WASHINGTON TRUST BANCORP INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - 8-K - WASHINGTON TRUST BANCORP INC	form8-k2016q3earningsrelease.htm

Exhibit 99.1

NASDAQ: WASH

Contact: Elizabeth B. Eckel

Senior Vice President, Marketing

Telephone: (401) 348-1309

E-mail: ebeckel@washtrust.com

Date: October 24, 2016

FOR IMMEDIATE RELEASE

Washington Trust Reports Record Quarterly Earnings

WESTERLY, R.I., October 24, 2016 (GLOBE NEWSWIRE)…Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced net income of $12.3 million, or $0.72 per diluted share, for the third quarter of 2016, up from net income of $11.1 million, or $0.64 per diluted share, reported for the second quarter of 2016.

"Our third quarter results reflect the strength and diversity of our business model, as we generated key revenues from our core business lines,” stated Joseph J. MarcAurele, Washington Trust Chairman and Chief Executive Officer. “We also posted record earnings and surpassed $4 billion in total assets for the first time in our 216-year history."

Selected highlights for the third quarter of 2016 include:


•	Returns on average equity and average assets were strong at 12.57% and 1.21%, respectively. Comparable amounts for the second quarter of 2016 were 11.50% and 1.14%, respectively.


•	The latest quarter results included a $939 thousand, or 5 cent per diluted share, benefit resulting from the reduction of a contingent consideration liability. Additional information is presented below under the heading Noninterest Expenses.


•	Total loans stood at $3.2 billion at September 30, 2016, up by 3% in the quarter and up by 8% from a year ago.


•	Total deposits grew by 9% in the third quarter and amounted to $3.0 billion at September 30, 2016. Deposits were up by 7% from a year ago.


•	Wealth management assets at the end of quarter stood in excess of $6 billion and third quarter revenues totaled $9.6 million. These were record highs for Washington Trust.


•	Mortgage banking revenues amounted to $3.7 million, up by 38% on a linked quarter basis. Mortgage loans sold to the secondary market totaled $164 million, the highest quarterly volume in our history.


•	In September, Washington Trust declared a quarterly dividend of 37 cents per share, representing a 1 cent per share increase over the previous quarter and the second dividend increase in 2016.

Net Interest Income

Net interest income totaled $27.4 million for the third quarter of 2016, up by $603 thousand on a linked quarter basis. The net interest margin was 2.94% for the third quarter of 2016, down by 11 basis points from the previous quarter. The reduction in the net interest margin was primarily due to lower yields on interest-earning assets, resulting from additions to the investment securities portfolio and to a lesser extent, a reduction in the yield on the loan portfolio. Significant linked quarter changes included:

Washington Trust

Page 2, October 24, 2016


•	Average interest-earning assets increased by $178 million from the prior quarter, reflecting a $95 million increase in the average balance of investment securities and a $58 million increase in the average balance of loans. The yield on interest-earning assets was 3.55%, down by 10 basis points.


•	Average interest-bearing liabilities increased by $131 million from the prior quarter, reflecting an increase of $111 million in the average balance of wholesale funding balances and an increase of $19 million in average interest-bearing deposits. The cost of interest-bearing funds was 0.76%, up by 2 basis points from the prior quarter.

Noninterest Income

Noninterest income totaled $17.3 million for the third quarter of 2016, up by $1.3 million, or 8%, from the second quarter of 2016. Significant linked quarter changes included:

•

Wealth management revenues, our largest source of noninterest income, totaled $9.6 million for the third quarter, up by $142 thousand, or 1%, from the prior quarter. The linked quarter change was affected by the second quarter recognition of $344 thousand in tax preparation fee income, which is typically concentrated in that quarter. Wealth management assets under administration amounted to $6.1 billion at September 30, 2016, up by $152 million on a linked quarter basis. Managed assets continue to represent over 90% of total wealth management assets at September 30, 2016.


•	Mortgage banking revenues totaled $3.7 million in the third quarter, up by $1.0 million, or 38%, from the previous quarter, reflecting both a higher volume of and yield on loans sold to the secondary market. Residential mortgage loans sold to the secondary market amounted to $164 million in the third quarter, compared to $139 million in the previous quarter.


•	Income from bank-owned life insurance ("BOLI") amounted to $521 thousand in the third quarter, down by $569 thousand on a linked quarter basis. This decrease was due to a $589 thousand non-taxable gain recognized in the second quarter due to the receipt of life insurance proceeds.


•	Loan related derivative income amounted to $1.2 million in the third quarter, up by $670 thousand from the prior quarter.

Noninterest Expenses

Noninterest expenses totaled $24.7 million for the third quarter of 2016, down by $1.4 million, or 5%, from the prior quarter. The largest reason for the decline was a $939 thousand reduction in noninterest expenses resulting from a downward adjustment in the fair value of the contingent consideration liability previously recognized upon the completion of the acquisition of Halsey Associates, Inc. in 2015. The remaining linked quarter decrease in noninterest expenses was due to a $497 thousand decline in salaries and employee benefit costs. In the previous quarter, costs of $425 thousand were recognized for various employee severance matters.

