WASH 09.30.2011 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended SEPTEMBER 30, 2011 or |
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o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ______ to ______. |
Commission file number: 001-32991
WASHINGTON TRUST BANCORP, INC.
(Exact name of registrant as specified in its charter)
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RHODE ISLAND | | 05-0404671 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
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23 BROAD STREET | | |
WESTERLY, RHODE ISLAND | | 02891 |
(Address of principal executive offices) | | (Zip Code) |
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(401) 348-1200 |
(Registrant’s telephone number, including area code) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
xYes oNo
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
xYes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Mark one)
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Large accelerated filer o | | Accelerated filer x |
Non-accelerated filer o | | Smaller reporting company o |
(Do not check if a smaller reporting company) | | |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
oYes xNo
The number of shares of common stock of the registrant outstanding as of November 2, 2011 was 16,289,125.
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FORM 10-Q |
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARIES |
For the Quarter Ended September 30, 2011 |
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TABLE OF CONTENTS |
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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| WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (unaudited)
| (Dollars and shares in thousands, except per share amounts)
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| September 30, 2011 | | December 31, 2010 |
Assets: | | | |
Cash and due from banks | $ | 64,312 |
| | $ | 85,971 |
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Other short-term investments | 3,474 |
| | 6,765 |
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Mortgage loans held for sale; amortized cost $21,842 in 2011 | 22,670 |
| | 13,894 |
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Securities: | | | |
Available for sale, at fair value; amortized cost $549,352 in 2011 and $578,897 in 2010 | 569,703 |
| | 594,100 |
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Held to maturity, at cost; fair value $11,843 in 2011 | 11,840 |
| | — |
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Total Securities | 581,543 |
| | 594,100 |
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Federal Home Loan Bank stock, at cost | 42,008 |
| | 42,008 |
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Loans: | | | |
Commercial and other | 1,070,525 |
| | 1,027,065 |
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Residential real estate | 691,468 |
| | 645,020 |
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Consumer | 325,766 |
| | 323,553 |
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Total loans | 2,087,759 |
| | 1,995,638 |
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Less allowance for loan losses | 29,641 |
| | 28,583 |
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Net loans | 2,058,118 |
| | 1,967,055 |
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Premises and equipment, net | 25,478 |
| | 26,069 |
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Investment in bank-owned life insurance | 53,291 |
| | 51,844 |
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Goodwill | 58,114 |
| | 58,114 |
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Identifiable intangible assets, net | 7,147 |
| | 7,852 |
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Other assets | 53,458 |
| | 55,853 |
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Total assets | $ | 2,969,613 |
| | $ | 2,909,525 |
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Liabilities: | | | |
Deposits: | | | |
Demand deposits | $ | 319,203 |
| | $ | 228,437 |
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NOW accounts | 242,372 |
| | 241,974 |
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Money market accounts | 374,324 |
| | 396,455 |
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Savings accounts | 239,356 |
| | 220,888 |
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Time deposits | 910,895 |
| | 948,576 |
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Total deposits | 2,086,150 |
| | 2,036,330 |
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Federal Home Loan Bank advances | 494,098 |
| | 498,722 |
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Junior subordinated debentures | 32,991 |
| | 32,991 |
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Other borrowings | 20,958 |
| | 23,359 |
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Other liabilities | 49,922 |
| | 49,259 |
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Total liabilities | 2,684,119 |
| | 2,640,661 |
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Shareholders’ Equity: | | | |
Common stock of $.0625 par value; authorized 30,000,000 shares; |
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issued 16,279,453 shares in 2011 and 16,171,618 shares in 2010 | 1,017 |
| | 1,011 |
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Paid-in capital | 87,467 |
| | 84,889 |
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Retained earnings | 190,042 |
| | 178,939 |
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Accumulated other comprehensive income | 6,968 |
| | 4,025 |
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Total shareholders’ equity | 285,494 |
| | 268,864 |
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Total liabilities and shareholders’ equity | $ | 2,969,613 |
| | $ | 2,909,525 |
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The accompanying notes are an integral part of these unaudited consolidated financial statements.
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| WASHINGTON TRUST BANCORP, INC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited) | (Dollars and shares in thousands, except per share amounts) |
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| Three Months | | Nine Months |
Periods ended September 30, | 2011 | | 2010 | | 2011 | | 2010 |
Interest income: | | | | | | | |
Interest and fees on loans | $ | 25,069 |
| | $ | 25,076 |
| | $ | 74,035 |
| | $ | 73,224 |
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Interest on securities: | | | | | | | |
Taxable | 4,640 |
| | 5,227 |
| | 14,282 |
| | 17,115 |
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Nontaxable | 746 |
| | 769 |
| | 2,273 |
| | 2,308 |
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Dividends on corporate stock and Federal Home Loan Bank stock | 64 |
| | 55 |
| | 197 |
| | 164 |
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Other interest income | 15 |
| | 25 |
| | 52 |
| | 59 |
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Total interest income | 30,534 |
| | 31,152 |
| | 90,839 |
| | 92,870 |
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Interest expense: | |
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Deposits | 3,808 |
| | 4,747 |
| | 12,040 |
| | 15,847 |
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Federal Home Loan Bank advances | 4,539 |
| | 5,574 |
| | 13,956 |
| | 17,793 |
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Junior subordinated debentures | 393 |
| | 484 |
| | 1,175 |
| | 1,561 |
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Other interest expense | 245 |
| | 246 |
| | 728 |
| | 731 |
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Total interest expense | 8,985 |
| | 11,051 |
| | 27,899 |
| | 35,932 |
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Net interest income | 21,549 |
| | 20,101 |
| | 62,940 |
| | 56,938 |
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Provision for loan losses | 1,000 |
| | 1,500 |
| | 3,700 |
| | 4,500 |
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Net interest income after provision for loan losses | 20,549 |
| | 18,601 |
| | 59,240 |
| | 52,438 |
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Noninterest income: | |
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Wealth management services: | |
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Trust and investment advisory fees | 5,547 |
| | 5,052 |
| | 17,045 |
| | 15,222 |
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Mutual fund fees | 1,035 |
| | 1,084 |
| | 3,293 |
| | 3,299 |
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Financial planning, commissions and other service fees | 209 |
| | 349 |
| | 1,043 |
| | 1,033 |
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Wealth management services | 6,791 |
| | 6,485 |
| | 21,381 |
| | 19,554 |
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Service charges on deposit accounts | 821 |
| | 904 |
| | 2,662 |
| | 2,666 |
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Merchant processing fees | 3,223 |
| | 3,050 |
| | 7,849 |
| | 7,062 |
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Card interchange fees | 597 |
| | 507 |
| | 1,665 |
| | 1,383 |
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Income from bank-owned life insurance | 488 |
| | 486 |
| | 1,446 |
| | 1,399 |
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Net gains on loan sales and commissions on loans originated for others | 1,077 |
| | 1,011 |
| | 2,139 |
| | 1,889 |
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Net realized gains on securities | — |
| | 737 |
| | 197 |
| | 737 |
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Net losses on interest rate swap contracts | (47 | ) | | (60 | ) | | (6 | ) | | (113 | ) |
Equity in losses of unconsolidated subsidiaries | (144 | ) | | (95 | ) | | (433 | ) | | (197 | ) |
Other income | 308 |
