WESTERLY, R.I., July 23, 2018 (GLOBE NEWSWIRE) -- Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced second quarter 2018 net income of $17.7 million, or $1.01 per diluted share, compared to net income of $16.2 million, or $0.93 per diluted share, reported for the first quarter of 2018.

“Washington Trust is pleased to report another strong performance, with record earnings and diluted earnings per share for the second quarter of 2018,” stated Edward O. Handy III, Washington Trust Chairman and Chief Executive Officer.  “Our continued profitability and solid financial metrics reflect the strength and stability of our corporation, as evidenced by our recent recognition by American Banker as one of the nation’s top performing mid-tier banks.”

Selected highlights for second quarter 2018 include:

• Profitability ratios were at their highest levels in over 15 years, with returns on average equity and average assets of 16.99% and 1.53%, respectively.
• Total revenues (net interest income and noninterest income) were up by 3% on a linked quarter basis and amounted to $49.1 million, a record level for Washington Trust.
  
• Total loans were up by $103 million, or 3%, from the end of the prior quarter and up by $290 million, or 9%, from a year ago.
  
• Total deposits were up by $65 million, or 2%, from the end of the first quarter and up by $300 million, or 10%, from a year ago.
  
• In June, Washington Trust declared a quarterly dividend of 43 cents per share.  Year-to-date dividends declared amounted to 86 cents per share, an increase of 10 cents per share, or 13%, from the same period a year ago.
  

Net Interest Income
Net interest income was $33.1 million for the second quarter of 2018, up by $1.3 million, or 4%, from the first quarter of 2018.  Included in net interest income in the second quarter of 2018 was loan prepayment fee income of $483 thousand, compared to $46 thousand in the first quarter of 2018.  The net interest margin was 3.05% for the second quarter, up by 2 basis points from the preceding quarter.  Excluding the impact of loan prepayment fee income in each period, the net interest margin was 3.01%, down by 2 basis points from the preceding quarter.

Significant linked quarter changes included:

• Average interest-earning assets increased by $91 million, largely due to loan growth.  The yield on interest-earning assets for the second quarter was 3.98%, up by 14 basis points from the preceding quarter.  Excluding the impact of loan prepayment fee income in each period, the yield on interest-earning assets was 3.94%, up by 10 basis points from the preceding quarter.  The yield benefited from increased market rates of interest.
  
• Average interest-bearing liabilities increased by $100 million, reflecting increases in average wholesale funding balances (wholesale brokered time deposits and Federal Home Loan Bank advances) and in-market time deposits.  The cost of interest-bearing funds for the second quarter was 1.14%, up by 14 basis points from the preceding quarter, largely due to higher rates paid on promotional time certificates of deposit and wholesale funding liabilities.
  

Noninterest Income
Noninterest income totaled $16.0 million for the second quarter of 2018, up by $250 thousand, or 2%, from the first quarter of 2018.  Significant linked quarter changes included:

• Wealth management revenues were $9.6 million for the second quarter of 2018, down by $671 thousand, or 7%, on a linked quarter basis.  Asset-based revenues were down by $819 thousand, or 8%, on a linked quarter basis.  The decline in asset-based revenues was largely attributable to client outflows that commenced in the latter portion of the first quarter of 2018 and continued into the second quarter.  These outflows were associated with the previously reported loss of certain client-facing personnel in the preceding quarter.  The decline in asset-based revenues was partially offset by an increase of $148 thousand in transaction-based revenues, largely attributable to tax preparation revenue, which is generally concentrated in the second quarter.
  
  Wealth management assets under administration were $6.2 billion at June 30, 2018, down by $124 million, or 2%, from the balance at March 31, 2018, with $257 million of net client outflows, partially offset by $133 million of net investment appreciation and income.
  

• Mortgage banking revenues were $2.9 million for the second quarter of 2018, up by $103 thousand, or 4%, from the preceding quarter.  Residential mortgage loans sold to the secondary market were $105 million in the second quarter, up by $8 million from the $97 million sold in the first quarter of 2018.
  
• Loan related derivative income was $668 thousand for the second quarter of 2018, up by $527 thousand from the preceding quarter, due to higher volume of commercial borrower loan related derivative transactions occurring in the second quarter.
  

Noninterest Expenses
Noninterest expenses totaled $26.3 million for the second quarter of 2018, down by $842 thousand, or 3%, from the first quarter.  The linked quarter comparison of noninterest expenses was impacted by the following:

• As previously reported in the first quarter of 2018, one-time cash incentive bonuses of approximately $450 thousand were expensed and paid to non-executive employees as tax reform provided Washington Trust with an opportunity to further recognize and invest in our employees with special compensation enhancements.
  
• In the second quarter of 2018, software system implementation expenses of $114 thousand were recognized, compared to $681 thousand recognized in the preceding quarter.  These were classified as other expenses and primarily related to the conversion of our wealth management accounting system, which was completed in April 2018.
  

Excluding the aforementioned items, noninterest expenses were up by $175 thousand, or 1%, on a linked quarter basis.  The linked quarter change included an increase in outsourced services and a decrease in equipment expenses, both of which were mainly due to the expansion of services provided by third party vendors.