Income tax expense amounted to $5.9 million for the third quarter of 2016, up by $710 thousand from the prior quarter. The effective tax rate for the third quarter of 2016 was 32.2%, compared to 31.8% for the second quarter of 2016. The effective tax rate in the prior quarter was lower due to the impact of the non-taxable gain related to the receipt of BOLI proceeds. Based on the current federal and applicable state income tax statutes, the Corporation currently expects the effective tax rate for the fourth quarter of 2016 will be approximately 32.5%.

Washington Trust

Page 3, October 24, 2016

Loans

Total loans amounted to $3.2 billion at September 30, 2016, up by $100 million, or 3%, from the balance at the end of the second quarter. Residential loan portfolio balances increased by $75 million, or 7%. During the quarter, $59 million of residential mortgages were purchased. These purchased loans were individually evaluated to our underwriting standards and are predominantly secured by properties in Massachusetts. The commercial loan portfolio increased by $25 million, or 1.4%, during the quarter, reflecting growth in the commercial mortgage and commercial construction portfolios.

Investment Securities

The investment securities portfolio amounted to $581 million at September 30, 2016, up by $161 million, or 38.5%, from the balance at June 30, 2016. During the quarter, government agency mortgage-backed debt securities and agency debt securities totaling $216 million and with a weighted average yield of 2.48% were purchased. The purchases were partially offset by calls of agency debt securities and obligations of state and political subdivisions, as well as routine principal pay-downs on mortgage-backed securities. Investment securities represented 14% of total assets as of September 30, 2016.

Deposits and Borrowings

Total deposits amounted to $3.0 billion at September 30, 2016, up by $248 million, or 8.9%, in the third quarter. Included in total deposits were wholesale brokered time deposit balances of $359 million, which increased by $65 million from the balance at the end of the second quarter. Excluding wholesale brokered time deposits, in-market deposits increased by $183 million, or 7.3%, in the quarter. This reflects increases in money market deposits and noninterest-bearing demand deposits, including inflows associated with the business cycles of various institutional and governmental depositors.

FHLBB advances amounted to $672 million at September 30, 2016, up by $32 million, or 4.9%, from June 30, 2016.

Asset Quality

Total past due loans amounted to $21.3 million, or 0.67% of total loans, at September 30, 2016, compared to $17.1 million, or 0.56% of total loans, at June 30, 2016. Total nonaccrual loans amounted to $24.0 million, or 0.75% of total loans, at September 30, 2016, compared to $17.2 million, or 0.56% of total loans, at June 30, 2016. The increase in both past due loans and nonaccrual loans was due to one commercial real estate relationship, previously modified in a troubled debt restructuring, with a carrying value of $6.3 million as of September 30, 2016. During the third quarter, a $1.9 million charge-off was recognized on this relationship.

A loan loss provision totaling $1.8 million was charged to earnings in the third quarter of 2016, compared to a loan loss provision of $450 thousand recognized in the second quarter of 2016. The increase in loan loss provision was primarily due to the additional loss exposure allocated to the commercial real estate relationship noted above. The allowance for loan losses was $25.6 million, or 0.81% of total loans, at September 30, 2016, compared to $25.8 million, or 0.84% of total loans, at June 30, 2016.

Capital and Dividends

Total shareholders' equity was $395 million at September 30, 2016, up by $7 million from June 30, 2016. Capital levels at September 30, 2016 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.31% at September 30, 2016, compared to 12.43% at June 30, 2016. At September 30, 2016, book value per share amounted to $23.11, up from $22.73 in the prior quarter.

Washington Trust

Page 4, October 24, 2016

The Board of Directors declared a quarterly dividend of 37 cents per share for the quarter ended September 30, 2016. The dividend was paid on October 14, 2016 to shareholders of record on October 3, 2016.

Conference Call

Washington Trust will host a conference call to discuss its third quarter results, business highlights and outlook on Tuesday, October 25, 2016 at 8:30 a.m. (Eastern Time). Individuals may dial in to the call at 1-877-407-0784. An audio replay of the call will be available, shortly after the conclusion of the call, by dialing 1-877-870-5176 and entering the Replay PIN Number 13646314; the audio replay will be available through November 4, 2016. Also, a webcast of the call will be posted in the Investor Relations section of Washington Trust's web site, www.washtrustbancorp.com, and will be available through December 31, 2016.