| | 414 |
| | 1,229 |
| | 1,102 |
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Noninterest income, excluding other-than-temporary impairment losses | 13,114 |
| | 13,439 |
| | 38,129 |
| | 35,482 |
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Total other-than-temporary impairment losses on securities | — |
| | — |
| | (54 | ) | | (245 | ) |
Portion of loss recognized in other comprehensive income (before taxes) | (158 | ) | | — |
| | (137 | ) | | (172 | ) |
Net impairment losses recognized in earnings | (158 | ) | | — |
| | (191 | ) | | (417 | ) |
Total noninterest income | 12,956 |
| | 13,439 |
| | 37,938 |
| | 35,065 |
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Noninterest expense: | |
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Salaries and employee benefits | 12,912 |
| | 12,067 |
| | 37,138 |
| | 35,294 |
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Net occupancy | 1,362 |
| | 1,202 |
| | 3,919 |
| | 3,663 |
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Equipment | 1,092 |
| | 1,037 |
| | 3,211 |
| | 3,048 |
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Merchant processing costs | 2,781 |
| | 2,606 |
| | 6,795 |
| | 6,020 |
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Outsourced services | 863 |
| | 769 |
| | 2,610 |
| | 2,464 |
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FDIC deposit insurance costs | 427 |
| | 861 |
| | 1,614 |
| | 2,439 |
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Legal, audit and professional fees | 430 |
| | 438 |
| | 1,389 |
| | 1,364 |
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Advertising and promotion | 561 |
| | 467 |
| | 1,341 |
| | 1,250 |
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Amortization of intangibles | 230 |
| | 273 |
| | 705 |
| | 854 |
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Foreclosed property costs | 45 |
| | 203 |
| | 549 |
| | 326 |
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Debt prepayment penalties | — |
| | 752 |
| | 221 |
| | 752 |
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Other expenses | 1,892 |
| | 2,180 |
| | 6,107 |
| | 6,041 |
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Total noninterest expense | 22,595 |
| | 22,855 |
| | 65,599 |
| | 63,515 |
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Income before income taxes | 10,910 |
| | 9,185 |
| | 31,579 |
| | 23,988 |
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Income tax expense | 3,328 |
| | 2,815 |
| | 9,632 |
| | 7,148 |
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Net income | $ | 7,582 |
| | $ | 6,370 |
| | $ | 21,947 |
| | $ | 16,840 |
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Weighted average common shares outstanding - basic | 16,278 |
| | 16,131 |
| | 16,242 |
| | 16,098 |
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Weighted average common shares outstanding - diluted | 16,294 |
| | 16,136 |
| | 16,269 |
| | 16,104 |
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Per share information: | Basic earnings per common share | $ | 0.46 |
| | $ | 0.39 |
| | $ | 1.35 |
| | $ | 1.04 |
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| Diluted earnings per common share | $ | 0.46 |
| | 0.39 |
| | $ | 1.34 |
| | $ | 1.04 |
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| Cash dividends declared per share | $ | 0.22 |
| | $ | 0.21 |
| | $ | 0.66 |
| | $ | 0.63 |
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The accompanying notes are an integral part of these unaudited consolidated financial statements
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WASHINGTON TRUST BANCORP, INC AND SUBSIDIARIES | (Dollars in thousands) |
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) |
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Nine months ended September 30, | 2011 | | 2010 |
Cash Flows from Operating Activities: | | | |
Net income | $ | 21,947 |
| | $ | 16,840 |
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Adjustments to reconcile net income to net cash provided by operating activities: | | | |
Provision for loan losses | 3,700 |
| | 4,500 |
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Depreciation of premises and equipment | 2,325 |
| | 2,316 |
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Foreclosed and repossessed property valuation adjustments | 392 |
| | 221 |
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Net gain on sale of premises | (208 | ) | | — |
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Net amortization of premium and discount | 1,149 |
| | 384 |
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Net amortization of intangibles | 705 |
| | 854 |
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Share-based compensation | 1,037 |
| | 666 |
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Income from bank-owned life insurance | (1,446 | ) | | (1,399 | ) |
Net gains on loan sales and commissions on loans originated for others | (2,139 | ) | | (1,889 | ) |
Net realized gains on securities | (197 | ) | | (737 | ) |
Net impairment losses recognized in earnings | 191 |
| | 417 |
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Net losses on interest rate swap contracts | 6 |
| | 113 |
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Equity in losses of unconsolidated subsidiaries | 433 |
| | 197 |
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Proceeds from sales of loans | 94,803 |
| | 114,423 |
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Loans originated for sale | (101,795 | ) | | (123,680 | ) |
Decrease in other assets | 877 |
| | 777 |
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Decrease in other liabilities | (3,328 | ) | | (1,148 | ) |
Net cash provided by operating activities | 18,452 |
| | 12,855 |
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Cash Flows from Investing Activities: | |
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Purchases of: | Mortgage-backed securities available for sale | (94,352 | ) | | (65,423 | ) |
| Other investment securities available for sale | (5,000 | ) | | (15,609 | ) |
| Mortgage-backed securities held to maturity | (11,954 | ) | | — |
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Proceeds from sale of: | Mortgage-backed securities available for sale | 42,783 |
| | 64,052 |
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| Other investment securities available for sale | 2,940 |
| | 9,851 |
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Maturities and principal payments of: | Mortgage-backed securities available for sale | 81,613 |
| | 116,017 |
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| Other investment securities available for sale | 355 |
| | 12,000 |
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| Mortgage-backed securities held to maturity | 106 |
| | — |
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Net increase in loans | (88,373 | ) | | (93,626 | ) |
Purchases of loans, including purchased interest | (5,985 | ) | | (1,429 | ) |
Proceeds from the sale of property acquired through foreclosure or repossession | 2,133 |
| | 598 |
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Purchases of premises and equipment | (2,237 | ) | | (1,421 | ) |
Purchases of bank-owned life insurance | — |
| | (5,000 | ) |
Net proceeds from the sale of premises | 1,279 |
| | — |
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Equity investments in real estate limited partnerships | (449 | ) | | (881 | ) |
Net cash (used in) provided by investing activities | (77,141 | ) | | 19,129 |
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Cash Flows from Financing Activities: | |
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Net increase in deposits | 49,820 |
| | 133,744 |
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Net (decrease) increase in other borrowings | (2,401 | ) | | 423 |
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Proceeds from Federal Home Loan Bank advances | 333,975 |
| | 184,540 |
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Repayment of Federal Home Loan Bank advances | (338,599 | ) | | (311,507 | ) |
Issuance of treasury stock, including deferred compensation plan activity | — |
| | 44 |
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Net proceeds from the issuance of common stock under dividend reinvestment plan | 754 |
| | 762 |
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Net proceeds from the exercise of stock options and issuance of other compensation-related equity instruments | 725 |
| | 531 |
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Tax benefit from stock option exercises and issuance of other compensation-related equity instruments | 68 |
| | 41 |
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Cash dividends paid | (10,603 | ) | | (10,162 | ) |
Net cash provided by (used in) financing activities | 33,739 |
| | (1,584 | ) |
Net (decrease) increase in cash and cash equivalents | (24,950 | ) | | 30,400 |
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Cash and cash equivalents at beginning of period | 92,736 |
| | 57,260 |
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Cash and cash equivalents at end of period | $ | 67,786 |
| | $ | 87,660 |
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Noncash Investing and Financing Activities: | Loans charged off | $ | 2,914 |
| | $ | 4,006 |
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| Net transfers from loans to property acquired through | |
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| foreclosure or repossession | 1,251 |
| | 1,555 |
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Supplemental Disclosures: | Interest payments | 26,941 |
| | 34,229 |
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| Income tax payments | 9,799 |
| | 8,143 |
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The accompanying notes are an integral part of these unaudited consolidated financial statements.
