
(Dollars in thousands)	September 30, 2020	December 31, 2019
Commercial:


Commercial real estate (1)	$1,665,745	$1,547,572
Commercial & industrial (2)	822,269	585,289
Total commercial	2,488,014	2,132,861
Residential Real Estate:


Residential real estate (3)	1,506,726	1,449,090
Consumer:


Home equity	268,551	290,874
Other (4)	18,756	20,174
Total consumer	287,307	311,048
Total loans (5)	$4,282,047	$3,892,999

(1)Commercial real estate (“CRE”) consists of commercial mortgages primarily secured by income-producing property, as well as construction and development loans. Construction and development loans are made to businesses for land development or the on-site construction of industrial, commercial, or residential buildings.

(5)Includes net unamortized loan origination fees of $670 thousand at September 30, 2020 and net unamortized loan origination costs of $5.3 million, at December 31, 2019 and net unamortized premiums on purchased loans of $919 thousand and $995 thousand, respectively, at September 30, 2020 and December 31, 2019.

A significant portion of our loan portfolio is concentrated among borrowers in southern New England and a substantial portion of the portfolio is collateralized by real estate in this area. The ability of single family residential and consumer borrowers to honor their repayment commitments is generally dependent on the level of overall economic activity within the market area and real estate values. The ability of commercial borrowers to honor their repayment commitments is dependent on the general economy as well as the health of the real estate economic sector in the Corporation’s market area.


(Dollars in thousands)	Days Past Due
September 30, 2020	30-59	60-89	Over 90	Total Past Due	Current	Total Loans
Commercial:


Commercial real estate	$—	$—	$431	$431	$1,665,314	$1,665,745
Commercial & industrial	21	—	—	21	822,248	822,269
Total commercial	21	—	431	452	2,487,562	2,488,014
Residential Real Estate:


Residential real estate	2,689	890	4,502	8,081	1,498,645	1,506,726
Consumer:


Home equity	969	166	618	1,753	266,798	268,551
Other	18	2	88	108	18,648	18,756
Total consumer	987	168	706	1,861	285,446	287,307
Total loans	$3,697	$1,058	$5,639	$10,394	$4,271,653	$4,282,047


(Dollars in thousands)	Days Past Due
December 31, 2019	30-59	60-89	Over 90	Total Past Due	Current	Total Loans
Commercial:


Commercial real estate	$830	$—	$603	$1,433	$1,546,139	$1,547,572
Commercial & industrial	1	—	—	1	585,288	585,289
Total commercial	831	—	603	1,434	2,131,427	2,132,861
Residential Real Estate:


Residential real estate	4,574	2,155	4,700	11,429	1,437,661	1,449,090
Consumer:


Home equity	971	729	996	2,696	288,178	290,874
Other	42	—	88	130	20,044	20,174
Total consumer	1,013	729	1,084	2,826	308,222	311,048
Total loans	$6,418	$2,884	$6,387	$15,689	$3,877,310	$3,892,999

Loans, with the exception of certain well-secured loans that are in the process of collection, are placed on nonaccrual status and interest recognition is suspended when such loans are 90 days or more overdue with respect to principal and/or interest, or sooner if considered appropriate by management. Well-secured loans are permitted to remain on accrual status provided that full collection of principal and interest is assured and the loan is in the process of collection. Loans are also placed on nonaccrual status when, in the opinion of management, full collection of principal and interest is doubtful. When loans are placed on nonaccrual status, interest previously accrued but not collected is reversed against current period income. Subsequent interest payments received on nonaccrual loans are applied to the outstanding principal balance of the loan or recognized as interest income depending on management’s assessment of the ultimate collectibility of the loan. Loans are removed from nonaccrual status when they have been current as to principal and interest for a period of time, the borrower has demonstrated an ability to comply with repayment terms, and when, in management’s opinion, the loans are considered to be fully collectible.


