Washington Trust Bancorp
Annual Report 2016

Plain-text annual report

2 0 1 6 A n n u a l R e p o r t L e a d e r s h i p Board of Directors John J. Bowen, Chancellor, President and Chief Executive Officer, Johnson & Wales University Steven J. Crandall, Vice President, Ashaway Line & Twine Mfg. Co. Robert A. DiMuccio, CPA, Chairman, President and Chief Executive Officer, Amica Mutual Insurance Company Edward O. Handy III, President and Chief Operating Officer, Washington Trust Bancorp, Inc. Barry G. Hittner, Esq., Retired Attorney Katherine W. Hoxsie, CPA, Retired Vice President, Hoxsie Buick-Pontiac-GMC Truck, Inc. Joseph J. MarcAurele, Chairman and Chief Executive Officer, Washington Trust Bancorp, Inc. Kathleen E. McKeough, Retired Senior Vice President of Human Resources, GTECH Holdings Corporation Victor J. Orsinger II, Esq., Law Office of Victor J. Orsinger II H. Douglas Randall III, Chief Executive Officer, Randall, Realtors, Kinlin Grover Real Estate, Page Taft Real Estate, Pequot Commercial and Kinlin Grover Commercial Edwin J. Santos, Chairman, Prospect CharterCARE, LLC John F. Treanor, Retired President and Chief Operating Officer, Washington Trust Bancorp, Inc. Officers of the Corporation Joseph J. MarcAurele, Chairman and Chief Executive Officer Edward O. Handy III, President and Chief Operating Officer David V. Devault, Vice Chair, Secretary and Chief Financial Officer Mark K. W. Gim, Senior Executive Vice President, Wealth Management, and Treasurer Maria N. Janes, CPA, Executive Vice President and Controller The Washington Trust Company Directors’ Advisory Council Alcino G. Almeida Gary P. Bennett Larry J. Hirsch Joseph J. Kirby Jacques de Laporte Edward M. Mazze James W. McCormick Jr. Thomas F. Moore Brendan P. O’Donnell Joseph H. Potter Joyce Olson Resnikoff Patrick J. Shanahan Jr. James P. Sullivan Neil H. Thorp John C. Warren William Blunt White Senior Management of The Washington Trust Company Joseph J. MarcAurele, Chairman and Chief Executive Officer Edward O. Handy III, President and Chief Operating Officer David V. Devault, Vice Chair, Secretary and Chief Financial Officer Mark K. W. Gim, Senior Executive Vice President, Wealth Management, and Treasurer Kristen L. DiSanto, Executive Vice President, Human Resources Debra A. Gormley, Executive Vice President, Retail Banking James M. Hagerty, Executive Vice President and Chief Lending Officer Maria N. Janes, CPA, Executive Vice President and Controller Mary E. Noons, Executive Vice President, Retail Lending William K. Wray Sr., Executive Vice President and Chief Risk Officer Dennis L. Algiere, Senior Vice President, Chief Compliance Officer and Director of Community Affairs Colleen O. Anderson, Senior Vice President, Wealth Management Support Services Michael T. Clarkin, Senior Vice President and Corporate Sales Manager Joseph M. Confessore, Senior Vice President and Team Leader, Commercial Banking Laura L. Davis, Senior Vice President, Lending Support Services Elizabeth B. Eckel, Senior Vice President, Marketing Alfred L. Grant, Senior Vice President, Mortgage Origination Barbara K. Hart, Senior Vice President, Credit Risk Robert R. Kent Jr., Senior Vice President and Team Leader, Commercial Banking Charles R. Kineke, Senior Vice President, Chief Technology Officer Thomas H. Klump, Senior Vice President, Bank Operations James A. Mignone, Senior Vice President, Chief Information Security Officer C. Scott Ostrowski, Senior Vice President, Internal Audit Timothy M. Pickering, Senior Vice President, Commercial Real Estate Group Kathleen A. Ryan, Esq., Senior Vice President, Client Services and Trust and Estate Services L. Peter Sheehan, Senior Vice President, Wealth Management Investments Julia Anne M. Slom, Senior Vice President and Team Leader, Commercial Real Estate Group Richard T. Tjader, Senior Vice President and Director of Project Management Weston Financial Group, Inc. John W. Filoon III, President and Chief Operating Officer Kerry P. Falco, CPA, Managing Director and Senior Financial Counselor Maria A. Staffiere, Managing Director Ronald A. Sugameli, Esq., Managing Director and Chief Investment Officer Nicole M. Tremblay, Esq., Senior Vice President and Chief Compliance Officer Halsey