totaled $35.1 million, or
$2.13 per diluted share, compared to $29.7 million, or $1.82 per diluted
share, for 2011. On a diluted earnings per share basis, 2012 earnings were up
by 17% over 2011. The returns on average equity and average assets for 2012
were 11.97% and 1.16%, respectively, compared to 10.61% and 1.02%,
respectively, for 2011.
“Washington Trust had another exceptional performance in 2012, highlighted by
record earnings and growth along key business lines,” stated Joseph J.
MarcAurele, Washington Trust Chairman, President and CEO. “We have continued
to manage our way through these challenging economic times by successfully
expanding our market reach, attracting new client relationships, and
continuing to make a difference in the communities in which we live and work.”
Selected financial highlights for the fourth quarter of 2012 included:
* The returns on average equity and average assets for the quarter were
12.01% and 1.19%, respectively, compared to 12.02% and 1.17%,
respectively, for the third quarter of 2012.
* Residential mortgage origination volume and mortgage banking revenues (net
gains on loan sales and commissions on loans originated for others)
reached an all-time quarterly high and totaled $4.5 million for the
quarter, a 28% increase over the prior quarter.
* Loans totaled $2.3 billion at December 31, 2012, up by $37.3 million, or
2%, from September 30, 2012, led by growth in the commercial loan
portfolio.
* Total deposits amounted to $2.3 billion at December 31, 2012, up
$78.0 million, or 3.5%, from September 30, 2012, with growth in lower-cost
deposits.
The following transactions were included in the results for fourth quarter of
2012:
* Balance sheet management transactions were conducted in the quarter and
were comprised of:
* The sale of mortgage-backed securities with an amortized cost of
$33.1 million, resulting in fourth quarter 2012 net realized gains of
$924 thousand.
* The prepayment of Federal Home Loan Bank of Boston (“FHLBB”) advances
totaling $38.8 million, resulting in debt prepayment penalty expense
of $1.8 million in the quarter.
* The modification of terms of $33.2 million of FHLBB advances with a
weighted average maturity of 43 months into longer-term advances with
a weighted average maturity of 78 months.
* These transactions resulted in net interest income enhancement of
approximately $45 thousand in the fourth quarter of 2012 and are
expected to result in net interest income enhancement of
approximately $577 thousand in 2013, with continuing benefits in
future years.
* A relatively large commercial loan prepayment penalty fee of $357 thousand
was received and included in net interest income.
* Two significant insurance commission fees totaling $462 thousand were
received in the quarter and reported in wealth management revenues.
* The Corporation made a $400 thousand contribution to its charitable
foundation, which was classified in other noninterest expenses.
The net impact of these transactions was a reduction in earnings of 2 cents
per diluted share in the fourth quarter of 2012.
Net Interest Income
The net interest margin for the fourth quarter of 2012 was 3.33%. Excluding
the impact of the above mentioned commercial loan prepayment penalty fee, the
net interest margin for the fourth quarter of 2012 was 3.28%, unchanged from
the previous quarter and up by 6 basis points from 3.22% in the fourth quarter
of 2011. The year over year improvement in the net interest margin largely
reflected a reduction in the cost of funds.
Average interest-earning assets for the fourth quarter of 2012 increased by
$6.8 million from the previous quarter and by $58.7 million from the fourth
quarter of 2011, reflecting solid loan growth partially offset by reductions
in the securities portfolio.
Fourth quarter 2012 net interest income amounted to $23.2 million. Excluding
the fourth quarter 2012 fee, net interest income was up slightly compared to
the previous quarter and up by $792 thousand, or 4%, compared to the fourth
quarter of 2011.
Noninterest Income
Noninterest income for the fourth quarter of 2012 totaled $17.9 million, up by
$966 thousand, or 6%, from the previous quarter and up by $3.1 million, or
21%, from the fourth quarter of 2011. Included in noninterest income were:
* Fourth quarter 2012 wealth management insurance commission fees of $462
thousand mentioned above;
* Net realized gains on sales of securities of $924 thousand in the fourth
quarter of 2012;
* A $528 thousand non-taxable gain related to the receipt of BOLI proceeds
in the third quarter of 2012; and
* $501 thousand of net realized gains on sales of securities recognized in
the fourth quarter of 2011.
Excluding these items, noninterest income for the fourth quarter of 2012
increased by $108 thousand, or 1%, from the previous quarter and up by $2.2
million, or 15%, from the fourth quarter of 2011. Significant changes in
noninterest income, on this basis, included the following:
* Mortgage banking revenues increased by $972 thousand, or 28%, from the
third quarter of 2012 and by $1.5 million, or 53%, from the fourth quarter
of 2011, due to a record quarter of mortgage origination and sales
activity.
* Fourth quarter 2012 wealth management revenues were $7.8 million.
Excluding the above mentioned insurance commission fees, these revenues
were up by $135 thousand, or 2%, on a linked quarter basis and up by
$403 thousand, or 6%, compared to the fourth quarter of 2011.
* Merchant processing fees totaled $2.2 million for the fourth quarter of
2012, down by $975 thousand, or 30%, on a linked quarter basis and up by
$176 thousand, or 9%, compared to the fourth quarter of 2011. On a linked
quarter basis, the decline reflects a seasonal decrease in the volume of
transactions processed for customers. See discussion on the corresponding
linked quarter decrease in merchant processing costs under the caption
“Noninterest Expenses.”