(Dollars in thousands)	Sep 30, 2020	Dec 31, 2019
Commercial:
Commercial real estate	$431	$603
Commercial & industrial	—	657
Total commercial	431	1,260
Residential Real Estate:
Residential real estate	12,792	14,297
Consumer:
Home equity	1,429	1,763
Other	88	88
Total consumer	1,517	1,851
Total nonaccrual loans	$14,740	$17,408
Accruing loans 90 days or more past due	$—	$—


(Dollars in thousands)	Interest Income Recognized

Periods ended September 30, 2020	Three Months	Nine Months
Commercial:
Commercial real estate	$—	$—
Commercial & industrial	—	—
Total commercial	—	—
Residential Real Estate:
Residential real estate	70	341
Consumer:
Home equity	11	51
Other	—	—
Total consumer	11	51
Total	$81	$392

A loan that has been modified or renewed is considered to be a troubled debt restructuring (“TDR”) when two conditions are met: 1) the borrower is experiencing financial difficulty and 2) concessions are made for the borrower’s benefit that would not otherwise be considered for a borrower or a transaction with similar credit risk characteristics. These concessions may include modifications of the terms of the debt such as deferral of payments, extension of maturity, reduction of principal

balance, reduction of the stated interest rate other than normal market rate adjustments, or a combination of these concessions. Debt may be bifurcated with separate terms for each tranche of the restructured debt. Restructuring of a loan in lieu of aggressively enforcing the collection of the loan may benefit the Corporation by increasing the ultimate probability of collection.

The Corporation's ACL reflects the effects of a TDR when management reasonably expects at the reporting date that a TDR will be executed with an individual borrower. A TDR is considered reasonably expected no later than the point when management concludes that modification is the best course of action and it is at least reasonably possible that the troubled borrower will accept some form of concession to avoid a default. Reasonably expected TDRs and executed TDRs are evaluated individually to determine the required ACL. Troubled debt restructurings that did not involve a below-market rate concession and perform in accordance with their modified contractual terms for a reasonable period of time may be included in the Corporation’s existing pools based on the underlying risk characteristics of the loan to measure the ACL.

TDRs are classified as accruing or non-accruing based on management’s assessment of the collectibility of the loan. Loans that are already on nonaccrual status at the time of the restructuring generally remain on nonaccrual status for approximately six months before management considers such loans for return to accruing status. Accruing restructured loans are placed into nonaccrual status if and when the borrower fails to comply with the restructured terms and management deems it unlikely that the borrower will return to a status of compliance in the near term and full collection of principal and interest is in doubt.

TDRs are reported as such for at least one year from the date of the restructuring. In years after the restructuring, TDRs are removed from this classification if the restructuring did not involve a below-market rate concession and the loan is performing in accordance with their modified contractual terms for a reasonable period of time.

The Corporation has elected to account for eligible loan modifications under Section 4013 of the CARES Act. To be eligible, a loan modification must be (1) related to the COVID-19 pandemic; (2) executed on a loan that was not more than 30 days past due as of December 31, 2019; and (3) executed between March 1, 2020, and the earlier of (A) 60 days after the date of termination of the national emergency declared by the President on March 13, 2020 concerning the COVID-19 outbreak (the “national emergency”) or (B) December 31, 2020. Eligible loan modifications are not required to be classified as TDRs and will not be reported as past due provided that they are performing in accordance with the modified terms. Interest income will continue to be recognized in accordance with GAAP unless the loan is placed on nonaccrual status in accordance with the nonaccrual loans accounting policy described above. Through September 30, 2020, we have executed loan payment deferment modifications on 617 loans totaling $685.4 million. The majority of these modifications qualified as eligible loan modifications under Section 4013 of the CARES Act and therefore, were not required to be classified as TDRs and were not reported as past due. Seventeen of these modifications on loan balances of $7.8 million were past due before the COVID-19 pandemic and therefore, were classified as TDRs and were included in past due loans as of September 30, 2020. Washington Trust has active deferrals on 253 loans totaling $418.2 million as of September 30, 2020.



(Dollars in thousands)			Outstanding Recorded Investment
	# of Loans		Pre-Modifications		Post-Modifications
Three months ended September 30,	2020	2019	2020	2019	2020	2019
Commercial:
Commercial real estate	—	—	$—	$—	$—	$—
Commercial & industrial	—	—	—	—	—	—
Total commercial	—	—	—	—	—	—
Residential Real Estate:
Residential real estate	4	—	2,092	—	2,092	—
Consumer:
Home equity	1	—	71	—	71	—
Other	—	—	—	—	—	—
Total consumer	1	—	$71	$—	$71	$—
Total	5	—	$2,163	$—	$2,163	$—



(Dollars in thousands)			Outstanding Recorded Investment
	# of Loans		Pre-Modifications		Post-Modifications
Nine months ended September 30,	2020	2019	2020	2019	2020	2019
Commercial:
Commercial real estate	1	—	$841	$—	$841	$—
Commercial & industrial	2	—	460	—	460	—
Total commercial	3	—	1,301	—	1,301	—
Residential Real Estate:
Residential real estate	10	—	5,604	—	5,604	—
Consumer:
Home equity	4	—	873	—	873	—
Other	—	—	—	—	—	—
Total consumer	4	—	$873	$—	$873	$—
Total	17	—	$7,778	$—	$7,778	$—



