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-k2017q3earningsrelease.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 23, 2017

FOR IMMEDIATE RELEASE

Washington Trust Reports Third Quarter 2017 Earnings

WESTERLY, R.I., October 23, 2017 (GLOBE NEWSWIRE)…Washington Trust Bancorp, Inc. (Nasdaq:WASH), parent company of The Washington Trust Company, today announced third quarter 2017 net income of $13.0 million, or $0.75 per diluted share, compared to $13.2 million, or $0.76 per diluted share, reported for the second quarter of 2017.

“Washington Trust’s third quarter performance reflects our continued success at growing our key business lines,” stated Joseph J. MarcAurele, Washington Trust Chairman and Chief Executive Officer. “Our diversified revenue streams were integral to our solid quarterly results, allowing us to maintain our strong profitability metrics.”

Selected highlights for the third quarter of 2017 include:


•	Returns on average equity and average assets were 12.56% and 1.18%, respectively. Comparable amounts for the second quarter of 2017 were 13.06% and 1.21%, respectively.


•	Third quarter 2017 total revenues (net interest income and noninterest income) amounted to $47.3 million, a record level for the Company.


•	Wealth management assets stood at an all-time high of $6.6 billion at September 30, 2017 and third quarter 2017 wealth management revenues exceeded $10.0 million for the first time in the Company's history.


•	Total loans surpassed $3.3 billion at September 30, 2017 and were up by 4% in the third quarter.


•	Total deposits grew by 4% in the third quarter and amounted to $3.2 billion at September 30, 2017.


•	In September 2017, Washington Trust declared a quarterly dividend of 39 cents per share, representing a 1 cent per share increase over the preceding quarter.

Net Interest Income

Net interest income totaled $30.1 million for the third quarter of 2017, up by $155 thousand, or 1%, from the second quarter. Included in net interest income in the third quarter was loan prepayment fee income of $131 thousand, compared to $549 thousand in the second quarter. Excluding the impact of loan prepayment fee income in each period, net interest income was up by $566 thousand, or 2%, on a linked quarter basis. The net interest margin was 2.93% for the third quarter of 2017, down by 4 basis points from the preceding quarter. Excluding the impact of the loan prepayment fee income in each period, the net interest margin was 2.91%, down by 1 basis point from the second quarter of 2017. Significant linked quarter changes included:

Washington Trust

Page 2, October 23, 2017

•

Average interest-earning assets increased by $35 million, with an increase of $59 million in average loan balances, partially offset by a $24 million decrease in the average balance of securities. The yield on interest-earning assets for the third quarter was 3.67%, down by 1 basis point from the preceding quarter. Excluding the impact of loan prepayment fee income in each period, the yield on interest-earning assets was 3.66%, up by 4 basis points from the preceding quarter.

•

Average interest-bearing liabilities increased by $8 million, reflecting an increase of $32 million in average wholesale funding balances (Federal Home Loan Bank advances and wholesale brokered time deposits), partially offset by a seasonal $24 million decrease in average in-market interest-bearing deposits. The cost of interest-bearing funds was 0.92%, up by 5 basis points from the preceding quarter.

Loans

Total loans amounted to $3.3 billion at September 30, 2017, up by $123 million, or 4%, from the end of the preceding quarter. Commercial loans increased by $102 million, or 6%, on a linked quarter basis, with growth of $91 million in the commercial real estate portfolio and $11 million in the commercial and industrial portfolio. Residential loan portfolio balances increased by $27 million, or 2%, from the balance at June 30, 2017. The consumer loan portfolio was down by $6 million, or 2%, from the end of the preceding quarter.

Investment Securities

The investment securities portfolio amounted to $728 million at September 30, 2017, down by $36 million, or 5%, from the balance at June 30, 2017, due to routine principal pay-downs on mortgage-backed securities and calls of debt securities. Investment securities represented 16% of total assets as at September 30, 2017.

Deposits and Borrowings

Total deposits amounted to $3.2 billion at September 30, 2017, up by $136 million, or 4%, from the balance at June 30, 2017. Included in total deposits were wholesale brokered time deposit balances of $416 million, which increased by $15 million from the end of preceding quarter. Excluding wholesale brokered time deposits, in-market deposits increased by $121 million, or 5%, in the quarter, reflecting seasonal inflows of various institutional and governmental depositors based on their underlying business cycles, as well as growth in promotional time certificates of deposit.

Federal Home Loan Bank advances amounted to $814 million at September 30, 2017, down by $56 million from the balance at June 30, 2017.

Noninterest Income

Noninterest income totaled $17.3 million for the third quarter of 2017, up by $477 thousand, or 3%, from the preceding quarter. Linked quarter changes included:


•	Wealth management revenues increased by $71 thousand, or 1%. This included an increase of $390 thousand in asset-based revenues and a decrease of $319 thousand in transaction-based revenues. The linked quarter change in transaction-based revenues was affected by the second quarter recognition of tax preparation fee income, which is typically concentrated in that quarter.