Noninterest Expenses
Noninterest expenses totaled $27.4 million for the fourth quarter of 2012, up
by $1.1 million, or 4%, from the previous quarter and up by $2.6 million, or
11%, from the fourth quarter of 2011. Included in noninterest expenses were:
* Debt prepayment penalties of $1.8 million in the fourth quarter of 2012,
$1.2 million in third quarter of 2012 and $473 thousand in the fourth
quarter of 2011; and
* Charitable contribution expense of $400 thousand in the fourth quarter of
2012 and $990 thousand in the fourth quarter of 2011.
Excluding these items, noninterest expenses for the fourth quarter of 2012
increased by $130 thousand, or 1%, from the previous quarter and up by $1.9
million, or 8%, from the fourth quarter of 2011. Significant changes in
noninterest expenses, on this basis, included the following:
* Salaries and employee benefit costs amounted to $15.7 million in the
fourth quarter of 2012, an increase of $447 thousand, or 3%, from the
previous quarter and up by $1.7 million, or 12%, from the fourth quarter
of 2011, reflecting higher staffing levels to support growth and higher
levels of business development based compensation primarily in mortgage
banking.
* Merchant processing costs totaled $1.9 million in the fourth quarter of
2012, down by $804 thousand, or 30%, on a linked quarter basis and up by
$138 thousand, or 8%, compared to the fourth quarter of 2011. See the
discussion above regarding the corresponding linked quarter decrease in
merchant processing fee income.
Income tax expense amounted to $4.0 million for the fourth quarter of 2012,
compared to $3.9 million for the third quarter of 2012 and $3.3 million for
the fourth quarter of 2011. The effective tax rate for the fourth quarter of
2012 was 30.8%, compared to 30.3% for the previous quarter and 29.7% for the
fourth quarter of 2011. Based on the current status of federal and applicable
state income tax statutes, the Corporation currently expects the 2013
effective tax rate to be approximately 31.8%.
Asset Quality
Total nonaccrual loans amounted to $22.5 million, or 0.98% of total loans, at
December 31, 2012, up by $4.8 million from September 30, 2012. At December 31,
2012, total past due loans amounted to $28.1 million, or 1.22% of total loans,
up by $4.5 million from September 30, 2012. These changes in nonaccrual loans
and past due loans are largely associated with a small number of larger
commercial relationships.
The loan loss provision charged to earnings amounted to $600 thousand for the
fourth quarter of 2012, level with the third quarter of 2012 and down by
$400 thousand from the fourth quarter of 2011. Net charge-offs amounted to
$479 thousand in the fourth quarter of 2012, compared to net charge-offs of
$296 thousand in the third quarter of 2012 and $839 thousand in the fourth
quarter of 2011.
The allowance for loan losses was $30.9 million, or 1.35% of total loans, at
December 31, 2012 compared to $30.8 million, or 1.36% of total loans, at
September 30, 2012.
Loans
Total loans rose by $37.3 million, or 2%, in the fourth quarter of 2012, with
increases in commercial loans of $33.1 million. Total loans are up by
$146.8 million, or 7%, from December 31, 2011, including a $127.8 million, or
11%, increase in total commercial loans.
Investment Securities
The investment securities portfolio amounted to $415.9 million at December 31,
2012, down by $68.0 million from September 30, 2012 and down by $177.5 million
from December 31, 2011, primarily due to principal payments received on
mortgage-backed securities not being reinvested and balance sheet management
transactions that included the sale of mortgage-backed securities.
Deposits and Borrowings
Total deposits increased by $78.0 million, or 3%, in the fourth quarter of
2012 and by $186.3 million, or 9%, since December 31, 2011, reflecting growth
in lower-cost non-time categories of deposits.
FHLBB advances totaled $361.2 million at December 31, 2012, down by
$56.5 million from September 30, 2012 and down by $179.3 million from
December 31, 2011. In addition to balance sheet management transactions, this
decline reflects less demand for wholesale funding due to the strong deposit
growth.
Other borrowings were $1.2 million at December 31, 2012, compared to
$229 thousand at September 30, 2012 and $19.8 million at December 31, 2011.
The decline in other borrowings from the balance at December 31, 2011, was
primarily due to the maturity of securities sold under repurchase agreements.
Capital Management
Capital levels continued to exceed the regulatory minimum levels to be
considered well capitalized, with a total risk-based capital ratio of 13.26%
at December 31, 2012, compared to 12.86% at December 31, 2011. Total
shareholder's equity was $295.7 million at December 31, 2012, down by
$2.7 million from the balance at September 30, 2012 and up by $14.3 million
from the balance at December 31, 2011. A charge of $6.1 million to the
accumulated other comprehensive income component of shareholders' equity was
recorded at December 31, 2012, associated with the periodic remeasurement of
the value of defined benefit pension liabilities. This charge was largely due
to a decline in the discount rates used to measure the present value of
pension liabilities as a result of a reduction in market rates of interest.
Dividends Declared
The Board of Directors declared a quarterly dividend of 24 cents per share for
the quarter ended December 31, 2012. The dividend was paid on January 11, 2013
to shareholders of record on January 2, 2013.
Conference Call
Washington Trust will host a conference call on Thursday, January 31, 2013 at
8:30 a.m. Eastern Time to discuss fourth quarter results and business outlook.
