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Washington Trust Reports Third Quarter 2022 Earnings

WASH

WESTERLY, R.I., Oct. 24, 2022 /PRNewswire/ -- Washington Trust Bancorp, Inc. (Nasdaq: WASH), parent company of The Washington Trust Company, today announced third quarter 2022 net income of $18.7 million, or $1.08 per diluted share, compared to net income of $20.0 million, or $1.14 per diluted share, for the second quarter of 2022.

(PRNewsfoto/Washington Trust Bancorp, Inc.)

"Washington Trust reported solid third quarter results, a testament to our diversified business model," stated Edward O. Handy III, Washington Trust Chairman and Chief Executive Officer. "We remain committed to our customers and expanding our presence within our geographic footprint. During the quarter, we opened a new commercial lending office in New Haven, Connecticut, opened a new full-service branch in Cumberland, Rhode Island and recently announced our intention to open three new branches in Rhode Island in 2023."

Selected financial highlights for the third quarter include:

  • Returns on average equity and average assets for the third quarter were 15.16% and 1.19%, respectively, compared to 16.11% and 1.37%, respectively, for the preceding quarter.
  • Net interest income totaled an all-time quarterly record of $42.0 million in the third quarter, up by $4.5 million, or 12%, from the preceding quarter, reflecting the impact of rising market interest rates.
  • Asset and credit quality metrics remain strong. In the third quarter, a provision for credit losses (or a charge) of $800 thousand was recognized, compared to a negative provision (or a benefit) of $3.0 million recognized in the preceding quarter.
  • Total loans amounted to an all-time high of $4.8 billion, up by $369 million, or 8%, from the end of the preceding quarter, reflecting strong loan growth in both the commercial and residential real estate loan portfolios.
  • In-market deposits (total deposits less wholesale brokered deposits) amounted to $4.6 billion at September 30, 2022, up by $79 million, or 2%, from the end of the preceding quarter and up by $324 million, or 8%, from the balance at September 30, 2021.

Net Interest Income

Net interest income was $42.0 million for the third quarter of 2022, up by $4.5 million, or 12%, from the second quarter of 2022. The net interest margin was 2.82% for the third quarter, up by 11 basis points from the preceding quarter. Linked quarter changes included:

  • Average interest-earning assets increased by $365 million, largely reflecting an increase of $305 million in average loans. The yield on interest-earning assets for the third quarter was 3.49%, up by 46 basis points from the preceding quarter, reflecting the impact of higher market interest rates.

  • Average interest-bearing liabilities increased by $318 million. Average in-market deposits declined by $120 million, while average wholesale funding balances increased by $438 million to fund loan growth. The cost of interest-bearing liabilities for the third quarter of 2022 was 0.86%, up by 44 basis points from the preceding quarter, reflecting higher rates paid on wholesale funding sources and money market accounts.

Noninterest Income

Noninterest income totaled $15.8 million for the third quarter of 2022, down modestly by $49 thousand, or 0.3%, from the second quarter of 2022. Linked quarter changes included:

  • Wealth management revenues amounted to $9.5 million in the third quarter of 2022, down by $541 thousand, or 5%, on a linked quarter basis. This included a decrease of $339 thousand, or 4%, in asset-based revenues and a decrease of $202 thousand, or 48%, in transaction-based revenues. The linked quarter decline in transaction-based revenues was mainly due to lower tax servicing fee income in the third quarter, as this income is concentrated in the first half of the year.

    Wealth management assets under administration ("AUA") amounted to $6.3 billion at September 30, 2022, down by $327 million, or 5%, from June 30, 2022. The decrease reflected net investment depreciation of $240 million and net client asset outflows of $87 million in the third quarter of 2022. The average balance of AUA for the third quarter of 2022 decrease by approximately $337 million, or 5%, from the average balance for the preceding quarter.

    Recently, four client-facing advisors in our registered investment adviser subsidiary resigned. As a result, Washington Trust could experience an increased level of client asset outflows in upcoming months.

  • Mortgage banking revenues totaled $2.0 million for the third quarter of 2022, down modestly by $35 thousand, or 2%, from the second quarter of 2022, largely reflecting both a lower volume of loans sold and a decline in the sales yield on loans sold to the secondary market.

  • Loan related derivative income was $1.0 million in the third quarter of 2022, up by $372 thousand, or 56%, from the preceding quarter, reflecting an increase in commercial borrower interest rate derivative transactions.

Noninterest Expense

Noninterest expense totaled $33.1 million for the third quarter of 2022, up by $2.0 million, or 6%, from the second quarter of 2022. Linked quarter changes included:

  • Salaries and employee benefits expense, the largest component of noninterest expense, amounted to $21.6 million for the third quarter of 2022, up by $1.2 million, or 6%, from the preceding quarter, largely reflecting adjustments to performance-based compensation accruals.

  • The remaining increase in noninterest expense reflects modest increases across a variety of other noninterest expense categories.

Income Tax

Income tax expense totaled $5.3 million for the third quarter of 2022, down by $23 thousand from the preceding quarter. The effective tax rate for the third quarter of 2022 was 22.1%, compared to 21.1% in the preceding quarter. Based on current federal and applicable state income statutes, the Corporation currently expects its full-year 2022 effective tax rate to be approximately 21.5%.

Investment Securities

The securities portfolio totaled $983 million at September 30, 2022, down by $38 million, or 4%, from June 30, 2022, reflecting a temporary decline in fair value of available for sale securities and routine pay-downs on mortgage-backed securities, partially offset by purchases of U.S. government agency and U.S. government-sponsored debt securities, including mortgage-backed securities. Purchases of debt securities in the third quarter 2022 totaled $47 million, with a weighted average yield of 4.24%. The securities portfolio represented 15% of total assets at September 30, 2022, compared to 17% of total assets at June 30, 2022.

