PR Newswire | Apr 21, 2021 04:17PM EDT

04/21 15:16 CDT

Washington Trust Reports First Quarter 2021 Earnings WESTERLY, R.I., April 21, 2021

WESTERLY, R.I., April 21, 2021 /PRNewswire/ -- Washington Trust Bancorp, Inc. (Nasdaq: WASH), parent company of The Washington Trust Company, today announced first quarter 2021 net income of $20.5 million, or $1.17 per diluted share, compared to net income of $18.6 million, or $1.07 per diluted share, for the fourth quarter of 2020.

"Washington Trust reported strong first quarter results, with an increase in profitability from the fourth quarter of 2020," stated Edward O. Handy III, Washington Trust Chairman and Chief Executive Officer. "Our team of employees have worked diligently throughout the COVID-19 pandemic to deliver quality service to our customers, and our results reflect the success of their hard work and dedication. We believe in our team and in our business model, and we are well-positioned to continue to navigate forward."

Selected financial highlights for the first quarter of 2021 include:

* Returns on average equity and average assets for the first quarter were 15.55% and 1.45%, respectively, compared to 13.96% and 1.28%, respectively, in the preceding quarter. * The provision for credit losses was a negative $2.0 million in the first quarter, compared to a positive $1.8 million in the preceding quarter. * Mortgage banking revenues totaled $11.9 million for the first quarter, down by $2.2 million, or 15%, from the preceding quarter, but up by $5.8 million, or 96%, from the same period in 2020. First quarter mortgage originations and sales were down compared to the preceding quarter, however, both originations and sales were significantly higher than the first quarter a year ago. * Wealth management revenues were $9.9 million for the first quarter, up by $689 thousand, or 7%, from the preceding quarter. Wealth management assets under administration ("AUA") amounted to a record $7.0 billion at March 31, 2021. * Total loans amounted to $4.2 billion, down slightly from the end of the preceding quarter and up by $104 million, or 3%, from a year ago. * In-market deposits (total deposits less out-of-market wholesale brokered deposits) amounted to a record $4.0 billion at March 31, 2021, up by $227 million, or 6%, from the end of the preceding quarter, and up by $739 million, or 23%, from a year ago.

Net Interest Income

Net interest income was $32.9 million for the first quarter of 2021, up by $628 thousand, or 2%, from the fourth quarter of 2020. The net interest margin was 2.51% for the first quarter, up by 12 basis points from the preceding quarter. Both net interest income and the net interest margin benefited from accelerated net deferred fee amortization associated with Paycheck Protection Program ("PPP") loans that were forgiven by the Small Business Association ("SBA"). In the first quarter of 2021, accelerated net deferred fee amortization on PPP loans amounted to approximately $1.2 million, or 9 basis points, compared to $423 thousand, or 3 basis points, in the preceding quarter. Linked quarter changes included:

* Average interest-earning assets decreased by $47 million, largely due to a decrease of $38 million in average loans. The yield on interest-earning assets for the first quarter was 2.90%, down by 2 basis points from the preceding quarter. * Average interest-bearing liabilities decreased by $95 million, resulting from a decrease of $183 million in average wholesale funding balances, partially offset by an increase of $88 million in average in-market deposits. The cost of interest-bearing liabilities for the first quarter of 2021 was 0.50%, down by 17 basis points from the preceding quarter, reflecting the impact of lower market interest rates.

Noninterest Income

Noninterest income totaled $26.0 million for the first quarter of 2021, down by $1.8 million, or 6%, from the fourth quarter of 2020. Included in other noninterest income in first quarter of 2021 was income of $1.0 million associated with a litigation settlement. As previously disclosed, included in other noninterest income in the fourth quarter of 2020 was a gain of $1.4 million associated with the sale of our limited partnership interest in a low-income housing tax credit investment. Excluding the impact of the aforementioned items, noninterest income was down by $1.4 million, or 5%. Linked quarter changes included:

* Mortgage banking revenues totaled $11.9 million for the first quarter of 2021, down by $2.2 million, or 15%, from the fourth quarter of 2020. Mortgage loans sold to the secondary market amounted to $292 million in the first quarter of 2020, down by $26 million, or 8%, from the preceding quarter. Also included in mortgage banking revenues was a decrease in the fair value of mortgage loan commitments as of March 31, 2021. * Wealth management revenues amounted to $9.9 million in the first quarter of 2021, up by $689 thousand, or 7%, on a linked quarter basis. This included an increase in asset-based revenues of $517 thousand, or 6%, and an increase in transaction-based revenues of $172 thousand, or 123%, from the preceding quarter. The increase in transaction-based revenues was largely due to tax reporting and preparation fees, which are generally concentrated in the first half of the year.Wealth management AUA amounted to $7.0 billion at March 31, 2021, up by $182 million, or 3%, from December 31, 2020. The increase reflected net investment appreciation of $209 million, partially offset by net client asset outflows of $26 million in the first quarter of 2021. The average balance of AUA for the first quarter of 2021 increased by approximately $298 million, or 5%, from the average balance for the preceding quarter.