Background

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

Forward-Looking Statements

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

Some of the factors that might cause these differences include the following: weakness in national, regional or international economic conditions or conditions affecting the banking or financial services industries or financial capital markets; volatility in national and international financial markets; additional government intervention in the U.S. financial system; reductions in net interest income resulting from interest rate volatility as well as changes in the balance and mix of loans and deposits; reductions in the market value of wealth management assets under administration; changes in the value of securities and other assets; reductions in loan demand; changes in loan collectibility, default and charge-off rates; changes in the size and nature of the our competition; changes in legislation or regulation and accounting principles, policies and guidelines; and changes in the assumptions used in making such forward-looking statements. In addition, the factors described under “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, as updated by our Quarterly Reports on Form 10-Q and other filings submitted to the SEC, may result in these differences. You should carefully review all of these factors and you should be aware that there may be other factors that could cause these differences. These forward-looking statements were based on information, plans and estimates at the date of this report, and we assume no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

Supplemental Information - Explanation of Non-GAAP Financial Measures

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



Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited; Dollars in thousands)

	Sep 30, 2016			Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015
Assets:
Cash and due from banks		$126,752			$116,658			$89,966			$93,222			$106,445
Short-term investments	2,420			3,255			4,931			4,409			3,629
Mortgage loans held for sale	45,162			38,554			22,895			38,554			31,805
Securities:
Available for sale, at fair value	564,256			401,749			411,352			375,044			323,795
Held to maturity, at amortized cost	16,848			17,917			19,040			20,023			21,140
Total securities	581,104			419,666			430,392			395,067			344,935
Federal Home Loan Bank stock, at cost	37,249			34,303			26,515			24,316			37,730
Loans:
Commercial	1,757,215			1,732,220			1,698,811			1,654,547			1,579,854
Residential real estate	1,079,887			1,005,036			1,004,349			1,013,555			1,024,214
Consumer	344,253			343,628			343,833			345,025			345,850
Total loans	3,181,355			3,080,884			3,046,993			3,013,127			2,949,918
Less allowance for loan losses	25,649			25,826			26,137			27,069			27,161
Net loans	3,155,706			3,055,058			3,020,856			2,986,058			2,922,757
Premises and equipment, net	29,433			29,590			29,882			29,593			28,180
Investment in bank-owned life insurance	70,557			65,036			66,000			65,501			65,000
Goodwill	64,059			64,059			64,059			64,059			64,196
Identifiable intangible assets, net	10,493			10,814			11,137			11,460			11,793
Other assets	81,099			80,088			71,577			59,365			58,366
Total assets		$4,204,034			$3,917,081			$3,838,210			$3,771,604			$3,674,836
Liabilities:
Deposits:
Demand deposits		$566,027			$512,307			$539,119			$537,298			$513,856
NOW accounts	404,827			414,532			394,873			412,602			358,973
Money market accounts	794,905			675,896			763,565			823,490			855,858
Savings accounts	357,966			342,579			331,800			326,967			305,775
Time deposits	913,649			844,036			850,294			833,898			801,818
Total deposits	3,037,374			2,789,350			2,879,651			2,934,255			2,836,280
Federal Home Loan Bank advances	671,615			640,010			487,189			378,973			381,649
Junior subordinated debentures	22,681			22,681			22,681			22,681			22,681
Other liabilities	77,037			76,708			67,409			60,307			63,699
Total liabilities	3,808,707			3,528,749			3,456,930			3,396,216			3,304,309
Shareholders’ Equity:
Common stock	1,069			1,068			1,064			1,064			1,062
Paid-in capital	113,290			112,314			111,641			110,949			109,724
Retained earnings	288,613			282,666			277,810			273,074			268,166
Accumulated other comprehensive loss	(7,645		)	(7,716		)	(9,235		)	(9,699		)	(8,425		)
Total shareholders’ equity	395,327			388,332			381,280			375,388			370,527
Total liabilities and shareholders’ equity		$4,204,034			$3,917,081			$3,838,210			$3,771,604			$3,674,836