Loans

Total loans amounted to $4.8 billion at September 30, 2022, up by $369 million, or 8%, from the end of the preceding quarter. Linked quarter changes included:

  • Commercial loans increased by $186 million, or 8%, from June 30, 2022, reflecting originations and advances of approximately $286 million, partially offset by payoffs and pay-downs of approximately $100 million.

  • Residential real estate loans increased by $178 million, or 9%, from June 30, 2022. In the third quarter of 2022, residential real estate loans originated for portfolio amounted to $225 million, down by $39 million, or 15%, from the preceding quarter.

  • The consumer loan portfolio increased by $6 million, or 2%, from the balance at June 30, 2022, due to growth in home equity lines and loans.

Deposits and Borrowings

At September 30, 2022, in-market deposits, which exclude wholesale brokered deposits, amounted to $4.6 billion, up by $79 million, or 2%, from the end of the preceding quarter. This included seasonal inflows of various institutional and governmental depositors based on their underlying business cycles. Wholesale brokered deposits amounted to $443 million, down by $16 million, or 3%, from June 30, 2022. Total deposits amounted to $5.1 billion at September 30, 2022, up by $63 million, or 1%, from the end of the preceding quarter.

FHLB advances totaled $700 million at September 30, 2022, up by $372 million, or 113%, from June 30, 2022, as higher levels of wholesale funding were utilized to fund balance sheet growth.

Asset Quality

Total nonaccrual loans amounted to $12.1 million, or 0.25% of total loans, at September 30, 2022, down from $12.4 million, or 0.28% of total loans, at June 30, 2022. Total past due loans amounted to $7.5 million, or 0.16% of total loans, at September 30, 2022, down from $8.6 million, or 0.19% of total loans, at June 30, 2022.

The allowance for credit losses ("ACL") on loans amounted to $36.9 million, or 0.76% of total loans, at September 30, 2022, compared to $36.3 million, or 0.81% of total loans, at June 30, 2022. The ACL on unfunded commitments, included in other liabilities on the Consolidated Balance Sheets, amounted to $2.4 million at September 30, 2022, compared to $2.2 million at June 30, 2022.

There was a positive $800 thousand provision for credit losses (or a charge) recognized in the third quarter of 2022, compared to a negative $3.0 million provision for credit losses (or a benefit) recognized in the preceding quarter. The provision for credit losses in the third quarter of 2022 reflected loan growth, our current estimate of forecasted economic conditions and strong asset and credit quality metrics. In the third quarter of 2022, net charge-offs of $54 thousand were recognized, compared to net recoveries of $10 thousand in the preceding quarter.

Capital and Dividends

Total shareholders' equity was $432.3 million at September 30, 2022, down by $44.4 million, or 9%, from June 30, 2022. The decline was largely due to a decrease of $53.7 million in the accumulated other comprehensive income component of shareholders' equity, reflecting a temporary decrease in the fair value of available for sale securities. In addition, the change in shareholders' equity also included $9.4 million in dividend declarations, partially offset by net income of $18.7 million.

In the third quarter of 2022, Washington Trust repurchased 18,754 shares, at an average price of $47.79 and a total cost of $896 thousand, under its stock repurchase program.

Capital levels at September 30, 2022 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.65% at September 30, 2022, compared to 13.51% at June 30, 2022. Book value per share was $25.17 at September 30, 2022, compared to $27.73 at June 30, 2022.

The Board of Directors declared a quarterly dividend of 54 cents per share for the quarter ended September 30, 2022. The dividend was paid on October 7, 2022 to shareholders of record on October 3, 2022.

Conference Call

Washington Trust will host a conference call to discuss its third quarter results, business highlights and outlook on Tuesday, October 25, 2022 at 8:30 a.m. (Eastern Time). Individuals may dial in to the call at 1-844-200-6205 and enter Access Code 898026. An audio replay of the call will be available, shortly after the conclusion of the call, by dialing 1-866-813-9403 and entering the Replay Access Code 135067. The audio replay will be available through November 8, 2022. Also, a webcast of the call will be posted in the Investor Relations section of Washington Trust's website, https://ir.washtrust.com, and will be available through December 31, 2022.

Background

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

Forward-Looking Statements

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

Some of the factors that might cause these differences include the following:

  • changes in political, business and economic conditions, including inflation;
  • interest rate changes or volatility, as well as changes in the balance and mix of loans and deposits;
  • changes in loan demand and collectability;
  • the possibility that future credit losses are higher than currently expected due to changes in economic assumptions or adverse economic developments;
  • ongoing volatility in national and international financial markets;
  • reductions in the market value or outflows of wealth management AUA;
  • decreases in the value of securities and other assets;
  • increases in defaults and charge-off rates;
  • changes in the size and nature of our competition;
  • changes in legislation or regulation and accounting principles, policies and guidelines;
  • operational risks including, but not limited to, changes in information technology, cybersecurity incidents, fraud, natural disasters, war, terrorism, civil unrest, the ongoing COVID-19 pandemic, and future pandemics;
  • reputational risks; 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, 2021, as updated by our Quarterly Reports on Form 10-Q and other filings submitted to the SEC, may result in these differences. You should carefully review all of these factors and you should be aware that there may be other factors that could cause these differences. These forward-looking statements were based on information, plans and estimates at the date of this report, and we assume no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

Supplemental Information - Explanation of Non-GAAP Financial Measures

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

Washington Trust Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; Dollars in thousands)








Sep 30,
2022

Jun 30,
2022

Mar 31,
2022

Dec 31,
2021

Sep 30,
2021

Assets:






Cash and due from banks

$130,066

$95,544

$224,807

$175,259

$297,039

Short-term investments

2,773

3,079

3,289

3,234

3,349

Mortgage loans held for sale, at fair value

24,054

22,656

15,612

40,196

48,705

Available for sale debt securities, at fair value

982,573

1,020,469

1,008,184

1,042,859

1,045,833

Federal Home Loan Bank stock, at cost

32,940

16,300

8,452

13,031

15,094

Loans:






Total loans

4,848,873

4,479,822

4,283,852

4,272,925

4,286,404

Less: allowance for credit losses on loans

36,863

36,317

39,236

39,088

41,711

Net loans

4,812,010

4,443,505

4,244,616

4,233,837

4,244,693

Premises and equipment, net

30,152

29,694

28,878

28,908

28,488

Operating lease right-of-use assets

27,788

28,098

28,816

26,692

27,518

Investment in bank-owned life insurance

101,491

100,807

93,192

92,592

92,974

Goodwill

63,909

63,909

63,909

63,909

63,909

Identifiable intangible assets, net

4,766

4,981

5,198

5,414

5,631

Other assets

195,529

153,849

123,046

125,196

129,410

Total assets

$6,408,051

$5,982,891

$5,847,999

$5,851,127

$6,002,643

Liabilities:






Deposits:






Noninterest-bearing deposits

$938,572

$888,981

$911,990

$945,229

$950,974

Interest-bearing deposits

4,131,285

4,117,648

4,215,960

4,034,822

4,107,168

Total deposits

5,069,857

5,006,629

5,127,950

4,980,051

5,058,142

Federal Home Loan Bank advances

700,000

328,000

55,000

145,000

222,592

Junior subordinated debentures

22,681

22,681

22,681

22,681

22,681

Operating lease liabilities

30,189

30,491

31,169

29,010

29,810

Other liabilities

153,050

118,456

98,007

109,577

114,100

Total liabilities

5,975,777

5,506,257

5,334,807

5,286,319

5,447,325

Shareholders' Equity:






Common stock

1,085

1,085

1,085

1,085

1,085

Paid-in capital

127,055

126,079

127,355

126,511

126,265

Retained earnings

485,163

475,889

465,295

458,310

447,566

Accumulated other comprehensive (loss) income

(171,755)

(118,041)

(79,451)

(19,981)

(18,128)

Treasury stock, at cost

(9,274)

(8,378)

(1,092)

(1,117)

(1,470)

Total shareholders' equity

432,274

476,634

513,192

564,808

555,318

Total liabilities and shareholders' equity

$6,408,051

$5,982,891

$5,847,999

$5,851,127

$6,002,643

Washington Trust Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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



For the Three Months Ended


For the Nine Months Ended


Sep 30,
2022

Jun 30,
2022

Mar 31,
2022

Dec 31,
2021

Sep 30,
2021


Sep 30,
2022

Sep 30,
2021

Interest income:









Interest and fees on loans

$45,125

$36,602

$33,930

$36,882

$35,691


$115,657

$104,670

Interest on mortgage loans held for sale

361

258

232

387

298


851

1,144

Taxable interest on debt securities

6,061

4,918

4,230

3,929

3,683


15,209

10,366

Dividends on Federal Home Loan Bank stock

88

63

67

98

95


218

338

Other interest income

503

188

78

60

56


769

121

Total interest and dividend income

52,138

42,029

38,537

41,356

39,823


132,704

116,639

Interest expense:









Deposits

6,656

3,963

3,103

2,977

2,789


13,722

9,413

Federal Home Loan Bank advances

3,234

413

244

547

872


3,891

3,253

Junior subordinated debentures

206

138

99

92

92


443

278

Total interest expense

10,096

4,514

3,446

3,616

3,753


18,056

12,944

Net interest income

42,042

37,515

35,091

37,740

36,070


114,648

103,695

Provision for credit losses

800

(3,000)

100

(2,822)


(2,100)

(2,000)

Net interest income after provision for credit losses

41,242

40,515

34,991

40,562

36,070


116,748

105,695

Noninterest income:









Wealth management revenues

9,525

10,066

10,531

10,504

10,455


30,122

30,778

Mortgage banking revenues

2,047

2,082

3,501

4,332

6,373


7,630

24,294

Card interchange fees

1,287

1,303

1,164

1,282

1,265


3,754

3,714

Service charges on deposit accounts

819

763

668

766

673


2,250

1,917

Loan related derivative income

1,041

669

301

1,972

728


2,011

2,370

Income from bank-owned life insurance

684

615

601

1,144

618


1,900

1,781

Other income

400

354

393

307

408


1,147

2,233

Total noninterest income

15,803

15,852

17,159

20,307

20,520


48,814

67,087

Noninterest expense:









Salaries and employee benefits

21,609

20,381

21,002

21,524

22,162


62,992

65,771

Outsourced services

3,552

3,375

3,242

3,585

3,294


10,169

9,711

Net occupancy

2,234

2,174

2,300

2,145

2,134


6,708

6,304

Equipment

939

938

918

959

977


2,795

2,946

Legal, audit and professional fees

693

677

770

817

767


2,140

2,042

FDIC deposit insurance costs

430

402

366

391

482


1,198

1,201

Advertising and promotion

799

724

351

502

559


1,874

1,341

Amortization of intangibles

215

216

217

216

223


648

674

Debt prepayment penalties

2,700


4,230

Other expenses

2,596

2,190

2,053

2,380

1,922


6,839

6,025

Total noninterest expense

33,067

31,077

31,219

35,219

32,520


95,363

100,245

Income before income taxes

23,978

25,290

20,931

25,650

24,070


70,199

72,537

Income tax expense

5,310

5,333

4,448

5,462

5,319


15,091

15,855

Net income

$18,668

$19,957

$16,483

$20,188

$18,751


$55,108

$56,682










Net income available to common shareholders

$18,615

$19,900

$16,429

$20,128

$18,697


$54,944

$56,520










Weighted average common shares outstanding:









Basic

17,174

17,303

17,331

17,328

17,320


17,269

17,303

Diluted

17,298

17,414

17,482

17,469

17,444


17,389

17,451

Earnings per common share:









Basic

$1.08

$1.15

$0.95

$1.16

$1.08


$3.18

$3.27

Diluted

$1.08

$1.14

$0.94

$1.15

$1.07


$3.16

$3.24










Cash dividends declared per share

$0.54

$0.54

$0.54

$0.54

$0.52


$1.62

$1.56

Washington Trust Bancorp, Inc. and Subsidiaries

SELECTED FINANCIAL HIGHLIGHTS

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




Sep 30,
2022

Jun 30,
2022

Mar 31,
2022

Dec 31,
2021

Sep 30,
2021

Share and Equity Related Data:






Book value per share

$25.17

$27.73

$29.61

$32.59

$32.06

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

$21.17

$23.72

$25.62

$28.59

$28.05

Market value per share

$46.48

$48.37

$52.50

$56.37

$52.98

Shares issued at end of period

17,363

17,363

17,363

17,363

17,363

Shares outstanding at end of period

17,171

17,190

17,332

17,331

17,320







Capital Ratios (2):






Tier 1 risk-based capital

11.97 %

12.78 %

13.32 %

13.24 %

13.01 %

Total risk-based capital

12.65 %

13.51 %

14.15 %

14.01 %

13.83 %

Tier 1 leverage ratio

8.99 %

9.42 %

9.46 %

9.36 %

9.12 %

Common equity tier 1

11.50 %

12.28 %

12.79 %

12.71 %

12.47 %







Balance Sheet Ratios:






Equity to assets

6.75 %

7.97 %

8.78 %

9.65 %

9.25 %

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

5.74 %

6.89 %

7.68 %

8.57 %

8.19 %

Loans to deposits (3)

95.4 %

89.2 %

83.1 %

85.8 %

84.9 %




For the Nine Months Ended


For the Three Months Ended



Sep 30,
2022

Jun 30,
2022

Mar 31,
2022

Dec 31,
2021

Sep 30,
2021


Sep 30,
2022

Sep 30,
2021

Performance Ratios (4):









Net interest margin (5)

2.82 %

2.71 %

2.57 %

2.71 %

2.58 %


2.71 %

2.55 %

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

1.19 %

1.37 %

1.14 %

1.36 %

1.26 %


1.23 %

1.30 %

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

1.20 %

1.39 %

1.15 %

1.38 %

1.27 %


1.25 %

1.32 %

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

15.16 %

16.11 %

12.04 %

14.34 %

13.37 %


14.35 %

13.93 %

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

17.65 %

18.71 %

13.77 %

16.39 %

15.29 %


16.59 %

15.98 %

Efficiency ratio (6)

57.2 %

58.2 %

59.7 %

60.7 %

57.5 %


58.3 %

58.7 %

(1)

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

(2)

Estimated for September 30, 2022 and actuals for prior periods.

(3)

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

(4)

Annualized based on the actual number of days in the period.

(5)

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

(6)

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

Washington Trust Bancorp, Inc. and Subsidiaries

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited; Dollars in thousands)







For the Three Months Ended


For the Nine Months Ended


Sep 30,
2022

Jun 30,
2022

Mar 31,
2022

Dec 31,
2021

Sep 30,
2021


Sep 30,
2022

Sep 30,
2021

Wealth Management Results









Wealth Management Revenues:









Asset-based revenues

$9,302

$9,641

$10,211

$10,417

$10,224


$29,154

$29,798

Transaction-based revenues

223

425

320

87

231


968

980

Total wealth management revenues

$9,525

$10,066

$10,531

$10,504

$10,455


$30,122

$30,778










Assets Under Administration (AUA):









Balance at beginning of period

$6,650,097

$7,492,893

$7,784,211

$7,443,396

$7,441,519


$7,784,211

$6,866,737

Net investment (depreciation) appreciation & income

(239,762)

(816,290)

(388,733)

358,796

(4,830)


(1,444,785)

572,506

Net client asset (outflows) inflows

(87,578)

(26,506)

97,415

(17,981)

6,707


(16,669)

4,153

Balance at end of period

$6,322,757

$6,650,097

$7,492,893

$7,784,211

$7,443,396


$6,322,757

$7,443,396










Percentage of AUA that are managed assets

91 %

91 %

92 %

92 %

91 %


91 %

91 %










Mortgage Banking Results









Mortgage Banking Revenues:









Realized gains on loan sales, net (1)

$1,718

$1,917

$3,327

$5,695

$5,750


$6,962

$28,057

Changes in fair value, net (2)

(226)

(330)

(242)

(1,594)

467


(798)

(3,964)

Loan servicing fee income, net (3)

555

495

416

231

156


1,466

201

Total mortgage banking revenues

$2,047

$2,082

$3,501

$4,332

$6,373


$7,630

$24,294










Residential Mortgage Loan Originations:









Originations for retention in portfolio (4)

$225,132

$263,762

$164,401

$174,438

$205,293


$653,295

$581,905

Originations for sale to secondary market (5)

77,242

86,459

106,619

188,735

190,702


270,320

744,589

Total mortgage loan originations

$302,374

$350,221

$271,020

$363,173

$395,995


$923,615

$1,326,494










Residential Mortgage Loans Sold:









Sold with servicing rights retained

$34,659

$23,478

$14,627

$21,180

$108,445


$72,764

$570,370

Sold with servicing rights released (5)

40,665

56,263

115,501

175,818

65,416


212,429

186,068

Total mortgage loans sold

$75,324

$79,741

$130,128

$196,998

$173,861


$285,193

$756,438

(1)

Includes gains on loan sales, commission income on loans originated for others, servicing right gains, and gains (losses) on forward loan commitments.