Noninterest Expense

Noninterest expense totaled $34.7 million for the first quarter of 2021, up by $604 thousand, or 2%, from the fourth quarter of 2020. In both the first quarter of 2021 and the fourth quarter of 2020, debt prepayment penalty expense was recognized resulting from paying off higher-yielding FHLB advances. Debt prepayment penalty expense was $3.3 million in the first quarter of 2021, compared to $1.4 million in the preceding quarter. Excluding the impact of debt prepayment penalty expense from both periods, noninterest expense was down by $1.3 million, or 4%, from the fourth quarter of 2020. Linked quarter changes included:

* Salaries and employee benefits expense, our largest noninterest expense, amounted to $21.5 million for the first quarter of 2021, down by $548 thousand, or 2%, from the preceding quarter. The decline reflected lower incentive compensation and higher deferred labor (contra expense), which were partially offset by higher payroll taxes associated with the start of the new calendar year. Deferred labor increased by approximately $560 thousand on a linked quarter basis and was largely due to first quarter PPP loan originations. * Advertising and promotion expense was down by $418 thousand from the preceding quarter, largely due to timing of such activities. * Legal, audit and professional fees were down by $417 thousand from the preceding quarter, reflecting a decline in legal expenses.

Income Tax

Income tax expense totaled $5.7 million for the first quarter of 2021, up by $147 thousand from the preceding quarter, reflecting a higher level of pre-tax income. The effective tax rate for the first quarter of 2021 was 21.7%, compared to 22.9% in the preceding quarter. Based on current federal and applicable state income statutes, the Corporation currently expects its full-year 2021 effective tax rate to be approximately 22.3%.

Investment Securities

The securities portfolio totaled $948 million at March 31, 2021, up by $54 million, or 6%, from December 31, 2020, reflecting purchases of U.S. government agency and U.S. government-sponsored debt securities, including mortgage-backed securities, which were partially offset by routine pay-downs on mortgage-backed securities and calls of debt securities. Purchases of debt securities in the first quarter 2021 totaled $208 million, with a weighted average yield of 1.44%. Securities represented 17% of total assets at March 31, 2021, compared to 16% of total assets at December 31, 2020.

Loans

Total loans amounted to $4.2 billion at March 31, 2021, down by $1 million, from the end of the preceding quarter. Linked quarter changes included:

* Commercial loans increased by $9 million, or 0.4%, from December 31, 2020. In the first quarter of 2021, commercial loan originations and construction advances totaled $160 million and included $97 million of PPP loan originations. This was largely offset by payoffs and pay-downs totaling $153 million, which included $66 million of PPP loans that were forgiven by the SBA. Commercial line utilization increased modestly by $2 million. * Residential real estate loans decreased by $10 million, or 1%, from December 31, 2020, reflecting continued elevated payoff and refinancing activity. * The consumer loan portfolio was essentially unchanged from the balance at December 31, 2020.

Deposits and Borrowings

Total deposits amounted to $4.5 billion at March 31, 2021, up by $171 million, or 4%, from the end of the preceding quarter. Included in total deposits are out-of-market wholesale brokered time deposits, which decreased by $56 million, or 9%, from December 31, 2020. Excluding wholesale brokered time deposits, in-market deposits at March 31, 2021 were up by $227 million, or 6%, from the end of the preceding quarter. This increase reflected a continuation of consumer behavior fostering excess liquidity across the banking industry, as well as temporary increases associated with PPP loan origination funds deposited to customer accounts at Washington Trust.

FHLB advances totaled $467 million at March 31, 2021, down by $127 million from December 31, 2020.

Asset Quality

Nonperforming assets amounted to $13.0 million at March 31, 2021, down by $214 thousand from the end of the preceding quarter. Total nonaccrual loans amounted to $13.0 million, or 0.31% of total loans, at March 31, 2021, compared to $13.2 million, or 0.31% of total loans, at December 31, 2020.

Total past due loans amounted to $10.9 million, or 0.26% of total loans, at March 31, 2021, compared to $12.4 million, or 0.30% of total loans, at December 31, 2020.

Total troubled debt restructured loans ("TDR") amounted to $14.3 million as of March 31, 2021, down by $1.4 million from December 31, 2020, reflecting payoffs.

Since the beginning of the COVID-19 pandemic, Washington Trust has processed loan payment deferral modifications, or "deferments", on 652 loans totaling $727 million. The majority of these deferments qualified as eligible loan modifications under Section 4013 of the CARES Act, as amended, and therefore, were not required to be classified as TDRs and were not reported as past due. As of April 16, 2021, Washington Trust has active deferments remaining on 59 loans totaling $149.7 million, or 4% of the outstanding balance of total loans, excluding PPP loan balances.

The allowance for credit losses ("ACL") on loans amounted to $42.1 million, or 1.00% of total loans, at March 31, 2021, compared to $44.1 million, or 1.05% of total loans, at December 31, 2020. The ACL on unfunded commitments, included in other liabilities on the Consolidated Balance Sheets, amounted to $2.3 million at March 31, 2021 as compared to $2.4 million, at December 31, 2020.

In the first quarter of 2021, a negative provision for credit losses of $2.0 million was recognized in earnings, compared to a positive provision for credit losses of $1.8 million in the preceding quarter. The reduction in the provision for credit losses and the ACL reflected our current estimate of forecasted economic conditions and continued stable asset quality metrics. In the first quarter of 2021, net charge-offs of $18 thousand were recognized, compared to $118 thousand in the preceding quarter.