Income tax expense totaled $4.7 million for the second quarter of 2018, up by $488 thousand from the preceding quarter, largely due to a higher level of pre-tax income.  The effective tax rate for the second quarter of 2018 was 21.2%, compared to 20.8% for the preceding quarter.  The linked quarter increase in the effective tax rate was due to a lower level of excess tax benefits on the settlement of share-based awards.

Investment Securities
The securities portfolio totaled $788 million at June 30, 2018, down by $12 million from the balance at March 31, 2018.  The decline was due to routine principal pay-downs on mortgage-backed securities, calls and maturities of debt securities and a temporary decline in the fair value of available for sale securities.  The overall decline was partially offset by purchases of debt securities in the second quarter totaling $21 million, with a weighted average yield of 3.58%.  Investment securities represented 17% of total assets at June 30, 2018.

Loans
Total loans amounted to $3.5 billion at June 30, 2018, up by $103 million, or 3%, from the end of the first quarter.  The residential real estate loan portfolio increased by $78 million, or 6%, from the balance at March 31, 2018 as origination volume was strong in the quarter.  Residential real estate loans originated for retention in portfolio were $128 million during the second quarter of 2018, compared to $68 million in the preceding quarter.  Total commercial loans increased by $30 million, or 2%, reflecting an increase of $28 million in the commercial and industrial ("C&I") portfolio, including approximately $22 million of completed commercial construction loans that were transferred to the C&I portfolio in the quarter.  Second quarter commercial real estate loan originations and advances were essentially offset by approximately $52 million of payoffs and the transfer of the commercial construction loans to the C&I portfolio in the quarter.  Total consumer loans declined by $4 million, or 1%, from the end of the first quarter.

Deposits and Borrowings
Total deposits amounted to $3.3 billion at June 30, 2018, up by $65 million, or 2%, from the end of the preceding quarter.  Included in total deposits were wholesale brokered time deposits of $446 million, which increased by $41 million from the balance at March 31, 2018.  Excluding the wholesale brokered time deposits, in-market deposits increased by $24 million from the end of the preceding quarter.  We experienced growth in in-market time deposits resulting from a promotional campaign that began in April 2018 and we implemented a program in June 2018 to transition approximately $70 million of wealth management client assets, previously held in outside accounts, into insured interest-bearing demand deposits on Washington Trust's balance sheet.  These increases were partially offset by a decline in money market and demand account balances, reflecting seasonal outflows of various institutional and governmental depositors based on their underlying business cycles.

Federal Home Loan Bank advances amounted to $901 million at June 30, 2018, up by $92 million from the balance at March 31, 2018 to fund asset growth.

Asset Quality
Total nonaccrual loans amounted to $11.7 million, or 0.34% of total loans, at June 30, 2018, up from $10.5 million, or 0.31% of total loans, at March 31, 2018.  Total past due loans amounted to $16.7 million, or 0.48% of total loans, at June 30, 2018, down from $19.4 million, or 0.57% of total loans, at March 31, 2018.

Based on the assessment of loan and credit quality metrics, loss exposures and changes in the loan portfolio during the quarter, a loan loss provision totaling $400 thousand was recognized in the second quarter of 2018.  There was no loan loss provision recognized in the preceding quarter.  Net charge-offs were nominal in the second quarter of 2018, totaling $90 thousand, compared to $624 thousand in the preceding quarter.  The allowance for loan losses amounted to $26.2 million, or 0.75% of total loans, at June 30, 2018, compared to $25.9 million, or 0.76% of total loans, at March 31, 2018.

Capital and Dividends
Total shareholders' equity was $422 million at June 30, 2018, up by $8.5 million from March 31, 2018, reflecting net income of $17.7 million, offset by $7.5 million in dividends declared and a $2.4 million reduction in the accumulated comprehensive income component of shareholders' equity primarily resulting from a decline in the fair value of available for sale securities.

Capital levels at June 30, 2018 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.61% at June 30, 2018, compared to 12.56% at March 31, 2018.  Book value per share amounted to $24.40 at June 30, 2018, compared to $23.93 at March 31, 2018.

The Board of Directors declared a quarterly dividend of 43 cents per share for the quarter ended June 30, 2018.  The dividend was paid on July 13, 2018 to shareholders of record on July 2, 2018.

Conference Call
Washington Trust will host a conference call to discuss its second quarter results, business highlights and outlook on Tuesday, July 24, 2018 at 8:30 a.m. (Eastern Time).  Individuals may dial in to the call at 1-877-407-9208.  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 13681368; the audio replay will be available through August 3, 2018.  Also, a webcast of the call will be posted in the Investor Relations section of Washington Trust's web site, http://ir.washtrust.com, and will be available through September 30, 2018.