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 1-866-250-8117. The international dial-in number is
1-412-317-6011 and the Canada dial-in number is 1-855-669-9657. 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 the replay, dial 1-877-344-7529. For
international access, dial 1-412-317-0088. The Conference Number for replay is
10023365. The replay will be available until 9:00 a.m. on February 15, 2013.
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 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:
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, 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 for the fiscal year
ended December 31, 2011, 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, Dec 31,
2012 2011
Assets:
Cash and due from banks $73,474 $82,238
Short-term investments 19,176 4,782
Mortgage loans held for sale, at fair value;
amortized cost $48,370 in 2012 and $19,624 in 50,056 20,340
2011
Securities:
Available for sale, at fair value; amortized 375,498 541,253
cost $363,408 in 2012 and $524,036 in 2011
Held to maturity, at cost; fair value $41,420 in 40,381 52,139
2012 and $52,499 in 2011
Total securities 415,879 593,392
Federal Home Loan Bank stock, at cost 40,418 42,008
Loans:
Commercial and other 1,252,419 1,124,628
Residential real estate 717,681 700,414
Consumer 323,903 322,117
Total loans 2,294,003 2,147,159
Less allowance for loan losses 30,873 29,802
Net loans 2,263,130 2,117,357
Premises and equipment, net 27,232 26,028
Investment in bank-owned life insurance 54,823 53,783
Goodwill 58,114 58,114
Identifiable intangible assets, net 6,173 6,901
Other assets 63,409 59,155
Total assets $3,071,884 $3,064,098
Liabilities:
Deposits:
Demand deposits $379,889 $339,809
NOW accounts 291,174 257,031
Money market accounts 496,402 406,777
Savings accounts 274,934 243,904
Time deposits 870,232 878,794
Total deposits 2,312,631 2,126,315
Federal Home Loan Bank advances 361,172 540,450
Junior subordinated debentures 32,991 32,991
Other borrowings 1,212 19,758
Other liabilities 68,226 63,233
Total liabilities 2,776,232 2,782,747
Shareholders’ Equity:
Common stock of $.0625 par value; authorized
30,000,000 shares; issued and outstanding 1,024 1,018
16,379,771 shares in 2012 and 16,292,471 shares
in 2011
Paid-in capital 91,453 88,030
Retained earnings 213,674 194,198
Accumulated other comprehensive loss (10,499 ) (1,895 )
Total shareholders’ equity 295,652 281,351
Total liabilities and shareholders’ equity $3,071,884 $3,064,098
Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars and shares in
thousands, except per share Three Months Twelve Months
amounts)
Periods ended December 31, 2012 2011 2012 2011
Interest income:
Interest and $26,109 $25,284 $102,656 $99,319
fees on loans
Interest on Taxable 3,241 4,422 15,359 18,704
securities:
Nontaxable 664 727 2,699 3,001
Dividends on corporate stock
and Federal Home Loan Bank 49 57 256 253
stock
Other interest income 27 17 91 69
Total interest income 30,090 30,507 121,061 121,346
Interest expense:
Deposits 3,380 3,652 13,590 15,692
Federal Home Loan Bank 3,148 4,202 14,957 18,158
advances
Junior subordinated 394 393 1,570 1,568
debentures
Other interest expense 4 245 248 973
Total interest expense 6,926 8,492 30,365 36,391
Net interest income 23,164 22,015 90,696 84,955
Provision for loan losses 600 1,000 2,700 4,700
Net interest income after 22,564 21,015 87,996 80,255
provision for loan losses
Noninterest income:
Wealth management services:
Trust and investment advisory 5,991 5,487 23,465 22,532
fees
Mutual fund fees 1,018 994 4,069 4,287
Financial planning,
commissions and other service 781 444 2,107 1,487
fees
Wealth management services 7,790 6,925 29,641 28,306
Service charges on deposit 837 793 3,193 3,455
accounts
Merchant processing fees 2,232 2,056 10,159 9,905
Card interchange fees 636 584 2,480 2,249
Income from bank-owned life 479 493 2,448 1,939
insurance
Net gains on loan sales and
commissions on loans 4,476 2,935 14,092 5,074
originated for others
Net realized gains on 924 501 1,223 698
securities
Net gains on interest rate 168 12 255 6
swap contracts
Equity in earnings (losses)
of unconsolidated 82 220 196 (213 )
subsidiaries
Other income 275 307 1,748 1,536
Noninterest income, excluding
other-than-temporary 17,899 14,826 65,435 52,955
impairment losses
Total other-than-temporary
impairment losses on 57 — (28 ) (54 )
securities
Portion of loss recognized in
other comprehensive income (69 ) — (193 ) (137 )
(before tax)
Net impairment losses (12 ) — (221 ) (191 )
recognized in earnings
Total noninterest income 17,887 14,826 65,214 52,764
Noninterest expense:
Salaries and employee 15,661 13,957 59,786 51,095
benefits
Net occupancy 1,518 1,376 6,039 5,295
Equipment 1,222 1,133 4,640 4,344
Merchant processing costs 1,903 1,765 8,593 8,560
Outsourced services 900 920 3,560 3,530
FDIC deposit insurance costs 419 429 1,730 2,043
Legal, audit and professional 641 538 2,240 1,927
fees
Advertising and promotion 435 478 1,730 1,819
Amortization of intangibles 173 246 728 951
Foreclosed property costs 158 329 762 878
Debt prepayment penalties 1,774 473 3,908 694
Other expenses 2,617 3,130 8,622 9,237
Total noninterest expense 27,421 24,774 102,338 90,373
Income before income taxes 13,030 11,067 50,872 42,646