Associates, Inc. James S. Zoldy Jr., President Kenneth J. Julian, Executive Vice President As of publication date M e s s a g e t o S h a r e h o l d e r s We are proud to report that Washington Trust posted another record performance in 2016; our seventh consecutive year of increased annual earnings. Once again, it was a collective effort, as our experienced management team and our talented employees worked together and focused on achieving our corporate goals. We were successful in growing our core business lines and expanding our local and regional footprint, while maintaining a disciplined approach to pricing and expense management. All noteworthy accomplishments in a very challenging operating environment. Our record earnings reflect the strength and diversity of our business model, as our ability to generate a consistent stream of revenues, from both interest and non-interest income sources, has been key to our success over time. In 2016 we achieved solid performances from all of our major business lines: • Our mortgage banking area had another great year, as mortgage banking revenues were up significantly from the previous year. We had good production from throughout the region and generated a healthy mix of both purchase and refinance loans. In July we opened a mortgage production office in Wellesley, Massachusetts, an affluent suburb of Boston. • Our wealth management division once again proved to be a key contributor to non-interest income, as wealth management revenues reached a record level in 2016. Wealth management assets under administration also peaked to an all-time high by year-end. We continued to make investments in technology to enhance our client experience and position the division for future growth. We recently relocated our Halsey Associates headquarters to take advantage of opportunities and synergies with our mortgage banking and commercial lending efforts in the New Haven, Connecticut market. • Our commercial lending group had good momentum and consistent growth throughout the year, however, overall growth was masked by heavy pay-offs. We generated quality commercial real estate and commercial and industrial loans, which resulted in new cash management and commercial deposit relationships. • Our retail banking area remains a key part of our community banking model and we opened a contemporary branch on the East Side of Providence in 2016 to expand our presence in Rhode Island’s capital city. Deposits surpassed the $3 billion mark, led by growth in low-cost demand deposits and NOW accounts. For more than 216 years, Washington Trust has served as a trusted advisor for generations of depositors, borrowers and investors. Our hallmark has been our five-star customer service. Technology continues to change our industry, providing new and different ways for us to serve our customers. In recent years we have 1. 2. M e s s a g e t o S h a r e h o l d e r s enhanced online, mobile, and telephone solutions to make banking easier, faster, and more secure for our customers. In 2016 we introduced several new technology-based customer conveniences, including EMV chip debit cards, online mortgage applications, wealth management portal upgrades, and Touch ID and Quick Balance mobile banking solutions. Going forward, we expect technology will bring even more changes to our industry and we will continue to evaluate and offer those solutions that provide the best security, service, and convenience for our customers. Washington Trust has a long and successful history and our 2016 performance once again ranks us among the nation’s top-performing mid-sized banks. We are pleased to have provided consistent returns and paid a healthy dividend to our shareholders. We appreciate the hard work and dedication of our management team and employees and thank our shareholders for their continued support and commitment to our Corporation. Joseph J. MarcAurele Chairman and Chief Executive Officer Edward O. Handy III President and Chief Operating Officer 3. 4. 8. 7. 6. 