EX-99.1 2 exhibit99.htm EXHIBIT 99.1 FOR FORM 8-K FOR Q3 2009 EARNINGS PRESS RELEASE DATED OCTOBER 20, 2009 exhibit99.htm
Exhibit 99.1
 
[Graphic Omitted]
NASDAQ: WASH
 
Contact:  Elizabeth B. Eckel
Senior Vice President, Marketing
Telephone:  (401) 348-1309
E-mail:  ebeckel@washtrust.com
Date:  October 20, 2009
FOR IMMEDIATE RELEASE


Washington Trust Announces Third Quarter 2009 Earnings

Westerly, Rhode Island…Washington Trust Bancorp, Inc. (NASDAQ Global Select; symbol: WASH), parent company of The Washington Trust Company, today announced third quarter 2009 net income of $4.9 million, or 31 cents per diluted share, compared to third quarter 2008 net income of $6.0 million, or 44 cents per diluted share.  For the nine months ended September 30, 2009, net income amounted to $11.3 million, or 71 cents per diluted share, compared to $18.0 million, or $1.32 per diluted share, for the same period in 2008.

Earnings in the third quarter of 2009 were influenced by the following:
·  
Impairment losses of $467 thousand were charged to earnings in the third quarter of 2009 for an investment security deemed to be other-than-temporarily impaired at September 30, 2009.  Impairment losses of $982 thousand were recognized in the third quarter of 2008.
·  
The loan loss provision charged to earnings amounted to $1.8 million for the third quarter of 2009, compared to $1.1 million for the third quarter of 2008.  The provision was based on management’s assessment of economic and credit conditions as well as growth in the loan portfolio.
·  
No dividend was received from the Federal Home Loan Bank of Boston (“FHLBB”) in the third quarter of 2009.  Dividend income on Washington Trust’s investment in FHLBB stock totaled $292 thousand in the third quarter of 2008.
·  
Federal Deposit Insurance Corp. (“FDIC”) deposit insurance premiums for the third quarter of 2009 were up by $543 thousand from the third quarter a year earlier, reflecting higher assessment rates.

Selected Third Quarter 2009 developments:
·  
Wealth management revenues for the third quarter of 2009 increased $95 thousand, or 2 percent, from the second quarter of 2009.  Included in second quarter amounts were seasonal tax preparation fee revenues of $339 thousand.  Assets under administration increased by $287 million in the third quarter of 2009 and were less than 1 percent below the balance at September 30, 2008.

-M O R E-
 
 
 

Washington Trust
Page Two, October 20, 2009

·  
Net gains on loan sales and commissions on loans originated for others for the third quarter of 2009 were up by $352 thousand from the same quarter a year ago, due to strong residential mortgage refinancing and sales activity.
·  
Commercial loan growth continued at a good pace, amounting to $29 million, or 3 percent, in the third quarter of 2009.  Commercial loans have increased $96 million, or 11 percent, from the balance at December 31, 2008.
·  
Reflecting continued weak economic conditions, nonperforming assets amounted to $27.9 million, or 0.97% of total assets, at September 30, 2009 up from $24.8 million, or 0.85% of total assets, at June 30, 2009.  Nonperforming assets were $8.8 million, or 0.30% of total assets, at December 31, 2008.

John C. Warren, Washington Trust Bancorp, Inc.’s Chairman and Chief Executive Officer, stated “We are pleased with Washington Trust’s third quarter performance in these challenging times.  It is a testament to our sound business model and strong corporate brand that we were able to outperform market expectations during a period of continued economic uncertainty.”

RESULTS OF OPERATIONS
Net interest income for the third quarter of 2009 increased $465 thousand, or 3 percent, from the second quarter of 2009 and remained essentially flat compared to the third quarter a year ago.  On a year-to-date basis, net interest income increased $1.0 million, or 2 percent, from 2008.  No dividend has been received from the FHLBB in 2009.  Dividend income on Washington Trust’s investment in FHLBB stock totaled $292 thousand and $1.1 million for the three and nine months ended September 30, 2008, respectively.

The net interest margin (annualized tax-equivalent net interest income as a percentage of average earning assets) for the third quarter of 2009 was 2.51%, up 6 basis points from the second quarter of 2009 primarily due to a 21 basis point decline in the effective rate paid on interest-bearing deposits.  The quarterly net interest margin was 11 basis points lower than the third quarter a year ago.  For the nine months ended September 30, 2009, the net interest margin was 2.45%, down 19 basis points from the same period a year earlier.  The quarter and year-to-date decreases in net interest margin from 2008 reflect the elimination of FHLBB dividend income and margin compression, in general, on core deposit rates following the Federal Reserve’s actions to reduce short-term interest rates in late 2008 and early 2009, as well as the impact of higher levels of nonaccrual loans in 2009 compared to 2008.
- M O R E -
 
 
 

Washington Trust
Page Three, October 20, 2009

Total noninterest income for the third quarter of 2009 decreased $1.3 million, or 10 percent, from the second quarter of 2009 and increased $447 thousand, or 4 percent, from the third quarter of 2008.  Included in noninterest income in the third quarter of 2009 were impairment losses of $467 thousand for an investment security deemed to be other-than-temporarily impaired at September 30, 2009.  There were no impairment losses recognized in the second quarter of 2009 while impairment losses of $982 thousand were recognized in earnings the third quarter of 2008.  Excluding other-than-temporary impairment losses, noninterest income for the third quarter of 2009 declined by $799 thousand, or 6 percent, from the second quarter of 2009 and remained essentially flat compared to the third quarter of 2008.  The linked-quarter decline in noninterest income, on this basis, was largely due to declines in net gains on loan sales and commissions on loans originated for others.  On a year-to-date basis, total noninterest income decreased by $2.5 million, or 8 percent, from 2008.  For the nine months ended September 30, 2009 and 2008, impairment losses recognized in earnings totaled $2.5 million and $3.0 million, respectively.  Excluding other-than-temporary net impairment losses, noninterest income, on a year-to-date basis, declined by $3.1 million, or 8 percent, from 2008 reflecting declines in wealth management revenues and lower net realized gains on securities, which were partially offset by higher net gains on loan sales and commissions on loans originated for others.

Wealth management revenues for the third quarter of 2009 increased $95 thousand, or 2 percent, from the second quarter of 2009 and decreased $1.1 million, or 16 percent, from the third quarter a year ago.  Second quarter 2009 amounts included seasonal tax preparation fee revenues of $339 thousand.  For the nine months ended September 30, 2009, wealth management revenues were down $4.7 million, or 21 percent, from the same period in 2008.  Wealth management revenues are largely dependent on the value of assets under administration and are closely tied to the performance of the financial markets.  Assets under administration totaled $3.603 billion at September 30, 2009, up $287 million, or 9 percent, from June 30, 2009 and up $456 million, or 14 percent, from December 31, 2008.  Assets under administration were down $21 million, or 1 percent, from September 30, 2008.  The increase in assets under administration in 2009 was primarily due to higher valuations in the financial markets.

Net gains on loan sales and commissions on loans originated for others for the third quarter of 2009 were down by $961 thousand from the second quarter of 2009 and up by $352 thousand from the third quarter a year ago.  On a year-to-date basis, net gains on loan sales and commissions on loans originated for others increased by $2.0 million from the same period in 2008, reflecting strong residential mortgage refinancing and sales activity in 2009.  Also included in noninterest income were net realized gains on securities of $314 thousand and $1.9 million for the nine months ended September 30, 2009 and 2008, respectively.


