WESTERLY, R.I., Jan. 25, 2017 (GLOBE NEWSWIRE) -- Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced net income of $12.2 million, or $0.70 per diluted share, for the fourth quarter of 2016, compared to net income of $12.3 million, or $0.72 per diluted share, reported for the third quarter of 2016.

For the year ended December 31, 2016, net income totaled $46.5 million, or $2.70 per diluted share.  Full-year net income increased by 7% from $43.5 million, or $2.54 per diluted share, reported for 2015.  Returns on average equity and average assets in 2016 were 11.96% and 1.16%, respectively, compared to 12.00% and 1.19%, for the same period in 2015.

“Washington Trust’s solid fourth quarter results contributed to record 2016 net income and earnings per share,” stated Joseph J. MarcAurele, Washington Trust Chairman and Chief Executive Officer.  “We are pleased with our continued success at growing our core business lines, expanding our local and regional footprint, and consistently providing healthy returns to our shareholders.”

Selected highlights for 2016 include: 

• Total loans stood at $3.2 billion at December 31, 2016, up by 2% in the quarter and up by 7% from a year ago.
  
  
• Total deposits amounted to $3.1 billion at December 31, 2016, up by 1% from the third quarter.  Total deposits were up by 4% from a year ago.
  
  
• Wealth management revenues of $37.6 million for the year 2016 and wealth management assets of $6.1 billion at December 31, 2016 were all-time highs for the Corporation.
  
  
• Mortgage banking revenues rose by 22% on a linked quarter basis.  Mortgage banking revenues and loans sold during the quarter were record highs for Washington Trust.
  

Net Interest Income
Net interest income totaled $28.6 million for the fourth quarter of 2016, up by $1.2 million from the third quarter.  Included in net interest income was loan prepayment fee income of $816 thousand for the fourth quarter, compared to $365 thousand in the third quarter.  The net interest margin was 2.89% for the fourth quarter of 2016, down by 5 basis points from the preceding quarter.  The reduction in the net interest margin reflects additions of lower-yielding debt securities to the investment portfolio and increases in wholesale funding balances.  Significant linked quarter changes included:

• Average interest-earning assets increased by $224 million from the third quarter, reflecting a $133 million increase in the average balance of investment securities and a $101 million increase in the average balance of loans.  The yield on interest-earning assets was 3.53%, down by 2 basis points from the preceding quarter.
  
  
• Average interest-bearing liabilities increased by $183 million from the preceding quarter, reflecting increases of $113 million in the average balance of wholesale funding balances (FHLBB advances and wholesale brokered time deposits) and $70 million in the average balance of in-market interest-bearing deposits.  The cost of interest-bearing funds was 0.79%, up by 3 basis points from the third quarter.
  

Noninterest Income
Noninterest income totaled $17.3 million for the fourth quarter of 2016, up modestly from the preceding quarter.  Significant linked quarter changes included: 

• Wealth management revenues totaled $9.3 million for the fourth quarter, down by $332 thousand, or 3%, from the preceding quarter, largely due to a decline of $216 thousand in transaction-based revenues.  Wealth management assets under administration amounted to $6.1 billion at December 31, 2016, up by $6 million on a linked quarter basis.  Managed assets continue to represent over 90% of total wealth management assets at December 31, 2016.
  
  Total annual wealth management revenues reached an all-time high of $37.6 million, up by $2.2 million, or 6%, from the preceding year.
  
  
• Mortgage banking revenues totaled $4.5 million for the fourth quarter, up by $807 thousand, or 22%, from the preceding quarter, reflecting both higher volume and yields on loans sold to the secondary market.  Residential mortgage loans sold to the secondary market amounted to $200 million in the fourth quarter, compared to $164 million in the preceding quarter.
  
  Total full-year 2016 mortgage banking revenues amounted to $13.2 million, up by $3.3 million, or 33%, from the preceding year.
  
  
• Loan related derivative income amounted to $912 thousand in the fourth quarter, down by $266 thousand from the preceding quarter, reflecting a lower volume of commercial borrower interest rate swap transactions.
  

Noninterest Expenses
Noninterest expenses totaled $25.0 million for the fourth quarter of 2016, up by $323 thousand, or 1%, from the third quarter.  Included in the third quarter was a $939 thousand reduction in noninterest expenses, resulting from a downward adjustment in the fair value of the contingent consideration liability recognized in connection with a 2015 acquisition.  Excluding this adjustment, noninterest expenses were down by $616 thousand, or 2%, on a linked quarter basis.  Salaries and benefit costs, the largest component of noninterest expenses, decreased by $380 thousand from the preceding quarter.

Income tax expense amounted to $5.9 million for the fourth quarter of 2016, up by $10 thousand from the preceding quarter.  The effective tax rate for the fourth quarter of 2016 was 32.6%, compared to 32.2% for the third quarter of 2016.  Based on the current federal and applicable state income tax statutes, the Corporation currently expects the 2017 effective tax rate will be approximately 34.0%.