5. F i n a n c i a l H i g h l i g h t s Net Income $40.8 $43.5 $46.5 Cash Dividends Declared Per Share $1.36 $1.46 $1.22 Closing Stock Price $56.05 $40.18 $39.52 2014 2015 2016 2014 2015 2016 2014 2015 2016 In Millions In Dollars Year-end; In Dollars Total Revenues* Total Loans Total Deposits $151.0 $162.3 $175.6 $2.9 $3.0 $3.2 $2.8 $2.9 $3.1 2014 2015 2016 2014 2015 2016 2014 2015 2016 In Millions Other* Mortgage Banking Revenue Wealth Management Revenues Net Interest Income Year-end; In Billions Consumer Residential Commercial Year-end; In Billions Time Deposits Money Market & Savings Demand & NOW Wealth Management Assets Under Administration Mortgage Originations $5.8 $6.1 $5.1 $700.3 $758.7 $865.3 2014 2015 2016 2014 2015 2016 Year-end; In Billions Including Brokered Loans as Agent; In Millions *Excludes $7.6 million of net gain on sale and pre-sale revenue from merchant processing service business line in 2014. F i n a n c i a l H i g h l i g h t s Note: Font and layout of the information in this file are to be determined by E. Eckel. Financial Highlights Dollars in thousands, except per share amounts Financial Condition Total assets Total securities Total loans Allowance for loan losses Total deposits Total shareholders’ equity Book value per share Total risk-based capital ratio Equity to assets Operating Results Net interest income Provision for loan losses Wealth management revenues Mortgage banking revenues Net income Diluted earnings per common share Cash dividends declared per share Return on average assets Return on average equity Net interest margin (taxable equivalent basis) Asset Quality Nonperforming assets to total assets Total past due loans to total loans Allowance for loan losses to total loans Net loan charge-offs to average loans 2016 At or for the years ended December 31, 2014 2015 2013 2012 $4,381,115 755,545 3,234,371 26,004 3,063,752 390,804 22.76 12.26% 8.92% $3,771,604 395,067 3,013,127 27,069 2,934,255 375,388 22.06 12.58% 9.95% $3,586,874 382,884 2,859,276 28,023 2,754,818 346,279 20.68 12.56% 9.65% $3,188,867 422,808 2,462,884 27,886 2,505,321 329,646 19.84 13.29% 10.34% $3,071,884 415,879 2,294,003 30,873 2,312,631 295,652 18.05 13.26% 9.62% $110,478 5,650 37,569 13,183 46,481 2.70 1.46 1.16% 11.96% 3.02% $103,982 1,050 35,416 9,901 43,465 2.54 1.36 1.19% 12.00% 3.12% $99,505 1,850 33,378 7,152 40,824 2.41 1.22 1.23% 11.87% 3.28% $91,785 2,400 31,825 13,293 36,153 2.16 1.03 1.17% 11.65% 3.28% $90,696 2,700 29,641 14,148 35,074 2.13 0.94 1.16% 11.97% 3.29% 0.53% 0.76% 0.80% 0.21% 0.58% 0.58% 0.90% 0.07% 0.48% 0.63% 0.98% 0.07% 0.62% 0.89% 1.13% 0.23% 0.83% 1.22% 1.35% 0.07% Stock Transfer and Dividend Disbursing Agent: American Stock Transfer & Trust Company, 6201 15th Avenue, Brooklyn, NY 11219, 800-852-0354, www.amstock.com The Corporation’s 2017 Proxy Statement, Form 10-K and Annual Report for 2016 are available online by visiting the Corporation’s website www.washtrustbancorp.com/proxy, by calling the Corporation’s toll-free number 800-475-2265 extension 1566, or by email at investor.relations@washtrust.com. Auditors: KPMG, LLP, Providence, Rhode Island Counsel: Goodwin Procter LLP, Boston, Massachusetts This report contains certain statements that may be considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Secu- rities Exchange Act of 1934, as amended. Actual results, performance or achievements of Washington Trust may differ materially from those discussed in these forward-looking statements, as a result of, among other factors, the factors described under the caption “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as filed with the Securities and Exchange Commission and updated by our Quarterly Reports on Form 10-Q. 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 Washington Trust assumes no obligation to update forward looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes. L o c a t i o n s Branch Offices HEADQUARTERS 23 Broad Street Westerly, RI 02891 401-348-1200 BLOCK ISLAND, RI Block Island Office Ocean Avenue Block Island, RI 02807 401-466-7710 CHARLESTOWN, RI Charlestown Office 4137 Old Post Road Charlestown, RI 02813 401-364-4000 COVENTRY, RI Coventry Office Opening 2017 732 Tiogue Avenue Coventry, RI 02816 CRANSTON, RI Oaklawn Avenue Office 1203 Oaklawn Avenue Cranston, RI 02920 401-732-0049 Plainfield Pike Office 2174 Plainfield Pike Cranston, RI 02921 401-383-8223 Reservoir Avenue Office 645 