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARIES
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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(1) | General and Basis of Presentation |
Washington Trust Bancorp, Inc. (the “Bancorp”) is a publicly-owned registered bank holding company that has elected to be a financial holding company. The Bancorp owns all of the outstanding common stock of The Washington Trust Company (the “Bank”), a Rhode Island chartered commercial bank founded in 1800. Through its subsidiaries, the Bancorp offers a complete product line of financial services including commercial, residential and consumer lending, retail and commercial deposit products, and wealth management services through its offices in Rhode Island, eastern Massachusetts and southeastern Connecticut.
The consolidated financial statements include the accounts of the Bancorp and its subsidiaries (collectively, the “Corporation” or “Washington Trust”). All significant intercompany transactions have been eliminated. Certain prior year amounts have been reclassified to conform to the current year classification. Such reclassifications have no effect on previously reported net income or shareholders’ equity.
The accounting and reporting policies of the Corporation conform to accounting principles generally accepted in the United States of America (“GAAP”) and to general practices of the banking industry. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to change are the determination of the allowance for loan losses and the review of goodwill, other intangible assets and investments for impairment. The current economic environment has increased the degree of uncertainty inherent in such estimates and assumptions.
In the opinion of management, the accompanying consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) and disclosures necessary to present fairly the Corporation’s financial position as of September 30, 2011 and December 31, 2010, respectively, and the results of operations and cash flows for the interim periods presented. Interim results are not necessarily reflective of the results of the entire year. The unaudited consolidated financial statements of the Corporation presented herein have been prepared pursuant to the rules of the Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by GAAP. The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2010.
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(2) | Recently Issued Accounting Pronouncements |
Receivables – Topic 310
Accounting Standards Update No. 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses” (“ASU 2010-20”), was issued in July 2010. ASU 2010-20 significantly enhances disclosures that entities must make about the credit quality of financing receivables and the allowance for credit losses. The Financial Accounting Standards Board (“FASB”) issued the ASU to give financial statement users greater transparency about entities’ credit-risk exposures and the allowance for credit losses. The disclosures provide financial statement users with additional information about the nature of credit risks inherent in entities’ financing receivables, how credit risk is analyzed and assessed when determining the allowance for credit losses, and the reasons for the change in the allowance for credit losses. Accounting Standards Update No. 2011-01, “Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update 2010-20” (“ASU 2011-01”), was issued in January 2011 and delayed the effective date of the ASU 2010-20 disclosures pertaining to troubled debt restructurings. The disclosures required by ASU 2011-01 are effective for interim and annual periods beginning after June 15, 2011. The provisions of ASU 2010-20 and ASU 2011-01 encouraged, but do not require, comparative disclosures for earlier reporting periods that ended before initial adoption. Effective December 31, 2010, we adopted the provisions of ASU 2010-20 requiring end of period disclosures about credit quality of financing receivables and the allowance for credit losses. Effective September 30, 2011, we adopted the remaining provisions of ASU 2010-20 and ASU 2011-01 pertaining to troubled debt restructurings. The adoption of ASU 2010-20 and ASU 2011-01 did not have a material impact on the Corporation’s consolidated financial position, results of operations or cash flows.
Accounting Standards Update No. 2011-02, “A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring” (“ASU 2011-02”), was issued in April 2011. ASU 2011-02 provides additional guidance to assist creditors in determining whether a creditor has granted a concession and whether a debtor is experiencing financial difficulties for purposes of determining whether a restructuring constitutes a trouble debt restructuring. ASU 2011-02 is effective for interim and annual reporting periods beginning after June 15, 2011 and was applied retrospectively to the beginning of the 2011 annual period. The adoption of ASU 2011-02 did not have a material impact on the Corporation’s consolidated financial position, results of operations or cash flows.
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARIES
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CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS | (Continued) |
Fair Value Measurement – Topic 820
Accounting Standards Update No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (“ASU 2011-04”), was issued in May 2011. The amendments in ASU 2011-04 change the wording used to describe many of the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. For many of the requirements, the FASB did not intend for ASU 2011-04 to result in a change in the application of the requirements in GAAP. The amendments required by ASU 2011-04 are to be applied prospectively and are effective for fiscal years and interim periods within those years, beginning after December 15, 2011. The adoption of ASU 2011-04 is not expected to have a material impact on the Corporation’s consolidated financial position, results of operations or cash flows.
Comprehensive Income – Topic 220
Accounting Standards Update No. 2011-05, “Presentation of Comprehensive Income” (“ASU 2011-05”), was issued in June 2011. The FASB issued ASU 2011-05 to improve the comparability, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. ASU 2011-05 eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity. ASU 2011-05 requires that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The provisions of ASU 2011-05 are to be applied retrospectively and are effective for fiscal years and interim periods within those years, beginning after December 15, 2011. The adoption of ASU 2011-05 is not expected to have a material impact on the Corporation’s consolidated financial position, results of operations or cash flows.