- M O R E -

 
 
 

Washington Trust
Page Four, October 20, 2009

Noninterest expenses for the third quarter of 2009 decreased by $1.1 million, or 6 percent, from the second quarter of 2009 and increased by $721 thousand, or 4 percent, from the third quarter of 2008.  FDIC deposit insurance costs for the third quarter of 2009 decreased by $1.3 million from the second quarter of 2009 and increased by $543 thousand from the third quarter a year earlier.  A special FDIC assessment of $1.35 million was recorded in the second quarter of 2009.  On a year-to-date basis, total noninterest expenses increased by $4.2 million, or 8 percent, from 2008, which included a $2.8 million increase in FDIC deposit insurance costs.  In addition to the special assessment, the year over year increase in FDIC deposit insurance costs also reflects higher assessment rates.

Income tax expense amounted to $1.9 million and $4.4 million for the three and nine months ended September 30, 2009, respectively, as compared to $1.6 million and $7.2 million for the same periods in 2008.  The effective tax rate for the third quarter and first nine months of 2009 was 27.4% and 28.1%, respectively, as compared to 21.2% and 28.5% for the same periods a year earlier.

ASSET QUALITY
Nonperforming assets (nonaccrual loans, nonaccrual investment securities and property acquired through foreclosure) amounted to $27.9 million, or 0.97% of total assets, at September 30, 2009, compared to $24.8 million, or 0.85% of total assets, at June 30, 2009.  Nonperforming assets were $8.8 million, or 0.30% of total assets, at December 31, 2008.  Nonaccrual loans totaled $25.2 million at September 30, 2009, up $2.5 million in the third quarter of 2009.  Included in this increase was one commercial real estate loan for $2.0 million, which is secured by office buildings.  Total nonaccrual loans were $7.8 million at December 31, 2008.  Nonaccrual investment securities totaled $1.5 million at September 30, 2009, compared to $633 thousand at December 31, 2008.  Property acquired through foreclosure or repossession amounted to $1.2 million at September 30, 2009, compared to $392 thousand at December 31, 2008.  The balance at September 30, 2009 consisted of one residential property.

At September 30, 2009, total 30 day+ delinquencies amounted to $30.0 million, or 1.57% of total loans, up $4.4 million in the third quarter of 2009 and up $12.4 million from the balance at December 31, 2008, with the largest increase in the commercial loan category.  Commercial loan delinquencies amounted to $22.2 million, or 2.27% of total commercial loans, at September 30, 2009, up $4.6 million in the third quarter of 2009 and up $10.6 million from the balance at December 31, 2008.


- M O R E -

 
 
 

Washington Trust
Page Five, October 20, 2009

Total residential mortgage and consumer loan 30 day+ delinquencies amounted to $7.9 million, or 0.84% of these loans, at September 30, 2009, down $207 thousand in the third quarter of 2009 and up $1.8 million from the balance at December 31, 2008.  Total 90 day+ delinquencies in the residential mortgage and consumer loan categories amounted to $4.2 million (13 loans) and $300 thousand (6 loans), respectively, at September 30, 2009.  Comparable amounts at June 30, 2009 were $3.8 million (10 loans) and $2 thousand (2 loans), respectively.  At December 31, 2008, these amounts were $973 thousand (5 loans) and $77 thousand (2 loans), respectively.  Washington Trust has never offered a subprime residential loan program.

The loan loss provision charged to earnings amounted to $1.8 million for the third quarter of 2009, compared to $3.0 million for the second quarter of 2009 and $1.1 million for the third quarter of 2008.  For the nine months ended September 30, 2009 and 2008, the loan loss provision totaled $6.5 million and $3.0 million, respectively.  The provision for loan losses was based on management’s assessment of economic and credit conditions, with particular emphasis on commercial and commercial real estate categories, as well as growth in the loan portfolio.  Net charge-offs amounted to $1.4 million in the third quarter of 2009, approximately equal to the second quarter of 2009.  Net charge-offs were $432 thousand in the third quarter of 2008.  For the nine months ended September 30, 2009 and 2008, net charge-offs totaled $3.8 million and $596 thousand, respectively.

We believe that the declining credit quality trend experienced in 2009 is primarily related to weakened national and regional economic conditions.  These conditions, including high unemployment levels, may continue for the next few quarters.  Management will continue to assess the adequacy of the allowance for loan losses in accordance with its established policies.  The allowance for loan losses was $26.4 million, or 1.39% of total loans, at September 30, 2009, compared to $23.7 million, or 1.29% of total loans, at December 31, 2008 and $22.6 million, or 1.28% of total loans, at September 30, 2008.

FINANCIAL CONDITION
Total loans grew by $15 million in the third quarter of 2009, with growth of $49 million in the commercial real estate portfolio, offset in part by a $20 million decline in other commercial loans and a $14 million decrease in the residential loan portfolio.  During the first nine months of 2009, total loans grew by $67 million, or 4 percent, with commercial real estate loan growth of $95 million, or 21 percent.

The investment securities portfolio amounted to $732.6 million at September 30, 2009, down by $44 million

– M O R E –

 
 
 

Washington Trust
Page Six, October 20, 2009

in the third quarter of 2009 and down by $134 million from the balance at December 31, 2008.  The largest component of the investment securities portfolio is mortgage-backed securities, all of which are issued by U.S. Government agencies or U.S. Government-sponsored enterprises.  At September 30, 2009, the net unrealized gain position on the investment securities portfolio was $16.2 million, including gross unrealized losses of $17.0 million.  Approximately 92% of the gross unrealized losses on the investment securities portfolio were concentrated in variable rate trust preferred securities issued by financial services companies.  During the third quarter of 2009, net impairment losses of $467 thousand were charged to earnings on a pooled trust preferred debt security deemed to be other-than-temporarily impaired at September 30, 2009.

Total deposits amounted to $1.894 billion at September 30, 2009, up by $10 million from June 30, 2009 and by $103 million, or 6 percent, from December 31, 2008.  Excluding out-of-market brokered certificates of deposit, in-market deposits grew by $59 million, or 3 percent, during the third quarter of 2009.  During the first nine months of 2009, in-market deposits increased by $189 million, or 12 percent, which included $40 million in wealth management client money market deposits previously held in outside money market funds.

FHLBB advances totaled $637 million at September 30, 2009, down by $52 million from June 30, 2009 and down by $193 million from December 31, 2008.

DIVIDENDS DECLARED
The Board of Directors declared a quarterly dividend of 21 cents per share for the quarter ended September 30, 2009.  The dividend was paid on October 13, 2009 to shareholders of record on September 30, 2009.

CONFERENCE CALL
Washington Trust Chairman and Chief Executive Officer John C. Warren, and David V. Devault, Executive Vice President, Chief Financial Officer and Secretary, will host a conference call on Wednesday, October 21, 2009 at 8:30 a.m. (Eastern Time) to discuss Washington Trust’s third quarter results.  This call is being webcast by SNL IR Solutions and can be accessed through the Investor Relations section of the Washington Trust website, www.washtrust.com, or may be accessed by calling (800) 860-2442, or (412) 858-4600 for international callers.  A replay of the call will be posted in this same location on the website shortly after the conclusion of the call.  To listen to a replay of the conference call, dial (877) 344-7529 and enter Conference ID #: 434184.  The replay will be available until 9:00 a.m. on October 30, 2009.
– M O R E –
 
 
 

Washington Trust
Page Seven, October 20, 2009

BACKGROUND
Washington Trust Bancorp, Inc. is the parent of The Washington Trust Company, a Rhode Island state-chartered bank founded in 1800.  Washington Trust offers personal banking, business banking and wealth management services through its offices in Rhode Island, Massachusetts and southeastern Connecticut.  Washington Trust Bancorp, Inc.’s common stock trades on the NASDAQ Global SelectÒ Market under the symbol “WASH.”  Investor information is available on the Washington Trust’s web site: www.washtrust.com.