-5-



CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; Dollars in thousands, except per share amounts)
																For the Nine Months Ended
	For the Three Months Ended
	Sep 30, 2016			Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			Sep 30, 2016			Sep 30, 2015
Interest income:
Interest and fees on loans		$29,633			$29,122			$29,998			$28,511			$28,626			$88,753			$85,718
Taxable interest on securities	3,024			2,487			2,370			2,262			2,178			7,881			6,613
Nontaxable interest on securities	218			280			327			352			366			825			1,203
Dividends on Federal Home Loan Bank stock	288			231			210			315			309			729			638
Other interest income	93			70			64			37			47			227			101
Total interest and dividend income	33,256			32,190			32,969			31,477			31,526			98,415			94,273
Interest expense:
Deposits	3,110			2,981			2,968			3,097			3,308			9,059			10,045
Federal Home Loan Bank advances	2,641			2,313			2,152			1,966			1,987			7,106			5,780
Junior subordinated debentures	125			119			112			157			232			356			714
Other interest expense	1			1			2			2			2			4			7
Total interest expense	5,877			5,414			5,234			5,222			5,529			16,525			16,546
Net interest income	27,379			26,776			27,735			26,255			25,997			81,890			77,727
Provision for loan losses	1,800			450			500			750			200			2,750			300
Net interest income after provision for loan losses	25,579			26,326			27,235			25,505			25,797			79,140			77,427
Noninterest income:
Wealth management revenues	9,623			9,481			9,174			9,167			8,902			28,278			26,249
Mortgage banking revenues	3,734			2,710			2,198			2,582			1,990			8,642			7,319
Service charges on deposit accounts	915			935			907			971			986			2,757			2,894
Card interchange fees	870			860			797			810			849			2,527			2,389
Income from bank-owned life insurance	521			1,090			499			502			498			2,110			1,480
Loan related derivative income	1,178			508			645			752			327			2,331			1,689
Equity in losses of unconsolidated subsidiaries	(88		)	(89		)	(88		)	(69		)	(69		)	(265		)	(224		)
Other income	508			419			502			431			430			1,429			1,398
Total noninterest income	17,261			15,914			14,634			15,146			13,913			47,809			43,194
Noninterest expense:
Salaries and employee benefits	16,908			17,405			16,380			16,053			15,971			50,693			46,971
Net occupancy	1,766			1,803			1,807			1,724			1,721			5,376			5,276
Equipment	1,648			1,503			1,501			1,393			1,424			4,652			4,140
Outsourced services	1,254			1,294			1,363			1,337			1,250			3,911			3,774
Legal, audit and professional fees	691			662			629			825			630			1,982			1,916
FDIC deposit insurance costs	504			491			493			470			467			1,488			1,376
Advertising and promotion	370			420			265			325			356			1,055			1,201
Amortization of intangibles	321			322			323			333			260			966			571
Debt prepayment penalties	—			—			431			—			—			431			—
Acquisition related expenses	—			—			—			52			504			—			937
Change in fair value of contingent consideration	(939		)	—			—			—			—			(939		)	—
Other expenses	2,127			2,130			2,258			2,049			1,955			6,515			6,206
Total noninterest expense	24,650			26,030			25,450			24,561			24,538			76,130			72,368
Income before income taxes	18,190			16,210			16,419			16,090			15,172			50,819			48,253
Income tax expense	5,863			5,153			5,484			5,346			4,964			16,500			15,532
Net income		$12,327			$11,057			$10,935			$10,744			$10,208			$34,319			$32,721

Net income available to common shareholders:
Basic		$12,302			$11,035			$10,910			$10,718			$10,181			$34,247			$32,621
Diluted		$12,302			$11,035			$10,910			$10,718			$10,180			$34,247			$32,621
Weighted average common shares outstanding:
Basic	17,090			17,067			17,023			17,004			16,939			17,060			16,837
Diluted	17,203			17,194			17,157			17,167			17,102			17,198			17,027
Earnings per common share:
Basic		$0.72			$0.65			$0.64			$0.63			$0.60			$2.01			$1.94
Diluted		$0.72			$0.64			$0.64			$0.62			$0.60			$1.99			$1.92

Cash dividends declared per share		$0.37			$0.36			$0.36			$0.34			$0.34			$1.09			$1.02

-6-



SELECTED FINANCIAL HIGHLIGHTS
(Unaudited; Dollars in thousands, except per share amounts)

	Sep 30, 2016			Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015
Share and Equity Related Data:
Book value per share		$23.11			$22.73			$22.40			$22.06			$21.82
Tangible book value per share - Non-GAAP (1)		$18.75			$18.35			$17.98			$17.62			$17.36
Market value per share		$40.22			$37.92			$37.32			$39.52			$38.45
Shares issued and outstanding at end of period	17,107			17,081			17,024			17,020			16,985

Capital Ratios:
Tier 1 risk-based capital	11.48% (i)			11.57		%	11.56		%	11.64		%	11.83		%
Total risk-based capital	12.31% (i)			12.43		%	12.45		%	12.58		%	12.80		%
Tier 1 leverage ratio	8.95% (i)			9.21		%	9.31		%	9.37		%	9.26		%
Common equity tier 1	10.77% (i)			10.84		%	10.82		%	10.89		%	11.05		%
Equity to assets	9.40		%	9.91		%	9.93		%	9.95		%	10.08		%
Tangible equity to tangible assets - Non-GAAP (1)	7.77		%	8.16		%	8.13		%	8.11		%	8.18		%
(i) - estimated



											For the Nine Months Ended
	For the Three Months Ended										For the Nine Months Ended
	Sep 30, 2016		Jun 30, 2016		Mar 31, 2016		Dec 31, 2015		Sep 30, 2015		Sep 30, 2016		Sep 30, 2015
Performance Ratios:
Net interest margin (FTE)	2.94	%	3.05	%	3.24	%	3.08	%	3.07	%	3.07	%	3.13	%
Return on average assets	1.21	%	1.14	%	1.16	%	1.16	%	1.11	%	1.17	%	1.20	%
Return on average tangible assets - Non-GAAP (1)	1.24	%	1.17	%	1.18	%	1.19	%	1.13	%	1.20	%	1.22	%
Return on average equity	12.57	%	11.50	%	11.50	%	11.52	%	11.13	%	11.86	%	12.17	%
Return on average tangible equity - Non-GAAP (1)	15.53	%	14.28	%	14.34	%	14.45	%	13.82	%	14.72	%	14.90	%