Loans
Total loans amounted to $3.2 billion at December 31, 2016, up by $53 million, or 2%, from the balance at the end of the third quarter.  The commercial loan portfolio increased by $14 million, or approximately 1%, during the quarter, reflecting growth in the commercial construction portfolio, partially offset by a reduction in commercial mortgages.  Residential loan portfolio balances increased by $43 million, or 4%.  During the quarter, $36 million of residential mortgages were purchased from another financial institution.  These purchased loans were individually evaluated to our underwriting standards and are predominantly secured by properties in Massachusetts.

Total loans were up by $221.2 million, or 7%, in the last twelve months.  This included a 7% increase in the commercial portfolio and an 11% increase in the residential real estate portfolio.

Investment Securities
The investment securities portfolio amounted to $756 million at December 31, 2016, up by $174 million, or 30%, from the balance at September 30, 2016.  During the quarter, government agency mortgage-backed debt securities and agency debt securities totaling $235 million and with a weighted average yield of 2.55% were purchased.  The purchases were partially offset by calls and maturities of agency debt securities and obligations of state and political subdivisions, as well as routine principal pay-downs on mortgage-backed securities.  Investment securities represented 17% of total assets as of December 31, 2016.

Deposits and Borrowings
Total deposits amounted to $3.1 billion at December 31, 2016, up by $26 million, or 1%, from the preceding quarter end and up by $129.5 million, or 4%, in the last twelve months.  Included in total deposits were wholesale brokered time deposit balances of $412 million, which increased by $53 million in the quarter and by $109.8 million in the last twelve months.  Excluding wholesale brokered time deposits, in-market deposits decreased by $27 million, or 1%, in the quarter and increased by $20 million, or 1%, in the last twelve months.  The balance of demand deposits and NOW accounts were up by 4% in the quarter and 7% in the last twelve months.

FHLBB advances amounted to $849 million at December 31, 2016, up by $177 million from September 30, 2016 and by $470 million from December 31, 2015.

Asset Quality
Total past due loans amounted to $24.4 million, or 0.76% of total loans, at December 31, 2016, compared to $21.3 million, or 0.67% of total loans, at September 30, 2016.  The linked quarter increase in past due loans was largely due to a $3.9 million increase in residential mortgage loans.  Total nonaccrual loans amounted to $22.1 million, or 0.68% of total loans, at December 31, 2016, compared to $24.0 million, or 0.75% of total loans, at September 30, 2016.  The linked quarter decrease in nonaccrual loans was attributable to $2.6 million of charge-offs recognized in the fourth quarter.

During the fourth quarter of 2016, a charge-off of $2.5 million was recognized on one nonaccrual commercial real estate relationship.  This relationship was placed on nonaccrual status in the third quarter of 2016 and had a carrying value of $3.9 million at December 31, 2016.  A loan loss provision totaling $2.9 million was charged to earnings in the fourth quarter of 2016, compared to a loan loss provision of $1.8 million recognized in the third quarter of 2016.  The increase in loan loss provision was primarily due to additional loss exposure allocated to this commercial real estate relationship.  The allowance for loan losses was $26.0 million, or 0.80% of total loans, at December 31, 2016, compared to $25.6 million, or 0.81% of total loans, at September 30, 2016.

Capital and Dividends
Total shareholders' equity was $391 million at December 31, 2016, down by $5 million from September 30, 2016.  This change included $9.5 million of market depreciation on available for sale securities and a charge of $2.6 million associated with the annual measurement of defined benefit pension liabilities, both net of tax and recognized in the accumulated other comprehensive income component of shareholders' equity.  Capital levels at December 31, 2016 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.26% at December 31, 2016, compared to 12.31% at September 30, 2016.  At December 31, 2016, book value per share amounted to $22.76, down from $23.11 in the preceding quarter.

The Board of Directors declared a quarterly dividend of 37 cents per share for the quarter ended December 31, 2016.  The dividend was paid on January 13, 2017 to shareholders of record on January 2, 2017.

Conference Call
Washington Trust will host a conference call to discuss its fourth quarter results, business highlights and outlook on Thursday, January 26, 2017 at 8:30 a.m. (Eastern Time).  Individuals may dial in to the call at 1-877-407-0784.  An audio replay of the call will be available, shortly after the conclusion of the call, by dialing 1-844-512-2921 and entering the Replay PIN Number 13652407; the audio replay will be available through February 5, 2017.  Also, a webcast of the call will be posted in the Investor Relations section of Washington Trust's web site, www.washtrustbancorp.com, and will be available through March 31, 2017.

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 www.washtrustbancorp.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 press releases and other written materials, and in oral statements made by our officers, directors or employees.  You can identify forward-looking statements by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “outlook,” “will,” “should,” and other expressions that predict or indicate future events and trends and which do not relate to historical matters.  You should not rely on forward-looking statements, because they involve known and unknown risks, uncertainties and other factors, some of which are beyond the control of Washington Trust.  These risks, uncertainties and other factors may cause the actual results, performance or achievements of Washington Trust to be materially different from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements.