(Dollars in thousands)	Three Months		Nine Months
Periods ended September 30,	2020	2019	2020	2019
Below-market interest rate concession	$—	$—	$—	$—
Payment deferral	2,163	—	7,365	—
Maturity / amortization concession	—	—	—	—
Interest only payments	—	—	—	—
Combination (1)	—	—	413	—

Total	$2,163	$—	$7,778	$—

Effective January 1, 2020, individually analyzed loans include nonaccrual commercial loans, reasonably expected TDRs and executed TDRs, as well as certain other loans based on the underlying risk characteristics and the discretion of management to individually analyze such loans. As of September 30, 2020, the carrying value of individually analyzed loans amounted to $15.7 million, of which $7.5 million were considered collateral dependent.

For collateral dependent loans where management has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and repayment of the loan is to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. See Note 10 for additional disclosure regarding fair value of individually analyzed collateral dependent loans.


(Dollars in thousands)
As of September 30, 2020	Carrying Value	Related Allowance
Commercial:
Commercial real estate (1)	$431	$146
Commercial & industrial (2)	409	—
Total commercial	840	146
Residential Real Estate:
Residential real estate (3)	5,845	—
Consumer:
Home equity (3)	825	232
Other	—	—
Total consumer	825	232
Total	$7,510	$378


(Dollars in thousands)
As of December 31, 2019	Recorded Investment (1)	Unpaid Principal	Related Allowance

No Related Allowance Recorded
Commercial:


Commercial real estate	$—	$—	$—
Commercial & industrial	—	—	—
Total commercial	—	—	—
Residential Real Estate:


Residential real estate	13,968	14,803	—
Consumer:


Home equity	1,471	1,472	—
Other	88	88	—
Total consumer	1,559	1,560	—
Subtotal	15,527	16,363	—
With Related Allowance Recorded
Commercial:


Commercial real estate	$603	$926	$—
Commercial & industrial	657	657	580
Total commercial	1,260	1,583	580
Residential Real Estate:


Residential real estate	687	714	95
Consumer:


Home equity	292	291	291
Other	18	18	2
Total consumer	310	309	293
Subtotal	2,257	2,606	968
Total impaired loans	$17,784	$18,969	$968
Total:
Commercial	$1,260	$1,583	$580
Residential real estate	14,655	15,517	95
Consumer	1,869	1,869	293
Total impaired loans	$17,784	$18,969	$968

(1)The recorded investment in impaired loans consists of unpaid principal balance, net of charge-offs, interest payments received applied to principal and unamortized deferred loan origination fees and costs. For accruing impaired loans (TDRs for which management has concluded that the collectibility of the loan is not in doubt), the recorded investment also includes accrued interest.


(Dollars in thousands)	Three Months		Nine Months

For the periods ended September 30, 2019	Average Recorded Investment	Interest Income Recognized	Average Recorded Investment	Interest Income Recognized
Commercial:
Commercial real estate	$886	$—	$929	$1
Commercial & industrial	—	—	2,835	103
Total commercial	886	—	3,764	104
Residential Real Estate:
Residential real estate	12,017	109	10,972	331
Consumer:
Home equity	1,414	16	1,409	43
Other	108	3	55	2
Total consumer	1,522	19	1,464	45
Total	$14,425	$128	$16,200	$480

The Corporation utilizes an internal rating system to assign a risk to each of its commercial loans. Loans are rated on a scale of 1 to 10. This scale can be assigned to three broad categories including “pass” for ratings 1 through 6, “special mention” for 7-rated loans, and “classified” for loans rated 8, 9 or 10. The loan rating system takes into consideration parameters including the borrower’s financial condition, the borrower’s performance with respect to loan terms, the adequacy of collateral, the adequacy of guarantees and other credit quality characteristics. The Corporation takes the risk rating into consideration along with other credit attributes in the establishment of an appropriate allowance for credit losses on loans. See Note 6 for additional information.

Pass - Loans with acceptable credit quality, defined as ranging from superior or very strong to a status of lesser stature. Superior or very strong credit quality is characterized by a high degree of cash collateralization or strong balance sheet liquidity. Lesser stature loans have an acceptable level of credit quality, but may exhibit some weakness in various credit metrics such as collateral adequacy, cash flow, performance or may be in an industry or of a loan type known to have a higher degree of risk. These weaknesses may be mitigated by secondary sources of repayment, including SBA guarantees.