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

-7-



SELECTED FINANCIAL HIGHLIGHTS
(Unaudited; Dollars in thousands)
															For the Nine Months Ended
	For the Three Months Ended														For the Nine Months Ended
	Sep 30, 2016			Jun 30, 2016			Mar 31, 2016		Dec 31, 2015			Sep 30, 2015			Sep 30, 2016			Sep 30, 2015
Wealth Management Results
Wealth Management Revenues:
Trust and investment management fees		$8,358			$8,195			$8,065		$8,001			$7,768			$24,618			$22,148
Mutual fund fees	812			812			843		952			989			2,467			3,057
Asset-based revenues	9,170			9,007			8,908		8,953			8,757			27,085			25,205
Transaction-based revenues	453			474			266		214			145			1,193			1,044
Total wealth management revenues		$9,623			$9,481			$9,174		$9,167			$8,902			$28,278			$26,249

Assets Under Administration:
Balance at beginning of period		$5,905,019			$5,878,967			$5,844,636		$5,714,201			$5,211,548			$5,844,636			$5,069,966
Acquisition of Halsey Associates, Inc.	—			—			—		—			839,994			—			839,994
Net investment appreciation (depreciation) & income	192,518			71,447			22,389		153,953			(316,121		)	286,354			(249,181		)
Net client asset flows	(40,678		)	(45,395		)	11,942		(23,518		)	(21,220		)	(74,131		)	53,422
Balance at end of period		$6,056,859			$5,905,019			$5,878,967		$5,844,636			$5,714,201			$6,056,859			$5,714,201

Mortgage Banking Results
Mortgage Banking Revenues:
Gains & commissions on loan sales, net		$3,744			$2,804			$2,134		$2,528			$1,964			$8,682			$7,297
Residential mortgage servicing fee income, net	(10		)	(94		)	64		54			26			(40		)	22
Total mortgage banking revenues		$3,734			$2,710			$2,198		$2,582			$1,990			$8,642			$7,319

Residential Mortgage Loan Originations:
Originations for retention in portfolio		$90,308			$54,080			$47,545		$38,080			$76,963			$191,934			$196,772
Originations for sale to secondary market (1)	170,673			154,043			90,458		134,125			126,353				$415,174		389,709
Total mortgage loan originations		$260,981			$208,123			$138,003		$172,205			$203,316			$607,108			$586,481

Residential Mortgage Loans Sold:
Sold with servicing rights retained		$44,611			$45,804			$26,454		$44,493			$37,782			$116,869			$117,731
Sold with servicing rights released (1)	119,572			93,239			79,507		82,906			94,645				$292,318		285,770
Total mortgage loans sold		$164,183			$139,043			$105,961		$127,399			$132,427			$409,187			$403,501


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

-8-



END OF PERIOD LOAN AND DEPOSIT COMPOSITION
(Unaudited; Dollars in thousands)

	Sep 30, 2016		Jun 30, 2016		Mar 31, 2016		Dec 31, 2015		Sep 30, 2015
Commercial:
Mortgages		$1,086,175		$1,074,747		$976,931		$931,953		$873,767
Construction & development	98,735		81,812		123,032		122,297		121,857
Commercial & industrial	572,305		575,661		598,848		600,297		584,230
Total commercial	1,757,215		1,732,220		1,698,811		1,654,547		1,579,854
Residential real estate:
Mortgages	1,052,829		978,399		980,274		984,437		994,808
Homeowner construction	27,058		26,637		24,075		29,118		29,406
Total residential real estate	1,079,887		1,005,036		1,004,349		1,013,555		1,024,214
Consumer:
Home equity lines	265,238		260,541		258,513		255,565		252,862
Home equity loans	38,264		39,572		45,499		46,649		47,610
Other	40,751		43,515		39,821		42,811		45,378
Total consumer	344,253		343,628		343,833		345,025		345,850
Total loans		$3,181,355		$3,080,884		$3,046,993		$3,013,127		$2,949,918



	September 30, 2016				December 31, 2015
	Balance		% of Total		Balance		% of Total
Commercial Real Estate Loans by Property Location:
Rhode Island, Connecticut, Massachusetts		$1,097,935	92.7	%		$959,883	91.0	%
New York, New Jersey, Pennsylvania	73,893		6.2	%	80,989		7.7	%
New Hampshire	13,082		1.1	%	13,377		1.3	%
Total commercial real estate loans (1)		$1,184,910	100.0	%		$1,054,249	100.0	%

Residential Mortgages by Property Location:
Rhode Island, Connecticut, Massachusetts		$1,062,256	98.3	%		$995,743	98.2	%
New Hampshire, Vermont, Maine	11,827		1.1	%	10,186		1.0	%
New York, Virginia, New Jersey, Maryland, Pennsylvania	2,851		0.3	%	4,163		0.4	%
Ohio	1,077		0.1	%	1,557		0.2	%
Other	1,876		0.2	%	1,906		0.2	%
Total residential mortgages		$1,079,887	100.0	%		$1,013,555	100.0	%


(1)	Commercial real estate loans consist of commercial mortgages and construction and development loans. Commercial mortgages are loans secured by income producing property.