Some of the factors that might cause these differences include the following: weakness in national, regional or international economic conditions or conditions affecting the banking or financial services industries or financial capital markets; 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 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 our 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, 2015, 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
CONSOLIDATED BALANCE SHEETS
(Unaudited; Dollars in thousands)
	Dec 31,  2016			Sep 30,  2016			Jun 30,  2016			Mar 31,  2016			Dec 31,  2015
Assets:
Cash and due from banks	$	106,185		$	126,752		$	116,658		$	89,966		$	93,222
Short-term investments		1,612			2,420			3,255			4,931			4,409
Mortgage loans held for sale		29,434			45,162			38,554			22,895			38,554
Securities:
Available for sale, at fair value		739,912			564,256			401,749			411,352			375,044
Held to maturity, at amortized cost		15,633			16,848			17,917			19,040			20,023
Total securities		755,545			581,104			419,666			430,392			395,067
Federal Home Loan Bank stock, at cost		43,129			37,249			34,303			26,515			24,316
Loans:
Commercial		1,771,666			1,757,215			1,732,220			1,698,811			1,654,547
Residential real estate		1,122,748			1,079,887			1,005,036			1,004,349			1,013,555
Consumer		339,957			344,253			343,628			343,833			345,025
Total loans		3,234,371			3,181,355			3,080,884			3,046,993			3,013,127
Less allowance for loan losses		26,004			25,649			25,826			26,137			27,069
Net loans		3,208,367			3,155,706			3,055,058			3,020,856			2,986,058
Premises and equipment, net		29,020			29,433			29,590			29,882			29,593
Investment in bank-owned life insurance		71,105			70,557			65,036			66,000			65,501
Goodwill		64,059			64,059			64,059			64,059			64,059
Identifiable intangible assets, net		10,175			10,493			10,814			11,137			11,460
Other assets		62,484			81,099			80,088			71,577			59,365
Total assets	$	4,381,115		$	4,204,034		$	3,917,081		$	3,838,210		$	3,771,604
Liabilities:
Deposits:
Demand deposits	$	585,960		$	566,027		$	512,307		$	539,119		$	537,298
NOW accounts		427,707			404,827			414,532			394,873			412,602
Money market accounts		730,075			794,905			675,896			763,565			823,490
Savings accounts		358,397			357,966			342,579			331,800			326,967
Time deposits		961,613			913,649			844,036			850,294			833,898
Total deposits		3,063,752			3,037,374			2,789,350			2,879,651			2,934,255
Federal Home Loan Bank advances		848,930			671,615			640,010			487,189			378,973
Junior subordinated debentures		22,681			22,681			22,681			22,681			22,681
Other liabilities		54,948			77,037			76,708			67,409			60,307
Total liabilities		3,990,311			3,808,707			3,528,749			3,456,930			3,396,216
Shareholders’ Equity:
Common stock		1,073			1,069			1,068			1,064			1,064
Paid-in capital		115,123			113,290			112,314			111,641			110,949
Retained earnings		294,365			288,613			282,666			277,810			273,074
Accumulated other comprehensive loss		(19,757	)		(7,645	)		(7,716	)		(9,235	)		(9,699	)
Total shareholders’ equity		390,804			395,327			388,332			381,280			375,388
Total liabilities and shareholders’ equity	$	4,381,115		$	4,204,034		$	3,917,081		$	3,838,210		$	3,771,604