Capital and Dividends

Total shareholders' equity was $533.6 million at March 31, 2021, down by $596 thousand from December 31, 2020. The decline reflected a decrease of $12.6 million in the accumulated other comprehensive income component of shareholders' equity largely due to a temporary decline in the fair value of available for sale debt securities, as well as $9.1 million in dividend declarations. These decreases were partially offset by net income of $20.5 million.

Capital levels at March 31, 2021 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 13.85% at March 31, 2021, compared to 13.51% at December 31, 2020.

Book value per share amounted to $30.83 at March 31, 2021, compared to $30.94 at December 31, 2020.

The Board of Directors declared a quarterly dividend of 52 cents per share for the quarter ended March 31, 2021. The dividend was paid on April 9, 2021 to shareholders of record on April 1, 2021.

Conference Call

Washington Trust will host a conference call to discuss its first quarter results, business highlights and outlook on Thursday, April 22, 2021 at 8:30 a.m. (Eastern Time). Individuals may dial in to the call at 1-844-378-6480. An audio replay of the call will be available, shortly after the conclusion of the call, by dialing 1-877-344-7529 and entering the Replay PIN Number 10154444; the audio replay will be available through May 6, 2021. Also, a webcast of the call will be posted in the Investor Relations section of Washington Trust's web site, http://ir.washtrust.com, and will be available through June 30, 2021.

Background

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

Forward-Looking Statements

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

Some of the factors that might cause these differences include the following: the negative impacts and disruptions of the COVID-19 pandemic and measures taken to contain its spread on our employees, customers, business operations, credit quality, financial position, liquidity and results of operations; changes in consumer behavior due to changing political, business and economic conditions, or legislative or regulatory initiatives; the possibility that future credits losses are higher than currently expected due to changes in economic assumptions or adverse economic developments; volatility in national and international financial markets; reductions in net interest income resulting from interest rate volatility as well as changes in the balance and mix of loans and deposits; reductions in the market value or outflows of wealth management assets under administration; decreases in the value of securities and other assets; reductions in loan demand; changes in loan collectability, increases in defaults and charge-off rates; changes in the size and nature of our competition; changes in legislation or regulation and accounting principles, policies and guidelines; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; reputational risk relating to our participation in the Paycheck Protection Program and other pandemic-related legislative and regulatory initiatives and programs; and changes in the assumptions used in making such forward-looking statements. In addition, the factors described under "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as updated by our Quarterly Reports on Form 10-Q and other filings submitted to the SEC, may result in these differences. You should carefully review all of these factors and you should be aware that there may be other factors that could cause these differences. These forward-looking statements were based on information, plans and estimates at the date of this report, and we assume no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

Supplemental Information - Explanation of Non-GAAP Financial Measures

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

Washington Trust Bancorp, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; Dollars in thousands)



Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, 2021 2020 2020 2020 2020

Assets:

Cash and due from banks $166,960 $194,143 $204,113 $215,601 $178,678

Short-term investments 3,783 8,125 7,902 7,739 6,591

Mortgage loans held for sale, at fair value 77,450 61,614 68,095 43,997 49,751

Available for sale debt securities, at fair value948,094 894,571 913,850 938,446 917,392

Federal Home Loan Bank stock, at cost 24,772 30,285 37,469 50,017 53,576

Loans:

Total loans 4,194,666 4,195,990 4,282,047 4,287,641 4,090,396

Less: allowance for credit losses on loans 42,137 44,106 42,645 41,441 39,665

Net loans 4,152,529 4,151,884 4,239,402 4,246,200 4,050,731

Premises and equipment, net 28,953 28,870 27,711 28,067 28,543

Operating lease right-of-use assets 28,761 29,521 29,861 27,022 26,098

Investment in bank-owned life insurance 84,749 84,193 83,623 83,056 83,053

Goodwill 63,909 63,909 63,909 63,909 63,909

Identifiable intangible assets, net 6,079 6,305 6,530 6,759 6,988

Other assets 133,350 159,749 167,327 166,147 155,669

Total assets $5,719,389$5,713,169$5,849,792$5,876,960$5,620,979

Liabilities:

Deposits:

Noninterest-bearing deposits $932,999 $832,287 $840,444 $815,770 $622,893

Interest-bearing deposits 3,616,143 3,546,066 3,445,249 3,285,666 3,083,421

Total deposits 4,549,142 4,378,353 4,285,693 4,101,436 3,706,314

Federal Home Loan Bank advances 466,912 593,859 713,868 1,005,051 1,198,534

Payment Protection Program Lending Facility - - 105,746 38,900 -

Junior subordinated debentures 22,681 22,681 22,681 22,681 22,681

Operating lease liabilities 30,974 31,717 32,012 29,125 28,184

Other liabilities 116,081 152,364 162,099 159,604 156,669

Total liabilities 5,185,790 5,178,974 5,322,099 5,356,797 5,112,382

Shareholders' Equity:

Common stock 1,085 1,085 1,085 1,085 1,085

Paid-in capital 124,882 125,610 124,768 123,684 123,167

Retained earnings 429,598 418,246 408,773 399,386 387,243

Accumulated other comprehensive (loss) income (20,006) (7,391) (3,403) (462) 929

Treasury stock, at cost (1,960) (3,355) (3,530) (3,530) (3,827)

Total shareholders' equity 533,599 534,195 527,693 520,163 508,597

Total liabilities and shareholders' equity $5,719,389$5,713,169$5,849,792$5,876,960$5,620,979

Washington Trust Bancorp, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

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

For the Three Months Ended

Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, 2021 2020 2020 2020 2020

Interest income:

Interest and fees on loans $34,159$34,487$34,925$36,005$40,008

Interest on mortgage loans held for sale 441 569 468 440 285

Taxable interest on debt securities 3,242 3,869 4,870 5,477 5,834

Dividends on Federal Home Loan Bank stock 133 414 532 654 640

Other interest income 33 35 39 36 349

Total interest and dividend income 38,008 39,374 40,834 42,612 47,116

Interest expense:

Deposits 3,663 4,632 5,532 7,112 8,536

Federal Home Loan Bank advances 1,380 2,305 3,354 4,382 5,765

Junior subordinated debentures 94 122 135 171 213

Other interest expense - 72 159 2 -

Total interest expense 5,137 7,131 9,180 11,667 14,514

Net interest income 32,871 32,243 31,654 30,945 32,602

Provision for credit losses (2,000)1,781 1,325 2,200 7,036

Net interest income after provision for credit losses34,871 30,462 30,329 28,745 25,566

Noninterest income:

Wealth management revenues 9,895 9,206 8,954 8,605 8,689

Mortgage banking revenues 11,927 14,077 12,353 14,851 6,096

Card interchange fees 1,133 1,148 1,161 1,031 947

Service charges on deposit accounts 609 767 598 517 860

Loan related derivative income 467 173 1,264 99 2,455

Income from bank-owned life insurance 556 569 567 791 564

Other income 1,387 1,787 571 426 316

Total noninterest income 25,974 27,727 25,468 26,320 19,927

Noninterest expense:

Salaries and employee benefits 21,527 22,075 21,892 19,464 19,468

Outsourced services 3,200 2,950 3,160 2,784 3,000

Net occupancy 2,128 2,083 2,012 1,909 2,019

Equipment 994 1,025 934 895 977

Legal, audit and professional fees 597 1,014 1,252 659 822

FDIC deposit insurance costs 345 330 392 674 422

Advertising and promotion 222 640 384 186 259

Amortization of intangibles 226 226 228 230 230

Debt prepayment penalties 3,335 1,413 - - -

Other expenses 2,139 2,353 2,090 1,677 3,256

Total noninterest expense 34,713 34,109 32,344 28,478 30,453

Income before income taxes 26,132 24,080 23,453 26,587 15,040

Income tax expense 5,661 5,514 5,131 5,547 3,139

Net income $20,471$18,566$18,322$21,040$11,901



Net income available to common shareholders $20,415$18,524$18,285$21,000$11,869



Weighted average common shares outstanding:

Basic 17,275 17,264 17,260 17,257 17,345

Diluted 17,431 17,360 17,317 17,292 17,441

Earnings per common share:

Basic $1.18 $1.07 $1.06 $1.22 $0.68

Diluted $1.17 $1.07 $1.06 $1.21 $0.68



Cash dividends declared per share $0.52 $0.52 $0.51 $0.51 $0.51

Washington Trust Bancorp, Inc. and Subsidiaries

SELECTED FINANCIAL HIGHLIGHTS

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



Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, 2021 2020 2020 2020 2020

Share and Equity Related Data:

Book value per share $30.83 $30.94 $30.57 $30.14 $29.48

Tangible book value per share - Non-GAAP (1) $26.79 $26.87 $26.49 $26.04 $25.37

Market value per share $51.63 $44.80 $30.66 $32.75 $36.56

Shares issued at end of period 17,363 17,363 17,363 17,363 17,363

Shares outstanding at end of period 17,306 17,265 17,260 17,260 17,252



Capital Ratios (2):

Tier 1 risk-based capital 12.99 %12.61 %12.23 %11.95 %11.62 %

Total risk-based capital 13.85 %13.51 %13.09 %12.78 %12.42 %

Tier 1 leverage ratio 9.11 %8.95 %8.77 %8.42 %8.77 %

Common equity tier 1 12.43 %12.06 %11.69 %11.40 %11.08 %



Balance Sheet Ratios:

Equity to assets 9.33 %9.35 %9.02 %8.85 %9.05 %

Tangible equity to tangible assets - Non-GAAP (1) 8.21 %8.22 %7.91 %7.74 %7.89 %

Loans to deposits (3) 93.0 %96.2 %100.5 %104.6 %110.6 %





For the Three Months Ended

Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, 2021 2020 2020 2020 2020

Performance Ratios (4):

Net interest margin (5) 2.51 %2.39 %2.31 %2.31 %2.61 %

Return on average assets (net income divided by average assets) 1.45 %1.28 %1.24 %1.46 %0.89 %

Return on average tangible assets - Non-GAAP (1) 1.47 %1.30 %1.26 %1.48 %0.90 %

Return on average equity (net income available for common shareholders 15.55 %13.96 %13.99 %16.51 %9.49 % divided by average equity)

Return on average tangible equity - Non-GAAP (1) 17.91 %16.10 %16.19 %19.15 %11.05 %

Efficiency ratio (6) 59.0 %56.9 %56.6 %49.7 %58.0 %



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

(2) Estimated for March 31, 2021 and actuals for prior periods.