	Sep 30, 2016		Jun 30, 2016		Mar 31, 2016		Dec 31, 2015		Sep 30, 2015
Deposits:
Non-interest bearing demand deposits		$520,860		$476,848		$474,477		$475,398		$472,349
Interest-bearing demand deposits	45,167		35,459		64,642		61,900		41,507
NOW accounts	404,827		414,532		394,873		412,602		358,973
Money market accounts	794,905		675,896		763,565		823,490		855,858
Savings accounts	357,966		342,579		331,800		326,967		305,775
Time deposits (in-market)	554,669		549,935		540,815		531,419		534,266
Wholesale brokered time deposits	358,980		294,101		309,479		302,479		267,552
Total deposits		$3,037,374		$2,789,350		$2,879,651		$2,934,255		$2,836,280

-9-



CREDIT & ASSET QUALITY DATA
(Unaudited; Dollars in thousands)

	Sep 30, 2016			Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015
Asset Quality Ratios:
Nonperforming assets to total assets	0.59		%	0.48		%	0.49		%	0.58		%	0.48		%
Nonaccrual loans to total loans	0.75		%	0.56		%	0.57		%	0.70		%	0.57		%
Allowance for loan losses to nonaccrual loans	107.09		%	149.73		%	150.00		%	128.61		%	161.25		%
Allowance for loan losses to total loans	0.81		%	0.84		%	0.86		%	0.90		%	0.92		%

Nonperforming Assets:
Commercial mortgages		$10,357			$4,054			$4,054			$5,711			$4,915
Commercial construction & development	—			—			—			—			—
Commercial & industrial	1,744			1,204			2,659			3,018			1,137
Residential real estate mortgages	10,140			10,409			9,367			10,666			9,472
Consumer	1,709			1,581			1,345			1,652			1,320
Total nonaccrual loans	23,950			17,248			17,425			21,047			16,844
Other real estate owned	1,045			1,515			1,326			716			955
Total nonperforming assets		$24,995			$18,763			$18,751			$21,763			$17,799

Past Due Loans:
Commercial mortgages		$10,352			$4,062			$4,564			$4,555			$5,062
Commercial & industrial	1,047			1,978			2,906			462			4,337
Residential real estate mortgages	8,291			8,893			8,703			9,286			10,567
Consumer loans	1,565			2,201			2,122			3,256			1,845
Total past due loans		$21,255			$17,134			$18,295			$17,559			$21,811

Total past due loans to total loans	0.67		%	0.56		%	0.60		%	0.58		%	0.74		%
Accruing loans 90 days or more past due		$—			$—			$—			$—			$—
Nonaccrual loans included in past due loans		$18,796			$13,211			$14,030			$13,635			$13,964



																For the Nine Months Ended
	For the Three Months Ended
	Sep 30, 2016			Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			Sep 30, 2016			Sep 30, 2015
Nonaccrual Loan Activity:
Balance at beginning of period		$17,248			$17,425			$21,047			$16,844			$15,131			$21,047			$15,945
Additions to nonaccrual status	9,750			2,072			1,352			7,029			3,319			13,174			7,494
Loans returned to accruing status	(592		)	—			(206		)	(303		)	(156		)	(798		)	(2,278		)
Loans charged-off	(2,055		)	(860		)	(1,475		)	(904		)	(725		)	(4,390		)	(1,401		)
Loans transferred to other real estate owned	—			(435		)	(610		)	(716		)	—			(1,045		)	(491		)
Payments, payoffs and other changes	(401		)	(954		)	(2,683		)	(903		)	(725		)	(4,038		)	(2,425		)
Balance at end of period		$23,950			$17,248			$17,425			$21,047			$16,844			$23,950			$16,844

Allowance for Loan Losses:
Balance at beginning of period		$25,826			$26,137			$27,069			$27,161			$27,587			$27,069			$28,023
Provision charged to earnings	1,800			450			500			750			200			2,750			300
Charge-offs	(2,055		)	(860		)	(1,475		)	(904		)	(725		)	(4,390		)	(1,401		)
Recoveries	78			99			43			62			99			220			239
Balance at end of period		$25,649			$25,826			$26,137			$27,069			$27,161			$25,649			$27,161

Net Loan Charge-Offs (Recoveries):
Commercial mortgages		$1,936			$65			$1,249			$405			($4	)		$3,250			$312
Commercial & industrial	(43		)	684			(18		)	217			348			623			367
Residential real estate mortgages	47			2			134			117			12			183			62
Consumer	37			10			67			103			270			114			421
Total		$1,977			$761			$1,432			$842			$626			$4,170			$1,162

Net charge-offs to average loans (annualized)	0.25		%	0.10		%	0.19		%	0.11		%	0.08		%	0.18		%	0.05		%

-10-

The following table presents average balance and interest rate information. Tax-exempt income is converted to a fully taxable equivalent basis using the statutory federal income tax rate adjusted for applicable state income taxes net of the related federal tax benefit. Unrealized gains (losses) on available for sale securities and fair value adjustments on mortgage loans held for sale are excluded from the average balance and yield calculations. Nonaccrual and renegotiated loans, as well as interest recognized on these loans are included in amounts presented for loans.