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; Dollars in thousands, except per share amounts)
	For the Three Months Ended																For the Twelve Months Ended
	Dec 31,  2016			Sep 30,  2016			Jun 30,  2016			Mar 31,  2016			Dec 31,  2015				Dec 31,  2016			Dec 31,  2015
Interest income:
Interest and fees on loans	$	30,738		$	29,633		$	29,122		$	29,998		$	28,511			$	119,491		$	114,229
Taxable interest on securities		3,703			3,024			2,487			2,370			2,262				11,584			8,875
Nontaxable interest on securities		157			218			280			327			352				982			1,555
Dividends on Federal Home Loan Bank stock		362			288			231			210			315				1,091			953
Other interest income		95			93			70			64			37				322			138
Total interest and dividend income		35,055			33,256			32,190			32,969			31,477				133,470			125,750
Interest expense:
Deposits		3,445			3,110			2,981			2,968			3,097				12,504			13,142
Federal Home Loan Bank advances		2,886			2,641			2,313			2,152			1,966				9,992			7,746
Junior subordinated debentures		135			125			119			112			157				491			871
Other interest expense		1			1			1			2			2				5			9
Total interest expense		6,467			5,877			5,414			5,234			5,222				22,992			21,768
Net interest income		28,588			27,379			26,776			27,735			26,255				110,478			103,982
Provision for loan losses		2,900			1,800			450			500			750				5,650			1,050
Net interest income after provision for loan losses		25,688			25,579			26,326			27,235			25,505				104,828			102,932
Noninterest income:
Wealth management revenues		9,291			9,623			9,481			9,174			9,167				37,569			35,416
Mortgage banking revenues		4,541			3,734			2,710			2,198			2,582				13,183			9,901
Service charges on deposit accounts		945			915			935			907			971				3,702			3,865
Card interchange fees		858			870			860			797			810				3,385			3,199
Income from bank-owned life insurance		549			521			1,090			499			502				2,659			1,982
Loan related derivative income		912			1,178			508			645			752				3,243			2,441
Equity in losses of unconsolidated subsidiaries		(89	)		(88	)		(89	)		(88	)		(69	)			(354	)		(293	)
Other income		313			508			419			502			431				1,742			1,829
Total noninterest income		17,320			17,261			15,914			14,634			15,146				65,129			58,340
Noninterest expense:
Salaries and employee benefits		16,528			16,908			17,405			16,380			16,053				67,221			63,024
Net occupancy		1,775			1,766			1,803			1,807			1,724				7,151			7,000
Equipment		1,556			1,648			1,503			1,501			1,393				6,208			5,533
Outsourced services		1,311			1,254			1,294			1,363			1,337				5,222			5,111
Legal, audit and professional fees		597			691			662			629			825				2,579			2,741
FDIC deposit insurance costs		390			504			491			493			470				1,878			1,846
Advertising and promotion		403			370			420			265			325				1,458			1,526
Amortization of intangibles		318			321			322			323			333				1,284			904
Debt prepayment penalties		—			—			—			431			—				431			—
Acquisition related expenses		—			—			—			—			52				—			989
Change in fair value of contingent consideration		—			(939	)		16			25			41				(898	)		41
Other expenses		2,095			2,127			2,114			2,233			2,008				8,569			8,214
Total noninterest expense		24,973			24,650			26,030			25,450			24,561				101,103			96,929
Income before income taxes		18,035			18,190			16,210			16,419			16,090				68,854			64,343
Income tax expense		5,873			5,863			5,153			5,484			5,346				22,373			20,878
Net income	$	12,162		$	12,327		$	11,057		$	10,935		$	10,744			$	46,481		$	43,465
Net income available to common shareholders:
Basic	$	12,137		$	12,302		$	11,035		$	10,910		$	10,718			$	46,384		$	43,339
Diluted	$	12,137		$	12,302		$	11,035		$	10,910		$	10,718			$	46,384		$	43,339
Weighted average common shares outstanding:
Basic		17,142			17,090			17,067			17,023			17,004				17,081			16,879
Diluted		17,245			17,203			17,194			17,157			17,167				17,208			17,067
Earnings per common share:
Basic	$	0.71		$	0.72		$	0.65		$	0.64		$	0.63			$	2.72		$	2.57
Diluted	$	0.70		$	0.72		$	0.64		$	0.64		$	0.62			$	2.70		$	2.54
Cash dividends declared per share	$	0.37		$	0.37		$	0.36		$	0.36		$	0.34			$	1.46		$	1.36

SELECTED FINANCIAL HIGHLIGHTS
(Unaudited; Dollars in thousands, except per share amounts)
	Dec 31,  2016			Sep 30,  2016			Jun 30,  2016			Mar 31,  2016			Dec 31,  2015
Share and Equity Related Data:
Book value per share	$	22.76		$	23.11		$	22.73		$	22.40		$	22.06
Tangible book value per share - Non-GAAP (1)	$	18.44		$	18.75		$	18.35		$	17.98		$	17.62
Market value per share	$	56.05		$	40.22		$	37.92		$	37.32		$	39.52
Shares issued and outstanding at end of period		17,171			17,107			17,081			17,024			17,020
Capital Ratios:
Tier 1 risk-based capital	11.44% (i)				11.48	%		11.57	%		11.56	%		11.64	%
Total risk-based capital	12.26% (i)				12.31	%		12.43	%		12.45	%		12.58	%
Tier 1 leverage ratio	8.67% (i)				8.95	%		9.21	%		9.31	%		9.37	%
Common equity tier 1	10.75% (i)				10.77	%		10.84	%		10.82	%		10.89	%
Equity to assets		8.92	%		9.40	%		9.91	%		9.93	%		9.95	%
Tangible equity to tangible assets - Non-GAAP (1)		7.35	%		7.77	%		8.16	%		8.13	%		8.11	%
(i) - estimated

	For the Three Months Ended											For the Twelve Months Ended
	Dec 31,  2016		Sep 30,  2016		Jun 30,  2016		Mar 31,  2016		Dec 31,  2015			Dec 31,  2016		Dec 31,  2015
Performance Ratios:
Net interest margin (FTE)	2.89	%	2.94	%	3.05	%	3.24	%	3.08	%		3.02	%	3.12	%
Return on average assets	1.14	%	1.21	%	1.14	%	1.16	%	1.16	%		1.16	%	1.19	%
Return on average tangible assets - Non-GAAP (1)	1.16	%	1.24	%	1.17	%	1.18	%	1.19	%		1.19	%	1.21	%
Return on average equity	12.26	%	12.57	%	11.50	%	11.50	%	11.52	%		11.96	%	12.00	%
Return on average tangible equity - Non-GAAP (1)	15.09	%	15.53	%	14.28	%	14.34	%	14.45	%		14.82	%	14.79	%

(1) See the section labeled “SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures” at the end of this document.