Intangibles-Goodwill and Other – Topic 350
Accounting Standards Update No. 2011-08, “Testing for Goodwill Impairment” (“ASU 2011-08”), was issued in September 2011. The objective of ASU 2011-08 is to simplify the testing of goodwill for impairment by allowing entities to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative test. There will no longer be a requirement to calculate the fair value of a reporting unit unless it is determined, based on a qualitative assessment, that it is more-likely-than-not that its fair value is less than its carrying amount. The more-likely-than-not threshold was defined as having a likelihood of more than 50 percent. The provisions of ASU 2011-08 are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of ASU 2011-08 is not expected to have a material impact on the Corporation’s consolidated financial position, results of operations or cash flows.
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(3) | Cash and Due from Banks |
The Bank is required to maintain certain average reserve balances with the Board of Governors of the Federal Reserve System. Such reserve balances amounted to $4.0 million at September 30, 2011 and December 31, 2010 and are included in cash and due from banks in the Consolidated Statements of Condition.
As of September 30, 2011 and December 31, 2010, cash and due from banks included interest-bearing deposits in other banks of $13.7 million and $50.5 million, respectively.
The amortized cost, gross unrealized holding gains, gross unrealized holding losses, and fair value of securities by major security type and class of security at September 30, 2011 and December 31, 2010 were as follows:
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARIES
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CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS | (Continued) |
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(Dollars in thousands) | | | | | | | |
September 30, 2011 | Amortized Cost (1) | | Unrealized Gains | | Unrealized Losses | | Fair Value |
Securities Available for Sale: | | | | | | | |
Obligations of U.S. government-sponsored enterprises | $ | 29,422 |
| | $ | 3,785 |
| | $ | — |
| | $ | 33,207 |
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Mortgage-backed securities issued by U.S. government | | | | | | | |
agencies and U.S. government-sponsored enterprises | 387,519 |
| | 21,138 |
| | (1 | ) | | 408,656 |
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States and political subdivisions | 76,145 |
| | 4,664 |
| | — |
| | 80,809 |
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Trust preferred securities: | | | | | | | |
Individual name issuers | 30,629 |
| | — |
| | (6,983 | ) | | 23,646 |
|
Collateralized debt obligations | 4,256 |
| | — |
| | (3,460 | ) | | 796 |
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Corporate bonds | 18,868 |
| | 960 |
| | (62 | ) | | 19,766 |
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Common stocks | 659 |
| | 298 |
| | — |
| | 957 |
|
Perpetual preferred stocks (2) | 1,854 |
| | 12 |
| | — |
| | 1,866 |
|
Total securities available for sale | $ | 549,352 |
| | $ | 30,857 |
| | $ | (10,506 | ) | | $ | 569,703 |
|
Held to Maturity: | | | | | | | |
Mortgage-backed securities issued by U.S. government | | | | | | | |
agencies and U.S. government-sponsored enterprises | 11,840 |
| | 3 |
| | — |
| | 11,843 |
|
Total securities held to maturity | $ | 11,840 |
| | $ | 3 |
| | $ | — |
| | $ | 11,843 |
|
Total securities | $ | 561,192 |
| | $ | 30,860 |
| | $ | (10,506 | ) | | $ | 581,546 |
|
|
| | | | | | | | | | | | | | | |
(Dollars in thousands) | | | | | | | |
December 31, 2010 | Amortized Cost (1) | | Unrealized Gains | | Unrealized Losses | | Fair Value |
Securities Available for Sale: | | | | | | | |
Obligations of U.S. government-sponsored enterprises | $ | 36,900 |
| | $ | 4,094 |
| | $ | — |
| | $ | 40,994 |
|
Mortgage-backed securities issued by U.S. government | | | | | | | |
agencies and U.S. government-sponsored enterprises | 411,087 |
| | 19,068 |
| | (384 | ) | | 429,771 |
|
States and political subdivisions | 79,455 |
| | 1,975 |
| | (375 | ) | | 81,055 |
|
Trust preferred securities: | | | | | | | |
Individual name issuers | 30,601 |
| | — |
| | (7,326 | ) | | 23,275 |
|
Collateralized debt obligations | 4,466 |
| | — |
| | (3,660 | ) | | 806 |
|
Corporate bonds | 13,874 |
| | 1,338 |
| | — |
| | 15,212 |
|
Common stocks | 660 |
| | 149 |
| | — |
| | 809 |
|
Perpetual preferred stocks (2) | 1,854 |
| | 324 |
| | — |
| | 2,178 |
|
Total securities available for sale | $ | 578,897 |
| | $ | 26,948 |
| | $ | (11,745 | ) | | $ | 594,100 |
|
(1) Net of other-than-temporary impairment losses.
(2) Callable at the discretion of the issuer.
Securities available for sale with a fair value of $511 million and $507 million were pledged in compliance with state regulations concerning trust powers and to secure Treasury Tax and Loan deposits, borrowings, certain public deposits and certain interest rate swap agreements at September 30, 2011 and December 31, 2010, respectively. See Note 7 for additional disclosure regarding Federal Home Loan Bank of Boston (“FHLBB”) borrowings. In addition, securities available for sale with a fair value of $22 million were pledged for potential use at the Federal Reserve Bank discount window at September 30, 2011 and December 31, 2010. There were no borrowings with the Federal Reserve Bank at either date. As of September 30, 2011 and December 31, 2010, securities available for sale with a fair value of $8.0 million and $5.5 million, respectively, were designated in rabbi trusts for
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARIES
| |
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS | (Continued) |
nonqualified retirement plans.