FORWARD-LOOKING STATEMENTS
This press release contains certain statements that may be considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  All statements, other than statements of historical facts, including statements regarding our strategy, effectiveness of investment programs, evaluations of future interest rate trends and liquidity, expectations as to growth in assets, deposits and results of operations, success of acquisitions, future operations, market position, financial position, and prospects, plans, goals and objectives of management are forward-looking statements.  The actual results, performance or achievements of Washington Trust could differ materially from those projected in the forward-looking statements as a result of, among other factors, changes in general national, regional or international economic conditions or conditions affecting the banking or financial services industries or financial capital markets, volatility and disruption in national and international financial markets, government intervention in the U.S. financial system, reductions in net interest income resulting from interest rate volatility as well as changes in the balance and mix of loans and deposits, reductions in the market value of wealth management assets under administration, changes in the value of securities and other assets, reductions in loan demand, changes in loan collectibility, default and charge-off rates, changes in the size and nature of the 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, 2008, as filed with the Securities and Exchange Commission, 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 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
Reported amounts are presented in accordance with U.S. generally accepted accounting principles ("GAAP").  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.




 
 
 
Washington Trust Bancorp, Inc. and Subsidiaries
  
CONSOLIDATED BALANCE SHEETS
  
   
(unaudited)
  
   
September 30,
    
December 31,
  
(Dollars in thousands)
  
2009
    
2008
  
Assets:
            
Cash and noninterest-bearing balances due from banks
   $ 28,354     $ 11,644  
Interest-bearing balances due from banks
     15,254       41,780  
Federal funds sold and securities purchased under resale agreements
     –       2,942  
Other short-term investments
     4,398       1,824  
Mortgage loans held for sale
     7,099       2,543  
Securities available for sale, at fair value;
                
amortized cost $716,406 in 2009 and $869,433 in 2008
     732,646       866,219  
Federal Home Loan Bank stock, at cost
     42,008       42,008  
Loans:
                
Commercial and other
     976,322       880,313  
Residential real estate
     604,573       642,052  
Consumer
     325,670       316,789  
Total loans
     1,906,565       1,839,154  
Less allowance for loan losses
     26,431       23,725  
Net loans
     1,880,134       1,815,429  
Premises and equipment, net
     26,212       25,102  
Accrued interest receivable
     9,761       11,036  
Investment in bank-owned life insurance
     44,505       43,163  
Goodwill
     58,114       58,114  
Identifiable intangible assets, net
     9,233       10,152  
Property acquired through foreclosure or repossession, net
     1,186       392  
Other assets
     29,161       33,118  
Total assets
   $ 2,888,065     $ 2,965,466  
                 
Liabilities:
                
Deposits:
                
Demand deposits
   $ 198,712     $ 172,771  
NOW accounts
     185,772       171,306  
Money market accounts
     376,100       305,879  
Savings accounts
     190,707       173,485  
Time deposits
     942,879       967,427  
Total deposits
     1,894,170       1,790,868  
Dividends payable
     3,370       3,351  
Federal Home Loan Bank advances
     636,660       829,626  
Junior subordinated debentures
     32,991       32,991  
Other borrowings
     20,628       26,743  
Accrued expenses and other liabilities
     48,100       46,776  
Total liabilities
     2,635,919       2,730,355  
                 
Shareholders’ Equity:
                
Common stock of $.0625 par value; authorized 30,000,000 shares;
                
issued 16,045,829 shares in 2009 and 16,018,868 shares in 2008
     1,003       1,001  
Paid-in capital
     82,320       82,095  
Retained earnings
     167,135       164,679  
Accumulated other comprehensive income (loss)
     2,189       (10,458 )
Treasury stock, at cost; 19,185 shares in 2009 and 84,191 in 2008
     (501 )     (2,206 )
Total shareholders’ equity
     252,146       235,111  
Total liabilities and shareholders’ equity
   $ 2,888,065     $ 2,965,466  
 
 
 
Washington Trust Bancorp, Inc. and Subsidiaries
  
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
  
   
(Dollars and shares in thousands, except per share amounts)
  
Three Months
    
Nine Months
  
Periods ended September 30,
  
2009
    
2008
    
2009
    
2008
  
Interest income:
                        
Interest and fees on loans
   $ 24,303     $ 25,520     $ 72,589     $ 74,896  
Interest on securities:
                                
Taxable
     7,028       8,504       23,065       25,222  
Nontaxable
     781       778       2,339       2,344  
Dividends on corporate stock and Federal Home Loan Bank stock
     63       407       190       1,516  
Other interest income
     13       128       39       318  
Total interest income
     32,188       35,337       98,222       104,296  
Interest expense:
                                
Deposits
     7,577       9,884       25,605       31,031  
Federal Home Loan Bank advances
     7,094       8,011       21,433       23,104  
Junior subordinated debentures
     545       524       1,503       1,371  
Other interest expense
     246       274       735       863  
Total interest expense
     15,462       18,693       49,276       56,369  
Net interest income
     16,726       16,644       48,946       47,927  
Provision for loan losses
     1,800       1,100       6,500       2,950  
Net interest income after provision for loan losses
     14,926       15,544       42,446       44,977  
Noninterest income:
                                
Wealth management services:
                                
Trust and investment advisory fees
     4,717       5,238       13,241       15,901  
Mutual fund fees
     1,089       1,383       2,997       4,169  
Financial planning, commissions and other service fees
     243       570       1,178       2,029  
Wealth management services
     6,049       7,191       17,416       22,099  
Service charges on deposit accounts
     1,257       1,215       3,571       3,583  
Merchant processing fees
     2,619       2,221       6,054       5,407  
Income from bank-owned life insurance
     451       452       1,342       1,352  
Net gains on loan sales and commissions on loans originated for others
     591       239       3,187       1,163  
Net realized gains on securities
     –       –       314       1,909  
Net unrealized gains (losses) on interest rate swap contracts
     92       (24 )     493       121  
Other income
     445       278       1,329       1,148  
Noninterest income, excluding other-than-temporary impairment losses
     11,504       11,572       33,706       36,782  
Total other-than-temporary impairment losses on securities
     (2,293 )     (982 )     (6,537 )     (2,989 )
Portion of loss recognized in other comprehensive income (before taxes)
     1,826       –       4,079       –  
Net impairment losses recognized in earnings
     (467 )     (982 )     (2,458 )     (2,989 )
Total noninterest income
     11,037       10,590       31,248       33,793  
Noninterest expense:
                                
Salaries and employee benefits
     10,416       10,580       31,250       31,334  
Net occupancy
     1,232       1,123       3,580       3,325  
Equipment
     916       956       2,927       2,877  
Merchant processing costs
     2,213       1,857       5,136       4,523  
Outsourced services
     683       700       2,037       2,078  
Legal, audit and professional fees
     546       626       1,885       1,599  
FDIC deposit insurance costs
     808       265       3,602       772  
Advertising and promotion
     422       376       1,214       1,229  
Amortization of intangibles
     303       320       919       972  
Other expenses
     1,653       1,668       5,361       4,958  
Total noninterest expense
     19,192       18,471       57,911       53,667  
Income before income taxes
     6,771       7,663       15,783       25,103  
Income tax expense
     1,858       1,623       4,435       7,152  
Net income
   $ 4,913     $ 6,040     $ 11,348     $ 17,951  
                                 
