Washington Trust Reports Third Quarter 2024 Earnings
WESTERLY, R.I., Oct. 21, 2024 /PRNewswire/ -- Washington Trust Bancorp, Inc. (NASDAQ:WASH), parent company of The Washington Trust Company, today announced third quarter 2024 net income of $11.0 million, or $0.64 per diluted share, compared to net income of $10.8 million, or $0.63 per diluted share, for the second quarter of 2024.
"Washington Trust's third quarter results remained steady, demonstrating the strength of our diversified business model, and commitment to our customers," stated Edward O. Handy III, Washington Trust Chairman and Chief Executive Officer. "We continue to carefully manage our balance sheet, while focusing on our customers, who rely on us for financial solutions and trusted advice. During the quarter, we expanded our presence in Providence, opening a new full-service branch in Olneyville."
Selected financial highlights for the third quarter of 2024 include:
Returns on average equity and average assets for the third quarter were 8.99% and 0.60%, respectively, compared to 9.43% and 0.60%, respectively, for the prior quarter.
The net interest margin was 1.85% in the third quarter, compared to 1.83% in the preceding quarter.
Asset and credit quality metrics remain solid. A provision for credit losses of $200 thousand was recognized for the third quarter, down by $300 thousand from the second quarter.
Wealth management revenues increased by 3% from the preceding quarter. End of period assets under administration ("AUA") eclipsed $7 billion and was up by 4% from the end of the second quarter.
Total loans amounted to $5.5 billion, down by 2% from June 30, 2024.
In-market deposits (total deposits less wholesale brokered deposits) amounted to an all-time high of $4.8 billion, up by 3% from June 30, 2024.
Net Interest Income
Net interest income was $32.3 million for the third quarter of 2024, up by $677 thousand, or 2%, from the second quarter of 2024. The net interest margin was 1.85% for the third quarter, an increase of 2 basis points from the preceding quarter. Linked quarter changes included:
Average interest-earning assets increased by $25 million, reflecting an increase of $132 million in deposits at correspondent banks, partially offset by decreases in loans and securities. The yield on interest-earning assets for the third quarter was 4.99%, up by 2 basis points from the preceding quarter.
Average interest-bearing liabilities increased by $2 million, as in-market deposits increased by $35 million while wholesale funding balances decreased by $33 million. The cost of interest-bearing liabilities for the third quarter of 2024 was 3.70%, up by 2 basis points from the preceding quarter.
Noninterest Income
Noninterest income totaled $16.3 million for the third quarter of 2024, down by $388 thousand, or 2%, from the second quarter of 2024. Included in other noninterest income in the second quarter of 2024 was a net gain of $988 thousand recognized on the sale of a bank-owned operations facility. Excluding this item, noninterest income was up by $600 thousand, or 4%, from the preceding quarter. Linked quarter changes included:
Wealth management revenues amounted to $10.0 million in the third quarter of 2024, up by $311 thousand, or 3%. This included an increase in asset-based revenues of $531 thousand, or 6%, which was partially offset by a decrease in transaction-based revenues of $220 thousand, or 50%. The decline in transaction-based revenues was largely due to seasonal tax servicing fee income concentrated in the second quarter. The end of period AUA balance at September 30, 2024 amounted to $7.1 billion, up by $249 million, or 4%, from June 30, 2024.
Mortgage banking revenues totaled $2.9 million for the third quarter of 2024, up by $105 thousand, or 4%. Loans sold amounted to $120.3 million in the third quarter of 2024, up by $10.3 million, or 9%. In both the second and third quarters of 2024, 81% of residential real estate loan originations were originated for sale.
Noninterest Expense
Noninterest expense totaled $34.5 million for the third quarter of 2024, up by $594 thousand, or 2%, from the second quarter of 2024. This included an increase in advertising and promotion expense of $196 thousand, or 30%, due to timing of such activities. The remaining increase in noninterest expense included modest changes across a variety of expense categories.
Income Tax
Income tax expense totaled $2.8 million for the third quarter of 2024, down by $171 thousand from the preceding quarter. The effective tax rate for the third quarter of 2024 was 20.6%, down from 21.8% in the preceding quarter. Based on current federal and applicable state income tax statutes, the Corporation currently expects its full-year 2024 effective tax rate to be approximately 21%.
Investment Securities
The securities portfolio totaled $973 million at September 30, 2024, up by $21 million, or 2%, from June 30, 2024, reflecting an increase of $41 million in the fair value of available for sale securities, partially offset by routine pay-downs. The securities portfolio represented 14% of total assets at September 30, 2024, compared to 13% of total assets at June 30, 2024.
Loans
Total loans amounted to $5.5 billion at September 30, 2024, down by $114 million, or 2%, from the end of the preceding quarter. These changes included:
Commercial loans decreased by $82 million, or 3%.
Residential real estate loans decreased by $29 million, or 1%.
The consumer loan portfolio decreased by $3 million, or 1%.
Deposits and Borrowings
Total deposits amounted to $5.2 billion at September 30, 2024, compared to $5.0 billion at the end of the preceding quarter. Uninsured deposits, after exclusions (as detailed in the financial tables below) amounted to $1.1 billion, or 20% of total deposits, at September 30, 2024.