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

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

Some of the factors that might cause these differences include the following: 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 or outflows 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 our competition; changes in legislation or regulation and accounting principles, policies and guidelines; occurrences of cyberattacks, hacking and identity theft; natural disasters; 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, 2017, as updated by our Quarterly Reports on Form 10-Q and other filings submitted to the SEC, may result in these differences. You should carefully review all of these factors and you should be aware that there may be other factors that could cause these differences. These forward-looking statements were based on information, plans and estimates at the date of this report, and we assume no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

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

Washington Trust Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; Dollars in thousands)
	Jun 30,  2018			Mar 31,  2018			Dec 31,  2017			Sep 30,  2017			Jun 30,  2017
Assets:
Cash and due from banks	$	132,068		$	85,680		$	79,853		$	128,580		$	117,608
Short-term investments		2,624			2,322			3,070			2,600			2,324
Mortgage loans held for sale		35,207			19,269			26,943			28,484			32,784
Securities:
Available for sale, at fair value		776,693			787,842			780,954			714,355			749,486
Held to maturity, at amortized cost		11,412			11,973			12,541			13,241			13,942
Total securities		788,105			799,815			793,495			727,596			763,428
Federal Home Loan Bank stock, at cost		46,281			41,127			40,517			42,173			44,640
Loans:
Total loans		3,490,230			3,387,406			3,374,071			3,323,078			3,200,100
Less allowance for loan losses		26,174			25,864			26,488			27,308			26,662
Net loans		3,464,056			3,361,542			3,347,583			3,295,770			3,173,438
Premises and equipment, net		28,377			28,316			28,333			28,591			28,508
Investment in bank-owned life insurance		79,319			73,782			73,267			72,729			72,183
Goodwill		63,909			63,909			63,909			63,909			63,909
Identifiable intangible assets, net		8,645			8,893			9,140			9,388			9,642
Other assets		88,651			81,671			63,740			69,410			67,065
Total assets	$	4,737,242		$	4,566,326		$	4,529,850		$	4,469,230		$	4,375,529
Liabilities:
Deposits:
Noninterest-bearing deposits	$	577,656		$	601,478		$	578,410		$	575,866		$	533,147
Interest-bearing deposits		2,743,955			2,654,956			2,664,297			2,581,215			2,488,042
Total deposits		3,321,611			3,256,434			3,242,707			3,157,081			3,021,189
Federal Home Loan Bank advances		901,053			808,677			791,356			814,045			869,733
Junior subordinated debentures		22,681			22,681			22,681			22,681			22,681
Other liabilities		70,326			65,453			59,822			61,195			55,884
Total liabilities		4,315,671			4,153,245			4,116,566			4,055,002			3,969,487
Shareholders’ Equity:
Common stock		1,080			1,079			1,077			1,076			1,076
Paid-in capital		118,883			118,172			117,961			117,189			116,484
Retained earnings		336,670			326,505			317,756			312,334			306,151
Accumulated other comprehensive loss		(35,062	)		(32,675	)		(23,510	)		(16,371	)		(17,669	)
Total shareholders’ equity		421,571			413,081			413,284			414,228			406,042
Total liabilities and shareholders’ equity	$	4,737,242		$	4,566,326		$	4,529,850		$	4,469,230		$	4,375,529

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; Dollars in thousands, except per share amounts)
	For the Three Months Ended																For the Six Months Ended
	Jun 30,  2018			Mar 31,  2018			Dec 31,  2017			Sep 30,  2017			Jun 30,  2017				Jun 30,  2018			Jun 30,  2017
Interest income:
Interest and fees on loans	$	37,101		$	34,578		$	33,459		$	32,509		$	31,642			$	71,679		$	61,994
Taxable interest on securities		5,358			5,118			4,719			4,655			4,844				10,476			9,553
Nontaxable interest on securities		20			23			24			41			72				43			184
Dividends on Federal Home Loan Bank stock		550			516			481			467			439				1,066			826
Other interest income		257			205			217			197			156				462			260
Total interest and dividend income		43,286			40,440			38,900			37,869			37,153				83,726			72,817
Interest expense:
Deposits		5,254			4,422			4,136			3,835			3,591				9,676			7,093
Federal Home Loan Bank advances		4,707			3,983			3,708			3,816			3,509				8,690			6,853
Junior subordinated debentures		214			183			167			159			149				397			287
Other interest expense		—			—			—			—			—				—			1
Total interest expense		10,175			8,588			8,011			7,810			7,249				18,763			14,234
Net interest income		33,111			31,852			30,889			30,059			29,904				64,963			58,583
Provision for loan losses		400			—			200			1,300			700				400			1,100
Net interest income after provision for loan losses		32,711			31,852			30,689			28,759			29,204				64,563			57,483
Noninterest income:
Wealth management revenues		9,602			10,273			9,914			10,013			9,942				19,875			19,419
Mortgage banking revenues		2,941			2,838			3,097			3,036			2,919				5,779			5,259
Service charges on deposit accounts		903			863			946			942			901				1,766			1,784
Card interchange fees		961			847			904			894			902				1,808			1,704
Income from bank-owned life insurance		537			515			537			546			542				1,052			1,078
Loan related derivative income		668			141			470			1,452			1,144				809			1,292
Other income		381			266			342			400			456				647			780
Total noninterest income		15,993			15,743			16,210			17,283			16,806				31,736			31,316
Noninterest expense:
Salaries and employee benefits		17,304			17,772			17,194			17,362			17,418				35,076			34,335
Net occupancy		1,930			2,002			1,859			1,928			1,767				3,932			3,734
Outsourced services		2,350			1,873			1,960			1,793			1,710				4,223			3,167
Equipment		1,069			1,180			1,198			1,380			1,313				2,249			2,780
Legal, audit and professional fees		555			726			562			534			582				1,281			1,198
FDIC deposit insurance costs		422			404			389			308			469				826			950
Advertising and promotion		329			177			466			416			362				506			599
Amortization of intangibles		247			248			248			253			257				495			534
Change in fair value of contingent consideration		—			—			(333	)		—			—				—			(310	)
Other expenses		2,082			2,748			2,211			2,780			2,428				4,830			4,605
Total noninterest expense		26,288			27,130			25,754			26,754			26,306				53,418			51,592
Income before income taxes		22,416			20,465			21,145			19,288			19,704				42,881			37,207
Income tax expense		4,742			4,254			13,163			6,326			6,505				8,996			12,226
Net income	$	17,674		$	16,211		$	7,982		$	12,962		$	13,199			$	33,885		$	24,981
Net income available to common shareholders	$	17,636		$	16,173		$	7,958		$	12,934		$	13,170			$	33,809		$	24,925
Weighted average common shares outstanding:
Basic		17,272			17,234			17,223			17,212			17,206				17,253			17,196
Diluted		17,387			17,345			17,349			17,318			17,316				17,384			17,312
Earnings per common share:
Basic	$	1.02		$	0.94		$	0.46		$	0.75		$	0.77			$	1.96		$	1.45
Diluted	$	1.01		$	0.93		$	0.46		$	0.75		$	0.76			$	1.94		$	1.44
Cash dividends declared per share	$	0.43		$	0.43		$	0.39		$	0.39		$	0.38			$	0.86		$	0.76