SELECTED FINANCIAL HIGHLIGHTS
(Unaudited; Dollars in thousands)
	For the Three Months Ended																For the Twelve Months Ended
	Dec 31,  2016			Sep 30,  2016			Jun 30,  2016			Mar 31,  2016			Dec 31,  2015				Dec 31,  2016			Dec 31,  2015
Wealth Management Results
Wealth Management Revenues:
Trust and investment management fees	$	8,283		$	8,358		$	8,195		$	8,065		$	8,001			$	32,901		$	30,149
Mutual fund fees		771			812			812			843			952				3,238			4,009
Asset-based revenues		9,054			9,170			9,007			8,908			8,953				36,139			34,158
Transaction-based revenues		237			453			474			266			214				1,430			1,258
Total wealth management revenues	$	9,291		$	9,623		$	9,481		$	9,174		$	9,167			$	37,569		$	35,416
Assets Under Administration:
Balance at beginning of period	$	6,056,859		$	5,905,019		$	5,878,967		$	5,844,636		$	5,714,201			$	5,844,636		$	5,069,966
Acquisition of Halsey Associates, Inc.		—			—			—			—			—				—			839,994
Net investment appreciation (depreciation)  & income		(8,506	)		192,518			71,447			22,389			153,953				277,848			(95,228	)
Net client asset flows		14,940			(40,678	)		(45,395	)		11,942			(23,518	)			(59,191	)		29,904
Balance at end of period	$	6,063,293		$	6,056,859		$	5,905,019		$	5,878,967		$	5,844,636			$	6,063,293		$	5,844,636
Mortgage Banking Results
Mortgage Banking Revenues:
Gains & commissions on loan sales, net	$	4,455		$	3,744		$	2,804		$	2,134		$	2,528			$	13,137		$	9,825
Residential mortgage servicing fee income, net		86			(10	)		(94	)		64			54				46			76
Total mortgage banking revenues	$	4,541		$	3,734		$	2,710		$	2,198		$	2,582			$	13,183		$	9,901
Residential Mortgage Loan Originations:
Originations for retention in portfolio	$	72,533		$	90,308		$	54,080		$	47,545		$	38,080			$	264,466		$	234,852
Originations for sale to secondary market (1)		185,626			170,673			154,043			90,458			134,125			$	600,800			523,834
Total mortgage loan originations	$	258,159		$	260,981		$	208,123		$	138,003		$	172,205			$	865,266		$	758,686
Residential Mortgage Loans Sold:
Sold with servicing rights retained	$	48,545		$	44,611		$	45,804		$	26,454		$	44,493			$	165,414		$	162,224
Sold with servicing rights released (1)		151,506			119,572			93,239			79,507			82,906			$	443,824			368,676
Total mortgage loans sold	$	200,051		$	164,183		$	139,043		$	105,961		$	127,399			$	609,238		$	530,900

(1) Also includes loans originated in a broker capacity.

END OF PERIOD LOAN AND DEPOSIT COMPOSITION
(Unaudited; Dollars in thousands)
	Dec 31,  2016			Sep 30,  2016			Jun 30,  2016			Mar 31,  2016			Dec 31,  2015
Commercial:
Mortgages	$	1,074,186		$	1,086,175		$	1,074,747		$	976,931		$	931,953
Construction & development		121,371			98,735			81,812			123,032			122,297
Commercial & industrial		576,109			572,305			575,661			598,848			600,297
Total commercial		1,771,666			1,757,215			1,732,220			1,698,811			1,654,547
Residential real estate:
Mortgages		1,094,824			1,052,829			978,399			980,274			984,437
Homeowner construction		27,924			27,058			26,637			24,075			29,118
Total residential real estate		1,122,748			1,079,887			1,005,036			1,004,349			1,013,555
Consumer:
Home equity lines		264,200			265,238			260,541			258,513			255,565
Home equity loans		37,272			38,264			39,572			45,499			46,649
Other		38,485			40,751			43,515			39,821			42,811
Total consumer		339,957			344,253			343,628			343,833			345,025
Total loans	$	3,234,371		$	3,181,355		$	3,080,884		$	3,046,993		$	3,013,127

	December 31, 2016						December 31, 2015
	Balance			% of Total			Balance			% of Total
Commercial Real Estate Loans by Property Location:
Rhode Island, Connecticut, Massachusetts	$	1,105,539		92.5	%		$	959,883		91.0	%
New York, New Jersey, Pennsylvania		77,038		6.4	%			80,989		7.7	%
New Hampshire		12,980		1.1	%			13,377		1.3	%
Total commercial real estate loans (1)	$	1,195,557		100.0	%		$	1,054,249		100.0	%
Residential Mortgages by Property Location:
Rhode Island, Connecticut, Massachusetts	$	1,106,366		98.6	%		$	995,743		98.2	%
New Hampshire, Vermont, Maine		11,445		1.0	%			10,186		1.0	%
New York, Virginia, New Jersey, Maryland, Pennsylvania		2,648		0.2	%			4,163		0.4	%
Ohio		997		0.1	%			1,557		0.2	%
Other		1,292		0.1	%			1,906		0.2	%
Total residential mortgages	$	1,122,748		100.0	%		$	1,013,555		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.