Income tax expense 4,007 3,290 15,798 12,922
Net income $9,023 $7,777 $35,074 $29,724
Weighted average common 16,376 16,288 16,358 16,254
shares outstanding - basic
Weighted average common 16,425 16,326 16,401 16,284
shares outstanding - diluted
Per share Basic
information: earnings per $0.55 $0.48 $2.13 $1.82
common share
Diluted
earnings per $0.55 $0.47 $2.13 $1.82
common share
Cash
dividends $0.24 $0.22 $0.94 $0.88
declared per
share
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
At or for the Quarters Ended
(Dollars and
shares in Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
thousands, 2012 2012 2012 2012 2011
except per
share amounts)
Financial Data:
Total assets $3,071,884 $3,048,868 $3,041,050 $3,028,690 $3,064,098
Total loans 2,294,003 2,256,697 2,213,842 2,155,359 2,147,159
Total 415,879 483,858 516,193 558,284 593,392
securities
Total deposits 2,312,631 2,234,659 2,130,453 2,145,562 2,126,315
Total
shareholders' 295,652 298,394 292,734 287,935 281,351
equity
Net interest 23,164 22,736 22,411 22,385 22,015
income
Provision for 600 600 600 900 1,000
loan losses
Noninterest
income, 17,899 16,921 16,174 14,441 14,826
excluding OTTI
losses
Net OTTI losses
recognized in (12 ) — — (209 ) —
earnings
Noninterest 27,421 26,290 25,228 23,399 24,774
expenses
Income tax 4,007 3,867 4,044 3,880 3,290
expense
Net income 9,023 8,900 8,713 8,438 7,777
Share Data:
Basic earnings
per common $0.55 $0.54 $0.53 $0.51 $0.48
share
Diluted
earnings per $0.55 $0.54 $0.53 $0.51 $0.47
common share
Dividends
declared per $0.24 $0.24 $0.23 $0.23 $0.22
share
Book value per $18.05 $18.23 $17.89 $17.61 $17.27
share
Tangible book
value per share $14.13 $14.29 $13.94 $13.64 $13.28
- Non-GAAP (1)
Market value $26.31 $26.27 $24.38 $24.14 $23.86
per share
Shares
outstanding at 16,380 16,371 16,359 16,354 16,292
end of period
Weighted
average common
shares 16,376 16,366 16,358 16,330 16,288
outstanding -
basic
Weighted
average common
shares 16,425 16,414 16,392 16,370 16,327
outstanding -
diluted
Key Ratios:
Return on 1.19 % 1.17 % 1.16 % 1.11 % 1.04 %
average assets
Return on
average 1.21 % 1.19 % 1.18 % 1.14 % 1.07 %
tangible assets
- Non-GAAP (1)
Return on 12.01 % 12.02 % 11.98 % 11.85 % 10.89 %
average equity
Return on
average 15.29 % 15.37 % 15.41 % 15.35 % 14.10 %
tangible equity
- Non-GAAP (1)
Capital Ratios:
Tier 1
risk-based 12.01% (i) 11.93 % 11.90 % 11.96 % 11.61 %
capital
Total
risk-based 13.26% (i) 13.18 % 13.15 % 13.22 % 12.86 %
capital
Tier 1 leverage 9.30% (i) 9.11 % 9.00 % 8.75 % 8.70 %
ratio
Equity to 9.62 % 9.79 % 9.63 % 9.51 % 9.18 %
assets
Tangible equity
to tangible 7.69 % 7.84 % 7.66 % 7.53 % 7.21 %
assets -
Non-GAAP (1)
(i) - estimated
Wealth
Management
Assets under
Administration:
Balance at
beginning of $4,242,520 $4,079,913 $4,196,447 $3,900,061 $3,728,837
period
Net investment
(depreciation) (5,887 ) 155,427 (131,896 ) 298,155 215,449
appreciation &
income
Net client cash (36,993 ) 7,180 15,362 (1,769 ) (36,815 )
flows
Other (2) — — — — (7,410 )
Balance at end $4,199,640 $4,242,520 $4,079,913 $4,196,447 $3,900,061
of period
(1) See the section labeled “Supplemental Information - Non-GAAP Financial
Measures” at the end of this document.
(2) Represents declassifications of largely low fee-paying assets from assets
under administration due to a change in the scope and/or frequency of services
provided by Washington Trust. The impact of this change on wealth management
revenues was minimal.
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
Twelve Months Ended
(Dollars and shares in thousands, except per Dec 31, Dec 31,
share amounts) 2012 2011
Financial Data:
Net interest income $90,696 $84,955
Provision for loan losses 2,700 4,700
Noninterest income, excluding OTTI losses 65,435 52,955
Net OTTI losses recognized in earnings (221 ) (191 )
Noninterest expenses 102,338 90,373
Income tax expense 15,798 12,922
Net income 35,074 29,724
Share Data:
Basic earnings per common share $2.13 $1.82
Diluted earnings per common share $2.13 $1.82
Dividends declared per share $0.94 $0.88
Weighted average common shares outstanding - 16,358 16,254
basic
Weighted average common shares outstanding - 16,401 16,284
diluted
Key Ratios:
Return on average assets 1.16 % 1.02 %
Return on average tangible assets - Non-GAAP (1) 1.18 % 1.04 %
Return on average equity 11.97 % 10.61 %
Return on average tangible equity - Non-GAAP (1) 15.35 % 13.85 %
Asset Quality Data:
Allowance for Loan Losses:
Balance at beginning of period $29,802 $28,583
Provision charged to earnings 2,700 4,700
Charge-offs (2,335 ) (3,834 )
Recoveries 706 353
Balance at end of period $30,873 $29,802
Net Loan Charge-Offs (Recoveries):
Commercial mortgages $43 $953
Other commercial 1,076 1,374
Residential real estate mortgages 257 637
Consumer 253 517
Total $1,629 $3,481
Net charge-offs to average loans (annualized) 0.07 % 0.17 %
Wealth Management Assets Under Administration:
Balance at beginning of period $3,900,061 $3,967,207
Net investment appreciation (depreciation) & 315,799 (12,324 )
income
Net client cash flows (16,220 ) (47,412 )
Other (2) — (7,410 )
Balance at end of period $4,199,640 $3,900,061
(1) See the section labeled “Supplemental Information - Non-GAAP Financial
Measures” at the end of this document.