SELECTED FINANCIAL HIGHLIGHTS
(Unaudited; Dollars in thousands, except per share amounts)
	Jun 30,  2018			Mar 31,  2018			Dec 31,  2017			Sep 30,  2017			Jun 30,  2017
Share and Equity Related Data:
Book value per share	$	24.40		$	23.93		$	23.99		$	24.06		$	23.59
Tangible book value per share - Non-GAAP (1)	$	20.20		$	19.71		$	19.75		$	19.81		$	19.32
Market value per share	$	58.10		$	53.75		$	53.25		$	57.25		$	51.55
Shares issued and outstanding at end of period		17,278			17,262			17,227			17,214			17,210
Capital Ratios (2):
Tier 1 risk-based capital		11.84%			11.78%			11.65%			11.69%			11.92%
Total risk-based capital		12.61%			12.56%			12.45%			12.53%			12.78%
Tier 1 leverage ratio		8.87%			8.84%			8.79%			8.83%			8.78%
Common equity tier 1		11.20%			11.13%			10.99%			11.02%			11.23%
Balance Sheet Ratios:
Equity to assets		8.90%			9.05%			9.12%			9.27%			9.28%
Tangible equity to tangible assets - Non-GAAP (1)		7.48%			7.57%			7.63%			7.76%			7.73%
Loans to deposits (3)		105.3%			103.8%			104.1%			105.3%			106.1%

							For the Six Months Ended
	For the Three Months Ended
	Jun 30,  2018	Mar 31,  2018	Dec 31,  2017	Sep 30,  2017	Jun 30,  2017		Jun 30,  2018		Jun 30,  2017
Performance Ratios (4):
Net interest margin (5)	3.05%	3.03%	2.95%	2.93%	2.97%		3.04%		2.92%
Return on average assets (net income divided by average assets)	1.53%	1.45%	0.71%	1.17%	1.22%		1.49%		1.16%
Return on average tangible assets - Non-GAAP (1)	1.56%	1.48%	0.72%	1.19%	1.24%		1.52%		1.18%
Return on average equity (net income available for common shareholders divided by average equity)	16.99%	15.96%	7.56%	12.43%	13.07%		16.48%		12.54%
Return on average tangible equity - Non-GAAP (1)	20.58%	19.40%	9.17%	15.12%	15.99%		20.00%		15.38%
Efficiency ratio (6)	53.5%	57.0%	54.7%	56.5%	56.3%		55.2%		57.4%

1. See the section labeled “SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures” at the end of this document.
2. Estimated for June 30, 2018 and actuals for the remaining periods.
3. Period-end balances of net loans and mortgage loans held as a percentage of total deposits.
4. Annualized based on the actual number of days in the period.
5. Fully taxable equivalent (FTE) net interest income as a percentage of average-earnings assets.
6. Total noninterest expense as percentage of total revenues (net interest income and noninterest income).