Weighted average shares outstanding – basic
     16,016.8       13,409.5       15,981.3       13,383.0  
Weighted average shares outstanding – diluted
     16,074.5       13,588.3       16,029.5       13,564.5  
Per share information:
                                
Basic earnings per share
   $ 0.31     $ 0.45     $ 0.71     $ 1.34  
Diluted earnings per share
   $ 0.31     $ 0.44     $ 0.71     $ 1.32  
Cash dividends declared per share
   $ 0.21     $ 0.21     $ 0.63     $ 0.62  
 
 
 
Washington Trust Bancorp, Inc. and Subsidiaries
  
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
  
   
   
At or for the Quarters Ended
  
   
Sept. 30,
    
June 30,
    
Mar 31,
    
Dec. 31,
    
Sept. 30,
  
(Dollars in thousands, except per share amounts)
  
2009
    
2009
    
2009
    
2008
    
2008
  
Financial Data
                              
Total assets
   $ 2,888,065     $ 2,919,808     $ 2,947,110     $ 2,965,466     $ 2,767,882  
Total loans
     1,906,565       1,891,254       1,865,954       1,839,154       1,769,041  
Total securities
     732,646       776,435       833,959       866,219       753,456  
Total deposits
     1,894,170       1,883,720       1,884,324       1,790,868       1,737,251  
Total shareholders’ equity
     252,146       242,293       238,727       235,111       184,762  
Net interest income
     16,726       16,261       15,959       17,586       16,644  
Provision for loan losses
     1,800       3,000       1,700       1,850       1,100  
Noninterest income, excluding other-than-temporary
                                        
impairment losses
     11,504       12,303       9,899       9,675       11,572  
Net impairment losses recognized in earnings
     (467 )     -       (1,991 )     (2,948 )     (982 )
Noninterest expenses
     19,192       20,329       18,390       18,075       18,471  
Income tax expense
     1,858       1,470       1,107       167       1,623  
Net income
     4,913       3,765       2,670       4,221       6,040  
                                         
Share Data
                                        
Basic earnings per share
   $ 0.31     $ 0.24     $ 0.17     $ 0.27     $ 0.45  
Diluted earnings per share
   $ 0.31     $ 0.23     $ 0.17     $ 0.27     $ 0.44  
Dividends declared per share
   $ 0.21     $ 0.21     $ 0.21     $ 0.21     $ 0.21  
Book value per share
   $ 15.73     $ 15.14     $ 14.97     $ 14.75     $ 13.76  
Tangible book value per share – Non-GAAP*
   $ 11.53     $ 10.91     $ 10.71     $ 10.47     $ 8.80  
Market value per share
   $ 17.52     $ 17.83     $ 16.25     $ 19.75     $ 26.60  
                                         
Shares outstanding at end of period
     16,026.6       16,001.9       15,949.9       15,934.7       13,423.2  
Weighted average shares outstanding – basic
     16,016.8       15,983.6       15,942.7       15,765.4       13,409.5  
Weighted average shares outstanding – diluted
     16,074.5       16,037.4       15,997.8       15,871.6       13,588.3  
                                         
Key Ratios
                                        
Return on average assets
     0.68 %     0.52 %     0.36 %     0.59 %     0.88 %
Return on average tangible assets – Non-GAAP*
     0.69 %     0.53 %     0.37 %     0.60 %     0.90 %
Return on average equity
     7.94 %     6.22 %     4.50 %     7.31 %     12.94 %
Return on average tangible equity – Non-GAAP*
     10.91 %     8.63 %     6.30 %     10.25 %     19.25 %
                                         
Capital Ratios
                                        
Tier 1 risk-based capital
     11.06 % (i)     10.98 % (i)     11.00 %     11.29 %     9.20 %
Total risk-based capital
     12.31 % (i)     12.23 % (i)     12.25 %     12.54 %     10.45 %
Tier 1 leverage ratio
     7.68 % (i)     7.53 % (i)     7.35 %     7.53 %     6.10 %
Equity to assets
     8.73 %     8.30 %     8.10 %     7.93 %     6.68 %
Tangible equity to tangible assets – Non-GAAP*
     6.55 %     6.12 %     5.93 %     5.76 %     4.38 %
(i) – estimated
                                        
                                         
Wealth Management Assets Under Administration
                                        
Balance at beginning of period
   $ 3,316,308     $ 2,957,918     $ 3,147,649     $ 3,624,502     $ 3,923,595  
Net investment (depreciation) appreciation & income
     295,257       313,999       (150,855 )     (466,461 )     (322,953 )
Net customer cash flows
     (8,141 )     44,391       (38,876 )     (10,392 )     23,860  
Balance at end of period
   $ 3,603,424     $ 3,316,308     $ 2,957,918     $ 3,147,649     $ 3,624,502  


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

 
 
 
Washington Trust Bancorp, Inc. and Subsidiaries
    
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
    
     
   
Nine Months Ended
    
   
Sept. 30,
    
Sept. 30,
(Dollars in thousands, except per share amounts)
  
2009
    
2008
Financial Data
          
Net interest income
   $ 48,946     $ 47,927  
Provision for loan losses
     6,500       2,950  
Noninterest income, excluding other-than-temporary impairment losses
     33,706       36,782  
Net impairment losses recognized in earnings
     (2,458 )     (2,989 )
Noninterest expenses
     57,911       53,667  
Income tax expense
     4,435       7,152  
Net income
     11,348       17,951  
                   
Share Data
                  
Basic earnings per share
   $ 0.71     $ 1.34  
Diluted earnings per share
   $ 0.71     $ 1.32  
Dividends declared per share
   $ 0.63     $ 0.62  
                   
Weighted average shares outstanding – basic
     15,981.3       13,383.0  
Weighted average shares outstanding – diluted
     16,029.5       13,564.5  
                   
Key Ratios
                  
Return on average assets
     0.52 %     0.90 %
Return on average tangible assets – Non-GAAP*
     0.53 %     0.92 %
Return on average equity
     6.24 %     12.68 %
Return on average tangible equity – Non-GAAP*
     8.66 %     18.80 %
                   
Asset Quality Data
                  
Allowance for Loan Losses
                  
Balance at beginning of period
   $ 23,725     $ 20,277  
Provision charged to earnings
     6,500       2,950  
Charge-offs
     (3,947 )     (818 )
Recoveries
     153       222  
Balance at end of period
   $ 26,431     $ 22,631  
                   
Net Loan Charge-Offs
                  
Commercial:
                  
Mortgages
   $ 1,965     $ (41 )
Construction and development
     -       -  
Other
     1,309       472  
Residential:
                  
Mortgages
     360       42  
Homeowner construction
     -       -  
Consumer
     160       123  
Total
   $ 3,794     $ 596  
                   
Net charge-offs to average loans (annualized)
     0.27 %     0.05 %
                   
Wealth Management Assets Under Administration
                  
Balance at beginning of period
   $ 3,147,649     $ 4,014,352  
Net investment (depreciation) appreciation & income
     458,401       (512,983 )
Net customer cash flows
     (2,626 )     123,133  
Balance at end of period
   $ 3,603,424     $ 3,624,502  


 
* - See the section labeled “Supplemental Information – Non-GAAP Financial Measures” at the end of this document.
 