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

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

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

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

Washington Trust Bancorp, Inc. and Subsidiaries

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited; Dollars in thousands)



For the Three Months Ended

Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, 2021 2020 2020 2020 2020

Wealth Management Results

Wealth Management Revenues:

Asset-based revenues $9,583 $9,066 $8,786 $8,156 $8,355

Transaction-based revenues 312 140 168 449 334

Total wealth management revenues $9,895 $9,206 $8,954 $8,605 $8,689



Assets Under Administration (AUA):

Balance at beginning of period $6,866,737 $6,395,652 $6,138,845 $5,337,733 $6,235,801

Net investment appreciation (depreciation) & income 208,953 540,189 335,209 671,602 (772,735)

Net client asset (outflows) inflows (26,464) (69,104) (78,402) 129,510 (125,333)

Balance at end of period $7,049,226 $6,866,737 $6,395,652 $6,138,845 $5,337,733



Percentage of AUA that are managed assets 91% 91% 90% 90% 89%



Mortgage Banking Results

Mortgage Banking Revenues:

Realized gains on loan sales, net (1) $13,745 $13,394 $14,280 $10,646 $3,688

Unrealized (losses) gains, net (2) (1,888) 813 (1,555) 4,415 2,325

Loan servicing fee income, net (3) 70 (130) (372) (210) 83

Total mortgage banking revenues $11,927 $14,077 $12,353 $14,851 $6,096



Residential Mortgage Loan Originations:

Originations for retention in portfolio (4) $131,791 $134,002 $132,726 $126,894 $108,498

Originations for sale to secondary market (5) 309,325 312,226 377,137 299,321 183,222

Total mortgage loan originations $441,116 $446,228 $509,863 $426,215 $291,720



Residential Mortgage Loans Sold:

Sold with servicing rights retained $226,645 $240,104 $317,920 $246,945 $44,498

Sold with servicing rights released (5) 65,374 78,072 36,250 58,279 117,693

Total mortgage loans sold $292,019 $318,176 $354,170 $305,224 $162,191



(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 adjustments 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)



Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, 2021 2020 2020 2020 2020

Loans:

Commercial real estate (1) $1,618,540 $1,633,024 $1,665,745 $1,630,998 $1,618,020

Commercial & industrial 840,585 817,408 822,269 852,445 655,157

Total commercial 2,459,125 2,450,432 2,488,014 2,483,443 2,273,177



Residential real estate (2) 1,457,490 1,467,312 1,506,726 1,508,223 1,510,472



Home equity 256,799 259,185 268,551 277,632 287,134

Other 21,252 19,061 18,756 18,343 19,613

Total consumer 278,051 278,246 287,307 295,975 306,747

Total loans $4,194,666 $4,195,990 $4,282,047 $4,287,641 $4,090,396



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

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

March 31, 2021 December 31, 2020

Count Balance % of TotalCount Balance % of Total

Commercial Real Estate Portfolio Segmentation:

Multi-family dwelling 135 $506,813 31 % 137 $524,874 32 %

Retail 131 345,679 21 136 339,569 21

Office 74 292,087 18 73 290,756 18

Hospitality 39 168,094 10 40 157,720 10

Healthcare 15 116,779 7 15 109,321 7

Industrial and warehouse 23 77,537 5 28 97,055 6

Commercial mixed use 20 41,702 3 22 42,405 3

Other 37 69,849 5 38 71,324 3

Commercial real estate loans 474 $1,618,540100 % 489 $1,633,024100 %



Commercial & Industrial Portfolio Segmentation:

Healthcare and social assistance 299 $196,555 23 % 253 $200,217 24 %

Manufacturing 161 89,118 11 146 88,802 11

Owner occupied and other real estate 277 76,704 9 268 74,309 9

Accommodation and food services 359 69,380 8 271 47,020 6

Educational services 65 67,694 8 53 64,969 8

Retail 201 57,128 7 192 63,895 8

Professional, scientific and technical 277 39,957 5 265 39,295 5

Finance and insurance 90 31,185 4 106 26,244 3

Entertainment and recreation 112 30,241 4 91 29,415 4

Information 36 29,005 3 32 28,394 3

Transportation and warehousing 46 23,727 3 42 24,061 3

Public administration 24 19,700 2 26 23,319 3

Other 919 110,191 13 772 107,468 13

Commercial & industrial loans 2,866$840,585 100 % 2,517$817,408 100 %

Washington Trust Bancorp, Inc. and Subsidiaries

SUPPLEMENTAL LOAN PORTFOLIO INFORMATION

(Unaudited; Dollars in thousands)



March 31, 2021 April 16, 2021

% of % of CountBalance Outstanding CountBalance Outstanding Balance, excl Balance, excl PPP loans (1) PPP loans (1)