SELECTED FINANCIAL HIGHLIGHTS
(Unaudited; Dollars in thousands)
	For the Three Months Ended																					For the Six Months Ended
	Jun 30,  2018				Mar 31,  2018				Dec 31,  2017				Sep 30,  2017				Jun 30,  2017					Jun 30,  2018				Jun 30,  2017
Wealth Management Results
Wealth Management Revenues:
Asset-based revenues	$	9,136			$	9,955			$	9,686			$	9,791			$	9,401				$	19,091			$	18,648
Transaction-based revenues		466				318				228				222				541					784				771
Total wealth management revenues	$	9,602			$	10,273			$	9,914			$	10,013			$	9,942				$	19,875			$	19,419
Assets Under Administration (AUA):
Balance at beginning of period	$	6,343,720			$	6,714,637			$	6,587,899			$	6,403,501			$	6,243,301				$	6,714,637			$	6,063,293
Net investment appreciation (depreciation) & income		133,450				(32,024	)			163,681				270,549				162,924					101,426				383,347
Net client asset flows		(257,015	)			(338,893	)			(36,943	)			(86,151	)			(2,724	)				(595,908	)			(43,139	)
Balance at end of period	$	6,220,155			$	6,343,720			$	6,714,637			$	6,587,899			$	6,403,501				$	6,220,155			$	6,403,501
Percentage of AUA that are managed assets		92		%		92		%		93		%		92		%		93		%			92		%		93		%
Mortgage Banking Results
Mortgage Banking Revenues:
Gains & commissions on loan sales, net	$	2,786			$	2,679			$	2,987			$	2,952			$	2,784				$	5,465			$	5,052
Residential mortgage servicing fee income, net		155				159				110				84				135					314				207
Total mortgage banking revenues	$	2,941			$	2,838			$	3,097			$	3,036			$	2,919				$	5,779			$	5,259
Residential Mortgage Loan Originations:
Originations for retention in portfolio	$	128,479			$	67,840			$	75,595			$	90,378			$	94,794				$	196,319			$	152,701
Originations for sale to secondary market (1)		122,693				87,720				143,834				143,112				144,491					210,413				246,932
Total mortgage loan originations	$	251,172			$	155,560			$	219,429			$	233,490			$	239,285				$	406,732			$	399,633
Residential Mortgage Loans Sold:
Sold with servicing rights retained	$	24,367			$	33,575			$	39,769			$	37,823			$	29,199				$	57,942			$	51,766
Sold with servicing rights released (1)		81,054				63,265				105,416				109,508				108,245					144,319				192,590
Total mortgage loans sold	$	105,421			$	96,840			$	145,185			$	147,331			$	137,444				$	202,261			$	244,356

1. Also includes loans originated in a broker capacity.

END OF PERIOD LOAN AND DEPOSIT COMPOSITION
(Unaudited; Dollars in thousands)
	Jun 30,  2018			Mar 31,  2018			Dec 31,  2017			Sep 30,  2017			Jun 30,  2017
Loans:
Commercial real estate (1)	$	1,218,643		$	1,217,278		$	1,210,495		$	1,211,792		$	1,121,273
Commercial & industrial		632,029			603,830			612,334			588,324			577,116
Total commercial		1,850,672			1,821,108			1,822,829			1,800,116			1,698,389
Residential real estate (2)		1,327,418			1,249,890			1,227,248			1,195,537			1,168,105
Home equity		283,744			285,723			292,467			294,657			299,107
Other		28,396			30,685			31,527			32,768			34,499
Total consumer		312,140			316,408			323,994			327,425			333,606
Total loans	$	3,490,230		$	3,387,406		$	3,374,071		$	3,323,078		$	3,200,100

1. Commercial real estate loans consist of commercial mortgages and construction and development loans.  Commercial mortgages are loans secured by income producing property.
2. Residential real estate loans consist of mortgage and homeowner construction loans secured by one- to four- family residential properties.

	June 30, 2018						December 31, 2017
	Balance			% of Total			Balance			% of Total
Commercial Real Estate Loans by Property Location:
Rhode Island	$	346,215		28.4	%		$	360,834		29.8	%
Connecticut		488,429		40.1				309,013		25.5
Massachusetts		300,353		24.6				461,230		38.1
Subtotal		1,134,997		93.1				1,131,077		93.4
All other states		83,646		6.9				79,418		6.6
Total commercial real estate loans	$	1,218,643		100.0	%		$	1,210,495		100.0	%
Residential Real Estate Loans by Property Location:
Rhode Island	$	347,605		26.2	%		$	343,340		28.0	%
Connecticut		145,949		11.0				140,843		11.5
Massachusetts		817,288		61.6				726,712		59.2
Subtotal		1,310,842		98.8				1,210,895		98.7
All other states		16,576		1.2				16,353		1.3
Total residential real estate loans	$	1,327,418		100.0	%		$	1,227,248		100.0	%

	Jun 30,  2018			Mar 31,  2018			Dec 31,  2017			Sep 30,  2017			Jun 30,  2017
Deposits:
Noninterest-bearing demand deposits	$	577,656		$	601,478		$	578,410		$	575,866		$	533,147
Interest-bearing demand deposits		136,640			83,249			82,728			45,407			54,666
NOW accounts		481,905			470,112			466,605			448,128			448,617
Money market accounts		604,954			693,748			731,345			716,827			666,047
Savings accounts		375,983			376,608			368,524			367,912			364,002
Time deposits (in-market)		698,286			625,965			617,368			587,166			553,783
Wholesale brokered time deposits		446,187			405,274			397,727			415,775			400,927
Total deposits	$	3,321,611		$	3,256,434		$	3,242,707		$	3,157,081		$	3,021,189