 
 
 
Washington Trust Bancorp, Inc. and Subsidiaries
  
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
  
   
   
For the Quarters Ended
  
   
Sept. 30,
    
June 30,
    
Mar. 31,
    
Dec. 31,
    
Sept. 30,
  
(Dollars in thousands, except per share amounts)
  
2009
    
2009
    
2009
    
2008
    
2008
  
Average Yields (taxable equivalent basis)
                              
Assets:
                              
Residential real estate loans
     5.22 %     5.38 %     5.47 %     5.50 %     5.54 %
Commercial and other loans
     5.26 %     5.37 %     5.47 %     6.19 %     6.28 %
Consumer loans
     4.15 %     4.19 %     4.29 %     5.00 %     5.38 %
Total loans
     5.06 %     5.17 %     5.27 %     5.74 %     5.86 %
Cash, federal funds sold
                                        
and other short-term investments
     0.28 %     0.27 %     0.26 %     0.30 %     1.63 %
FHLBB stock
     0.00 %     0.00 %     0.00 %     2.50 %     2.76 %
Taxable debt securities
     4.19 %     4.21 %     4.45 %     4.87 %     4.85 %
Nontaxable debt securities
     5.73 %     5.80 %     5.86 %     5.64 %     5.63 %
Corporate stocks
     7.02 %     5.40 %     0.83 %     8.08 %     7.97 %
Total securities
     4.38 %     4.37 %     4.26 %     4.97 %     4.97 %
Total interest-earning assets
     4.76 %     4.83 %     4.93 %     5.41 %     5.49 %
Liabilities:
                                        
NOW accounts
     0.19 %     0.17 %     0.18 %     0.17 %     0.18 %
Money market accounts
     0.91 %     0.98 %     1.55 %     1.91 %     1.79 %
Savings accounts
     0.25 %     0.26 %     0.40 %     0.48 %     0.47 %
Time deposits
     2.74 %     3.06 %     3.30 %     3.51 %     3.68 %
FHLBB advances
     4.18 %     4.11 %     3.81 %     4.05 %     4.20 %
Junior subordinated debentures
     6.56 %     5.82 %     5.89 %     6.13 %     6.31 %
Other
     4.71 %     4.70 %     4.22 %     4.20 %     4.68 %
Total interest-bearing liabilities
     2.54 %     2.66 %     2.83 %     3.09 %     3.16 %
                                         
Interest rate spread (taxable equivalent basis)
     2.22 %     2.17 %     2.10 %     2.32 %     2.33 %
Net interest margin (taxable equivalent basis)
     2.51 %     2.45 %     2.39 %     2.65 %     2.62 %


 
 
 
Washington Trust Bancorp, Inc. and Subsidiaries
  
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
  
       
   
Period End Balances At
  
(Dollars in thousands)
  
9/30/2009
    
6/30/2009
    
3/31/2009
    
12/31/2008
    
9/30/2008
  
Loans
                              
Commercial:
Commercial mortgages
   $ 484,478     $ 439,182     $ 412,817     $ 407,904     $ 394,085  
 
Construction and development
     68,069       64,504       49,215       49,599       51,592  
 
Other
     423,775       443,552       446,251       422,810       396,161  
 
Total commercial
     976,322       947,238       908,283       880,313       841,838  
Residential:
Mortgages
     595,270       606,324       621,141       626,663       604,205  
 
Homeowner construction
     9,303       12,535       15,996       15,389       14,124  
 
Total residential real estate
     604,573       618,859       637,137       642,052       618,329  
Consumer:
Home equity lines
     200,512       195,612       183,058       170,662       158,837  
 
Home equity loans
     66,439       70,806       79,881       89,297       93,690  
 
Other
     58,719       58,739       57,595       56,830       56,347  
 
Total consumer
     325,670       325,157       320,534       316,789       308,874  
 
Total loans
   $ 1,906,565     $ 1,891,254     $ 1,865,954     $ 1,839,154     $ 1,769,041  

(Dollars in thousands)
      
   
At September 30, 2009
  
Commercial Real Estate Loans by Property Location
  
Balance
    
% of Total
  
Rhode Island, Connecticut, Massachusetts
   $ 496,711       89.9 %
New York, New Jersey, Pennsylvania
     40,109       7.3 %
New Hampshire, Maine
     14,013       2.5 %
Other
     1,714       0.3 %
Total commercial real estate loans (1)
   $ 552,547       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.

(Dollars in thousands)
            
   
At September 30, 2009
  
Residential Mortgages by Property Location
  
Balance
    
% of Total
  
Rhode Island, Connecticut, Massachusetts
   $ 549,833       91.0 %
New York, Virginia, New Jersey, Maryland, Pennsylvania, District of Columbia
     21,496       3.6 %
Ohio, Michigan
     15,078       2.5 %
California, Washington, Oregon
     8,661       1.4 %
Colorado, Texas, New Mexico, Utah
     5,052       0.8 %
Georgia
     2,524       0.4 %
New Hampshire, Vermont
     1,350       0.2 %
Other
     579       0.1 %
Total residential mortgages
   $ 604,573       100.0 %

       
   
Period End Balances At
  
(Dollars in thousands)
  
9/30/2009
    
6/30/2009
    
3/31/2009
    
12/31/2008
    
9/30/2008
  
Deposits
                              
Demand deposits
   $ 198,712     $ 187,830     $ 170,975     $ 172,771     $ 187,839  
NOW accounts
     185,772       187,014       179,903       171,306       164,829  
Money market accounts
     376,100       356,726       377,603       305,879       298,106  
Savings accounts
     190,707       192,484       186,152       173,485       171,856  
Time deposits
     942,879       959,666       969,691       967,427       914,621  
Total deposits
   $ 1,894,170     $ 1,883,720     $ 1,884,324     $ 1,790,868     $ 1,737,251  
                                         
Out-of-market brokered certificates of deposits
                                        
included in time deposits
   $ 102,383     $ 151,175     $ 162,463     $ 187,987     $ 187,925  
                                         
In-market deposits, excluding out of market
                                        
brokered certificates of deposit
   $ 1,791,787     $ 1,732,545     $ 1,721,861     $ 1,602,881     $ 1,549,326  
 
 
 

Washington Trust Bancorp, Inc. and Subsidiaries
  
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
  
   
(Dollars in thousands)
  
At September 30, 2009
  
   
Amortized
    
Unrealized
    
Unrealized
    
Fair
  
Securities Available for Sale
  
Cost (1)
    
Gains
    
Losses
    
Value
  
U.S. Treasury obligations and obligations of
                        
U.S. government-sponsored agencies
   $ 41,555     $ 4,115     $ −     $ 45,670  
Mortgage-backed securities issued by U.S. government
                                
agencies and U.S. government-sponsored enterprises
     540,673       22,716       (1,158 )     562,231  
States and political subdivisions
     80,664       4,680       (27 )     85,317  
Trust preferred securities:
                                
Individual name issuers
     30,554       −       (11,415 )     19,139  
Collateralized debt obligations
     5,675       −       (4,185 )     1,490  
Corporate bonds
     13,273       1,519       −       14,792  
Common stocks
     658       28       −       686  
Perpetual preferred stocks
     3,354       161       (194 )     3,321  
Total securities available for sale
   $ 716,406     $ 33,219     $ (16,979 )   $ 732,646  
                                 
(1)  
Net of other-than-temporary impairment losses recognized in earnings, other than such noncredit-related amounts reversed on January 1, 2009 in accordance with FASB Staff Position No. FAS 115-2 and FAS 124-2.