Washington Trust

Page 3, October 23, 2017

Wealth management assets under administration amounted to $6.6 billion at September 30, 2017, up by $184 million from the second quarter, reflecting financial market appreciation. Managed assets represented 92% of total wealth management assets at September 30, 2017.


•	Mortgage banking revenues increased by $117 thousand, or 4%, due to a higher volume of loans sold in the secondary market. Residential mortgage loans sold to the secondary market amounted to $147 million in the third quarter, compared to $137 million in the preceding quarter.


•	Loan related derivative income increased by $308 thousand, or 27%, reflecting a higher volume of commercial borrower loan related derivative transactions.

Noninterest Expenses

Noninterest expenses totaled $26.8 million for the third quarter of 2017, up by $448 thousand, or 2%, from the second quarter. Included in other noninterest expenses in the third quarter was a charge of approximately $570 thousand associated with an isolated external fraud matter. Excluding this charge, total noninterest expenses were down by 0.5% on a linked quarter basis.

Income tax expense totaled $6.3 million for the third quarter of 2017, down by $179 thousand from the preceding quarter. The effective tax rate for the third quarter of 2017 was 32.8%, compared to 33.0% for the preceding quarter.

Asset Quality

Total past due loans amounted to $16.4 million, or 0.49% of total loans, at September 30, 2017, compared to $21.1 million, or 0.66% of total loans, at June 30, 2017. Total nonaccrual loans amounted to $18.5 million, or 0.56% of total loans, at September 30, 2017, down from $20.2 million, or 0.63% of total loans, at June 30, 2017.

A loan loss provision totaling $1.3 million was charged to earnings in the third quarter of 2017, compared to a loan loss provision of $700 thousand in the preceding quarter. The increase in the loan loss provision reflected loan loss allocations commensurate with growth and other changes in the loan portfolio during the quarter as well as an increase in specific reserves on impaired loans. Net charge-offs amounted to $654 thousand in the third quarter of 2017, compared to $484 thousand in the preceding quarter. The allowance for loan losses was $27.3 million, or 0.82% of total loans, at September 30, 2017, compared to $26.7 million, or 0.83% of total loans, at June 30, 2017.

Capital and Dividends

Total shareholders' equity was $414 million at September 30, 2017, up by $8 million from June 30, 2017. Capital levels at September 30, 2017 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.53% at September 30, 2017, compared to 12.78% at June 30, 2017. Book value per share amounted to $24.06 at September 30, 2017, up from $23.59 at June 30, 2017.

The Board of Directors declared a quarterly dividend of 39 cents per share for the quarter ended September 30, 2017, an increase of 1 cent compared to the second quarter. The dividend was paid on October 13, 2017 to shareholders of record on October 2, 2017.

Washington Trust

Page 4, October 23, 2017

Conference Call

Washington Trust will host a conference call to discuss its third quarter results, business highlights and outlook on Tuesday, October 24, 2017 at 8:30 a.m. (Eastern Time). Individuals may dial in to the call at 1-877-407-9208. An audio replay of the call will be available, shortly after the conclusion of the call, by dialing 1-844-512-2921 and entering the Replay PIN Number 13671590; the audio replay will be available through November 3, 2017. Also, a webcast of the call will be posted in the Investor Relations section of Washington Trust's web site, www.washtrustbancorp.com, and will be available through December 31, 2017.