The following table presents a roll forward of the balance of credit-related impairment losses on debt securities, for which a portion of an other-than-temporary impairment was recognized in other comprehensive income:
|
| | | | | | | | | | | | | | | |
(Dollars in thousands) | | | |
| Three Months | | Nine Months |
Periods ended September 30, | 2011 | | 2010 | | 2011 | | 2010 |
Balance at beginning of period | $ | 2,946 |
| | $ | 2,913 |
| | $ | 2,913 |
| | $ | 2,496 |
|
Credit-related impairment loss on debt securities for | | | | | | | |
which an other-than-temporary impairment was not | | | | | | | |
previously recognized | — |
| | — |
| | — |
| | — |
|
Additional increases to the amount of credit-related | | | | | | | |
impairment loss on debt securities for which an other | | | | | | | |
than-temporary impairment was previously recognized | 158 |
| | — |
| | 191 |
| | 417 |
|
Balance at end of period | $ | 3,104 |
| | $ | 2,913 |
| | $ | 3,104 |
| | $ | 2,913 |
|
During the third quarter of 2011, $158 thousand of credit-related impairment losses were recognized in earnings on a pooled trust preferred debt security. There were no credit-related impairment losses recognized in the same quarter of 2010. For the nine months ended September 30, 2011 and 2010, credit-related impairment losses recognized in earnings on pooled trust preferred debt securities totaled $191 thousand and $417 thousand, respectively. The anticipated cash flows expected to be collected from these debt securities were discounted at the rate equal to the yield used to accrete the current and prospective beneficial interest for each security. Significant inputs included estimated cash flows and prospective deferrals, defaults and recoveries. Estimated cash flows are generated based on the underlying seniority status and subordination structure of the pooled trust preferred debt tranche at the time of measurement. Prospective deferral, default and recovery estimates affecting projected cash flows were based on analysis of the underlying financial condition of individual issuers, and took into account capital adequacy, credit quality, lending concentrations, and other factors.
All cash flow estimates were based on the underlying security’s tranche structure and contractual rate and maturity terms. The present value of the expected cash flows was compared to the current outstanding balance of the tranche to determine the ratio of the estimated present value of expected cash flows to the total current balance for the tranche. This ratio was then multiplied by the principal balance of Washington Trust’s holding to determine the credit-related impairment loss. The estimates used in the determination of the present value of the expected cash flows are susceptible to changes in future periods, which could result in additional credit-related impairment losses.
The following table summarizes temporarily impaired securities as of September 30, 2011, segregated by length of time the securities have been in a continuous unrealized loss position:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | Less than 12 Months | | 12 Months or Longer | | Total |
September 30, 2011 | # | | Fair Value | | Unrealized Losses | | # | | Fair Value | | Unrealized Losses | | # | | Fair Value | | Unrealized Losses |
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises | 1 | | $ | 115 |
| | $ | 1 |
| | — | | $ | — |
| | $ | — |
| | 1 | | $ | 115 |
| | $ | 1 |
|
Trust preferred securities: | | | | | | | | | | | | | | | | | |
Individual name issuers | — | | — |
| | — |
| | 11 | | 23,646 |
| | 6,983 |
| | 11 | | 23,646 |
| | 6,983 |
|
Collateralized debt obligations | — | | — |
| | — |
| | 2 | | 796 |
| | 3,460 |
| | 2 | | 796 |
| | 3,460 |
|
Corporate bonds | 3 | | 5,544 |
| | 62 |
| | — | | — |
| | — |
| | 3 | | 5,544 |
| | 62 |
|
Total temporarily impaired securities | 4 | | $ | 5,659 |
| | $ | 63 |
| | 13 | | $ | 24,442 |
| | $ | 10,443 |
| | 17 | | $ | 30,101 |
| | $ | 10,506 |
|
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARIES
| |
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS | (Continued) |
The following table summarizes temporarily impaired securities as of December 31, 2010, segregated by length of time the securities have been in a continuous unrealized loss position:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | Less than 12 Months | | 12 Months or Longer | | Total |
December 31, 2010 | # | | Fair Value | | Unrealized Losses | | # | | Fair Value | | Unrealized Losses | | # | | Fair Value | | Unrealized Losses |
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises | 6 | | $ | 76,382 |
| | $ | 369 |
| | 3 | | $ | 5,208 |
| | $ | 15 |
| | 9 | | $ | 81,590 |
| | $ | 384 |
|
States and | | | | | | | | | | | | | | | | | |
political subdivisions | 15 | | 14,209 |
| | 273 |
| | 2 | | 1,228 |
| | 102 |
| | 17 | | 15,437 |
| | 375 |
|
Trust preferred securities: | | | | | | | | | | | | | | | | | |
Individual name issuers | — | | — |
| | — |
| | 11 | | 23,275 |
| | 7,326 |
| | 11 | | 23,275 |
| | 7,326 |
|
Collateralized debt obligations | — | | — |
| | — |
| | 2 | | 806 |
| | 3,660 |
| | 2 | | 806 |
| | 3,660 |
|
Total temporarily impaired securities | 21 | | $ | 90,591 |
| | $ | 642 |
| | 18 | | $ | 30,517 |
| | $ | 11,103 |
| | 39 | | $ | 121,108 |
| | $ | 11,745 |
|
Unrealized losses on debt securities generally occur as a result of increases in interest rates since the time of purchase, a structural change in an investment or deterioration in credit quality of the issuer. Management evaluates impairments in value whether caused by adverse interest rates or credit movements to determine if they are other-than-temporary.
Further deterioration in credit quality of the companies backing the securities, further deterioration in the condition of the financial services industry, a continuation or worsening of the current economic downturn, or additional declines in real estate values, among other things, may further affect the fair value of these securities and increase the potential that certain unrealized losses be designated as other-than-temporary in future periods, and the Corporation may incur additional write-downs.
Trust Preferred Debt Securities of Individual Name Issuers
Included in debt securities in an unrealized loss position at September 30, 2011 were 11 trust preferred security holdings issued by seven individual companies in the financial services/banking industry. The aggregate unrealized losses on these debt securities amounted to $7.0 million at September 30, 2011. Management believes the decline in fair value of these trust preferred securities primarily reflects investor concerns about global economic growth and how it will affect the recent and potential future losses in the financial services industry. These concerns resulted in increased risk premiums for securities in this sector. Based on the information available through the filing date of this report, all individual name trust preferred debt securities held in our portfolio continue to accrue and make payments as expected with no payment deferrals or defaults on the part of the issuers. As of September 30, 2011, trust preferred debt securities with a carrying value of $8.6 million and unrealized losses of $3.3 million were rated below investment grade by Standard & Poors, Inc. (“S&P”). Management reviewed the collectibility of these securities taking into consideration such factors as the financial condition of the issuers, reported regulatory capital ratios of the issuers, credit ratings including ratings in effect as of the reporting period date as well as credit rating changes between the reporting period date and the filing date of this report and other information. We noted no additional downgrades to below investment grade between the reporting period date and the filing date of this report. Based on these analyses, management concluded that it expects to recover the entire amortized cost basis of these securities. Furthermore, Washington Trust does not intend to sell these securities and it is not more likely than not that Washington Trust will be required to sell these securities before recovery of their cost basis, which may be maturity. Therefore, management does not consider these investments to be other-than-temporarily impaired at September 30, 2011.