Reservoir Avenue Cranston, RI 02910 401-946-1004 EAST PROVIDENCE, RI East Providence Office 587 Taunton Avenue East Providence, RI 02914 401-383-8800 Rumford Office 330 Newport Avenue Rumford, RI 02916 401-228-6555 JOHNSTON, RI Johnston Office 1383 Atwood Avenue Johnston, RI 02919 401-654-4837 NARRAGANSETT, RI Bonnet Shores Office 885 Boston Neck Road Narragansett, RI 02882 401-782-4800 Sweet Meadows Office 20 Point Judith Road Narragansett, RI 02882 401-782-1000 NORTH KINGSTOWN, RI North Kingstown Office 7625 Post Road North Kingstown, RI 02852 401-295-4700 PROVIDENCE, RI East Side Office 229 Waterman Street Providence, RI 02906 401-443-2800 Providence Office 156 Westminster Street Providence, RI 02903 401-421-3600 RICHMOND, RI Richmond Office 1200 Main Street Wyoming, RI 02898 401-539-2427 SOUTH KINGSTOWN, RI Wakefield Office 730 Kingstown Road Wakefield, RI 02879 401-782-4200 WARWICK, RI Centerville Road Office 236 Centerville Road Warwick, RI 02886 401-739-2353 Governor Francis Office 1473 Warwick Avenue Warwick, RI 02888 401-921-2500 WESTERLY, RI Main Office 23 Broad Street Westerly, RI 02891 401-348-1200 Franklin Street Office 126 Franklin Street Westerly, RI 02891 401-348-1367 McQuade’s Marketplace 106 Main Street Westerly, RI 02891 401-348-1201 Wealth Management Offices PROVIDENCE, RI 10 Weybosset Street, Suite 200 Providence, RI 02903 401-654-4801 NARRAGANSETT, RI 20 Point Judith Road Narragansett, RI 02882 401-782-1000 WESTERLY, RI 23 Broad Street Westerly, RI 02891 401-348-1238 WELLESLEY, MA Weston Financial Group Wellesley Office Park 100 William Street, Suite 200 Wellesley, MA 02481 781-235-7055 NEW HAVEN, CT Halsey Associates One Century Tower 265 Church Street, Suite 1006 New Haven, CT 06510 203-772-0740 Customer Solutions Center RI: 401-348-1200 CT: 860-443-1508 Toll-free: 800-475-2265 Websites www.washtrustbancorp.com www.washtrust.com www.washtrustmortgage.com www.washtrustwealth.com www.westonfinancial.net www.halseyassociates.com Ticker Symbol NASDAQ: WASH MYSTIC, CT McQuade’s Marketplace 14 Clara Drive Mystic, CT 06355 860-572-2058 Commercial Banking Offices PROVIDENCE, RI 10 Weybosset Street, Suite 100 Providence, RI 02903 401-331-5090 WARWICK, RI 236 Centerville Road Warwick, RI 02886 401-739-2353 WESTERLY, RI 23 Broad Street Westerly, RI 02891 401-348-1200 Mortgage Offices WARWICK, RI 171 Service Avenue Warwick, RI 02886 401-681-4224 DARIEN, CT 1025 Boston Post Road Darien, CT 06820 203-309-5571 GLASTONBURY, CT* 180 Glastonbury Boulevard, Suite 107 Glastonbury, CT 06033 860-430-9900 BRAINTREE, MA* 25 Braintree Hill Office Park, Suite 309 Braintree, MA 02184 781-428-7970 BURLINGTON, MA* 25 Mall Road, Suite 408 Burlington, MA 01803 781-229-2004 SHARON, MA* One Merchant Street, Suite 102 Sharon, MA 02067 781-784-3089 WELLESLEY, MA* 62 Walnut Street, Suite 102 Wellesley, MA 02481 781-489-3175 *Operating as Washington Trust Mortgage Company Parent Company of The Washington Trust Company The Corporation has an Affirmative Action Plan and is an Equal Opportunity Employer. Washington Trust is also a member of the FDIC and an Equal Housing Lender 1. Our Annual Peanut Butter Drive helps feed local families in need; collecting almost 120 tons of peanut butter over the past 16 years. 2. Our mortgage team helps homeowners, from throughout the southern New England region, secure home financing. 3. Our employees serve as “trusted advisors,” offering important information on financial matters and topics of interest. 4. Networking and business development activities enable us to develop relationships with new clients and key centers of influence. 5. We are recognized as one of Rhode Island’s “Best Places to Work,” earning the Providence Business News award for the sixth consecutive year. 6. Our annual Community Shred-it Day is an important fraud protection event, offering a safe and free method to dispose of confidential information. 7. Our commercial lending team provides millions of dollars in financing to businesses throughout our market area. 8. Members of executive management serve in a leadership capacity for major organizations and groups within our region and the industry. 

Continue reading text version or see original annual report in PDF format above