Loan Deferments by Portfolio:

Commercial Real Estate Deferments by Segment:

Hospitality 16 $69,406 41 % 12 $51,357 31 %

Retail 3 20,600 6 3 20,600 6

Healthcare 1 18,345 16 1 18,385 16

Office 1 1,833 1 1 1,833 1

Other 7 27,749 40 7 27,749 40

Subtotal - commercial real estate deferments 28 137,933 9 24 119,924 7

Commercial & Industrial Deferments by Segment:

Healthcare and social assistance 5 19,855 13 3 12,949 9

Transportation and warehousing 3 814 4 - - -

Entertainment and recreation 2 424 2 - - -

Owner occupied and other real estate 1 326 1 - - -

Accommodation and food services 1 304 1 1 304 1

Other 5 7,693 12 - - -

Subtotal - commercial & industrial deferments 17 29,416 5 4 13,253 2

Total commercial deferments 45 167,349 8 28 133,177 6

Residential real estate deferments 38 23,350 2 26 15,813 1

Consumer deferments 5 687 - 5 687 -

Total loan deferments 88 $191,3865 % 59 $149,6774 %



(1) Percent of respective outstanding portfolio segment balance, excluding PPP loans, as of March 31, 2021.

March 31, 2021 December 31, 2020

Count Balance % of TotalCount Balance % of Total

PPP Loans By Industry:

Accommodation and food services 299 $46,873 21 % 209 $23,678 12 %

Healthcare and social assistance 224 44,902 20 173 47,354 24

Manufacturing 100 22,564 10 89 23,321 12

Professional, scientific and technical 235 21,444 9 220 20,031 10

Retail 143 12,209 5 134 12,107 6

Educational services 43 11,243 5 32 9,681 5

Owner occupied and other real estate 123 9,658 4 115 9,241 5

Entertainment and recreation 85 4,797 2 61 3,386 2

Information 24 3,325 1 20 2,478 1

Transportation and warehousing 23 2,088 1 21 2,059 1

Finance and insurance 37 1,102 - 55 2,000 1

Public administration 5 421 - 4 483 -

Other 724 47,957 22 573 43,961 21

Total PPP loans (included in the commercial & industrial loan portfolio)2,065$228,583100 % 1,706$199,780100 %



Average PPP loan size $111 $117

Net unamortized fees on PPP loans $5,747 $3,893

Washington Trust Bancorp, Inc. and Subsidiaries

END OF PERIOD LOAN AND DEPOSIT COMPOSITION

(Unaudited; Dollars in thousands)



March 31, 2021 December 31, 2020

Balance % of TotalBalance % of Total

Commercial Real Estate Loans by Property Location:

Connecticut $641,757 40 % $649,919 40 %

Massachusetts 456,379 28 468,947 29

Rhode Island 435,779 27 431,133 26

Subtotal 1,533,915 95 1,549,999 95

All other states 84,625 5 83,025 5

Total commercial real estate loans $1,618,540100 % $1,633,024100 %



Residential Real Estate Loans by Property Location:

Massachusetts $985,925 68 % $994,800 68 %

Rhode Island 332,846 23 331,713 23

Connecticut 117,068 8 122,102 8

Subtotal 1,435,839 99 1,448,615 99

All other states 21,651 1 18,697 1

Total residential real estate loans $1,457,490100 % $1,467,312100 %

Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, 2021 2020 2020 2020 2020

Deposits:

Noninterest-bearing demand deposits$932,999 $832,287 $840,444 $815,770 $622,893

Interest-bearing demand deposits 171,571 174,290 170,198 158,343 178,391

NOW accounts 745,376 698,706 644,909 617,792 528,650

Money market accounts 950,413 910,167 877,536 834,954 784,893

Savings accounts 511,759 466,507 439,383 417,195 382,509

Time deposits (in-market) 701,524 704,855 729,058 728,801 776,992

In-market deposits 4,013,642 3,786,812 3,701,528 3,572,855 3,274,328

Wholesale brokered time deposits 535,500 591,541 584,165 528,581 431,986

Total deposits $4,549,142$4,378,353$4,285,693$4,101,436$3,706,314

Washington Trust Bancorp, Inc. and Subsidiaries

CREDIT & ASSET QUALITY DATA

(Unaudited; Dollars in thousands)



Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, 2021 2020 2020 2020 2020

Asset Quality Ratios:

Nonperforming assets to total assets 0.23 %0.23 %0.25 %0.27 %0.32 %

Nonaccrual loans to total loans 0.31 %0.31 %0.34 %0.37 %0.44 %

Total past due loans to total loans 0.26 %0.30 %0.24 %0.34 %0.40 %

Allowance for credit losses on loans to nonaccrual loans324.56 %334.21 %289.31 %258.73 %221.37 %

Allowance for credit losses on loans to total loans 1.00 %1.05 %1.00 %0.97 %0.97 %



Nonperforming Assets:

Commercial real estate $- $- $431 $431 $450

Commercial & industrial - - - - 290

Total commercial - - 431 431 740

Residential real estate 11,748 11,981 12,792 13,850 15,423

Home equity 1,147 1,128 1,429 1,648 1,667

Other consumer 88 88 88 88 88

Total consumer 1,235 1,216 1,517 1,736 1,755

Total nonaccrual loans 12,983 13,197 14,740 16,017 17,918

Other real estate owned - - - - 28

Total nonperforming assets $12,983 $13,197 $14,740 $16,017 $17,946



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

Commercial real estate $- $265 $431 $431 $1,275

Commercial & industrial 1 3 21 3 310

Total commercial 1 268 452 434 1,585

Residential real estate 9,661 10,339 8,081 12,499 12,293

Home equity 1,131 1,667 1,753 1,633 2,482

Other consumer 119 118 108 106 115

Total consumer 1,250 1,785 1,861 1,739 2,597

Total past due loans $10,912 $12,392 $10,394 $14,672 $16,475



Accruing loans 90 days or more past due $- $- $- $- $-

Nonaccrual loans included in past due loans $8,356 $8,521 $8,799 $10,553 $11,385



Troubled Debt Restructurings:

Accruing TDRs $12,358 $13,340 $5,709 $5,473 $373

Nonaccrual TDRs 1,935 2,345 2,894 998 490

Total TDRs $14,293 $15,685 $8,603 $6,471 $863

Washington Trust Bancorp, Inc. and Subsidiaries

CREDIT & ASSET QUALITY DATA

(Unaudited; Dollars in thousands)

For the Three Months Ended

Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, 2021 2020 2020 2020 2020

Nonaccrual Loan Activity:

Balance at beginning of period $13,197$14,740$16,017$17,918$17,408

Additions to nonaccrual status 734 707 971 237 1,729

Loans returned to accruing status (3) (1,112)(1,623)(154) (393)

Loans charged-off (64) (246) (111) (325) (635)

Loans transferred to other real estate owned - (285) - - (28)

Payments, payoffs and other changes (881) (607) (514) (1,659)(163)

Balance at end of period $12,983$13,197$14,740$16,017$17,918



Allowance for Credit Losses on Loans:

Balance at beginning of period $44,106$42,645$41,441$39,665$27,014

Adoption of CECL accounting standard (Topic 326) - - - - 6,501

Provision for credit losses on loans (1) (1,951)1,579 1,300 2,084 6,773

Charge-offs (64) (245) (111) (326) (635)

Recoveries 46 127 15 18 12

Balance at end of period $42,137$44,106$42,645$41,441$39,665



Allowance for Credit Losses on Unfunded Commitments:

Balance at beginning of period $2,382 $2,180 $2,155 $2,039 $293

Adoption of CECL accounting standard (Topic 326) - - - - 1,483

Provision for credit losses on unfunded commitments (1)(49) 202 25 116 263

Balance at end of period (2) $2,333 $2,382 $2,180 $2,155 $2,039

(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

Mar 31,Dec 31,Sep 30,Jun 30,Mar 31, 2021 2020 2020 2020 2020

Net Loan Charge-Offs (Recoveries):

Commercial real estate $- $133 $- $19 $153

Commercial & industrial 1 (12) - 284 290

Total commercial 1 121 - 303 443

Residential real estate 17 (20) 99 - -

Home equity (2) 9 (4) (5) 172

Other consumer 2 8 1 10 8

Total consumer - 17 (3) 5 180

Total $18 $118 $96 $308 $623



Net charge-offs to average loans (annualized)- % 0.01% 0.01% 0.03% 0.06%

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

Washington Trust Bancorp, Inc. and Subsidiaries

CONSOLIDATED AVERAGE BALANCE SHEETS (FTE Basis)

(Unaudited; Dollars in thousands)

For the Three Months Ended March 31, 2021 December 31, 2020 Quarter Change

Average Yield/Average Yield/Average Yield/ Balance Interest Balance Interest Balance Interest Rate Rate Rate

Assets:

Cash, federal funds sold and short-term $154,895 $33 0.09%$172,731 $35 0.08%($17,836)($2) 0.01 % investments

Mortgage loans held for sale 61,408 441 2.91 71,113 569 3.18 (9,705) (128) (0.27)

Taxable debt securities 915,864 3,242 1.44 892,112 3,869 1.73 23,752 (627) (0.29)

FHLB stock 28,867 133 1.87 33,320 414 4.94 (4,453) (281) (3.07)

Commercial real estate 1,625,859 11,359 2.83 1,658,809 11,905 2.86 (32,950) (546) (0.03)

Commercial & industrial 839,740 7,866 3.80 818,611 7,174 3.49 21,129 692 0.31

Total commercial 2,465,599 19,225 3.16 2,477,420 19,079 3.06 (11,821) 146 0.10

Residential real estate 1,454,323 12,817 3.57 1,475,699 13,206 3.56 (21,376) (389) 0.01

Home equity 257,733 2,122 3.34 264,811 2,229 3.35 (7,078) (107) (0.01)

Other 20,106 241 4.86 18,209 226 4.94 1,897 15 (0.08)

Total consumer 277,839 2,363 3.45 283,020 2,455 3.45 (5,181) (92) -

Total loans 4,197,761 34,405 3.32 4,236,139 34,740 3.26 (38,378) (335) 0.06

Total interest-earning assets 5,358,795 38,254 2.90 5,405,415 39,627 2.92 (46,620) (1,373)(0.02)