Trust Preferred Debt Securities in the Form of Collateralized Debt Obligations
Washington Trust has two pooled trust preferred holdings in the form of collateralized debt obligations with a total amortized cost of $4.3 million and aggregate unrealized losses of $3.5 million at September 30, 2011. These pooled trust preferred holdings consist of trust preferred obligations of banking industry companies and, to a lesser extent, insurance industry companies. For both of these pooled trust preferred securities, Washington Trust’s investment is senior to one or more subordinated tranches which have first loss exposure. Valuations of the pooled trust preferred holdings are dependent in part on cash flows from underlying issuers. Unexpected cash flow disruptions could have an adverse impact on the fair value and performance of pooled trust preferred securities. Management believes the unrealized losses on these pooled trust preferred securities primarily reflect investor concerns about global economic growth and how it will affect the recent and potential future losses in the financial services industry and the possibility of further incremental deferrals of or defaults on interest payments on trust preferred debentures by financial
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARIES
| |
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS | (Continued) |
institutions participating in these pools. These concerns have resulted in a substantial decrease in market liquidity and increased risk premiums for securities in this sector. Credit spreads for issuers in this sector have remained wide during recent months, causing prices for these securities holdings to remain at low levels.
As of September 30, 2011, one of the pooled trust preferred securities had an amortized cost of $3.0 million. This amortized cost was net of $1.9 million of credit-related impairment losses previously recognized in earnings reflective of payment deferrals and credit deterioration of the underlying collateral. This security was placed on nonaccrual status in March 2009. The tranche instrument held by Washington Trust has been deferring a portion of interest payments since April 2010. As of September 30, 2011, this security has unrealized losses of $2.4 million and a below investment grade rating of “Ca” by Moody’s Investors Service Inc. (“Moody’s”). Through the filing date of this report, there have been no further rating changes on this security. This credit rating status has been considered by management in its assessment of the impairment status of this security. During the third quarter of 2011, an adverse change occurred in the expected cash flows for this security and additional credit-related impairment losses of $158 thousand were recognized in earnings.
As of September 30, 2011, the second pooled trust preferred security held by Washington Trust had an amortized cost of $1.3 million. This amortized cost was net of $1.2 million of credit-related impairment losses previously recognized in earnings reflective of payment deferrals and credit deterioration of the underlying collateral. This security was placed on nonaccrual status in December 2008. The tranche instrument held by Washington Trust has been deferring interest payments since December 2008. As of September 30, 2011, this security has unrealized losses of $1.1 million and a below investment grade rating of “C” by Moody’s. Through the filing date of this report, there have been no material rating changes on this security. This credit rating status has been considered by management in its assessment of the impairment status of this security. The analysis of the expected cash flows for this security as of September 30, 2011 did not negatively affect the amount of credit-related impairment losses previously recognized on this security.
Based on information available through the filing date of this report, there have been no further adverse changes in the deferral or default status of the underlying issuer institutions within either of these trust preferred collateralized debt obligations. Based on cash flow forecasts for these securities, management expects to recover the remaining amortized cost of these securities. Furthermore, Washington Trust does not intend to sell these securities and it is not more likely than not that Washington Trust will be required to sell these securities before recovery of their cost basis, which may be at maturity. Therefore, management does not consider the unrealized losses on these investments to be other-than-temporary.
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARIES
| |
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS | (Continued) |
As of September 30, 2011, the amortized cost of debt securities by maturity is presented below. Mortgage-backed securities are included based on weighted average maturities, adjusted for anticipated prepayments. All other securities are included based on contractual maturities. Actual maturities may differ from amounts presented because certain issuers have the right to call or prepay obligations with or without call or prepayment penalties. Yields on tax exempt obligations are not computed on a tax equivalent basis. Included in the securities portfolio at September 30, 2011 were debt securities with an amortized cost balance of $98 million and a fair value of $91 million that are callable at the discretion of the issuers. Final maturities of the callable securities range from four to twenty-six years, with call features ranging from one month to six years.
|
| | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | | | | | | | | |
| Due in 1 Year or Less | | After 1 Year but within 5 Years | | After 5 Years but within 10 Years | | After 10 Years | | Totals |
Securities Available for Sale: | | | | | | | | | |
Obligations of U.S. government-sponsored | | | | | | | | | |
enterprises: | | | | | | | | | |
Amortized cost | $ | — |
| | $ | 29,422 |
| | $ | — |
| | $ | — |
| | $ | 29,422 |
|
Weighted average yield | — | % | | 5.41 | % | | — | % | | — | % | | 5.41 | % |
Mortgage-backed securities issued by U.S. | | | | | | | | | |
government agencies & U.S. | | | | | | | | | |
government-sponsored enterprises: | | | | | | | | | |
Amortized cost | 129,428 |
| | 194,993 |
| | 50,540 |
| | 12,558 |
| | 387,519 |
|
Weighted average yield | 4.29 | % | | 3.86 | % | | 2.34 | % | | 2.42 | % | | 3.76 | % |
State and political subdivisions: | | | | | | | | | |
Amortized cost | 7,427 |
| | 52,808 |
| | 15,910 |
| | — |
| | 76,145 |
|
Weighted average yield | 3.89 | % | | 3.87 | % | | 3.94 | % | | — | % | | 3.89 | % |
Trust preferred securities: | | | | | | | | | |
Amortized cost (1) | — |
| | — |
| | — |
| | 34,885 |
| | 34,885 |
|
Weighted average yield | — | % | | — | % | | — | % | | 1.66 | % | | 1.66 | % |
Corporate bonds: | | | | | | | | | |
Amortized cost | 4,989 |
| | 13,879 |
| | — |
| | — |
| | 18,868 |
|
Weighted average yield | 6.50 | % | | 5.06 | % | | — | % | | — | % | | 5.44 | % |
Total debt securities available for sale: | | | | | | | | | |
Amortized cost | 141,844 |
| | 291,102 |
| | 66,450 |
| | 47,443 |
| | 546,839 |
|
Weighted average yield | 4.34 | % | | 4.08 | % | | 2.72 | % | | 1.86 | % | | 3.79 | % |
Fair value | $ | 146,836 |