Background

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

Forward-Looking Statements

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

Some of the factors that might cause these differences include the following: weakness in national, regional or international economic conditions or conditions affecting the banking or financial services industries or financial capital markets; volatility in national and international financial markets; reductions in net interest income resulting from interest rate volatility as well as changes in the balance and mix of loans and deposits; reductions in the market value of wealth management assets under administration; changes in the value of securities and other assets; reductions in loan demand; changes in loan collectibility, default and charge-off rates; changes in the size and nature of the our competition; changes in legislation or regulation and accounting principles, policies and guidelines; occurrences of cyberattacks, hacking and identity theft; natural disasters; and changes in the assumptions used in making such forward-looking statements. In addition, the factors described under “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, 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, 2017			Jun 30, 2017			Mar 31, 2017			Dec 31, 2016			Sep 30, 2016
Assets:
Cash and due from banks		$128,580			$117,608			$111,941			$106,185			$126,752
Short-term investments	2,600			2,324			2,039			1,612			2,420
Mortgage loans held for sale	28,484			32,784			25,414			29,434			45,162
Securities:
Available for sale, at fair value	714,355			749,486			754,720			739,912			564,256
Held to maturity, at amortized cost	13,241			13,942			14,721			15,633			16,848
Total securities	727,596			763,428			769,441			755,545			581,104
Federal Home Loan Bank stock, at cost	42,173			44,640			43,714			43,129			37,249
Loans:
Commercial	1,800,116			1,698,389			1,762,499			1,771,666			1,757,215
Residential real estate	1,195,537			1,168,105			1,131,210			1,122,748			1,079,887
Consumer	327,425			333,606			331,151			339,957			344,253
Total loans	3,323,078			3,200,100			3,224,860			3,234,371			3,181,355
Less allowance for loan losses	27,308			26,662			26,446			26,004			25,649
Net loans	3,295,770			3,173,438			3,198,414			3,208,367			3,155,706
Premises and equipment, net	28,591			28,508			28,853			29,020			29,433
Investment in bank-owned life insurance	72,729			72,183			71,642			71,105			70,557
Goodwill	63,909			63,909			64,059			64,059			64,059
Identifiable intangible assets, net	9,388			9,642			9,898			10,175			10,493
Other assets	69,410			67,065			63,348			62,484			81,099
Total assets		$4,469,230			$4,375,529			$4,388,763			$4,381,115			$4,204,034
Liabilities:
Deposits:
Demand deposits		$621,273			$587,813			$596,974			$585,960			$566,027
NOW accounts	448,128			448,617			454,344			427,707			404,827
Money market accounts	716,827			666,047			762,233			730,075			794,905
Savings accounts	367,912			364,002			362,281			358,397			357,966
Time deposits	1,002,941			954,710			939,739			961,613			913,649
Total deposits	3,157,081			3,021,189			3,115,571			3,063,752			3,037,374
Federal Home Loan Bank advances	814,045			869,733			798,741			848,930			671,615
Junior subordinated debentures	22,681			22,681			22,681			22,681			22,681
Other liabilities	61,195			55,884			53,985			54,948			77,037
Total liabilities	4,055,002			3,969,487			3,990,978			3,990,311			3,808,707
Shareholders’ Equity:
Common stock	1,076			1,076			1,075			1,073			1,069
Paid-in capital	117,189			116,484			116,200			115,123			113,290
Retained earnings	312,334			306,151			299,555			294,365			288,613
Accumulated other comprehensive loss	(16,371		)	(17,669		)	(19,045		)	(19,757		)	(7,645		)
Total shareholders’ equity	414,228			406,042			397,785			390,804			395,327
Total liabilities and shareholders’ equity		$4,469,230			$4,375,529			$4,388,763			$4,381,115			$4,204,034

-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, 2017			Jun 30, 2017			Mar 31, 2017			Dec 31, 2016			Sep 30, 2016			Sep 30, 2017			Sep 30, 2016
Interest income:
Interest and fees on loans		$32,509			$31,642			$30,352			$30,738			$29,633			$94,503			$88,753
Taxable interest on securities	4,655			4,844			4,709			3,703			3,024			14,208			7,881
Nontaxable interest on securities	41			72			112			157			218			225			825
Dividends on Federal Home Loan Bank stock	467			439			387			362			288			1,293			729
Other interest income	197			156			104			95			93			457			227
Total interest and dividend income	37,869			37,153			35,664			35,055			33,256			110,686			98,415
Interest expense:
Deposits	3,835			3,591			3,502			3,445			3,110			10,928			9,059
Federal Home Loan Bank advances	3,816			3,509			3,344			2,886			2,641			10,669			7,106
Junior subordinated debentures	159			149			138			135			125			446			356
Other interest expense	—			—			1			1			1			1			4
Total interest expense	7,810			7,249			6,985			6,467			5,877			22,044			16,525
Net interest income	30,059			29,904			28,679			28,588			27,379			88,642			81,890
Provision for loan losses	1,300			700			400			2,900			1,800			2,400			2,750
Net interest income after provision for loan losses	28,759			29,204			28,279			25,688			25,579			86,242			79,140
Noninterest income:
Wealth management revenues	10,013			9,942			9,477			9,291			9,623			29,432			28,278
Mortgage banking revenues	3,036			2,919			2,340			4,541			3,734			8,295			8,642
Service charges on deposit accounts	942			901			883			945			915			2,726			2,757
Card interchange fees	894			902			802			858			870			2,598			2,527
Income from bank-owned life insurance	546			542			536			549			521			1,624			2,110
Loan related derivative income	1,452			1,144			148			912			1,178			2,744			2,331
Equity in losses of unconsolidated subsidiaries	(89		)	(89		)	(88		)	(89		)	(88		)	(266		)	(265		)
Other income	489			545			412			313			508			1,446			1,429
Total noninterest income	17,283			16,806			14,510			17,320			17,261			48,599			47,809
Noninterest expense:
Salaries and employee benefits	17,251			17,358			16,795			16,528			16,908			51,404			50,693
Net occupancy	1,928			1,767			1,967			1,775			1,766			5,662			5,376
Equipment	1,380			1,313			1,467			1,556			1,648			4,160			4,652
Outsourced services	1,793			1,710			1,457			1,311			1,254			4,960			3,911
Legal, audit and professional fees	534			582			616			597			691			1,732			1,982
FDIC deposit insurance costs	308			469			481			390			504			1,258			1,488
Advertising and promotion	416			362			237			403			370			1,015			1,055
Amortization of intangibles	253			257			277			318			321			787			966
Debt prepayment penalties	—			—			—			—			—			—			431
Change in fair value of contingent consideration	—			—			(310		)	—			(939		)	(310		)	(898		)
Other expenses	2,891			2,488			2,299			2,095			2,127			7,678			6,474
Total noninterest expense	26,754			26,306			25,286			24,973			24,650			78,346			76,130
Income before income taxes	19,288			19,704			17,503			18,035			18,190			56,495			50,819
Income tax expense	6,326			6,505			5,721			5,873			5,863			18,552			16,500
Net income		$12,962			$13,199			$11,782			$12,162			$12,327			$37,943			$34,319