CONSOLIDATED AVERAGE BALANCE SHEETS
(Unaudited; Dollars in thousands)

For the Three Months Ended	September 30, 2016					June 30, 2016					September 30, 2015
	Average Balance		Interest		Yield/ Rate	Average Balance		Interest		Yield/ Rate	Average Balance		Interest		Yield/ Rate

Assets:
Commercial mortgages		$1,079,917		$9,362	3.45		$1,019,290		$8,992	3.55		$869,471		$7,898	3.60
Construction & development	86,623		712		3.27	117,204		985		3.38	118,243		897		3.01
Commercial & industrial	565,170		6,382		4.49	591,893		6,408		4.35	583,931		6,680		4.54
Total commercial loans		$1,731,710		$16,456	3.78		$1,728,387		$16,385	3.81		$1,571,645		$15,475	3.91
Residential real estate loans, including loans held for sale	1,080,302		10,386		3.82	1,024,653		9,980		3.92	1,050,949		10,329		3.90
Consumer loans	341,829		3,340		3.89	342,866		3,311		3.88	343,603		3,283		3.79
Total loans	3,153,841		30,182		3.81	3,095,906		29,676		3.86	2,966,197		29,087		3.89
Cash, federal funds sold and short-term investments	88,414		93		0.42	69,839		70		0.40	89,280		47		0.21
FHLBB stock	37,933		288		3.02	31,723		231		2.93	37,730		309		3.25
Taxable debt securities	497,738		3,024		2.42	396,428		2,487		2.52	316,214		2,178		2.73
Nontaxable debt securities	22,038		336		6.07	28,531		433		6.10	37,780		567		5.95
Total securities	519,776		3,360		2.57	424,959		2,920		2.76	353,994		2,745		3.08
Total interest-earning assets	3,799,964		33,923		3.55	3,622,427		32,897		3.65	3,447,201		32,188		3.70
Noninterest-earning assets	262,724					247,081					231,286
Total assets		$4,062,688					$3,869,508					$3,678,487
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits		$39,865		$13	0.13		$42,952		$7	0.07		$30,392		$5	0.07
NOW accounts	402,307		51		0.05	403,136		53		0.05	357,128		53		0.06
Money market accounts	709,549		487		0.27	710,075		459		0.26	820,597		951		0.46
Savings accounts	352,032		52		0.06	338,504		49		0.06	303,587		52		0.07
Time deposits (in-market)	552,576		1,408		1.01	542,621		1,345		1.00	541,486		1,338		0.98
Wholesale brokered time deposits	310,740		1,099		1.41	302,707		1,068		1.42	279,839		909		1.29
FHLBB advances	690,843		2,641		1.52	587,395		2,313		1.58	425,931		1,987		1.85
Junior subordinated debentures	22,681		125		2.19	22,681		119		2.11	22,681		232		4.06
Other	53		1		7.51	66		1		6.09	104		2		7.63
Total interest-bearing liabilities	3,080,646		5,877		0.76	2,950,137		5,414		0.74	2,781,745		5,529		0.79
Demand deposits	520,439					473,731					477,393
Other liabilities	69,370					60,923					52,625
Shareholders' equity	392,233					384,717					366,724
Total liabilities and shareholders' equity		$4,062,688					$3,869,508					$3,678,487
Net interest income (FTE)				$28,046					$27,483					$26,659
Interest rate spread					2.79					2.91					2.91
Net interest margin					2.94					3.05					3.07

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



For the Three Months Ended	Sep 30, 2016		Jun 30, 2016		Sep 30, 2015
Commercial loans		$549		$554		$461
Nontaxable debt securities	118		153		201
Total		$667		$707		$662

-11-



CONSOLIDATED AVERAGE BALANCE SHEETS
(Unaudited; Dollars in thousands)

For the Nine Months Ended	September 30, 2016					September 30, 2015
	Average Balance		Interest		Yield/ Rate	Average Balance		Interest		Yield/ Rate