| | $ | 301,735 |
| | $ | 70,181 |
| | $ | 48,128 |
| | $ | 566,880 |
|
Held to Maturity: | | | | | | | | | |
Mortgage-backed securities issued by U.S. | | | | | | | | | |
government agencies & U.S. | | | | | | | | | |
government-sponsored enterprises: | | | | | | | | | |
Amortized cost | 2,861 |
| | 6,168 |
| | 2,314 |
| | 497 |
| | 11,840 |
|
Weighted average yield | 2.18 | % | | 2.05 | % | | 1.86 | % | | 0.19 | % | | 1.97 | % |
Fair value | $ | 2,864 |
| | $ | 6,168 |
| | $ | 2,314 |
| | $ | 497 |
| | $ | 11,843 |
|
| |
(1) | Net of other-than-temporary impairment losses. |
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARIES
| |
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS | (Continued) |
The following is a summary of loans:
|
| | | | | | | | | | | | | |
(Dollars in thousands) | September 30, 2011 | | December 31, 2010 |
| Amount | | % | | Amount | | % |
Commercial: | | | | | | | |
Mortgages (1) | $ | 573,355 |
| | 27 | % | | $ | 518,623 |
| | 26 | % |
Construction and development (2) | 18,518 |
| | 1 |
| | 47,335 |
| | 2 |
|
Other (3) | 478,652 |
| | 23 |
| | 461,107 |
| | 23 |
|
Total commercial | 1,070,525 |
| | 51 |
| | 1,027,065 |
| | 51 |
|
Residential real estate: | | | | | | | |
Mortgages (4) | 674,242 |
| | 32 |
| | 634,739 |
| | 31 |
|
Homeowner construction | 17,226 |
| | 1 |
| | 10,281 |
| | 1 |
|
Total residential real estate | 691,468 |
| | 33 |
| | 645,020 |
| | 32 |
|
Consumer: | | | | | | | |
Home equity lines (5) | 222,886 |
| | 11 |
| | 218,288 |
| | 11 |
|
Home equity loans (5) | 45,354 |
| | 2 |
| | 50,624 |
| | 3 |
|
Other (6) | 57,526 |
| | 3 |
| | 54,641 |
| | 3 |
|
Total consumer | 325,766 |
| | 16 |
| | 323,553 |
| | 17 |
|
Total loans (7) | $ | 2,087,759 |
| | 100 | % | | $ | 1,995,638 |
| | 100 | % |
| |
(1) | Amortizing mortgages and lines of credit, primarily secured by income producing property. As of September 30, 2011 and December 31, 2010, $109 million and $122 million, respectively, of these loans were pledged as collateral for FHLBB borrowings (see Note 7). |
| |
(2) | Loans for construction of residential and commercial properties and for land development. |
| |
(3) | Loans to businesses and individuals, a substantial portion of which are fully or partially collateralized by real estate. As of September 30, 2011, $28 million and $44 million, respectively, of these loans were pledged as collateral for FHLBB borrowings and were collateralized for the discount window at the Federal Reserve Bank. Comparable amounts for December 31, 2010 were $30 million and $61 million, respectively (see Note 7). |
| |
(4) | As of September 30, 2011 and December 31, 2010, $609 million and $570 million, respectively, of these loans were pledged as collateral for FHLBB borrowings (see Note 7). |
| |
(5) | As of September 30, 2011 and December 31, 2010, $179 million and $203 million, respectively, of these loans were pledged as collateral for FHLBB borrowings (see Note 7). |
| |
(6) | Fixed rate consumer installment loans. |
| |
(7) | Includes unamortized loan origination costs, net of fees, totaling $80 thousand and $271 thousand at September 30, 2011 and December 31, 2010, respectively. Also includes $46 thousand and $39 thousand of net premiums on purchased loans at September 30, 2011 and December 31, 2010, respectively. |
Nonaccrual Loans
Loans, with the exception of certain well-secured residential mortgage 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 residential mortgage 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. Interest previously accrued but not collected on such loans is reversed against current period income. Subsequent cash receipts 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 collectability 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.
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARIES
| |
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS | (Continued) |
The following is a summary of nonaccrual loans, segregated by class of loans, as of the dates indicated:
|
| | | | | | | |
(Dollars in thousands) | September 30, 2011 |
| | December 31, 2010 |
|
Commercial: | | | |
Mortgages | $ | 6,367 |
| | $ | 6,624 |
|
Construction and development | — |
| | — |
|
Other | 2,745 |
| | 5,259 |
|
Residential real estate: | | | |
Mortgages | 11,352 |
| | 6,414 |
|
Homeowner construction | — |
| | — |
|
Consumer: | | | |
Home equity lines | 647 |
| | 152 |
|
Home equity loans | 316 |
| | 53 |
|
Other | 163 |
| | 8 |
|
Total nonaccrual loans | $ | 21,590 |
| | $ | 18,510 |
|
Accruing loans 90 days or more past due | $ | — |
| | $ | — |
|
Past Due Loans
Past due status is based on the contractual payment terms of the loan. The following tables present an age analysis of past due loans, segregated by class of loans, as of the dates indicated:
|
| | | | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | Days Past Due | | | | | | |
September 30, 2011 | 30-59 | | 60-89 | | Over 90 | | Total Past Due | | Current | | Total Loans |
Commercial: | | | | | | | | | | | |
Mortgages | $ | 874 |
| | $ | 328 |
| | $ | 5,510 |
| | $ | 6,712 |
| | $ | 566,643 |
| | $ | 573,355 |
|
Construction and development | — |
| | — |
| | — |
| | — |
| | 18,518 |
| | 18,518 |
|
Other | 1,629 |
| | 103 |
| | 1,209 |
| | 2,941 |
| | 475,711 |
| | 478,652 |
|
Residential real estate: | | | | | | | | | | | |
Mortgages | 2,145 |
| | 206 |
| | 7,826 |
| | 10,177 |
| | 664,065 |
| | 674,242 |
|
Homeowner construction | — |
| | — |
| | — |
| | — |
| | 17,226 |
| | 17,226 |
|
Consumer: | | | | | | | | | | | |
Home equity lines | 728 |
| | 354 |
| | 312 |
| | 1,394 |
| | 221,492 |
| | 222,886 |
|
Home equity loans | 342 |
| | 66 |
| | 180 |
| | 588 |
| | 44,766 |
| | 45,354 |
|
Other | 30 |
| | — |
| | 157 |
| | 187 |
| | 57,339 |
| | 57,526 |
|
Total loans | $ | 5,748 |
| | $ | 1,057 |
| | $ | 15,194 |
| | $ | 21,999 |
| | $ | 2,065,760 |
| | $ | 2,087,759 |
|
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARIES
| |
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS | (Continued) |
|
| | | | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | Days Past Due | | | | | | |
December 31, 2010 | 30-59 | | 60-89 | | Over 90 | | Total Past Due | | Current | | Total Loans |
Commercial: | | | | | | | | | | | |
Mortgages | $ | 2,185 |
| | $ | 514 |
| | $ | 5,322 |
| | $ | 8,021 |
| | $ | 510,602 |
| | $ | 518,623 |
|
Construction and development | — |
| | — |
| | — |
| | — |
| | 47,335 |
| | 47,335 |
|
Other | 1,862 |
| | 953 |
| | 3,376 |
| | 6,191 |
| | 454,916 |
| | 461,107 |
|
Residential real estate: | | | | | | | | | | | |
Mortgages | 3,073 |
| | 1,477 |
| | 4,041 |
| | 8,591 |
| | 626,148 |
| | 634,739 |
|
Homeowner construction | — |
| | — |
| | — |
| | — |
| | 10,281 |
| | 10,281 |
|
Consumer: | | | | | | | | | | | |
Home equity lines | 1,255 |
| | 170 |
| | — |
| | 1,425 |
| | 216,863 |
| | 218,288 |
|
Home equity loans | 529 |
| | 180 |
| | 11 |
| | 720 |
| | 49,904 |
| | 50,624 |
|
Other | 221 |
| | 98 |
| | — |
| | 319 |
| | 54,322 |
| | 54,641 |
|
Total loans | $ | 9,125 |
| | $ | 3,392 |
| | $ | 12,750 |
| | $ | 25,267 |
| | $ | 1,970,371 |
| | $ | 1,995,638 |
|
Included in past due loans as of September 30, 2011 and December 31, 2010, were nonaccrual loans of $16.6 million and $14.9 million, respectively.