Net income available to common shareholders:
Basic		$12,934			$13,170			$11,755			$12,137			$12,302			$37,859			$34,247
Diluted		$12,934			$13,170			$11,755			$12,137			$12,302			$37,859			$34,247
Weighted average common shares outstanding:
Basic	17,212			17,206			17,186			17,142			17,090			17,201			17,060
Diluted	17,318			17,316			17,293			17,245			17,203			17,320			17,198
Earnings per common share:
Basic		$0.75			$0.77			$0.68			$0.71			$0.72			$2.20			$2.01
Diluted		$0.75			$0.76			$0.68			$0.70			$0.72			$2.19			$1.99

Cash dividends declared per share		$0.39			$0.38			$0.38			$0.37			$0.37			$1.15			$1.09

-6-



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

	Sep 30, 2017			Jun 30, 2017			Mar 31, 2017			Dec 31, 2016			Sep 30, 2016
Share and Equity Related Data:
Book value per share		$24.06			$23.59			$23.14			$22.76			$23.11
Tangible book value per share - Non-GAAP (1)		$19.81			$19.32			$18.83			$18.44			$18.75
Market value per share		$57.25			$51.55			$49.30			$56.05			$40.22
Shares issued and outstanding at end of period	17,214			17,210			17,193			17,171			17,107

Capital Ratios:
Tier 1 risk-based capital	11.69% (i)			11.92		%	11.54		%	11.44		%	11.48		%
Total risk-based capital	12.53% (i)			12.78		%	12.38		%	12.26		%	12.31		%
Tier 1 leverage ratio	8.83% (i)			8.78		%	8.58		%	8.67		%	8.95		%
Common equity tier 1	11.02% (i)			11.23		%	10.86		%	10.75		%	10.77		%
Equity to assets	9.27		%	9.28		%	9.06		%	8.92		%	9.40		%
Tangible equity to tangible assets - Non-GAAP (1)	7.76		%	7.73		%	7.51		%	7.35		%	7.77		%
(i) - estimated



											For the Nine Months Ended
	For the Three Months Ended										For the Nine Months Ended
	Sep 30, 2017		Jun 30, 2017		Mar 31, 2017		Dec 31, 2016		Sep 30, 2016		Sep 30, 2017		Sep 30, 2016
Performance Ratios:
Net interest margin (FTE)	2.93	%	2.97	%	2.87	%	2.89	%	2.94	%	2.92	%	3.07	%
Return on average assets	1.18	%	1.21	%	1.08	%	1.14	%	1.21	%	1.16	%	1.17	%
Return on average tangible assets - Non-GAAP (1)	1.20	%	1.23	%	1.10	%	1.16	%	1.24	%	1.18	%	1.20	%
Return on average equity	12.56	%	13.06	%	11.87	%	12.26	%	12.57	%	12.50	%	11.86	%
Return on average tangible equity - Non-GAAP (1)	15.27	%	15.98	%	14.59	%	15.09	%	15.53	%	15.28	%	14.72	%


(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, 2017			Jun 30, 2017			Mar 31, 2017			Dec 31, 2016			Sep 30, 2016			Sep 30, 2017			Sep 30, 2016
Wealth Management Results
Wealth Management Revenues:
Trust and investment management fees		$9,101			$8,781			$8,518			$8,283			$8,358			$26,400			$24,618
Mutual fund fees	690			620			729			771			812			2,039			2,467
Asset-based revenues	9,791			9,401			9,247			9,054			9,170			28,439			27,085
Transaction-based revenues	222			541			230			237			453			993			1,193
Total wealth management revenues		$10,013			$9,942			$9,477			$9,291			$9,623			$29,432			$28,278