Special Mention - Loans with potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Bank’s position as creditor at some future date. Special Mention assets are not adversely classified and do not expose the Bank to sufficient risk to warrant adverse classification. Examples of these conditions include but are not limited to outdated or poor quality financial data, strains on liquidity and leverage, losses or negative trends in operating results, marginal cash flow, weaknesses in occupancy rates or trends in the case of commercial real estate and frequent delinquencies.

Classified - Loans identified as “substandard,” “doubtful” or “loss” based on criteria consistent with guidelines provided by banking regulators. A “substandard” loan has defined weaknesses which make payment default or principal exposure likely, but not yet certain. Such loans are apt to be dependent upon collateral liquidation, a secondary source of repayment or an event outside of the normal course of business. The loans are closely watched and are either already on nonaccrual status or may be placed on nonaccrual status when management determines there is uncertainty of collectibility. A “doubtful” loan is placed on nonaccrual status and has a high probability of loss, but the extent of the loss is difficult to quantify due to dependency upon collateral having a value that is difficult to determine or upon some near-term event which lacks certainty. A loan in the “loss” category is considered generally uncollectible or the timing or amount of payments cannot be determined. “Loss” is not intended to imply that the loan has no recovery value, but rather, it is not practical or desirable to continue to carry the asset.

The Corporation’s procedures call for loan ratings and classifications to be revised whenever information becomes available that indicates a change is warranted. On a quarterly basis, management reviews the watched asset list, which generally consists of commercial loans that are risk-rated 6 or worse, highly leveraged transaction loans, high-volatility commercial real estate and other selected loans. Management’s review focuses on the current status of the loans and strategies to improve the credit. An annual loan review program is conducted by a third party to provide an independent evaluation of the creditworthiness of the commercial loan portfolio, the quality of the underwriting and credit risk management practices and the appropriateness of the risk rating classifications. This review is supplemented with selected targeted internal reviews of the commercial loan portfolio.

In addition, other techniques are utilized to monitor indicators of credit deterioration in the residential real estate loans and home equity consumer loans. Among these techniques is the periodic tracking of loans with an updated Fair Isaac Corporation (“FICO”) score and an estimated loan to value (“LTV”) ratio. LTV is estimated based on such factors as the location, the original LTV ratio, and the date of origination of the loan and do not reflect actual appraisal amounts. The results of these analyses and other loan review procedures, including selected targeted internal reviews, are taken into consideration in the determination of qualitative loss factors for residential real estate and home equity consumer credits.


(Dollars in thousands)	Term Loans Amortized Cost by Origination Year
As of September 30, 2020	2020	2019	2018	2017	2016	Prior	Revolving Loans Amortized Cost	Revolving Loans Converted to Term Loans	Total
Commercial:
CRE:
Pass	$231,992	$387,398	$317,206	$253,085	$158,862	$270,453	$14,778	$2,406	$1,636,180
Special Mention	649	—	18,104	9,537	—	844	—	—	29,134
Classified	—	—	—	—	—	431	—	—	431
Total CRE	232,641	387,398	335,310	262,622	158,862	271,728	14,778	2,406	1,665,745
C&I:
Pass	284,453	96,228	83,099	62,716	67,899	98,371	98,285	1,380	792,431
Special Mention	1,398	573	—	2,429	293	15,007	3,273	68	23,041
Classified	409	—	—	—	—	6,388	—	—	6,797
Total C&I	286,260	96,801	83,099	65,145	68,192	119,766	101,558	1,448	822,269





Residential Real Estate:
Residential real estate:
Current	351,153	300,217	176,465	179,310	145,739	345,761	—	—	1,498,645
Past Due	—	238	627	768	401	6,047	—	—	8,081
Total residential real estate	351,153	300,455	177,092	180,078	146,140	351,808	—	—	1,506,726
Consumer:
Home equity:
Current	8,821	8,247	4,425	1,858	1,379	4,432	225,650	11,986	266,798
Past Due	—	—	—	50	—	63	489	1,151	1,753
Total home equity	8,821	8,247	4,425	1,908	1,379	4,495	226,139	13,137	268,551
Other:
Current	2,801	2,437	1,713	1,992	628	8,746	330	1	18,648
Past Due	9	11	—	—	88	—	—	—	108
Total other	2,810	2,448	1,713	1,992	716	8,746	330	1	18,756




Total Loans	$881,685	$795,349	$601,639	$511,745	$375,289	$756,543	$342,805	$16,992	$4,282,047