	Dec 31,  2016			Sep 30,  2016			Jun 30,  2016			Mar 31,  2016			Dec 31,  2015
Deposits:
Non-interest bearing demand deposits	$	521,165		$	520,860		$	476,848		$	474,477		$	475,398
Interest-bearing demand deposits		64,795			45,167			35,459			64,642			61,900
NOW accounts		427,707			404,827			414,532			394,873			412,602
Money market accounts		730,075			794,905			675,896			763,565			823,490
Savings accounts		358,397			357,966			342,579			331,800			326,967
Time deposits (in-market)		549,376			554,669			549,935			540,815			531,419
Wholesale brokered time deposits		412,237			358,980			294,101			309,479			302,479
Total deposits	$	3,063,752		$	3,037,374		$	2,789,350		$	2,879,651		$	2,934,255

CREDIT & ASSET QUALITY DATA
(Unaudited; Dollars in thousands)
	Dec 31,  2016			Sep 30,  2016			Jun 30,  2016			Mar 31,  2016			Dec 31,  2015
Asset Quality Ratios:
Nonperforming assets to total assets		0.53	%		0.59	%		0.48	%		0.49	%		0.58	%
Nonaccrual loans to total loans		0.68	%		0.75	%		0.56	%		0.57	%		0.70	%
Allowance for loan losses to nonaccrual loans		117.89	%		107.09	%		149.73	%		150.00	%		128.61	%
Allowance for loan losses to total loans		0.80	%		0.81	%		0.84	%		0.86	%		0.90	%
Nonperforming Assets:
Commercial mortgages	$	7,811		$	10,357		$	4,054		$	4,054		$	5,711
Commercial construction & development		—			—			—			—			—
Commercial & industrial		1,337			1,744			1,204			2,659			3,018
Residential real estate mortgages		11,736			10,140			10,409			9,367			10,666
Consumer		1,174			1,709			1,581			1,345			1,652
Total nonaccrual loans		22,058			23,950			17,248			17,425			21,047
Other real estate owned		1,075			1,045			1,515			1,326			716
Total nonperforming assets	$	23,133		$	24,995		$	18,763		$	18,751		$	21,763
Past Due Loans:
Commercial mortgages	$	8,708		$	10,352		$	4,062		$	4,564		$	4,555
Commercial & industrial		1,154			1,047			1,978			2,906			462
Residential real estate mortgages		12,226			8,291			8,893			8,703			9,286
Consumer loans		2,334			1,565			2,201			2,122			3,256
Total past due loans	$	24,422		$	21,255		$	17,134		$	18,295		$	17,559
Total past due loans to total loans		0.76	%		0.67	%		0.56	%		0.60	%		0.58	%
Accruing loans 90 days or more past due	$	—		$	—		$	—		$	—		$	—
Nonaccrual loans included in past due loans	$	18,602		$	18,796		$	13,211		$	14,030		$	13,635

	For the Three Months Ended																For the Twelve Months Ended
	Dec 31,  2016			Sep 30,  2016			Jun 30,  2016			Mar 31,  2016			Dec 31,  2015				Dec 31,  2016			Dec 31,  2015
Nonaccrual Loan Activity:
Balance at beginning of period	$	23,950		$	17,248		$	17,425		$	21,047		$	16,844			$	21,047		$	15,945
Additions to nonaccrual status		2,105			9,750			2,072			1,352			7,029				15,278			14,964
Loans returned to accruing status		(718	)		(592	)		—			(206	)		(303	)			(1,516	)		(2,489	)
Loans charged-off		(2,622	)		(2,055	)		(860	)		(1,475	)		(904	)			(7,012	)		(2,305	)
Loans transferred to other real estate owned		(30	)		—			(435	)		(610	)		(716	)			(1,075	)		(1,206	)
Payments, payoffs and other changes		(627	)		(401	)		(954	)		(2,683	)		(903	)			(4,664	)		(3,862	)
Balance at end of period	$	22,058		$	23,950		$	17,248		$	17,425		$	21,047			$	22,058		$	21,047
Allowance for Loan Losses:
Balance at beginning of period	$	25,649		$	25,826		$	26,137		$	27,069		$	27,161			$	27,069		$	28,023
Provision charged to earnings		2,900			1,800			450			500			750				5,650			1,050
Charge-offs		(2,622	)		(2,055	)		(860	)		(1,475	)		(904	)			(7,012	)		(2,305	)
Recoveries		77			78			99			43			62				297			301
Balance at end of period	$	26,004		$	25,649		$	25,826		$	26,137		$	27,069			$	26,004		$	27,069
Net Loan Charge-Offs (Recoveries):
Commercial mortgages	$	2,510		$	1,936		$	65		$	1,249		$	405			$	5,760		$	717
Commercial & industrial		(20	)		(43	)		684			(18	)		217				603			584
Residential real estate mortgages		6			47			2			134			117				189			179
Consumer		49			37			10			67			103				163			524
Total	$	2,545		$	1,977		$	761		$	1,432		$	842			$	6,715		$	2,004
Net charge-offs to average loans (annualized)		0.31	%		0.25	%		0.10	%		0.19	%		0.11	%			0.21	%		0.07	%

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 and renegotiated loans, as well as interest recognized on these loans are included in amounts presented for loans.