Assets Under Administration:
Balance at beginning of period		$6,403,501			$6,243,301			$6,063,293			$6,056,859			$5,905,019			$6,063,293			$5,844,636
Net investment appreciation (depreciation) & income	270,549			162,924			220,423			(8,506		)	192,518			653,896			286,354
Net client asset flows	(86,151		)	(2,724		)	(40,415		)	14,940			(40,678		)	(129,290		)	(74,131		)
Balance at end of period		$6,587,899			$6,403,501			$6,243,301			$6,063,293			$6,056,859			$6,587,899			$6,056,859

Mortgage Banking Results
Mortgage Banking Revenues:
Gains & commissions on loan sales, net		$2,952			$2,784			$2,268			$4,455			$3,744			$8,004			$8,682
Residential mortgage servicing fee income, net	84			135			72			86			(10		)	291			(40		)
Total mortgage banking revenues		$3,036			$2,919			$2,340			$4,541			$3,734			$8,295			$8,642

Residential Mortgage Loan Originations:
Originations for retention in portfolio		$90,378			$94,794			$57,907			$72,533			$90,308			$243,079			$191,934
Originations for sale to secondary market (1)	143,112			144,491			102,441			185,626			170,673			390,044			415,174
Total mortgage loan originations		$233,490			$239,285			$160,348			$258,159			$260,981			$633,123			$607,108

Residential Mortgage Loans Sold:
Sold with servicing rights retained		$37,823			$29,199			$22,567			$48,545			$44,611			$89,589			$116,869
Sold with servicing rights released (1)	109,508			108,245			84,345			151,506			119,572			302,098			292,318
Total mortgage loans sold		$147,331			$137,444			$106,912			$200,051			$164,183			$391,687			$409,187


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

-8-



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

	Sep 30, 2017		Jun 30, 2017		Mar 31, 2017		Dec 31, 2016		Sep 30, 2016
Commercial:
Mortgages		$1,085,535		$1,009,096		$1,076,648		$1,074,186		$1,086,175
Construction & development	126,257		112,177		123,841		121,371		98,735
Commercial & industrial	588,324		577,116		562,010		576,109		572,305
Total commercial	1,800,116		1,698,389		1,762,499		1,771,666		1,757,215
Residential Real Estate:
Mortgages	1,171,161		1,143,416		1,100,435		1,094,824		1,052,829
Homeowner construction	24,376		24,689		30,775		27,924		27,058
Total residential real estate	1,195,537		1,168,105		1,131,210		1,122,748		1,079,887
Consumer:
Home equity lines	259,880		263,934		258,695		264,200		265,238
Home equity loans	34,777		35,173		36,050		37,272		38,264
Other	32,768		34,499		36,406		38,485		40,751
Total consumer	327,425		333,606		331,151		339,957		344,253
Total loans		$3,323,078		$3,200,100		$3,224,860		$3,234,371		$3,181,355



	September 30, 2017				December 31, 2016
	Balance		% of Total		Balance		% of Total
Commercial Real Estate Loans by Property Location:
Rhode Island, Connecticut, Massachusetts		$1,136,168	93.8	%		$1,105,539	92.5	%
New York, New Jersey, Pennsylvania	62,956		5.2	%	77,038		6.4	%
New Hampshire	12,668		1.0	%	12,980		1.1	%
Total commercial real estate loans (1)		$1,211,792	100.0	%		$1,195,557	100.0	%

Residential Mortgages by Property Location:
Rhode Island, Connecticut, Massachusetts		$1,179,112	98.6	%		$1,106,366	98.6	%
New Hampshire, Vermont, Maine	12,085		1.0	%	11,445		1.0	%
New York, Virginia, New Jersey, Maryland, Pennsylvania	2,187		0.2	%	2,648		0.2	%
Ohio	884		0.1	%	997		0.1	%
Other	1,269		0.1	%	1,292		0.1	%
Total residential mortgages		$1,195,537	100.0	%		$1,122,748	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, 2017		Jun 30, 2017		Mar 31, 2017		Dec 31, 2016		Sep 30, 2016
Deposits:
Non-interest bearing demand deposits		$575,866		$533,147		$534,792		$521,165		$520,860
Interest-bearing demand deposits	45,407		54,666		62,182		64,795		45,167
NOW accounts	448,128		448,617		454,344		427,707		404,827
Money market accounts	716,827		666,047		762,233		730,075		794,905
Savings accounts	367,912		364,002		362,281		358,397		357,966
Time deposits (in-market)	587,166		553,783		557,312		549,376		554,669
Wholesale brokered time deposits	415,775		400,927		382,427		412,237		358,980
Total deposits		$3,157,081		$3,021,189		$3,115,571		$3,063,752		$3,037,374