Assets:
Commercial mortgages		$1,011,327		$26,569	3.51		$864,941		$23,394	3.62
Construction & development	110,914		2,806		3.38	100,787		2,336		3.10
Commercial & industrial	587,098		20,470		4.66	597,887		20,987		4.69
Total commercial loans	1,709,339		49,845		3.90	1,563,615		46,717		3.99
Residential real estate loans, including loans held for sale	1,045,532		30,521		3.90	1,035,408		30,745		3.97
Consumer loans	342,735		10,044		3.91	339,608		9,634		3.79
Total loans	3,097,606		90,410		3.90	2,938,631		87,096		3.96
Cash, federal funds sold and short-term investments	75,627		227		0.40	68,205		101		0.20
FHLBB stock	31,774		729		3.06	37,730		638		2.26
Taxable debt securities	418,034		7,881		2.52	319,786		6,613		2.76
Nontaxable debt securities	27,939		1,276		6.10	41,083		1,858		6.05
Total securities	445,973		9,157		2.74	360,869		8,471		3.14
Total interest-earning assets	3,650,980		100,523		3.68	3,405,435		96,306		3.78
Noninterest-earning assets	250,019					224,921
Total assets		$3,900,999					$3,630,356
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits		$44,490		$34	0.10		$35,430		$17	0.06
NOW accounts	397,329		161		0.05	350,151		153		0.06
Money market accounts	735,324		1,461		0.27	813,915		2,775		0.46
Savings accounts	339,616		148		0.06	298,635		148		0.07
Time deposits (in-market)	544,441		4,067		1.00	554,369		4,198		1.01
Wholesale brokered time deposits	303,442		3,188		1.40	286,728		2,754		1.28
FHLBB advances	577,501		7,106		1.64	407,363		5,780		1.90
Junior subordinated debentures	22,681		356		2.10	22,681		714		4.21
Other	66		4		8.10	116		7		8.07
Total interest-bearing liabilities	2,964,890		16,525		0.74	2,769,388		16,546		0.80
Demand deposits	488,767					452,691
Other liabilities	61,555					49,786
Shareholders' equity	385,787					358,491
Total liabilities and shareholders' equity		$3,900,999					$3,630,356
Net interest income (FTE)				$83,998					$79,760
Interest rate spread					2.94					2.98
Net interest margin					3.07					3.13

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

-12-



SUPPLEMENTAL INFORMATION - Calculation of Non-GAAP Financial Measures
(Unaudited; Dollars in thousands, except per share amounts)

	Sep 30, 2016			Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015
Tangible Book Value per Share:
Total shareholders' equity, as reported		$395,327			$388,332			$381,280			$375,388			$370,527
Less:
Goodwill	64,059			64,059			64,059			64,059			64,196
Identifiable intangible assets, net	10,493			10,814			11,137			11,460			11,793
Total tangible shareholders' equity		$320,775			$313,459			$306,084			$299,869			$294,538

Shares outstanding, as reported	17,107			17,081			17,024			17,020			16,985

Book value per share - GAAP		$23.11			$22.73			$22.40			$22.06			$21.82
Tangible book value per share - Non-GAAP		$18.75			$18.35			$17.98			$17.62			$17.34

Tangible Equity to Tangible Assets:
Total tangible shareholders' equity		$320,775			$313,459			$306,084			$299,869			$294,538

Total assets, as reported		$4,204,034			$3,917,081			$3,838,210			$3,771,604			$3,674,836
Less:
Goodwill	64,059			64,059			64,059			64,059			64,196
Identifiable intangible assets, net	10,493			10,814			11,137			11,460			11,793
Total tangible assets		$4,129,482			$3,842,208			$3,763,014			$3,696,085			$3,598,847

Equity to assets - GAAP	9.40		%	9.91		%	9.93		%	9.95		%	10.08		%
Tangible equity to tangible assets - Non-GAAP	7.77		%	8.16		%	8.13		%	8.11		%	8.18		%



	For the Three Months Ended															For the Nine Months Ended
	Sep 30, 2016			Jun 30, 2016			Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			Sep 30, 2016			Sep 30, 2015
Return on Average Tangible Assets:
Net income, as reported		$12,327			$11,057			$10,935			$10,744			$10,208			$34,319			$32,721

Total average assets, as reported		$4,062,688			$3,869,508			$3,769,025			$3,700,441			$3,678,487			$3,900,999			$3,630,356
Less average balances of:
Goodwill	64,059			64,059			64,059			64,194			62,524			64,059			59,465
Identifiable intangible assets, net	10,650			10,972			11,294			11,616			8,768			10,971			6,280
Total average tangible assets		$3,987,979			$3,794,477			$3,693,672			$3,624,631			$3,607,195			$3,825,969			$3,564,611

Return on average assets - GAAP	1.21		%	1.14		%	1.16		%	1.16		%	1.11		%	1.17		%	1.20		%
Return on average tangible assets - Non-GAAP	1.24		%	1.17		%	1.18		%	1.19		%	1.13		%	1.20		%	1.22		%

Return on Average Tangible Equity:
Net income, as reported		$12,327			$11,057			$10,935			$10,744			$10,208			$34,319			$32,721

Total average equity, as reported		$392,233			$384,717			$380,342			$373,197			$366,724			$385,787			$358,491
Less average balances of:
Goodwill	64,059			64,059			64,059			64,194			62,524			64,059			59,465
Identifiable intangible assets, net	10,650			10,972			11,294			11,616			8,768			10,971			6,280
Total average tangible equity		$317,524			$309,686			$304,989			$297,387			$295,432			$310,757			$292,746

Return on average equity - GAAP	12.57		%	11.50		%	11.50		%	11.52		%	11.13		%	11.86		%	12.17		%
Return on average tangible equity - Non-GAAP	15.53		%	14.28		%	14.34		%	14.45		%	13.82		%	14.72		%	14.90		%

-13-

For the Nine Months Ended

Sep 30, 2016

Sep 30, 2015

Commercial loans

Nontaxable debt securities