CONSOLIDATED AVERAGE BALANCE SHEETS
(Unaudited; Dollars in thousands)
For the Three Months Ended	December 31, 2016									September 30, 2016									December 31, 2015
	Average Balance			Interest			Yield/ Rate			Average Balance			Interest			Yield/ Rate			Average Balance			Interest			Yield/  Rate
Assets:
Commercial mortgages	$	1,086,772		$	9,520		3.48			$	1,079,917		$	9,362		3.45			$	885,967		$	7,887		3.53
Construction & development		110,342			927		3.34				86,623			712		3.27				134,243			1,004		2.97
Commercial & industrial		575,983			6,927		4.78				565,170			6,382		4.49				581,584			6,520		4.45
Total commercial loans		1,773,097		$	17,374		3.90				1,731,710		$	16,456		3.78				1,601,794		$	15,411		3.82
Residential real estate loans, including loans held for sale		1,140,492			10,652		3.72				1,080,302			10,386		3.82				1,049,007			10,338		3.91
Consumer loans		341,528			3,284		3.83				341,829			3,340		3.89				344,690			3,251		3.74
Total loans		3,255,117			31,310		3.83				3,153,841			30,182		3.81				2,995,491			29,000		3.84
Cash, federal funds sold and short-term investments		77,092			95		0.49				88,414			93		0.42				72,031			37		0.20
FHLBB stock		39,212			362		3.67				37,933			288		3.02				24,316			315		5.14
Taxable debt securities		636,277			3,703		2.32				497,738			3,024		2.42				341,130			2,262		2.63
Nontaxable debt securities		16,003			244		6.07				22,038			336		6.07				35,799			550		6.10
Total securities		652,280			3,947		2.41				519,776			3,360		2.57				376,929			2,812		2.96
Total interest-earning assets		4,023,701			35,714		3.53				3,799,964			33,923		3.55				3,468,767			32,164		3.68
Noninterest-earning assets		249,182									262,724									231,674
Total assets	$	4,272,883								$	4,062,688								$	3,700,441
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits	$	46,668		$	16		0.14			$	39,865		$	13		0.13			$	42,324		$	11		0.10
NOW accounts		408,788			51		0.05				402,307			51		0.05				376,185			56		0.06
Money market accounts		761,582			574		0.30				709,549			487		0.27				856,405			707		0.33
Savings accounts		356,837			51		0.06				352,032			52		0.06				310,608			47		0.06
Time deposits (in-market)		552,474			1,419		1.02				552,576			1,408		1.01				533,224			1,333		0.99
Wholesale brokered time deposits		382,798			1,334		1.39				310,740			1,099		1.41				277,681			943		1.35
FHLBB advances		732,269			2,886		1.57				690,843			2,641		1.52				373,652			1,966		2.09
Junior subordinated debentures		22,681			135		2.37				22,681			125		2.19				22,681			157		2.75
Other		40			1		9.95				53			1		7.51				92			2		8.62
Total interest-bearing liabilities		3,264,137			6,467		0.79				3,080,646			5,877		0.76				2,792,852			5,222		0.74
Demand deposits		548,595									520,439									475,215
Other liabilities		63,410									69,370									59,177
Shareholders' equity		396,741									392,233									373,197
Total liabilities and shareholders' equity	$	4,272,883								$	4,062,688								$	3,700,441
Net interest income (FTE)				$	29,247								$	28,046								$	26,942
Interest rate spread							2.74									2.79									2.94
Net interest margin							2.89									2.94									3.08

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

For the Three Months Ended	Dec 31, 2016			Sep 30, 2016			Dec 31, 2015
Commercial loans	$	572		$	549		$	489
Nontaxable debt securities		87			118			198
Total	$	659		$	667		$	687

CONSOLIDATED AVERAGE BALANCE SHEETS
(Unaudited; Dollars in thousands)
For the Twelve Months Ended	December 31, 2016									December 31, 2015
	Average Balance			Interest			Yield/ Rate			Average Balance			Interest			Yield/  Rate
Assets:
Commercial mortgages	$	1,030,289		$	36,089		3.50			$	870,241		$	31,281		3.59
Construction & development		110,770			3,732		3.37				109,198			3,340		3.06
Commercial & industrial		584,307			27,398		4.69				593,799			27,507		4.63
Total commercial loans		1,725,366			67,219		3.90				1,573,238			62,128		3.95
Residential real estate loans, including loans held for sale		1,069,402			41,173		3.85				1,038,836			41,083		3.95
Consumer loans		342,431			13,328		3.89				340,889			12,885		3.78
Total loans		3,137,199			121,720		3.88				2,952,963			116,096		3.93
Cash, federal funds sold and short-term investments		75,997			322		0.42				69,169			138		0.20
FHLBB stock		33,643			1,091		3.24				34,349			953		2.77
Taxable debt securities		472,892			11,584		2.45				325,166			8,875		2.73
Nontaxable debt securities		24,939			1,520		6.09				39,751			2,408		6.06
Total securities		497,831			13,104		2.63				364,917			11,283		3.09
Total interest-earning assets		3,744,670			136,237		3.64				3,421,398			128,470		3.75
Noninterest-earning assets		249,808									226,623
Total assets	$	3,994,478								$	3,648,021
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits	$	45,038		$	49		0.11			$	37,168		$	27		0.07
NOW accounts		400,209			212		0.05				356,713			209		0.06
Money market accounts		741,925			2,035		0.27				824,625			3,482		0.42
Savings accounts		343,943			200		0.06				301,652			196		0.06
Time deposits (in-market)		546,460			5,486		1.00				549,039			5,531		1.01
Wholesale brokered time deposits		323,390			4,522		1.40				284,448			3,697		1.30
FHLBB advances		616,404			9,992		1.62				398,866			7,746		1.94
Junior subordinated debentures		22,681			491		2.16				22,681			871		3.84
Other		60			5		8.33				110			9		8.18
Total interest-bearing liabilities		3,040,110			22,992		0.76				2,775,302			21,768		0.78
Demand deposits		503,806									458,369
Other liabilities		62,021									52,152
Shareholders' equity		388,541									362,198
Total liabilities and shareholders' equity	$	3,994,478								$	3,648,021
Net interest income (FTE)				$	113,245								$	106,702
Interest rate spread							2.88									2.97
Net interest margin							3.02									3.12