-9-



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

	Sep 30, 2017			Jun 30, 2017			Mar 31, 2017			Dec 31, 2016			Sep 30, 2016
Asset Quality Ratios:
Nonperforming assets to total assets	0.44		%	0.49		%	0.54		%	0.53		%	0.59		%
Nonaccrual loans to total loans	0.56		%	0.63		%	0.69		%	0.68		%	0.75		%
Total past due loans to total loans	0.49		%	0.66		%	0.65		%	0.76		%	0.67		%
Allowance for loan losses to nonaccrual loans	147.52		%	132.00		%	119.52		%	117.89		%	107.09		%
Allowance for loan losses to total loans	0.82		%	0.83		%	0.82		%	0.80		%	0.81		%

Nonperforming Assets:
Commercial mortgages		$5,887			$6,422			$7,809			$7,811			$10,357
Commercial construction & development	—			—			—			—			—
Commercial & industrial	429			1,232			1,129			1,337			1,744
Residential real estate mortgages	11,699			11,815			12,253			11,736			10,140
Consumer	496			729			936			1,174			1,709
Total nonaccrual loans	18,511			20,198			22,127			22,058			23,950
Other real estate owned	1,038			1,342			1,410			1,075			1,045
Total nonperforming assets		$19,549			$21,540			$23,537			$23,133			$24,995

Past Due Loans (30 days or more past due):
Commercial mortgages		$5,887			$6,422			$7,806			$8,708			$10,352
Commercial & industrial	455			4,009			1,046			1,154			1,047
Residential real estate mortgages	7,802			8,857			10,533			12,226			8,291
Consumer loans	2,303			1,832			1,547			2,334			1,565
Total past due loans		$16,447			$21,120			$20,932			$24,422			$21,255

Accruing loans 90 days or more past due		$—			$—			$—			$—			$—
Nonaccrual loans included in past due loans		$13,216			$14,490			$18,081			$18,602			$18,796



																For the Nine Months Ended
	For the Three Months Ended
	Sep 30, 2017			Jun 30, 2017			Mar 31, 2017			Dec 31, 2016			Sep 30, 2016			Sep 30, 2017			Sep 30, 2016
Nonaccrual Loan Activity:
Balance at beginning of period		$20,198			$22,127			$22,058			$23,950			$17,248			$22,058			$21,047
Additions to nonaccrual status	1,969			1,946			2,138			2,105			9,750			6,053			13,174
Loans returned to accruing status	(1,411		)	(778		)	(547		)	(718		)	(592		)	(2,736		)	(798		)
Loans charged-off	(694		)	(642		)	(79		)	(2,622		)	(2,055		)	(1,415		)	(4,390		)
Loans transferred to other real estate owned	—			(98		)	(478		)	(30		)	—			(576		)	(1,045		)
Payments, payoffs and other changes	(1,551		)	(2,357		)	(965		)	(627		)	(401		)	(4,873		)	(4,038		)
Balance at end of period		$18,511			$20,198			$22,127			$22,058			$23,950			$18,511			$23,950

Allowance for Loan Losses:
Balance at beginning of period		$26,662			$26,446			$26,004			$25,649			$25,826			$26,004			$27,069
Provision charged to earnings	1,300			700			400			2,900			1,800			2,400			2,750
Charge-offs	(694		)	(642		)	(79		)	(2,622		)	(2,055		)	(1,415		)	(4,390		)
Recoveries	40			158			121			77			78			319			220
Balance at end of period		$27,308			$26,662			$26,446			$26,004			$25,649			$27,308			$25,649

Net Loan Charge-Offs (Recoveries):
Commercial mortgages		$535			$318			$—			$2,510			$1,936			$853			$3,250
Commercial & industrial	114			115			(105		)	(20		)	(43		)	124			623
Residential real estate mortgages	(1		)	8			(4		)	6			47			3			183
Consumer	6			43			67			49			37			116			114
Total		$654			$484			($42	)		$2,545			$1,977			$1,096			$4,170

Net charge-offs to average loans (annualized)	0.08		%	0.06		%	(0.01		%)	0.31		%	0.25		%	0.04		%	0.18		%

-10-

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



CONSOLIDATED AVERAGE BALANCE SHEETS (FTE Basis)
(Unaudited; Dollars in thousands)

For the Three Months Ended	September 30, 2017					June 30, 2017							September 30, 2016
	Average Balance		Interest		Yield/ Rate	Average Balance		Interest			Yield/ Rate		Average Balance		Interest		Yield/ Rate