(2)

Represents fair value changes on mortgage loans held for sale and forward loan commitments.

(3)

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

(4)

Includes the full commitment amount of homeowner construction loans.

(5)

Includes brokered loans (loans originated for others).

Washington Trust Bancorp, Inc. and Subsidiaries

END OF PERIOD LOAN COMPOSITION

(Unaudited; Dollars in thousands)




Sep 30,
2022

Jun 30,
2022

Mar 31,
2022

Dec 31,
2021

Sep 30,
2021

Loans:






Commercial real estate (1)

$1,762,687

$1,609,618

$1,628,620

$1,639,062

$1,661,785

Commercial & industrial

652,758

620,270

614,892

641,555

682,774

Total commercial

2,415,445

2,229,888

2,243,512

2,280,617

2,344,559







Residential real estate (2)

2,144,098

1,966,341

1,777,974

1,726,975

1,672,364







Home equity

273,742

267,785

246,097

247,697

249,874

Other

15,588

15,808

16,269

17,636

19,607

Total consumer

289,330

283,593

262,366

265,333

269,481

Total loans

$4,848,873

$4,479,822

$4,283,852

$4,272,925

$4,286,404

(1)

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

(2)

Residential real estate loans consist of mortgage and homeowner construction loans secured by one- to four-family residential properties.


September 30, 2022


December 31, 2021


Count

Balance

% of Total


Count

Balance

% of Total

Commercial Real Estate Portfolio Segmentation:








Retail

109

$441,631

25 %


121

$389,487

24 %

Multi-family dwelling

123

429,796

24


127

474,229

29

Office

55

253,816

14


57

216,602

13

Hospitality

32

196,503

11


31

184,990

11

Industrial and warehouse

39

176,081

10


35

137,254

8

Healthcare

15

138,475

8


13

128,189

8

Commercial mixed use

20

43,235

2


20

38,978

2

Other

36

83,150

6


36

69,333

5

Commercial real estate loans

429

$1,762,687

100 %


440

$1,639,062

100 %









Commercial & Industrial Portfolio Segmentation:








Healthcare and social assistance

70

$194,128

30 %


101

$174,376

27 %

Owner occupied and other real estate

162

71,431

11


185

72,957

11

Manufacturing

54

55,489

9


65

55,341

9

Transportation and warehousing

20

50,597

8


31

35,064

5

Retail

55

49,365

8


79

47,290

7

Educational services

20

48,208

7


28

52,211

8

Finance and insurance

58

31,579

5


59

31,279

5

Entertainment and recreation

24

26,050

4


37

32,087

5

Information

8

22,258

3


14

25,045

4

Accommodation and food services

49

17,499

3


114

28,320

4

Professional, scientific and technical

37

6,357

1


69

8,912

1

Public administration

12

4,223

1


16

5,441

1

Other

164

75,574

10


281

73,232

13

Commercial & industrial loans

733

$652,758

100 %


1,079

$641,555

100 %

Washington Trust Bancorp, Inc. and Subsidiaries

END OF PERIOD LOAN AND DEPOSIT COMPOSITION

(Unaudited; Dollars in thousands)








September 30, 2022


December 31, 2021


Balance

% of Total


Balance

% of Total

Commercial Real Estate Loans by Property Location:






Connecticut

$674,816

38 %


$643,182

39 %

Massachusetts

529,364

30


464,018

28

Rhode Island

396,869

23


408,496

25

Subtotal

1,601,049

91


1,515,696

92

All other states

161,638

9


123,366

8

Total commercial real estate loans

$1,762,687

100 %


$1,639,062

100 %







Residential Real Estate Loans by Property Location:






Massachusetts

$1,552,728

72 %


$1,207,789

70 %

Rhode Island

423,070

20


365,831

21

Connecticut

143,701

7


132,430

8

Subtotal

2,119,499

99


1,706,050

99

All other states

24,599

1


20,925

1

Total residential real estate loans

$2,144,098

100 %


$1,726,975

100 %


Sep 30,
2022

Jun 30,
2022

Mar 31,
2022

Dec 31,
2021

Sep 30,
2021

Deposits:






Noninterest-bearing demand deposits

$938,572

$888,981

$911,990

$945,229

$950,974

Interest-bearing demand deposits (in-market)

273,231

258,451

248,914

251,032

238,317

NOW accounts

869,984

887,678

893,603

867,138

817,937

Money market accounts

1,146,826

1,139,676

1,295,339

1,072,864

1,046,324

Savings accounts

600,568

572,251

566,461

555,177

540,306

Time deposits (in-market)

797,505

800,898

809,858

773,383

709,288

In-market deposits

4,626,686

4,547,935

4,726,165

4,464,823

4,303,146

Wholesale brokered demand deposits

31,044

31,003

Wholesale brokered time deposits

412,127

427,691

401,785

515,228

754,996

Wholesale brokered deposits

443,171

458,694

401,785

515,228

754,996

Total deposits

$5,069,857

$5,006,629

$5,127,950

$4,980,051

$5,058,142

Washington Trust Bancorp, Inc. and Subsidiaries

CREDIT & ASSET QUALITY DATA

(Unaudited; Dollars in thousands)




Sep 30,
2022

Jun 30,
2022

Mar 31,
2022

Dec 31,
2021

Sep 30,
2021

Asset Quality Ratios:






Nonperforming assets to total assets

0.19 %

0.21 %

0.22 %

0.24 %

0.18 %

Nonaccrual loans to total loans

0.25 %

0.28 %

0.29 %

0.33 %

0.26 %

Total past due loans to total loans

0.16 %

0.19 %

0.16 %

0.24 %

0.22 %

Allowance for credit losses on loans to nonaccrual loans

304.10 %

292.55 %

311.67 %

275.21 %

380.02 %

Allowance for credit losses on loans to total loans

0.76 %

0.81 %

0.92 %

0.91 %

0.97 %







Nonperforming Assets:






Commercial real estate

$—

$—

$—

$—

$—

Commercial & industrial

Total commercial

Residential real estate

11,700

11,815

11,916

13,576

10,321

Home equity

422

599

673

627

655

Other consumer

Total consumer

422

599

673

627

655

Total nonaccrual loans

12,122

12,414

12,589

14,203

10,976

Other real estate owned

Total nonperforming assets

$12,122

$12,414

$12,589

$14,203

$10,976







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






Commercial real estate

$—

$—

$—

$—

$—

Commercial & industrial

4

7

108

3

2

Total commercial

4

7

108

3

2

Residential real estate

7,256

7,794

6,467

9,622

8,698

Home equity

252

728

431

765

824

Other consumer

17

28

30

21

24

Total consumer

269

756

461

786

848

Total past due loans

$7,529

$8,557

$7,036

$10,411

$9,548







Accruing loans 90 days or more past due

$—

$—

$—

$—

$—

Nonaccrual loans included in past due loans

$7,059

$6,817

$5,707

$9,359

$6,930







Troubled Debt Restructurings ("TDR"):






Accruing TDRs

$7,214

$9,607

$16,303

$16,328

$7,979

Nonaccrual TDRs

2,890

2,906

2,789

2,819

1,732

Total TDRs

$10,104

$12,513

$19,092

$19,147

$9,711

Washington Trust Bancorp, Inc. and Subsidiaries

CREDIT & ASSET QUALITY DATA

(Unaudited; Dollars in thousands)



For the Three Months Ended


For the Nine Months Ended


Sep 30,
2022

Jun 30,
2022

Mar 31,
2022

Dec 31,
2021

Sep 30,
2021


Sep 30,
2022

Sep 30,
2021

Nonaccrual Loan Activity:









Balance at beginning of period

$12,414

$12,589

$14,203

$10,976

$10,481


$14,203

$13,197

Additions to nonaccrual status

521

158

427

3,959

2,583


1,106

3,854

Loans returned to accruing status

(400)

(236)

(63)

(339)


(699)

(877)

Loans charged-off

(63)

(23)

(36)

(31)

(249)


(122)

(630)

Payments, payoffs and other changes

(350)

(74)

(1,942)

(362)

(1,839)


(2,366)

(4,568)

Balance at end of period

$12,122

$12,414

$12,589

$14,203

$10,976


$12,122

$10,976










Allowance for Credit Losses on Loans:









Balance at beginning of period

$36,317

$39,236

$39,088

$41,711

$41,879


$39,088

$44,106

Provision for credit losses on loans (1)

600

(2,929)

(2,650)


(2,329)

(1,951)

Charge-offs

(63)

(23)

(36)

(33)

(249)


(122)

(630)

Recoveries

9

33

184

60

81


226

186

Balance at end of period

$36,863

$36,317

$39,236

$39,088

$41,711


$36,863

$41,711










Allowance for Credit Losses on Unfunded Commitments:








Balance at beginning of period

$2,190

$2,261

$2,161

$2,333

$2,333


$2,161

$2,382

Provision for credit losses on unfunded commitments (1)

200

(71)

100

(172)


229

(49)

Balance at end of period (2)

$2,390

$2,190

$2,261

$2,161

$2,333


$2,390

$2,333

(1)

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

(2)

Included in other liabilities in the Consolidated Balance Sheets.


For the Three Months Ended


For the Nine Months Ended


Sep 30,
2022

Jun 30,
2022

Mar 31,
2022

Dec 31,
2021

Sep 30,
2021


Sep 30,
2022

Sep 30,
2021

Net Loan Charge-Offs (Recoveries):









Commercial real estate

$—

$—

($145)

$—

$—


($145)

$—

Commercial & industrial

9

(11)

(1)

(35)

(2)


(3)

301

Total commercial

9

(11)

(146)

(35)

(2)


(148)

301

Residential real estate

(21)

(4)

52


(21)

22

Home equity

(2)

(2)

(12)

110


(4)

104

Other consumer

45

3

21

24

8


69

17

Total consumer

45

1

19

12

118


65

121

Total

$54

($10)

($148)

($27)

$168


($104)

$444










Net charge-offs (recoveries) to average loans - annualized

— %

— %

(0.01 %)

— %

0.02 %


— %

0.01 %

The following table presents average balance and interest rate information. Tax-exempt income is converted to a fully taxable equivalent ("FTE") basis using the statutory federal income tax rate adjusted for applicable state income taxes net of the related federal tax benefit. Unrealized gains (losses) on available for sale securities and changes in fair value on mortgage loans held for sale are excluded from the average balance and yield calculations. Nonaccrual loans, as well as interest recognized on these loans, are included in amounts presented for loans.