(2) Represents declassifications of largely low fee-paying assets from assets
under administration due to a change in the scope and/or frequency of services
provided by Washington Trust. The impact of this change on wealth management
revenues was minimal.
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
For the Quarters Ended
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
2012 2012 2012 2012 2011
Average Yield / Rate
(taxable equivalent basis):
Assets:
Commercial mortgages and 4.90 % 4.94 % 5.03 % 5.13 % 5.19 %
other commercial loans
Residential real estate
loans, including mortgage 4.23 % 4.32 % 4.40 % 4.51 % 4.46 %
loans held for sale
Consumer loans 3.86 % 3.89 % 3.85 % 3.89 % 3.87 %
Total loans 4.53 % 4.59 % 4.65 % 4.74 % 4.74 %
Cash, federal funds sold and 0.26 % 0.26 % 0.23 % 0.15 % 0.19 %
other short-term investments
FHLBB stock 0.48 % 0.51 % 0.54 % 0.50 % 0.30 %
Taxable debt securities 3.49 % 3.50 % 3.63 % 3.62 % 3.58 %
Nontaxable debt securities 5.89 % 5.83 % 5.93 % 5.92 % 5.82 %
Corporate stocks — — 7.58 % 7.16 % 5.89 %
Total securities 3.86 % 3.83 % 3.95 % 3.93 % 3.88 %
Total interest-earning 4.31 % 4.34 % 4.41 % 4.43 % 4.44 %
assets
Liabilities:
NOW accounts 0.07 % 0.06 % 0.06 % 0.08 % 0.10 %
Money market accounts 0.28 % 0.26 % 0.23 % 0.22 % 0.24 %
Savings accounts 0.09 % 0.11 % 0.11 % 0.11 % 0.12 %
Time deposits 1.32 % 1.33 % 1.35 % 1.41 % 1.45 %
FHLBB advances 3.27 % 3.18 % 3.25 % 3.14 % 3.44 %
Junior subordinated 4.75 % 4.74 % 4.77 % 4.78 % 4.73 %
debentures
Other 5.51 % 6.33 % 2.07 % 4.98 % 4.59 %
Total interest-bearing 1.19 % 1.27 % 1.33 % 1.38 % 1.45 %
liabilities
Interest rate spread 3.12 % 3.07 % 3.08 % 3.05 % 2.99 %
(taxable equivalent basis)
Net interest margin (taxable 3.33 % 3.28 % 3.30 % 3.27 % 3.22 %
equivalent basis)
At December 31, 2012
Amortized Unrealized Unrealized Fair
(Dollars in thousands) Cost (1) Gains Losses Value
Securities Available for
Sale:
Obligations of U.S.
government-sponsored $29,458 $2,212 $— $31,670
enterprises
Mortgage-backed securities
issued by U.S. government
agencies and U.S. 217,136 14,097 — 231,233
government-sponsored
enterprises
States and political 68,196 4,424 — 72,620
subdivisions
Trust preferred securities:
Individual name issuers 30,677 — (5,926 ) 24,751
Collateralized debt 4,036 — (3,193 ) 843
obligations
Corporate bonds 13,905 476 — 14,381
Total securities available 363,408 21,209 (9,119 ) 375,498
for sale
Held to Maturity:
Mortgage-backed securities
issued by U.S. government
agencies and U.S. 40,381 1,039 — 41,420
government-sponsored
enterprises
Total securities held to 40,381 1,039 — 41,420
maturity
Total securities $403,789 $22,248 ($9,119 ) $416,918
(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, Sep 30, Jun 30, Mar 31, Dec 31,
2012 2012 2012 2012 2011
Loans:
Commercial: Mortgages $710,813 $693,221 $664,410 $642,012 $624,813
Construction
& 27,842 25,132 17,365 11,130 10,955
development
Other 513,764 500,974 510,220 486,258 488,860
Total 1,252,419 1,219,327 1,191,995 1,139,400 1,124,628
commercial
Residential
real Mortgages 692,798 692,659 680,772 675,249 678,582
estate:
Homeowner 24,883 22,753 21,247 21,708 21,832
construction
Total
residential 717,681 715,412 702,019 696,957 700,414
real estate
Consumer: Home equity 226,861 227,549 224,550 223,311 223,430
lines
Home equity 39,329 39,452 40,690 40,793 43,121
loans
Other 57,713 54,957 54,588 54,898 55,566
Total 323,903 321,958 319,828 319,002 322,117
consumer
Total loans $2,294,003 $2,256,697 $2,213,842 $2,155,359 $2,147,159
At December 31, 2012
(Dollars in thousands) Balance % of Total
Commercial Real Estate Loans by Property Location:
Rhode Island, Connecticut, Massachusetts $707,068 95.7 %
New York 22,081 3.0 %
New Hampshire 9,290 1.3 %
Other 216 —
Total commercial real estate loans (1) $738,655 100.0 %
(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, 2012
(Dollars in thousands) Balance % of Total
Residential Mortgages by Property Location:
Rhode Island, Connecticut, Massachusetts $697,814 97.2 %
New York, Virginia, New Jersey, Maryland, 9,591 1.3 %
Pennsylvania, District of Columbia
New Hampshire 3,903 0.5 %
Ohio 2,953 0.4 %
Washington, Oregon 1,379 0.2 %
Georgia 1,101 0.2 %
New Mexico 476 0.1 %