(Dollars in thousands)
  
At December 31, 2008
  
   
Amortized
    
Unrealized
    
Unrealized
    
Fair
  
Securities Available for Sale
  
Cost (1)
    
Gains
    
Losses
    
Value
  
U.S. Treasury obligations and obligations of
                        
U.S. government-sponsored agencies
   $ 59,022     $ 5,355     $ −     $ 64,377  
Mortgage-backed securities issued by U.S. government
                                
agencies and U.S. government-sponsored enterprises
     675,159       12,543       (4,083 )     683,619  
States and political subdivisions
     80,680       1,348       (815 )     81,213  
Trust preferred securities:
                                
Individual name issuers
     30,525       −       (13,732 )     16,793  
Collateralized debt obligations
     5,633       −       (3,693 )     1,940  
Corporate bonds
     12,973       603       −       13,576  
Common stocks
     942       50       −       992  
Perpetual preferred stocks
     4,499       2       (792 )     3,709  
Total securities available for sale
   $ 869,433     $ 19,901     $ (23,115 )   $ 866,219  
                                 
(1)  
Net of other-than-temporary impairment losses recognized in earnings.
 
 
 
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)

The following is supplemental information concerning trust preferred investment securities:

 
At September 30, 2009
 
Credit Rating
Amortized
Unrealized
Fair
(Dollars in thousands)
Moody’s
S&P (b)
Cost (a)
Gains
Losses
Value
Trust preferred securities:
            
Individual name issuers (c):
            
JPMorgan Chase & Co.
A1
BBB+
$9,711
$ –
$(3,152)
$6,559
Bank of America Corporation
Baa3
B
5,724
–
(2,067)
3,657
Wells Fargo & Company
A3
A-
5,097
–
(1,891)
3,206
SunTrust Banks, Inc.
Baa2
BB+
4,163
–
(1,989)
2,174
Northern Trust Corporation
A2
A-
1,979
–
(886)
1,093
State Street Corporation
A2
BBB+
1,967
–
(337)
1,630
Huntington Bancshares Incorporated
Baa3
B
1,913
–
(1,093)
820
Total individual name issuers
    
30,554
–
(11,415)
19,139
             
Collateralized debt obligations (CDO):
            
Tropic CDO 1, tranche A4L (d)
Caa3
  
3,650
–
(2,359)
1,291
Preferred Term Securities
[PreTSL] XXV, tranche C1 (e)
Ca
  
2,025
–
(1,826)
199
Total collateralized debt obligations
    
5,675
–
(4,185)
1,490
Total trust preferred securities
    
$36,229
$ –
$(15,600)
$20,629

  (a)
Net of other-than-temporary impairment losses recognized in earnings, other than such noncredit-related amounts reversed on January 1, 2009 in accordance with FASB Staff Position No. FAS 115-2 and FAS 124-2.
  (b)
Standard & Poor’s (“S&P”).
  (c)
Consists of various series of trust preferred securities issued by seven corporate financial institutions.
  (d)
This investment security is not rated by S&P.  As of September 30, 2009, 14 of the 38 pooled institutions have invoked their original contractual right to defer interest payments.  This investment security was placed on nonaccrual status as of March 31, 2009.
  (e)
This investment security is not rated by S&P. As of September 30, 2009, 18 of the 73 pooled institutions have invoked their original contractual right to defer interest payments.  In the fourth quarter of 2008, the tranche held by Washington Trust began deferring interest payments until future periods.  This investment security was placed on nonaccrual status as of December 31, 2008.  During the quarter ended September 30, 2009, an adverse change occurred in the expected cash flows for this instrument indicating that, based on cash flow forecasts with regard to timing of deferrals and potential future recovery of deferred payments, default rates, and other matters, Washington Trust will not receive all contractual amounts due under the instrument and will not recover the entire cost basis of the security.  The Corporation had concluded that these conditions warrant a conclusion of other-than-temporary impairment for this holding as of September 30, 2009 and recognized net impairment losses of $467 thousand in earnings in the third quarter of 2009.

The following is supplemental information concerning common and perpetual preferred stock investment securities:

   
At September 30, 2009
  
   
Amortized
    
Unrealized
    
Fair
  
(Dollars in thousands)
  
Cost (a)
    
Gains
    
Losses
    
Value
  
Common and perpetual preferred stocks
                        
Common stock
   $ 658     $ 28     $ –     $ 686  
Perpetual preferred stocks:
                                
Financials
     2,354       161       (69 )     2,446  
Utilities
     1,000       –       (125 )     875  
Total perpetual preferred stocks
     3,354       161       (194 )     3,321  
Total common and perpetual preferred stocks
   $ 4,012     $ 189     $ (194 )   $ 4,007  
                                 
  (a)
Net of other-than-temporary impairment losses recognized in earnings in accordance with FASB Staff Position No. FAS 115-2 and FAS 124-2.
 
 
 

Washington Trust Bancorp, Inc. and Subsidiaries
  
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
  
   
(Dollars in thousands)
  
For the Quarters Ended
  
   
Sept. 30,
    
June 30,
    
Mar. 31,
    
Dec. 31,
    
Sept. 30,
  
Asset Quality Data
  
2009
    
2009
    
2009
    
2008
    
2008
  
Allowance for Loan Losses
                              
Balance at beginning of period
   $ 26,051     $ 24,498     $ 23,725     $ 22,631     $ 21,963  
Provision charged to earnings
     1,800       3,000       1,700       1,850       1,100  
Charge-offs
     (1,438 )     (1,483 )     (1,026 )     (776 )     (492 )
Recoveries
     18       36       99       20       60  
Balance at end of period
   $ 26,431     $ 26,051     $ 24,498     $ 23,725     $ 22,631  
                                         
Net Loan Charge-Offs
                                        
Commercial:
                                        
Mortgages
   $ 710     $ 794     $ 461     $ 185     $ –  
Construction and development
     –       –       –       –       –  
Other
     445       515       349       497       386  
Residential:
                                        
Mortgages
     201       127       32       62       9  
Homeowner construction
     –       –       –       –       –  
Consumer
     64       11       85       12       37  
Total
   $ 1,420     $ 1,447     $ 927     $ 756     $ 432  
                                         
                                         



 
 
 

Washington Trust Bancorp, Inc. and Subsidiaries
  
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
  
   
(Dollars in thousands)
      
   
Sept. 30,
    
June 30,
    
Mar. 31,
    
Dec. 31,
    
Sept. 30,
  
Asset Quality Data
  
2009
    
2009
    
2009
    
2008
    
2008
  
Past Due Loans
                              
Loans 30–59 Days Past Due
                              
Commercial real estate
   $ 4,699     $ 2,635     $ 2,027     $ 3,466     $ 2,036  
Other commercial loans
     1,496       2,255       3,537       2,024       1,524  
Residential mortgages
     2,164       1,820       3,000       3,113       1,619  
Consumer loans
     593       1,042       419       76       77  
Loans 30–59 days past due
   $ 8,952     $ 7,752     $ 8,983     $ 8,679     $ 5,256  
                                         
Loans 60–89 Days Past Due
                                        
Commercial real estate
   $ 400     $ 3,537     $ 194     $ 6     $ 143  
Other commercial loans
     609       514       461       785       114  
Residential mortgages
     569       1,324       165       1,452       296  
Consumer loans
     39       44       –       401       –  
Loans 60-89 days past due
   $ 1,617     $ 5,419     $ 820     $ 2,644     $ 553  
                                         