CREDIT & ASSET QUALITY DATA
(Unaudited; Dollars in thousands)
	Jun 30,  2018			Mar 31,  2018			Dec 31,  2017			Sep 30,  2017			Jun 30,  2017
Asset Quality Ratios:	%
Nonperforming assets to total assets		0.32	%		0.30	%		0.34	%		0.44	%		0.49	%
Nonaccrual loans to total loans		0.34	%		0.31	%		0.45	%		0.56	%		0.63	%
Total past due loans to total loans		0.48	%		0.57	%		0.59	%		0.49	%		0.66	%
Allowance for loan losses to nonaccrual loans		222.85	%		245.83	%		174.14	%		147.52	%		132.00	%
Allowance for loan losses to total loans		0.75	%		0.76	%		0.79	%		0.82	%		0.83	%
Nonperforming Assets:
Commercial real estate	$	—		$	—		$	4,954		$	5,887		$	6,422
Commercial & industrial		397			397			283			429			1,232
Total commercial		397			397			5,237			6,316			7,654
Residential real estate		10,206			9,340			9,414			11,699			11,815
Home equity		1,133			771			544			480			620
Other consumer		9			13			16			16			109
Total consumer		1,142			784			560			496			729
Total nonaccrual loans		11,745			10,521			15,211			18,511			20,198
Other real estate owned		3,206			3,206			131			1,038			1,342
Total nonperforming assets	$	14,951		$	13,727		$	15,342		$	19,549		$	21,540
Past Due Loans (30 days or more past due):
Commercial real estate	$	—		$	—		$	4,960		$	5,887		$	6,422
Commercial & industrial		2,851			3,295			4,076			455			4,009
Total commercial		2,851			3,295			9,036			6,342			10,431
Residential real estate		11,243			11,806			7,855			7,802			8,857
Home equity		2,585			4,235			3,141			2,268			1,806
Other consumer		16			22			43			35			26
Total consumer		2,601			4,257			3,184			2,303			1,832
Total past due loans	$	16,695		$	19,358		$	20,075		$	16,447		$	21,120
Accruing loans 90 days or more past due	$	—		$	—		$	—		$	—		$	—
Nonaccrual loans included in past due loans	$	8,575		$	7,066		$	11,788		$	13,216		$	14,490

CREDIT & ASSET QUALITY DATA
(Unaudited; Dollars in thousands)
	For the Three Months Ended																For the Six Months Ended
	Jun 30,  2018			Mar 31,  2018			Dec 31,  2017			Sep 30,  2017			Jun 30,  2017				Jun 30,  2018			Jun 30,  2017
Nonaccrual Loan Activity:
Balance at beginning of period	$	10,521		$	15,211		$	18,511		$	20,198		$	22,127			$	15,211		$	22,058
Additions to nonaccrual status		2,457			1,210			462			1,969			1,946				3,667			4,084
Loans returned to accruing status		(475	)		(344	)		(1,316	)		(1,411	)		(778	)			(819	)		(1,325	)
Loans charged-off		(103	)		(690	)		(1,047	)		(694	)		(642	)			(793	)		(721	)
Loans transferred to other real estate owned		—			(3,074	)		—			—			(98	)			(3,074	)		(576	)
Payments, payoffs and other changes		(655	)		(1,792	)		(1,399	)		(1,551	)		(2,357	)			(2,447	)		(3,322	)
Balance at end of period	$	11,745		$	10,521		$	15,211		$	18,511		$	20,198			$	11,745		$	20,198
Allowance for Loan Losses:
Balance at beginning of period	$	25,864		$	26,488		$	27,308		$	26,662		$	26,446			$	26,488		$	26,004
Provision charged to earnings		400			—			200			1,300			700				400			1,100
Charge-offs		(103	)		(690	)		(1,047	)		(694	)		(642	)			(793	)		(721	)
Recoveries		13			66			27			40			158				79			279
Balance at end of period	$	26,174		$	25,864		$	26,488		$	27,308		$	26,662			$	26,174		$	26,662
Net Loan Charge-Offs (Recoveries):
Commercial real estate	$	—		$	602		$	932		$	535		$	318			$	602		$	318
Commercial & industrial		(3	)		(23	)		43			114			115				(26	)		10
Total commercial		(3	)		579			975			649			433				576			328
Residential real estate		5			—			32			(1	)		8				5			4
Home equity		73			28			(2	)		(7	)		12				101			55
Other consumer		15			17			15			13			31				32			55
Total consumer		88			45			13			6			43				133			110
Total	$	90		$	624		$	1,020		$	654		$	484			$	714		$	442
Net charge-offs to average loans (annualized)		0.01	%		0.07	%		0.12	%		0.08	%		0.06	%			0.04	%		0.03	%

The following table presents average balance and interest rate information.  Tax-exempt income is converted to a FTE basis using the statutory federal income tax rate adjusted for applicable state income taxes net of the related federal tax benefit.  Unrealized gains (losses) on available for sale securities and 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.  Certain previously reported amounts have been reclassified to conform to current year's presentation.