Other 464 0.1 %
Total residential mortgages $717,681 100.0 %
Period End Balances At
(Dollars in Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
thousands) 2012 2012 2012 2012 2011
Deposits:
Demand $379,889 $352,330 $321,488 $333,833 $339,809
deposits
NOW accounts 291,174 267,495 263,124 258,986 257,031
Money market 496,402 459,671 388,686 400,396 406,777
accounts
Savings 274,934 268,191 264,772 257,495 243,904
accounts
Time deposits 870,232 886,972 892,383 894,852 878,794
Total $2,312,631 $2,234,659 $2,130,453 $2,145,562 $2,126,315
deposits
Out-of-market
brokered
certificates $102,636 $98,603 $102,661 $95,989 $90,073
of deposits
included in
time deposits
In-market
deposits,
excluding
out-of-market $2,209,995 $2,136,056 $2,027,792 $2,049,573 $2,036,242
brokered
certificates
of deposit
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
Period End Balances At
(Dollars in Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
thousands) 2012 2012 2012 2012 2011
Asset Quality
Data:
Nonperforming
Assets:
Commercial $10,681 $5,956 $2,597 $5,099 $5,709
mortgages
Commercial
construction and — — — — —
development
Other commercial 4,412 3,201 3,405 4,200 3,708
Residential real 6,158 7,127 8,659 9,031 10,614
estate mortgages
Consumer 1,292 1,463 1,081 1,069 1,206
Total nonaccrual $22,543 $17,747 $15,742 $19,399 $21,237
loans
Nonaccrual
investment 843 929 767 750 887
securities
Property acquired
through 2,047 2,447 2,332 3,478 2,647
foreclosure or
repossession
Total
nonperforming $25,433 $21,123 $18,841 $23,627 $24,771
assets
Total past due
loans to total 1.22 % 1.05 % 0.92 % 0.98 % 1.22 %
loans
Nonperforming
assets to total 0.83 % 0.69 % 0.62 % 0.78 % 0.81 %
assets
Nonaccrual loans 0.98 % 0.79 % 0.71 % 0.90 % 0.99 %
to total loans
Allowance for loan
losses to 136.95 % 173.28 % 193.42 % 154.88 % 140.33 %
nonaccrual loans
Allowance for loan
losses to total 1.35 % 1.36 % 1.38 % 1.39 % 1.39 %
loans
Troubled Debt
Restructured
Loans:
Accruing troubled
debt restructured
loans:
Commercial $9,569 $9,131 $1,251 $1,059 $6,389
mortgages
Other commercial 6,577 6,880 6,916 7,329 6,625
Residential real 1,123 386 570 935 1,481
estate mortgages
Consumer 154 158 159 174 171
Accruing troubled
debt restructured 17,423 16,555 8,896 9,497 14,666
loans
Nonaccrual
troubled debt
restructured
loans:
Commercial — — — 348 91
mortgages
Other commercial 2,063 2,306 2,317 2,361 2,154
Residential real 688 1,697 2,028 1,904 2,615
estate mortgages
Consumer 44 46 47 35 106
Nonaccrual
troubled debt 2,795 4,049 4,392 4,648 4,966
restructured loans
Total troubled
debt restructured $20,218 $20,604 $13,288 $14,145 $19,632
loans
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
Period End Balances At
(Dollars in Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
thousands) 2012 2012 2012 2012 2011
Past Due Loans:
Loans 30-59 Days
Past Due:
Commercial mortgages $373 $3,978 $411 $104 $1,621
Other commercial 260 2,719 849 1,031 3,760
loans
Residential real 4,840 2,368 4,969 4,468 3,969
estate mortgages
Consumer loans 1,134 1,876 2,660 2,404 1,073
Loans 30-59 days $6,607 $10,941 $8,889 $8,007 $10,423
past due
Loans 60-89 Days
Past Due:
Commercial mortgages $408 $874 $233 $— $315
Other commercial 296 1,169 434 33 982
loans
Residential real 1,951 821 1,600 488 1,505
estate mortgages
Consumer loans 385 1,213 677 219 263
Loans 60-89 days $3,040 $4,077 $2,944 $740 $3,065
past due
Loans 90 Days or
more Past Due:
Commercial mortgages $10,300 $2,495 $2,339 $4,676 $4,995
Other commercial 3,647 1,366 1,714 2,521 633
loans
Residential real 3,658 3,924 4,039 4,843 6,283
estate mortgages
Consumer loans 844 811 362 326 874
Loans 90 days or $18,449 $8,596 $8,454 $12,366 $12,785
more past due
Total Past Due
Loans:
Commercial mortgages $11,081 $7,347 $2,983 $4,780 $6,931
Other commercial 4,203 5,254 2,997 3,585 5,375
loans
Residential real 10,449 7,113 10,608 9,799 11,757
estate mortgages
Consumer loans 2,363 3,900 3,699 2,949 2,210
Total past due loans $28,096 $23,614 $20,287 $21,113 $26,273
Nonaccrual loans
included in past due $20,979 $14,471 $12,719 $14,747 $17,588
loans
For the Quarters Ended
(Dollars in Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
thousands) 2012 2012 2012 2012 2011
Allowance for Loan