Loans 90 Days or more Past Due
                                        
Commercial real estate
   $ 7,972     $ 2,760     $ 4,269     $ 1,826     $ 1,870  
Other commercial loans
     6,982       5,861       4,453       3,408       3,264  
Residential mortgages
     4,186       3,826       3,575       973       188  
Consumer loans
     300       2       7       77       48  
Loans 90 days or more past due
   $ 19,440     $ 12,449     $ 12,304     $ 6,284     $ 5,370  
                                         
Total Past Due Loans
                                        
Commercial real estate
   $ 13,071     $ 8,932     $ 6,490     $ 5,298     $ 4,049  
Other commercial loans
     9,087       8,630       8,451       6,217       4,902  
Residential mortgages
     6,919       6,970       6,740       5,538       2,103  
Consumer loans
     932       1,088       426       554       125  
Total past due loans
   $ 30,009     $ 25,620     $ 22,107     $ 17,607     $ 11,179  
                                         



 
 
 

Washington Trust Bancorp, Inc. and Subsidiaries
  
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
  
   
(Dollars in thousands)
      
   
Sept. 30,
    
June 30,
    
Mar. 31,
    
Dec. 31,
    
Sept. 30,
  
Asset Quality Data
  
2009
    
2009
    
2009
    
2008
    
2008
  
Nonperforming Assets
                              
Commercial mortgages
   $ 8,147     $ 5,995     $ 4,384     $ 1,942     $ 1,986  
Commercial construction and development
     –       –       –       –       –  
Other commercial
     10,903       10,948       6,433       3,845       3,555  
Residential real estate mortgages
     5,313       5,168       4,057       1,754       962  
Consumer
     850       556       564       236       208  
Total nonaccrual loans
   $ 25,213     $ 22,667     $ 15,438     $ 7,777     $ 6,711  
Nonaccrual investment securities
     1,490       1,881       1,928       633       –  
Property acquired through foreclosure or repossession
     1,186       236       170       392       113  
Total nonperforming assets
   $ 27,889     $ 24,784     $ 17,536     $ 8,802     $ 6,824  
                                         
Total past due loans to total loans
     1.57 %     1.35 %     1.18 %     0.96 %     0.63 %
Nonperforming assets to total assets
     0.97 %     0.85 %     0.60 %     0.30 %     0.25 %
Nonaccrual loans to total loans
     1.32 %     1.20 %     0.83 %     0.42 %     0.38 %
Allowance for loan losses to nonaccrual loans
     104.83 %     114.93 %     158.69 %     305.07 %     337.22 %
Allowance for loan losses to total loans
     1.39 %     1.38 %     1.31 %     1.29 %     1.28 %
                                         
                                         
Troubled Debt Restructured Loans
                                        
Accruing troubled debt restructured loans
                                        
Commercial mortgages
   $ 2,107     $ 1,576     $ –     $ –     $ –  
Other commercial
     375       323       59       –       –  
Residential real estate mortgages
     3,520       2,190       262       263       264  
Consumer
     822       780       479       607       216  
Accruing troubled debt restructured loans
     6,824       4,869       800       870       480  
Nonaccrual troubled debt restructured loans
                                        
Other commercial
     353       136       86       –       –  
Residential real estate mortgages
     336       367                          
Consumer
     7       –       7       –       –  
Nonaccrual troubled debt restructured loans
     696       503       93       –       –  
Total troubled debt restructured loans
   $ 7,520     $ 5,372     $ 893     $ 870     $ 480  
                                         

 
 
 
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 September 30,
  
2009
    
2008
  
   
Average
          
Yield/
    
Average
          
Yield/
  
(Dollars in thousands)
  
Balance
    
Interest
    
Rate
    
Balance
    
Interest
    
Rate
  
Assets
                    
 
              
Residential real estate loans
   $ 616,825     $ 8,113       5.22 %   $ 619,288     $ 8,629       5.54 %
Commercial and other loans
     969,215       12,850       5.26 %     812,749       12,834       6.28 %
Consumer loans
     324,306       3,390       4.15 %     303,745       4,106       5.38 %
Total loans
     1,910,346       24,353       5.06 %     1,735,782       25,569       5.86 %
Cash, federal funds sold
                                                
and other short-term investments
     18,962       13       0.28 %     31,213       128       1.63 %
FHLBB stock
     42,008       –       – %     42,008       292       2.76 %
                                                 
Taxable debt securities
     664,923       7,028       4.19 %     696,815       8,504       4.85 %
Nontaxable debt securities
     80,667       1,166       5.73 %     80,833       1,144       5.63 %
Corporate stocks
     5,027       89       7.02 %     7,822       156       7.97 %
Total securities
     750,617       8,283       4.38 %     785,470       9,804       4.97 %
Total interest-earning assets
     2,721,933       32,649       4.76 %     2,594,473       35,793       5.49 %
Non interest-earning assets
     189,177                       160,296                  
Total assets
   $ 2,911,110                     $ 2,754,769                  
Liabilities and Shareholders’ Equity
                                                
NOW accounts
   $ 184,253     $ 88       0.19 %   $ 166,379     $ 77       0.18 %
Money market accounts
     366,712       840       0.91 %     303,675       1,363       1.79 %
Savings accounts
     194,116       122       0.25 %     173,654       203       0.47 %
Time deposits
     944,874       6,527       2.74 %     891,803       8,241       3.68 %
FHLBB advances
     672,746       7,094       4.18 %     758,858       8,011       4.20 %
Junior subordinated debentures
     32,991       545       6.56 %     32,991       524       6.31 %
Other
     20,742       246       4.71 %     23,251       274       4.68 %
Total interest-bearing liabilities
     2,416,434       15,462       2.54 %     2,350,611       18,693       3.16 %
Demand deposits
     201,678                       187,238                  
Other liabilities
     45,413                       30,256                  
Shareholders’ equity
     247,585                       186,664                  
Total liabilities and shareholders’ equity
   $ 2,911,110                     $ 2,754,769                  
Net interest income (FTE)
           $ 17,187                     $ 17,100          
Interest rate spread
                     2.22 %                     2.33 %
Net interest margin
                     2.51 %                     2.62 %


Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:
(Dollars in thousands)
            
             
Three months ended September 30,
  
2009
    
2008
  
Commercial and other loans
   $ 50     $ 49  
Nontaxable debt securities
     385       366  
Corporate stocks
     26       41  
Total
   $ 461     $ 456  



 
 
 


Washington Trust Bancorp, Inc. and Subsidiaries
  
CONSOLIDATED AVERAGE BALANCE SHEETS (unaudited)
  
       
Nine months ended September 30,
  
2009
    
2008
  
   
Average
          
Yield/
    
Average
          
Yield/
  
(Dollars in thousands)
  
Balance
    
Interest
    
Rate
    
Balance
    
Interest
    
Rate
  
Assets
                    
 
              
Residential real estate loans
   $ 633,365     $ 25,375       5.36 %   $ 606,422     $ 25,183       5.55 %
Commercial and other loans
     927,931       37,231       5.36 %     756,636       37,190       6.57 %
Consumer loans
     322,078       10,135       4.21 %     298,136       12,662       5.67 %
Total loans
     1,883,374       72,741       5.16 %     1,661,194       75,035       6.03 %
Cash, federal funds sold
                                                
and other short-term investments
     19,520       39       0.27 %     21,506       318       1.97 %
FHLBB stock
     42,008       –       – %     38,367       1,081       3.76 %
                                                 