CONSOLIDATED AVERAGE BALANCE SHEETS (FTE Basis)
(Unaudited; Dollars in thousands)
For the Three Months Ended	June 30, 2018									March 31, 2018									June 30, 2017
	Average Balance			Interest			Yield/ Rate			Average Balance			Interest			Yield/ Rate			Average Balance			Interest			Yield/  Rate
Assets:
Cash, federal funds sold and short-term investments	$	56,142		$	257		1.84	%		$	53,138		$	205		1.56	%		$	60,428		$	156		1.04	%
Mortgage loans held for sale	$	30,203		$	313		4.16			$	24,424		$	226		3.75			$	21,977		$	223		4.07
Taxable debt securities		821,772			5,358		2.62				804,518			5,118		2.58				773,280			4,844		2.51
Nontaxable debt securities		1,956			26		5.33				2,355			29		4.99				7,076			109		6.18
Total securities		823,728			5,384		2.62				806,873			5,147		2.59				780,356			4,953		2.55
FHLB stock		43,331			550		5.09				40,888			516		5.12				44,362			439		3.97
Commercial real estate		1,225,926			13,463		4.40				1,218,702			12,346		4.11				1,162,002			11,032		3.81
Commercial & industrial		622,141			7,569		4.88				608,784			6,823		4.55				576,312			6,607		4.60
Total commercial		1,848,067		$	21,032		4.56				1,827,486		$	19,169		4.25				1,738,314		$	17,639		4.07
Residential real estate		1,275,171			12,426		3.91				1,228,379			11,929		3.94				1,140,918			10,865		3.82
Home equity		284,188			3,278		4.63				287,176			3,160		4.46				296,971			3,047		4.12
Other		29,696			360		4.86				30,706			370		4.89				35,082			417		4.77
Total consumer		313,884			3,638		4.65				317,882			3,530		4.50				332,053			3,464		4.18
Total loans		3,437,122			37,096		4.33				3,373,747			34,628		4.16				3,211,285			31,968		3.99
Total interest-earning assets		4,390,526			43,600		3.98				4,299,070			40,722		3.84				4,118,408			37,739		3.68
Noninterest-earning assets		238,290									230,638									236,056
Total assets	$	4,628,816								$	4,529,708								$	4,354,464
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits	$	86,204		$	101		0.47	%		$	80,502		$	28		0.14	%		$	54,675		($	8	)	(0.06	)%
NOW accounts		460,712			57		0.05				449,298			54		0.05				437,282			57		0.05
Money market accounts		664,127			960		0.58				718,664			880		0.50				711,711			640		0.36
Savings accounts		375,690			57		0.06				368,012			57		0.06				361,545			52		0.06
Time deposits (in-market)		662,969			2,265		1.37				617,878			1,820		1.19				559,442			1,460		1.05
Wholesale brokered time deposits		430,118			1,814		1.69				409,243			1,583		1.57				392,734			1,390		1.42
Total interest-bearing deposits		2,679,820			5,254		0.79				2,643,597			4,422		0.68				2,517,389			3,591		0.57
FHLB advances		874,746			4,707		2.16				810,967			3,983		1.99				817,349			3,509		1.72
Junior subordinated debentures		22,681			214		3.78				22,681			183		3.27				22,681			149		2.63
Other		—			—		—				—			—		—				13			—		—
Total interest-bearing liabilities		3,577,247			10,175		1.14				3,477,245			8,588		1.00				3,357,432			7,249		0.87
Noninterest-bearing demand deposits		574,258									584,557									543,781
Other liabilities		60,878									56,951									49,013
Shareholders' equity		416,433									410,955									404,238
Total liabilities and shareholders' equity	$	4,628,816								$	4,529,708								$	4,354,464
Net interest income (FTE)				$	33,425								$	32,134								$	30,490
Interest rate spread							2.84	%								2.84	%								2.81	%
Net interest margin							3.05	%								3.03	%								2.97	%

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

For the Three Months Ended	Jun 30, 2018			Mar 31, 2018			Jun 30, 2017
Commercial loans	$	308		$	276		$	549
Nontaxable debt securities		6			6			37
Total	$	314		$	282		$	586

CONSOLIDATED AVERAGE BALANCE SHEETS (FTE Basis)
(Unaudited; Dollars in thousands)
For the Six Months Ended	June 30, 2018									June 30, 2017
	Average Balance			Interest			Yield/ Rate			Average Balance			Interest			Yield/  Rate
Assets:
Cash, federal funds sold and short-term investments	$	54,649		$	462		1.70	%		$	58,323		$	260		0.90	%
Mortgage loans for sale		27,329			539		3.98				23,194			445		3.87
Taxable debt securities		813,193			10,476		2.60				764,666			9,553		2.52
Nontaxable debt securities		2,154			55		5.15				9,286			282		6.12
Total securities		815,347			10,531		2.60				773,952			9,835		2.56
FHLB stock		42,116			1,066		5.10				43,994			826		3.79
Commercial real estate		1,222,136			25,809		4.26				1,184,294			21,588		3.68
Commercial & industrial		615,698			14,392		4.71				575,162			12,765		4.48
Total commercial		1,837,834			40,201		4.41				1,759,456			34,353		3.94
Residential real estate		1,251,904			24,355		3.92				1,134,516			21,511		3.82
Home equity		285,684			6,439		4.55				297,481			5,924		4.02
Other		30,188			729		4.87				36,064			863		4.83
Total consumer		315,872			7,168		4.58				333,545			6,787		4.10
Total loans		3,405,610			71,724		4.25				3,227,517			62,651		3.91
Total interest-earning assets		4,345,051			84,322		3.91				4,126,980			74,017		3.62
Noninterest-earning assets		234,485									232,957
Total assets	$	4,579,536								$	4,359,937
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits	$	83,368		$	129		0.31	%		$	55,722		$	7		0.03	%
NOW accounts		455,036			111		0.05				428,998			108		0.05
Money market accounts		691,245			1,840		0.54				732,988			1,239		0.34
Savings accounts		371,873			114		0.06				359,730			102		0.06
Time deposits (in-market)		640,548			4,085		1.29				557,161			2,878		1.04
Wholesale brokered time deposits		419,738			3,397		1.63				394,992			2,759		1.41
Total interest-bearing deposits		2,661,808			9,676		0.73				2,529,591			7,093		0.57
FHLB advances		843,033			8,690		2.08				824,442			6,853		1.68
Junior subordinated debentures		22,681			397		3.53				22,681			287		2.55
Other		—			—		—				20			1		10.08
Total interest-bearing liabilities		3,527,522			18,763		1.07				3,376,734			14,234		0.85
Noninterest-bearing demand deposits		579,379									535,544
Other liabilities		58,926									46,962
Shareholders' equity		413,709									400,697
Total liabilities and shareholders' equity	$	4,579,536								$	4,359,937
Net interest income (FTE)				$	65,559								$	59,783
Interest rate spread							2.84	%								2.77	%
Net interest margin							3.04	%								2.92	%