Noninterest-earning assets 353,136 362,848 (9,712)

Total assets $5,711,931 $5,768,263 ($56,332)

Liabilities and Shareholders' Equity:

Interest-bearing demand deposits $183,989 $96 0.21%$161,664 $81 0.20%$22,325 $15 0.01 %

NOW accounts 697,964 102 0.06 664,055 115 0.07 33,909 (13) (0.01)

Money market accounts 909,890 714 0.32 903,607 963 0.42 6,283 (249) (0.10)

Savings accounts 489,851 69 0.06 455,933 70 0.06 33,918 (1) -

Time deposits (in-market) 703,580 2,238 1.29 711,838 2,566 1.43 (8,258) (328) (0.14)

Total interest-bearing in-market deposits 2,985,274 3,219 0.44 2,897,097 3,795 0.52 88,177 (576) (0.08)

Wholesale brokered time deposits 579,149 444 0.31 589,272 837 0.57 (10,123) (393) (0.26)

Total interest-bearing deposits 3,564,423 3,663 0.42 3,486,369 4,632 0.53 78,054 (969) (0.11)

FHLB advances 542,684 1,380 1.03 634,081 2,305 1.45 (91,397) (925) (0.42)

Junior subordinated debentures 22,681 94 1.68 22,681 122 2.14 - (28) (0.46)

PPPLF borrowings - - - 81,858 72 0.35 (81,858) (72) (0.35)

Total interest-bearing liabilities 4,129,788 5,137 0.50 4,224,989 7,131 0.67 (95,201) (1,994)(0.17)

Noninterest-bearing demand deposits 890,628 838,713 51,915

Other liabilities 159,244 176,592 (17,348)

Shareholders' equity 532,271 527,969 4,302

Total liabilities and shareholders' equity$5,711,931 $5,768,263 ($56,332)

Net interest income (FTE) $33,117 $32,496 $621

Interest rate spread 2.40% 2.25% 0.15 %

Net interest margin 2.51% 2.39% 0.12 %

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

For the Three Months Mar 31, Dec 31,QuarterEnded 2021 2020 Change

Commercial loans $246 $253 ($7)

Total $246 $253 ($7)

Washington Trust Bancorp, Inc. and Subsidiaries

SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures

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



Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, 2021 2020 2020 2020 2020

Tangible Book Value per Share:

Total shareholders' equity, as reported $533,599 $534,195 $527,693 $520,163 $508,597

Less:

Goodwill 63,909 63,909 63,909 63,909 63,909

Identifiable intangible assets, net 6,079 6,305 6,530 6,759 6,988

Total tangible shareholders' equity $463,611 $463,981 $457,254 $449,495 $437,700



Shares outstanding, as reported 17,306 17,265 17,260 17,260 17,252



Book value per share - GAAP $30.83 $30.94 $30.57 $30.14 $29.48

Tangible book value per share - Non-GAAP $26.79 $26.87 $26.49 $26.04 $25.37



Tangible Equity to Tangible Assets:

Total tangible shareholders' equity $463,611 $463,981 $457,254 $449,495 $437,700



Total assets, as reported $5,719,389 $5,713,169 $5,849,792 $5,876,960 $5,620,979

Less:

Goodwill 63,909 63,909 63,909 63,909 63,909

Identifiable intangible assets, net 6,079 6,305 6,530 6,759 6,988

Total tangible assets $5,649,401 $5,642,955 $5,779,353 $5,806,292 $5,550,082



Equity to assets - GAAP 9.33 %9.35 %9.02 %8.85 %9.05 %

Tangible equity to tangible assets - Non-GAAP 8.21 %8.22 %7.91 %7.74 %7.89 %





For the Three Months Ended

Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, 2021 2020 2020 2020 2020

Return on Average Tangible Assets:

Net income, as reported $20,471 $18,566 $18,322 $21,040 $11,901



Total average assets, as reported $5,711,931 $5,768,263 $5,864,449 $5,789,692 $5,394,948

Less average balances of:

Goodwill 63,909 63,909 63,909 63,909 63,909

Identifiable intangible assets, net 6,189 6,414 6,641 6,871 7,100

Total average tangible assets $5,641,833 $5,697,940 $5,793,899 $5,718,912 $5,323,939



Return on average assets - GAAP 1.45 %1.28 %1.24 %1.46 %0.89 %

Return on average tangible assets - Non-GAAP 1.47 %1.30 %1.26 %1.48 %0.90 %



Return on Average Tangible Equity:

Net income available to common shareholders, as reported$20,415 $18,524 $18,285 $21,000 $11,869



Total average equity, as reported $532,271 $527,969 $519,785 $511,751 $503,124

Less average balances of:

Goodwill 63,909 63,909 63,909 63,909 63,909

Identifiable intangible assets, net 6,189 6,414 6,641 6,871 7,100

Total average tangible equity $462,173 $457,646 $449,235 $440,971 $432,115



Return on average equity - GAAP 15.55 %13.96 %13.99 %16.51 %9.49 %

Return on average tangible equity - Non-GAAP 17.91 %16.10 %16.19 %19.15 %11.05 %

Category: Earnings

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SOURCE Washington Trust Bancorp, Inc.