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

For the Twelve Months Ended	Dec 31, 2016			Dec 31, 2015
Commercial loans	$	2,229		$	1,867
Nontaxable debt securities		538			853
Total	$	2,767		$	2,720

SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures
(Unaudited; Dollars in thousands, except per share amounts)
	Dec 31,  2016			Sep 30,  2016			Jun 30,  2016			Mar 31,  2016			Dec 31,  2015
Tangible Book Value per Share:
Total shareholders' equity, as reported	$	390,804		$	395,327		$	388,332		$	381,280		$	375,388
Less:
Goodwill		64,059			64,059			64,059			64,059			64,059
Identifiable intangible assets, net		10,175			10,493			10,814			11,137			11,460
Total tangible shareholders' equity	$	316,570		$	320,775		$	313,459		$	306,084		$	299,869
Shares outstanding, as reported		17,171			17,107			17,081			17,024			17,020
Book value per share - GAAP	$	22.76		$	23.11		$	22.73		$	22.40		$	22.06
Tangible book value per share - Non-GAAP	$	18.44		$	18.75		$	18.35		$	17.98		$	17.62
Tangible Equity to Tangible Assets:
Total tangible shareholders' equity	$	316,570		$	320,775		$	313,459		$	306,084		$	299,869
Total assets, as reported	$	4,381,115		$	4,204,034		$	3,917,081		$	3,838,210		$	3,771,604
Less:
Goodwill		64,059			64,059			64,059			64,059			64,059
Identifiable intangible assets, net		10,175			10,493			10,814			11,137			11,460
Total tangible assets	$	4,306,881		$	4,129,482		$	3,842,208		$	3,763,014		$	3,696,085
Equity to assets - GAAP		8.92	%		9.40	%		9.91	%		9.93	%		9.95	%
Tangible equity to tangible assets - Non-GAAP		7.35	%		7.77	%		8.16	%		8.13	%		8.11	%

	For the Three Months Ended																For the Twelve Months Ended
	Dec 31,  2016			Sep 30,  2016			Jun 30,  2016			Mar 31,  2016			Dec 31,  2015				Dec 31,  2016			Dec 31,  2015
Return on Average Tangible Assets:
Net income, as reported	$	12,162		$	12,327		$	11,057		$	10,935		$	10,744			$	46,481		$	43,465
Total average assets, as reported	$	4,272,883		$	4,062,688		$	3,869,508		$	3,769,025		$	3,700,441			$	3,994,478		$	3,648,021
Less average balances of:
Goodwill		64,059			64,059			64,059			64,059			64,194				64,059			60,657
Identifiable intangible assets, net		10,330			10,650			10,972			11,294			11,616				10,810			7,625
Total average tangible assets	$	4,198,494		$	3,987,979		$	3,794,477		$	3,693,672		$	3,624,631			$	3,919,609		$	3,579,739
Return on average assets - GAAP		1.14	%		1.21	%		1.14	%		1.16	%		1.16	%			1.16	%		1.19	%
Return on average tangible assets -   Non-GAAP		1.16	%		1.24	%		1.17	%		1.18	%		1.19	%			1.19	%		1.21	%
Return on Average Tangible Equity:
Net income, as reported	$	12,162		$	12,327		$	11,057		$	10,935		$	10,744			$	46,481		$	43,465
Total average equity, as reported	$	396,741		$	392,233		$	384,717		$	380,342		$	373,197			$	388,541		$	362,198
Less average balances of:
Goodwill		64,059			64,059			64,059			64,059			64,194				64,059			60,657
Identifiable intangible assets, net		10,330			10,650			10,972			11,294			11,616				10,810			7,625
Total average tangible equity	$	322,352		$	317,524		$	309,686		$	304,989		$	297,387			$	313,672		$	293,916
Return on average equity - GAAP		12.26	%		12.57	%		11.50	%		11.50	%		11.52	%			11.96	%		12.00	%
Return on average tangible equity -   Non-GAAP		15.09	%		15.53	%		14.28	%		14.34	%		14.45	%			14.82	%		14.79	%

 

Contact:  Elizabeth B. Eckel
Senior Vice President, Marketing
Telephone:  (401) 348-1309
E-mail:  ebeckel@washtrust.com

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