Losses:
Balance at
beginning of $30,752 $30,448 $30,045 $29,802 $29,641
period
Provision charged 600 600 600 900 1,000
to earnings
Charge-offs (534 ) (424 ) (696 ) (681 ) (920 )
Recoveries 55 128 499 24 81
Balance at end of $30,873 $30,752 $30,448 $30,045 $29,802
period
Net Loan
Charge-Offs
(Recoveries):
Commercial $212 $212 ($388 ) $7 $249
mortgages
Other commercial 225 (22 ) 549 324 39
Residential real 39 41 (47 ) 224 273
estate mortgages
Consumer 3 65 83 102 278
Total $479 $296 $197 $657 $839
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 2012 2011
December 31,
Average Yield/ Average Yield/
(Dollars in Balance Interest Rate Balance Interest Rate
thousands)
Assets:
Commercial
mortgages and other $1,227,120 $15,121 4.90 % $1,082,834 $14,159 5.19 %
commercial loans
Residential real
estate loans, 757,764 8,049 4.23 % 717,250 8,065 4.46 %
including mortgage
loans held for sale
Consumer loans 322,476 3,131 3.86 % 323,339 3,155 3.87 %
Total loans 2,307,360 26,301 4.53 % 2,123,423 25,379 4.74 %
Cash, federal funds
sold and short-term 42,056 27 0.26 % 35,429 17 0.19 %
investments
FHLBB stock 40,418 49 0.48 % 42,008 32 0.30 %
Taxable debt 369,736 3,241 3.49 % 490,589 4,422 3.58 %
securities
Nontaxable debt 68,198 1,010 5.89 % 75,352 1,105 5.82 %
securities
Corporate stocks — — — 2,291 34 5.89 %
Total securities 437,934 4,251 3.86 % 568,232 5,561 3.88 %
Total
interest-earning 2,827,768 30,628 4.31 % 2,769,092 30,989 4.44 %
assets
Noninterest-earning 216,996 214,556
assets
Total assets $3,044,764 $2,983,648
Liabilities and
Shareholders'
Equity:
NOW accounts $276,572 $49 0.07 % $243,241 $63 0.10 %
Money market 473,747 338 0.28 % 402,652 245 0.24 %
accounts
Savings accounts 271,716 60 0.09 % 239,110 70 0.12 %
Time deposits 886,355 2,933 1.32 % 897,535 3,274 1.45 %
FHLBB advances 382,465 3,148 3.27 % 484,537 4,202 3.44 %
Junior subordinated 32,991 394 4.75 % 32,991 393 4.73 %
debentures
Other 289 4 5.51 % 21,194 245 4.59 %
Total
interest-bearing 2,324,135 6,926 1.19 % 2,321,260 8,492 1.45 %
liabilities
Demand deposits 362,060 330,027
Other liabilities 58,139 46,654
Shareholders' 300,430 285,707
equity
Total liabilities
and shareholders' $3,044,764 $2,983,648
equity
Net interest income $23,702 $22,497
(FTE)
Interest rate 3.12 % 2.99 %
spread
Net interest margin 3.33 % 3.22 %
Interest income amounts presented in the preceding table include the following
adjustments for taxable equivalency:
(Dollars in thousands)
Three months ended December 31, 2012 2011
Commercial loans $192 $95
Nontaxable debt securities 346 376
Corporate stocks — 11
Total $538 $482
Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS (unaudited)
Twelve months ended 2012 2011
December 31,
Average Yield/ Average Yield/
(Dollars in Balance Interest Rate Balance Interest Rate
thousands)
Assets:
Commercial
mortgages and other $1,177,268 $58,823 5.00 % $1,063,322 $55,592 5.23 %
commercial loans
Residential real
estate loans, 733,178 31,974 4.36 % 678,697 31,447 4.63 %
including mortgage
loans held for sale
Consumer loans 320,828 12,428 3.87 % 324,002 12,649 3.90 %
Total loans 2,231,274 103,225 4.63 % 2,066,021 99,688 4.83 %
Cash, federal funds
sold and short-term 41,359 91 0.22 % 35,625 69 0.19 %
investments
FHLBB stock 40,713 207 0.51 % 42,008 124 0.30 %
Taxable debt 431,024 15,359 3.56 % 489,210 18,704 3.82 %
securities
Nontaxable debt 69,838 4,115 5.89 % 77,634 4,555 5.87 %
securities
Corporate stocks 910 68 7.47 % 2,456 177 7.21 %
Total securities 501,772 19,542 3.89 % 569,300 23,436 4.12 %
Total
interest-earning 2,815,118 123,065 4.37 % 2,712,954 123,317 4.55 %
assets
Noninterest-earning 221,031 214,214
assets
Total assets $3,036,149 $2,927,168
Liabilities and
Shareholders'
Equity:
NOW accounts $259,595 $175 0.07 % $232,545 $242 0.10 %
Money market 430,262 1,078 0.25 % 392,002 1,051 0.27 %
accounts
Savings accounts 261,795 276 0.11 % 229,180 286 0.12 %
Time deposits 893,474 12,061 1.35 % 925,064 14,113 1.53 %
FHLBB advances 466,424 14,957 3.21 % 492,714 18,158 3.69 %
Junior subordinated 32,991 1,570 4.76 % 32,991 1,568 4.75 %
debentures
Other 5,093 248 4.87 % 21,891 973 4.44 %
Total
interest-bearing 2,349,634 30,365 1.29 % 2,326,387 36,391 1.56 %
liabilities
Demand deposits 338,046 278,120