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

For the Six Months Ended	Jun 30, 2018			Jun 30, 2017
Commercial loans	$	584		$	1,102
Nontaxable debt securities		12			98
Total	$	596		$	1,200

SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures
(Unaudited; Dollars in thousands, except per share amounts)
	Jun 30,  2018			Mar 31,  2018			Dec 31,  2017			Sep 30,  2017			Jun 30,  2017
Tangible Book Value per Share:
Total shareholders' equity, as reported	$	421,571		$	413,081		$	413,284		$	414,228		$	406,042
Less:
Goodwill		63,909			63,909			63,909			63,909			63,909
Identifiable intangible assets, net		8,645			8,893			9,140			9,388			9,642
Total tangible shareholders' equity	$	349,017		$	340,279		$	340,235		$	340,931		$	332,491
Shares outstanding, as reported		17,278			17,262			17,227			17,214			17,210
Book value per share - GAAP	$	24.40		$	23.93		$	23.99		$	24.06		$	23.59
Tangible book value per share - Non-GAAP	$	20.20		$	19.71		$	19.75		$	19.81		$	19.32
Tangible Equity to Tangible Assets:
Total tangible shareholders' equity	$	349,017		$	340,279		$	340,235		$	340,931		$	332,491
Total assets, as reported	$	4,737,242		$	4,566,326		$	4,529,850		$	4,469,230		$	4,375,529
Less:
Goodwill		63,909			63,909			63,909			63,909			63,909
Identifiable intangible assets, net		8,645			8,893			9,140			9,388			9,642
Total tangible assets	$	4,664,688		$	4,493,524		$	4,456,801		$	4,395,933		$	4,301,978
Equity to assets - GAAP		8.90	%		9.05	%		9.12	%		9.27	%		9.28	%
Tangible equity to tangible assets - Non-GAAP		7.48	%		7.57	%		7.63	%		7.76	%		7.73	%

	For the Three Months Ended																For the Six Months Ended
	Jun 30,  2018			Mar 31,  2018			Dec 31,  2017			Sep 30,  2017			Jun 30,  2017				Jun 30,  2018			Jun 30,  2017
Return on Average Tangible Assets:
Net income, as reported	$	17,674		$	16,211		$	7,982		$	12,962		$	13,199			$	33,885		$	24,981
Total average assets, as reported	$	4,628,816		$	4,529,708		$	4,473,340		$	4,401,536		$	4,354,464			$	4,579,536		$	4,359,937
Less average balances of:
Goodwill		63,909			63,909			63,909			63,909			64,058				63,909			64,059
Identifiable intangible assets, net		8,766			9,014			9,261			9,511			9,767				8,889			9,896
Total average tangible assets	$	4,556,141		$	4,456,785		$	4,400,170		$	4,328,116		$	4,280,639			$	4,506,738		$	4,285,982
Return on average assets - GAAP		1.53	%		1.45	%		0.71	%		1.17	%		1.22	%			1.49	%		1.16	%
Return on average tangible assets - Non-GAAP		1.56	%		1.48	%		0.72	%		1.19	%		1.24	%			1.52	%		1.18	%
Return on Average Tangible Equity:
Net income available to common shareholders, as reported	$	17,636		$	16,173		$	7,958		$	12,934		$	13,170			$	33,809		$	24,925
Total average equity, as reported	$	416,433		$	410,955		$	417,568		$	412,862		$	404,238			$	413,709		$	400,697
Less average balances of:
Goodwill		63,909			63,909			63,909			63,909			64,058				63,909			64,059
Identifiable intangible assets, net		8,766			9,014			9,261			9,511			9,767				8,889			9,896
Total average tangible equity	$	343,758		$	338,032		$	344,398		$	339,442		$	330,413			$	340,911		$	326,742
Return on average equity - GAAP		16.99	%		15.96	%		7.56	%		12.43	%		13.07	%			16.48	%		12.54	%
Return on average tangible equity - Non-GAAP		20.58	%		19.40	%		9.17	%		15.12	%		15.99	%			20.00	%		15.38	%

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

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