Assets:
Commercial mortgages		$1,027,517		$9,909	3.83		$1,037,327		$9,821		3.80			$1,079,917		$9,362	3.45
Construction & development	133,190		1,326		3.95	126,212		1,211			3.85		86,623		712		3.27
Commercial & industrial	590,915		6,684		4.49	574,775		6,607			4.61		565,170		6,382		4.49
Total commercial loans	1,751,622			$17,919	4.06	1,738,314			$17,639		4.07		1,731,710			$16,456	3.78
Residential real estate loans, including loans held for sale	1,210,686		11,541		3.78	1,162,895		11,088			3.82		1,080,302		10,386		3.82
Consumer loans	329,689		3,604		4.34	332,053		3,464			4.18		341,829		3,340		3.89
Total loans	3,291,997		33,064		3.98	3,233,262		32,191			3.99		3,153,841		30,182		3.81
Cash, federal funds sold and short-term investments	61,390		197		1.27	60,428		156			1.04		88,414		93		0.42
FHLBB stock	44,057		467		4.21	44,362		439			3.97		37,933		288		3.02
Taxable debt securities	751,735		4,655		2.46	773,280		4,844			2.51		497,738		3,024		2.42
Nontaxable debt securities	4,287		65		6.02	7,076		109			6.18		22,038		336		6.07
Total securities	756,022		4,720		2.48	780,356		4,953			2.55		519,776		3,360		2.57
Total interest-earning assets	4,153,466		38,448		3.67	4,118,408		37,739			3.68		3,799,964		33,923		3.55
Noninterest-earning assets	248,070					236,056							262,724
Total assets		$4,401,536					$4,354,464							$4,062,688
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits		$46,352		$30	0.26		$54,675		($8	)	(0.06	)		$39,865		$13	0.13
NOW accounts	442,166		68		0.06	437,282		57			0.05		402,307		51		0.05
Money market accounts	680,755		642		0.37	711,711		640			0.36		709,549		487		0.27
Savings accounts	366,177		56		0.06	361,545		52			0.06		352,032		52		0.06
Time deposits (in-market)	565,402		1,566		1.10	559,442		1,460			1.05		552,576		1,408		1.01
Wholesale brokered time deposits	404,953		1,473		1.44	392,734		1,390			1.42		310,740		1,099		1.41
FHLBB advances	837,300		3,816		1.81	817,349		3,509			1.72		690,843		2,641		1.52
Junior subordinated debentures	22,681		159		2.78	22,681		149			2.63		22,681		125		2.19
Other	1		—		—	13		—			—		53		1		7.51
Total interest-bearing liabilities	3,365,787		7,810		0.92	3,357,432		7,249			0.87		3,080,646		5,877		0.76
Demand deposits	567,737					543,781							520,439
Other liabilities	55,150					49,013							69,370
Shareholders' equity	412,862					404,238							392,233
Total liabilities and shareholders' equity		$4,401,536					$4,354,464							$4,062,688
Net interest income (FTE)				$30,638					$30,490							$28,046
Interest rate spread					2.75						2.81						2.79
Net interest margin					2.93						2.97						2.94

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



For the Three Months Ended	Sep 30, 2017		Jun 30, 2017		Sep 30, 2016
Commercial loans		$555		$549		$549
Nontaxable debt securities	24		37		118
Total		$579		$586		$667

-11-




CONSOLIDATED AVERAGE BALANCE SHEETS (FTE Basis)
(Unaudited; Dollars in thousands)

For the Nine Months Ended	September 30, 2017					September 30, 2016
	Average Balance		Interest		Yield/ Rate	Average Balance		Interest		Yield/ Rate

Assets:
Commercial mortgages		$1,047,831		$29,174	3.72		$1,011,327		$26,569	3.51
Construction & development	129,104		3,650		3.78	110,914		2,806		3.38
Commercial & industrial	579,881		19,448		4.48	587,098		20,470		4.66
Total commercial loans	1,756,816		52,272		3.98	1,709,339		49,845		3.90
Residential real estate loans, including loans held for sale	1,175,563		33,497		3.81	1,045,532		30,521		3.90
Consumer loans	332,245		10,391		4.18	342,735		10,044		3.91
Total loans	3,264,624		96,160		3.94	3,097,606		90,410		3.90
Cash, federal funds sold and short-term investments	59,357		457		1.03	75,627		227		0.40
FHLBB stock	44,015		1,293		3.93	31,774		729		3.06
Taxable debt securities	760,308		14,208		2.50	418,034		7,881		2.52
Nontaxable debt securities	7,602		347		6.10	27,939		1,276		6.10
Total securities	767,910		14,555		2.53	445,973		9,157		2.74
Total interest-earning assets	4,135,906		112,465		3.64	3,650,980		100,523		3.68
Noninterest-earning assets	238,050					250,019
Total assets		$4,373,956					$3,900,999
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits		$52,564		$37	0.09		$44,490		$34	0.10
NOW accounts	433,435		176		0.05	397,329		161		0.05
Money market accounts	715,386		1,881		0.35	735,324		1,461		0.27
Savings accounts	361,904		158		0.06	339,616		148		0.06
Time deposits (in-market)	559,938		4,443		1.06	544,441		4,067		1.00
Wholesale brokered time deposits	398,349		4,233		1.42	303,442		3,188		1.40
FHLBB advances	828,775		10,669		1.72	577,501		7,106		1.64
Junior subordinated debentures	22,681		446		2.63	22,681		356		2.10
Other	13		1		10.28	66		4		8.10
Total interest-bearing liabilities	3,373,045		22,044		0.87	2,964,890		16,525		0.74
Demand deposits	546,393					488,767
Other liabilities	49,721					61,555
Shareholders' equity	404,797					385,787
Total liabilities and shareholders' equity		$4,373,956					$3,900,999
Net interest income (FTE)				$90,421					$83,998
Interest rate spread					2.77					2.94
Net interest margin					2.92					3.07