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARIES
| |
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS | (Continued) |
Impaired Loans
Impaired loans are loans for which it is probable that the Corporation will not be able to collect all amounts due according to the contractual terms of the loan agreements and loans restructured in a troubled debt restructuring. Impaired loans do not include large groups of smaller-balance homogeneous loans that are collectively evaluated for impairment, which consist of most residential mortgage loans and consumer loans. The following is a summary of impaired loans, as of the dates indicated:
|
| | | | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | Recorded Investment (1) | | Unpaid Principal | | Related Allowance |
| Sept. 30, 2011 | | Dec 31, 2010 | | Sept. 30, 2011 | | Dec 31, 2010 | | Sept. 30, 2011 | | Dec 31, 2010 |
No Related Allowance Recorded: | | | | | | | | | | | |
Commercial: | | | | | | | | | | | |
Mortgages | $ | 6,535 |
| | $ | 3,113 |
| | $ | 6,523 |
| | $ | 3,128 |
| | $ | — |
| | $ | — |
|
Construction and development | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Other | 2,299 |
| | 3,237 |
| | 2,431 |
| | 3,834 |
| | — |
| | — |
|
Residential real estate: | | | | | | | | | | | |
Mortgages | 1,391 |
| | 928 |
| | 1,463 |
| | 937 |
| | — |
| | — |
|
Homeowner construction | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Consumer: | | | | | | | | | | | |
Home equity lines | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Home equity loans | — |
| | 163 |
| | — |
| | 159 |
| | — |
| | — |
|
Other | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Subtotal | $ | 10,225 |
| | $ | 7,441 |
| | $ | 10,417 |
| | $ | 8,058 |
| | $ | — |
| | $ | — |
|
With Related Allowance Recorded: | | | | | | | | | | | |
Commercial: | | | | | | | | | | | |
Mortgages | $ | 5,706 |
| | $ | 15,287 |
| | $ | 7,150 |
| | $ | 15,930 |
| | $ | 229 |
| | $ | 629 |
|
Construction and development | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Other | 4,518 |
| | 6,632 |
| | 5,595 |
| | 9,311 |
| | 407 |
| | 1,245 |
|
Residential real estate: | | | | | | | | | | | |
Mortgages | 4,432 |
| | 3,773 |
| | 4,933 |
| | 3,971 |
| | 554 |
| | 258 |
|
Homeowner construction | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Consumer: | | | | | | | | | | | |
Home equity lines | 172 |
| | 105 |
| | 280 |
| | 172 |
| | 34 |
| | 1 |
|
Home equity loans | 148 |
| | 307 |
| | 172 |
| | 330 |
| | 1 |
| | 4 |
|
Other | 273 |
| | 145 |
| | 247 |
| | 143 |
| | 149 |
| | — |
|
Subtotal | $ | 15,249 |
| | $ | 26,249 |
| | $ | 18,377 |
| | $ | 29,857 |
| | $ | 1,374 |
| | $ | 2,137 |
|
Total impaired loans | $ | 25,474 |
| | $ | 33,690 |
| | $ | 28,794 |
| | $ | 37,915 |
| | $ | 1,374 |
| | $ | 2,137 |
|
Total: | | | | | | | | | | | |
Commercial | $ | 19,058 |
| | $ | 28,269 |
| | $ | 21,699 |
| | $ | 32,203 |
| | $ | 636 |
| | $ | 1,874 |
|
Residential real estate | 5,823 |
| | 4,701 |
| | 6,396 |
| | 4,908 |
| | 554 |
| | 258 |
|
Consumer | 593 |
| | 720 |
| | 699 |
| | 804 |
| | 184 |
| | 5 |
|
Total impaired loans | $ | 25,474 |
| | $ | 33,690 |
| | $ | 28,794 |
| | $ | 37,915 |
| | $ | 1,374 |
| | $ | 2,137 |
|
| |
(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 impaired accruing loans (those troubled debt restructurings for which management has concluded that the collectibility of the loan is not in doubt), the recorded investment also includes accrued interest. As of September 30, 2011 and December 31, 2010, recorded investment in impaired loans included accrued interest of $32 thousand and $62 thousand, respectively. |
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARIES
| |
CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS | (Continued) |
The following tables present the average recorded investment and interest income recognized on impaired loans segregated by loan class for the periods indicated:
|
| | | | | | | | | | | | | | | |
(Dollars in thousands) | | | |
| Average Recorded Investment | | Interest Income Recognized |
Three months ended September 30, | 2011 | | 2010 | | 2011 | | 2010 |
Commercial: | | | | | | | |
Mortgages | $ | 14,150 |
| | $ | 13,745 |
| | $ | 111 |
| | $ | 162 |
|
Construction and development | — |
| | — |
| | — |
| | — |
|
Other | 7,330 |
| | 10,553 |
| | 80 |
| | 125 |
|
Residential real estate: | | | | | | | |
Mortgages | 5,822 |
| | 4,848 |
| | 38 |
| | 63 |
|
Homeowner construction | — |
| | — |
| | — |
| | — |
|
Consumer: | | | | | | | |
Home equity lines | 116 |
| | 158 |
| | 1 |
| | 1 |
|
Home equity loans | 167 |
| | 718 |
| | 3 |
| | 12 |
|
Other | 245 |
| | 223 |
| | 4 |
| | 2 |
|
Totals | $ | 27,830 |
| | $ | 30,245 | |