Taxable debt securities
     719,398       23,065       4.29 %     684,371       25,222       4.92 %
Nontaxable debt securities
     80,672       3,498       5.80 %     81,168       3,440       5.66 %
Corporate stocks
     5,707       262       6.16 %     10,257       598       7.80 %
Total securities
     805,777       26,825       4.45 %     775,796       29,260       5.04 %
Total interest-earning assets
     2,750,679       99,605       4.84 %     2,496,863       105,694       5.65 %
Non interest-earning assets
     182,160                       164,921                  
Total assets
   $ 2,932,839                     $ 2,661,784                  
Liabilities and Shareholders’ Equity
                                                
NOW accounts
   $ 178,470     $ 242       0.18 %   $ 165,551     $ 236       0.19 %
Money market accounts
     369,453       3,154       1.14 %     315,499       5,314       2.25 %
Savings accounts
     186,881       422       0.30 %     174,425       853       0.65 %
Time deposits
     960,450       21,787       3.03 %     829,028       24,628       3.97 %
FHLBB advances
     711,575       21,433       4.03 %     728,920       23,104       4.23 %
Junior subordinated debentures
     32,991       1,503       6.09 %     29,341       1,371       6.24 %
Other
     21,678       735       4.53 %     25,496       863       4.52 %
Total interest-bearing liabilities
     2,461,498       49,276       2.68 %     2,268,260       56,369       3.32 %
Demand deposits
     184,590                       174,973                  
Other liabilities
     44,255                       29,801                  
Shareholders’ equity
     242,496                       188,750                  
Total liabilities and shareholders’ equity
   $ 2,932,839                     $ 2,661,784                  
Net interest income (FTE)
           $ 50,329                     $ 49,325          
Interest rate spread
                     2.16 %                     2.33 %
Net interest margin
                     2.45 %                     2.64 %


Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:
(Dollars in thousands)
            
             
Nine months ended September 30,
  
2009
    
2008
  
Commercial and other loans
   $ 152     $ 139  
Nontaxable debt securities
     1,159       1,096  
Corporate stocks
     72       163  
Total
   $ 1,383     $ 1,398  
 
 
 
Washington Trust Bancorp, Inc. and Subsidiaries
  
SUPPLEMENTAL INFORMATION – Non-GAAP Financial Measures (unaudited)
  
   
   
At of for the Quarters Ended
  
   
Sept. 30,
    
June 30,
    
Mar. 31,
    
Dec. 31,
    
Sept. 30,
  
(Dollars in thousands, except per share amounts)
  
2009
    
2009
    
2009
    
2008
    
2008
  
Calculation of tangible book value per share
                              
Total shareholders’ equity at end of period
   $ 252,146     $ 242,293     $ 238,727     $ 235,111     $ 184,762  
Less:
                                        
Goodwill
     58,114       58,114       58,114       58,114       56,117  
Identifiable intangible assets, net
     9,233       9,536       9,844       10,152       10,461  
Total tangible shareholders’ equity at end of period
   $ 184,799     $ 174,643     $ 170,769     $ 166,845     $ 118,184  
                                         
Shares outstanding at end of period
     16,026.6       16,001.9       15,949.9       15,934.7       13,423.2  
                                         
Book value per share – GAAP
   $ 15.73     $ 15.14     $ 14.97     $ 14.75     $ 13.76  
Tangible book value per share – Non-GAAP
   $ 11.53     $ 10.91     $ 10.71     $ 10.47     $ 8.80  
                                         
Calculation of tangible equity to tangible assets
                                        
Total tangible shareholders’ equity at end of period
   $ 184,799     $ 174,643     $ 170,769     $ 166,845     $ 118,184  
                                         
Total assets at end of period
   $ 2,888,065     $ 2,919,808     $ 2,947,110     $ 2,965,466     $ 2,767,882  
Less:
                                        
Goodwill
     58,114       58,114       58,114       58,114       56,117  
Identifiable intangible assets, net
     9,233       9,536       9,844       10,152       10,461  
Total tangible assets at end of period
   $ 2,820,718     $ 2,852,158     $ 2,879,152     $ 2,897,200     $ 2,701,304  
                                         
Equity to assets - GAAP
     8.73 %     8.30 %     8.10 %     7.93 %     6.68 %
Tangible equity to tangible assets – Non-GAAP
     6.55 %     6.12 %     5.93 %     5.76 %     4.38 %
                                         
Calculation of return on average tangible assets
                                        
Net income
   $ 4,913     $ 3,765     $ 2,670     $ 4,221     $ 6,040  
                                         
Total average assets
   $ 2,911,110     $ 2,924,002     $ 2,963,985     $ 2,867,086     $ 2,754,769  
Less:
                                        
Average goodwill
     58,114       58,114       58,114       56,139       50,540  
Average identifiable intangible assets, net
     9,379       9,686       9,995       10,302       10,615  
Total average tangible assets
   $ 2,843,617     $ 2,856,202     $ 2,895,876     $ 2,800,645     $ 2,693,614  
                                         
Return on average assets - GAAP
     0.68 %     0.52 %     0.36 %     0.59 %     0.88 %
Return on average tangible assets – Non-GAAP
     0.69 %     0.53 %     0.37 %     0.60 %     0.90 %
                                         
Calculation of return on average tangible equity
                                        
Net income
   $ 4,913     $ 3,765     $ 2,670     $ 4,221     $ 6,040  
                                         
Total average shareholders’ equity
   $ 247,585     $ 242,270     $ 237,522     $ 231,101     $ 186,664  
Less:
                                        
Average goodwill
     58,114       58,114       58,114       56,139       50,540  
Average identifiable intangible assets, net
     9,379       9,686       9,995       10,302       10,615  
Total average tangible shareholders’ equity
   $ 180,092     $ 174,470     $ 169,413     $ 164,660     $ 125,509  
                                         
Return on average shareholders’ equity - GAAP
     7.94 %     6.22 %     4.50 %     7.31 %     12.94 %
Return on average tangible shareholders’ equity –
  Non-GAAP
     10.91 %     8.63 %     6.30 %     10.25 %     19.25 %
 
 
 

Washington Trust Bancorp, Inc. and Subsidiaries
  
SUPPLEMENTAL INFORMATION – Non-GAAP Financial Measures (unaudited)
  
   
   
Nine Months Ended
  
   
Sept. 30,
    
Sept. 30,
  
(Dollars in thousands)
  
2009
    
2008
  
Calculation of return on average tangible assets
            
Net income
   $ 11,348     $ 17,951  
                 
Total average assets
   $ 2,932,839     $ 2,661,784  
Less:
                
Average goodwill
     58,114       50,499  
Average identifiable intangible assets, net
     9,684       10,939  
Total average tangible assets
   $ 2,865,041     $ 2,600,346  
                 
Return on average assets - GAAP
     0.52 %     0.90 %
Return on average tangible assets – Non-GAAP
     0.53 %     0.92 %
                 
                 
Calculation of return on average tangible equity
                
Net income
   $ 11,348     $ 17,951  
                 
Total average shareholders’ equity
   $ 242,496     $ 188,750  
Less:
                
Average goodwill
     58,114       50,499  
Average identifiable intangible assets, net
     9,684       10,939  
Total average tangible shareholders’ equity
   $ 174,698     $ 127,312  
                 
Return on average shareholders’ equity - GAAP
     6.24 %     12.68 %
Return on average tangible shareholders’ equity –   Non-GAAP
     8.66 %     18.80 %