Washington Trust Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCE SHEETS (FTE Basis)

(Unaudited; Dollars in thousands)


For the Three Months Ended

September 30, 2022


June 30, 2022


Change


Average
Balance

Interest

Yield/

Rate


Average
Balance

Interest

Yield/

Rate


Average
Balance

Interest

Yield/

Rate


Assets:












Cash, federal funds sold and short-term investments

$92,708

$503

2.15 %


$110,424

$188

0.68 %


($17,716)

$315

1.47 %

Mortgage loans held for sale

34,503

361

4.15


26,914

258

3.84


7,589

103

0.31

Taxable debt securities

1,150,674

6,061

2.09


1,096,611

4,918

1.80


54,063

1,143

0.29

FHLB stock

25,377

88

1.38


9,420

63

2.68


15,957

25

(1.30)

Commercial real estate

1,692,374

17,974

4.21


1,619,325

13,495

3.34


73,049

4,479

0.87

Commercial & industrial

630,360

7,114

4.48


620,543

6,115

3.95


9,817

999

0.53

Total commercial

2,322,734

25,088

4.29


2,239,868

19,610

3.51


82,866

5,478

0.78

Residential real estate

2,045,833

17,379

3.37


1,836,245

15,010

3.28


209,588

2,369

0.09

Home equity

269,654

2,804

4.13


256,771

2,075

3.24


12,883

729

0.89

Other

15,299

171

4.43


15,770

183

4.65


(471)

(12)

(0.22)

Total consumer

284,953

2,975

4.14


272,541

2,258

3.32


12,412

717

0.82

Total loans

4,653,520

45,442

3.87


4,348,654

36,878

3.40


304,866

8,564

0.47

Total interest-earning assets

5,956,782

52,455

3.49


5,592,023

42,305

3.03


364,759

10,150

0.46

Noninterest-earning assets

259,347




249,309




10,038



Total assets

$6,216,129




$5,841,332




$374,797



Liabilities and Shareholders' Equity:












Interest-bearing demand deposits (in-market)

$267,670

$822

1.22 %


$248,764

$222

0.36 %


$18,906

$600

0.86 %

NOW accounts

871,038

212

0.10


883,251

151

0.07


(12,213)

61

0.03

Money market accounts

1,137,875

2,231

0.78


1,268,496

1,139

0.36


(130,621)

1,092

0.42

Savings accounts

582,513

100

0.07


566,307

119

0.08


16,206

(19)

(0.01)

Time deposits (in-market)

797,199

1,983

0.99


809,697

1,951

0.97


(12,498)

32

0.02

Interest-bearing in-market deposits

3,656,295

5,348

0.58


3,776,515

3,582

0.38


(120,220)

1,766

0.20

Wholesale brokered demand deposits

31,014

166

2.12


20,233

46

0.91


10,781

120

1.21

Wholesale brokered time deposits

381,984

1,142

1.19


352,438

335

0.38


29,546

807

0.81

Wholesale brokered deposits

412,998

1,308

1.26


372,671

381

0.41


40,327

927

0.85

Total interest-bearing deposits

4,069,293

6,656

0.65


4,149,186

3,963

0.38


(79,893)

2,693

0.27

FHLB advances

549,729

3,234

2.33


151,736

413

1.09


397,993

2,821

1.24

Junior subordinated debentures

22,681

206

3.60


22,681

138

2.44


68

1.16

Total interest-bearing liabilities

4,641,703

10,096

0.86


4,323,603

4,514

0.42


318,100

5,582

0.44

Noninterest-bearing demand deposits

944,153




891,883




52,270



Other liabilities

143,043




130,273




12,770



Shareholders' equity

487,230




495,573




(8,343)



Total liabilities and shareholders' equity

$6,216,129




$5,841,332




$374,797



Net interest income (FTE)


$42,359




$37,791




$4,568


Interest rate spread



2.63 %




2.61 %




0.02 %

Net interest margin



2.82 %




2.71 %




0.11 %

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

For the Three Months Ended

Sep 30,
2022

Jun 30,
2022

Change

Commercial loans

$317

$276

$41

Total

$317

$276

$41











Washington Trust Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCE SHEETS (FTE Basis)

(Unaudited; Dollars in thousands)


For the Nine Months Ended

September 30, 2022

September 30, 2021

Change


Average
Balance

Interest

Yield/

Rate

Average
Balance

Interest

Yield/

Rate

Average
Balance

Interest

Yield/

Rate


Assets:










Cash, federal funds sold and short-term investments

$128,606

$769

0.80 %

$160,350

$121

0.10 %

($31,744)

$648

0.70 %

Mortgage loans for sale

29,985

851

3.79

53,307

1,144

2.87

(23,322)

(293)

0.92

Taxable debt securities

1,106,632

15,209

1.84

997,741

10,366

1.39

108,891

4,843

0.45

FHLB stock

15,745

218

1.85

24,265

338

1.86

(8,520)

(120)

(0.01)

Commercial real estate

1,648,061

43,360

3.52

1,638,200

35,269

2.88

9,861

8,091

0.64

Commercial & industrial

628,574

19,456

4.14

794,091

23,865

4.02

(165,517)

(4,409)

0.12

Total commercial

2,276,635

62,816

3.69

2,432,291

59,134

3.25

(155,656)

3,682

0.44

Residential real estate

1,875,175

46,376

3.31

1,531,529

39,248

3.43

343,646

7,128

(0.12)

Home equity

257,814

6,753

3.50

255,959

6,220

3.25

1,855

533

0.25

Other

15,995

550

4.60

20,301

742

4.89

(4,306)

(192)

(0.29)

Total consumer

273,809

7,303

3.57

276,260

6,962

3.37

(2,451)

341

0.20

Total loans

4,425,619

116,495

3.52

4,240,080

105,344

3.32

185,539

11,151

0.20

Total interest-earning assets

5,706,587

133,542

3.13

5,475,743

117,313

2.86

230,844

16,229

0.27

Noninterest-earning assets

268,744



346,514



(77,770)



Total assets

$5,975,331



$5,822,257



$153,074



Liabilities and Shareholders' Equity:










Interest-bearing demand deposits (in-market)