Other liabilities 55,382 42,554
Shareholders' 293,087 280,107
equity
Total liabilities
and shareholders' $3,036,149 $2,927,168
equity
Net interest income $92,700 $86,926
(FTE)
Interest rate 3.08 % 2.99 %
spread
Net interest margin 3.29 % 3.20 %
Interest income amounts presented in the preceding table include the following
adjustments for taxable equivalency:
(Dollars in thousands)
Twelve months ended December 31, 2012 2011
Commercial loans $569 $369
Nontaxable debt securities 1,416 1,553
Corporate stocks 19 49
Total $2,004 $1,971
Washington Trust Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION - Non-GAAP Financial Measures (unaudited)
At or for the Quarters Ended
(Dollars in
thousands, Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
except per 2012 2012 2012 2012 2011
share
amounts)
Calculation
of Tangible
Book Value
per Share:
Total
shareholders' $295,652 $298,394 $292,734 $287,935 $281,351
equity at end
of period
Less:
Goodwill 58,114 58,114 58,114 58,114 58,114
Identifiable
intangible 6,173 6,346 6,528 6,714 6,901
assets, net
Total
tangible
shareholders' $231,365 $233,934 $228,092 $223,107 $216,336
equity at end
of period
Shares
outstanding 16,380 16,371 16,359 16,354 16,292
at end of
period
Book value
per share - $18.05 $18.23 $17.89 $17.61 $17.27
GAAP
Tangible book
value per $14.13 $14.29 $13.94 $13.64 $13.28
share -
Non-GAAP
Calculation
of Tangible
Equity to
Tangible
Assets:
Total
tangible
shareholders' $231,365 $233,934 $228,092 $223,107 $216,336
equity at end
of period
Total assets
at end of $3,071,884 $3,048,868 $3,041,050 $3,028,690 $3,064,098
period
Less:
Goodwill 58,114 58,114 58,114 58,114 58,114
Identifiable
intangible 6,173 6,346 6,528 6,714 6,901
assets, net
Total
tangible $3,007,597 $2,984,408 $2,976,408 $2,963,862 $2,999,083
assets at end
of period
Equity to 9.62 % 9.79 % 9.63 % 9.51 % 9.18 %
assets - GAAP
Tangible
equity to
tangible 7.69 % 7.84 % 7.66 % 7.53 % 7.21 %
assets -
Non-GAAP
Calculation
of Return on
Average
Tangible
Assets:
Net income $9,023 $8,900 $8,713 $8,438 $7,777
Total average $3,044,764 $3,045,203 $3,017,167 $3,037,270 $2,983,648
assets
Less:
Average 58,114 58,114 58,114 58,114 58,114
goodwill
Average
identifiable 6,257 6,434 6,619 6,805 7,025
intangible
assets, net
Total average
tangible $2,980,393 $2,980,655 $2,952,434 $2,972,351 $2,918,509
assets
Return on
average 1.19 % 1.17 % 1.16 % 1.11 % 1.04 %
assets - GAAP
Return on
average
tangible 1.21 % 1.19 % 1.18 % 1.14 % 1.07 %
assets -
Non-GAAP
Calculation
of Return on
Average
Tangible
Equity:
Net income $9,023 $8,900 $8,713 $8,438 $7,777
Total average
shareholders' $300,430 $296,150 $290,854 $284,801 $285,707
equity
Less:
Average 58,114 58,114 58,114 58,114 58,114
goodwill
Average
identifiable 6,257 6,434 6,619 6,805 7,025
intangible
assets, net
Total average
tangible $236,059 $231,602 $226,121 $219,882 $220,568
shareholders'
equity
Return on
average 12.01 % 12.02 % 11.98 % 11.85 % 10.89 %
shareholders'
equity - GAAP
Return on
average
tangible 15.29 % 15.37 % 15.41 % 15.35 % 14.10 %
shareholders'
equity -
Non-GAAP
Washington Trust Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION - Non-GAAP Financial Measures (unaudited)
Twelve Months Ended
(Dollars in thousands) Dec 31, Dec 31,
2012 2011
Calculation of Return on Average Tangible
Assets:
Net income $35,074 $29,724
Total average assets $3,036,149 $2,927,168
Less:
Average goodwill 58,114 58,114
Average identifiable intangible assets, net 6,528 7,374
Total average tangible assets $2,971,507 $2,861,680
Return on average assets - GAAP 1.16 % 1.02 %
Return on average tangible assets - Non-GAAP 1.18 % 1.04 %
Calculation of Return on Average Tangible
Equity:
Net income $35,074 $29,724
Total average shareholders' equity $293,087 $280,107
Less:
Average goodwill 58,114 58,114
Average identifiable intangible assets, net 6,528 7,374
Total average tangible shareholders' equity $228,445 $214,619
Return on average shareholders' equity - GAAP 11.97 % 10.61 %
Return on average tangible shareholders' equity 15.35 % 13.85 %
- Non-GAAP
Contact:
Washington Trust Bancorp, Inc.
Elizabeth B. Eckel, 401-348-1309
Senior Vice President, Marketing
ebeckel@washtrust.com
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