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, 2017			Jun 30, 2017			Mar 31, 2017			Dec 31, 2016			Sep 30, 2016
Tangible Book Value per Share:
Total shareholders' equity, as reported		$414,228			$406,042			$397,785			$390,804			$395,327
Less:
Goodwill	63,909			63,909			64,059			64,059			64,059
Identifiable intangible assets, net	9,388			9,642			9,898			10,175			10,493
Total tangible shareholders' equity		$340,931			$332,491			$323,828			$316,570			$320,775

Shares outstanding, as reported	17,214			17,210			17,193			17,171			17,107

Book value per share - GAAP		$24.06			$23.59			$23.14			$22.76			$23.11
Tangible book value per share - Non-GAAP		$19.81			$19.32			$18.83			$18.44			$18.75

Tangible Equity to Tangible Assets:
Total tangible shareholders' equity		$340,931			$332,491			$323,828			$316,570			$320,775

Total assets, as reported		$4,469,230			$4,375,529			$4,388,763			$4,381,115			$4,204,034
Less:
Goodwill	63,909			63,909			64,059			64,059			64,059
Identifiable intangible assets, net	9,388			9,642			9,898			10,175			10,493
Total tangible assets		$4,395,933			$4,301,978			$4,314,806			$4,306,881			$4,129,482

Equity to assets - GAAP	9.27		%	9.28		%	9.06		%	8.92		%	9.40		%
Tangible equity to tangible assets - Non-GAAP	7.76		%	7.73		%	7.51		%	7.35		%	7.77		%



	For the Three Months Ended															For the Nine Months Ended
	Sep 30, 2017			Jun 30, 2017			Mar 31, 2017			Dec 31, 2016			Sep 30, 2016			Sep 30, 2017			Sep 30, 2016
Return on Average Tangible Assets:
Net income, as reported		$12,962			$13,199			$11,782			$12,162			$12,327			$37,943			$34,319

Total average assets, as reported		$4,401,536			$4,354,464			$4,365,471			$4,272,883			$4,062,688			$4,373,956			$3,900,999
Less average balances of:
Goodwill	63,909			64,058			64,059			64,059			64,059			64,008			64,059
Identifiable intangible assets, net	9,511			9,767			10,027			10,330			10,650			9,766			10,971
Total average tangible assets		$4,328,116			$4,280,639			$4,291,385			$4,198,494			$3,987,979			$4,300,182			$3,825,969

Return on average assets - GAAP	1.18		%	1.21		%	1.08		%	1.14		%	1.21		%	1.16		%	1.17		%
Return on average tangible assets - Non-GAAP	1.20		%	1.23		%	1.10		%	1.16		%	1.24		%	1.18		%	1.20		%

Return on Average Tangible Equity:
Net income, as reported		$12,962			$13,199			$11,782			$12,162			$12,327			$37,943			$34,319

Total average equity, as reported		$412,862			$404,238			$397,117			$396,741			$392,233			$404,797			$385,787
Less average balances of:
Goodwill	63,909			64,058			64,059			64,059			64,059			64,008			64,059
Identifiable intangible assets, net	9,511			9,767			10,027			10,330			10,650			9,766			10,971
Total average tangible equity		$339,442			$330,413			$323,031			$322,352			$317,524			$331,023			$310,757

Return on average equity - GAAP	12.56		%	13.06		%	11.87		%	12.26		%	12.57		%	12.50		%	11.86		%
Return on average tangible equity - Non-GAAP	15.27		%	15.98		%	14.59		%	15.09		%	15.53		%	15.28		%	14.72		%

-13-

For the Nine Months Ended

Sep 30, 2017

Sep 30, 2016

Commercial loans

Nontaxable debt securities