$255,014

$1,114

0.58 %

$190,979

$196

0.14 %

$64,035

$918

0.44 %

NOW accounts

867,464

492

0.08

747,385

350

0.06

120,079

142

0.02

Money market accounts

1,193,599

3,984

0.45

958,812

1,852

0.26

234,787

2,132

0.19

Savings accounts

570,129

246

0.06

513,110

211

0.05

57,019

35

0.01

Time deposits (in-market)

800,037

5,997

1.00

687,278

5,822

1.13

112,759

175

(0.13)

Interest-bearing in-market deposits

3,686,243

11,833

0.43

3,097,564

8,431

0.36

588,679

3,402

0.07

Wholesale brokered demand deposits

17,197

212

1.65

17,197

212

1.65

Wholesale brokered time deposits

396,465

1,677

0.57

655,165

982

0.20

(258,700)

695

0.37

Wholesale brokered deposits

413,662

1,889

0.61

655,165

982

0.20

(241,503)

907

0.41

Total interest-bearing deposits

4,099,905

13,722

0.45

3,752,729

9,413

0.34

347,176

4,309

0.11

FHLB advances

285,590

3,891

1.82

438,213

3,253

0.99

(152,623)

638

0.83

Junior subordinated debentures

22,681

443

2.61

22,681

278

1.64

165

0.97

Total interest-bearing liabilities

4,408,176

18,056

0.55

4,213,623

12,944

0.41

194,553

5,112

0.14

Noninterest-bearing demand deposits

925,433



918,760



6,673



Other liabilities

129,967



147,244



(17,277)



Shareholders' equity

511,755



542,630



(30,875)



Total liabilities and shareholders' equity

$5,975,331



$5,822,257



$153,074



Net interest income (FTE)


$115,486



$104,369



$11,117


Interest rate spread



2.58 %



2.45 %



0.13 %

Net interest margin



2.71 %



2.55 %



0.16 %

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





For the Nine Months Ended

Sep 30,
2022

Sep 30,
2021

Change

Commercial loans

$838

$674

$164

Total

$838

$674

$164

Washington Trust Bancorp, Inc. and Subsidiaries

SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures

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




Sep 30,
2022

Jun 30,
2022

Mar 31,
2022

Dec 31,
2021

Sep 30,
2021

Tangible Book Value per Share:






Total shareholders' equity, as reported

$432,274

$476,634

$513,192

$564,808

$555,318

Less:






Goodwill

63,909

63,909

63,909

63,909

63,909

Identifiable intangible assets, net

4,766

4,981

5,198

5,414

5,631

Total tangible shareholders' equity

$363,599

$407,744

$444,085

$495,485

$485,778







Shares outstanding, as reported

17,171

17,190

17,332

17,331

17,320







Book value per share - GAAP

$25.17

$27.73

$29.61

$32.59

$32.06

Tangible book value per share - Non-GAAP

$21.18

$23.72

$25.62

$28.59

$28.05







Tangible Equity to Tangible Assets:






Total tangible shareholders' equity

$363,599

$407,744

$444,085

$495,485

$485,778







Total assets, as reported

$6,408,051

$5,982,891

$5,847,999

$5,851,127

$6,002,643

Less:






Goodwill

63,909

63,909

63,909

63,909

63,909

Identifiable intangible assets, net

4,766

4,981

5,198

5,414

5,631

Total tangible assets

$6,339,376

$5,914,001

$5,778,892

$5,781,804

$5,933,103







Equity to assets - GAAP

6.75 %

7.97 %

8.78 %

9.65 %

9.25 %

Tangible equity to tangible assets - Non-GAAP

5.74 %

6.89 %

7.68 %

8.57 %

8.19 %


For the Three Months Ended


For the Nine Months Ended


Sep 30,
2022

Jun 30,
2022

Mar 31,
2022

Dec 31,
2021

Sep 30,
2021


Sep 30,
2022

Sep 30,
2021

Return on Average Tangible Assets:









Net income, as reported

$18,668

$19,957

$16,483

$20,188

$18,751


$55,108

$56,682










Total average assets, as reported

$6,216,129

$5,841,332

$5,864,668

$5,884,581

$5,919,137


$5,975,331

$5,822,257

Less average balances of:









Goodwill

63,909

63,909

63,909

63,909

63,909


63,909

63,909

Identifiable intangible assets, net

4,871

5,086

5,303

5,526

5,739


5,085

5,962

Total average tangible assets

$6,147,349

$5,772,337

$5,795,456

$5,815,146

$5,849,489


$5,906,337

$5,752,386










Return on average assets - GAAP

1.19 %

1.37 %

1.14 %

1.36 %

1.26 %


1.23 %

1.30 %

Return on average tangible assets - Non-GAAP

1.20 %

1.39 %

1.15 %

1.38 %

1.27 %


1.25 %

1.32 %










Return on Average Tangible Equity:









Net income available to common
shareholders, as reported

$18,615

$19,900

$16,429

$20,128

$18,697


$54,944

$56,520










Total average equity, as reported

$487,230

$495,573

$553,185

$556,765

$554,847


$511,755

$542,630

Less average balances of:









Goodwill

63,909

63,909

63,909

63,909

63,909


63,909

63,909

Identifiable intangible assets, net

4,871

5,086

5,303

5,526

5,739


5,085

5,962

Total average tangible equity

$418,450

$426,578

$483,973

$487,330

$485,199


$442,761

$472,759










Return on average equity - GAAP

15.16 %

16.11 %

12.04 %

14.34 %

13.37 %


14.35 %

13.93 %

Return on average tangible equity - Non-GAAP

17.65 %

18.71 %

13.77 %

16.39 %

15.29 %


16.59 %

15.98 %

Category: Earnings

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SOURCE Washington Trust Bancorp, Inc.