In-market deposits, which exclude wholesale brokered deposits, amounted to $4.8 billion at September 30, 2024, up by $155 million, or 3%, from June 30, 2024. As of September 30, 2024, in-market deposits were approximately 59% retail and 41% commercial. The average size of our in-market deposit accounts was approximately $36 thousand at September 30, 2024.
Wholesale brokered deposits amounted to $380 million and were up by $41 million, or 12%, from June 30, 2024.
FHLB advances totaled $1.3 billion at September 30, 2024, down by $250 million, or 16%, from June 30, 2024. As of September 30, 2024, contingent liquidity amounted to $1.7 billion and consisted of noninterest-bearing cash, unencumbered securities, and unused collateralized borrowing capacity.
Asset Quality
Nonaccrual loans were $31.1 million, or 0.56% of total loans, at September 30, 2024, compared to $30.5 million, or 0.54% of total loans, at June 30, 2024. The composition of nonaccrual loans at September 30, 2024 was 61% commercial and 39% residential and consumer.
Past due loans were $20.3 million, or 0.37% of total loans, at September 30, 2024, compared to $11.9 million, or 0.21% of total loans, at June 30, 2024. The increase in past due loans was largely due to one commercial real estate loan that has been on nonaccrual status since the fourth quarter of 2023. The composition of past due loans at September 30, 2024 was 52% commercial and 48% residential and consumer.
The allowance for credit losses ("ACL") on loans amounted to $42.6 million, or 0.77% of total loans, at September 30, 2024, compared to $42.4 million, or 0.75% of total loans, at June 30, 2024. The ACL on unfunded commitments, included in other liabilities on the Consolidated Balance Sheets, was $1.6 million at September 30, 2024, compared to $1.7 million at June 30, 2024.
The provision for credit losses totaled $200 thousand in the third quarter of 2024, down by $300 thousand from the preceding quarter, largely reflecting the decline in loan balances. Net charge-offs amounted to $48 thousand in the third quarter of 2024, compared to $27 thousand in the preceding quarter.
Capital and Dividends
Total shareholders' equity was $502.2 million at September 30, 2024, up by $31.3 million, or 7%, from June 30, 2024. Net income of $11.0 million and an increase of $29.2 million in the accumulated other comprehensive income ("AOCI") component of shareholders' equity were partially offset by $9.7 million in dividend declarations. The increase in AOCI mainly reflected increases in the fair value of available for sale debt securities due to changes in market interest rates.
The Board of Directors declared a quarterly dividend of 56 cents per share for the quarter ended September 30, 2024. The dividend was paid on October 11, 2024 to shareholders of record on October 1, 2024.
Capital levels at September 30, 2024 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 12.21% at September 30, 2024, compared to 11.81% at June 30, 2024. Book value per share was $29.44 at September 30, 2024, compared to $27.61 at June 30, 2024.
Conference Call
Washington Trust will host a conference call to discuss its third quarter results, business highlights, and outlook on Tuesday, October 22, 2024 at 8:30 a.m. (Eastern Time). Individuals may dial in to the call at 1-833-470-1428 and enter Access Code 539756. An audio replay of the call will be available, shortly after the conclusion of the call, by dialing 1-866-813-9403 and entering the Replay Access Code 963764. The audio replay will be available through November 5, 2024. Also, a webcast of the call will be posted in the Investor Relations section of Washington Trust's website, https://ir.washtrust.com, and will be available through December 31, 2024.
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 website at https://ir.washtrust.com.
Forward-Looking Statements
This press release contains statements that are "forward-looking statements." We may also make forward-looking statements in other documents we file with the U.S. Securities and Exchange Commission ("SEC"), in our annual reports to shareholders, in press releases and other written materials, and in oral statements made by our officers, directors, or employees. You can identify forward-looking statements by the use of the words "believe," "expect," "anticipate," "intend," "estimate," "assume," "outlook," "will," "should," and other expressions that predict or indicate future events and trends and which do not relate to historical matters. You should not rely on forward-looking statements, because they involve known and unknown risks, uncertainties, and other factors, some of which are beyond our control. These risks, uncertainties, and other factors may cause our actual results, performance, or achievements to be materially different from the anticipated future results, performance, or achievements expressed or implied by the forward-looking statements.
Some of the factors that might cause these differences include the following:
changes in general business and economic conditions on a national basis and in the local markets in which we operate;
changes in customer behavior due to political, business, and economic conditions, including inflation and concerns about liquidity;
interest rate changes or volatility, as well as changes in the balance and mix of loans and deposits;
changes in loan demand and collectability;
the possibility that future credit losses are higher than currently expected due to changes in economic assumptions or adverse economic developments;
ongoing volatility in national and international financial markets;
reductions in the market value or outflows of wealth management AUA;
decreases in the value of securities and other assets;
increases in defaults and charge-off rates;
changes in the size and nature of our competition;
changes in legislation or regulation and accounting principles, policies, and guidelines;
operational risks including, but not limited to, changes in information technology, cybersecurity incidents, fraud, natural disasters, war, terrorism, civil unrest, and future pandemics;
regulatory, litigation, and reputational risks; 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, 2023, as updated by our Quarterly Reports on Form 10-Q and other filings submitted to the SEC, may result in these differences. You should carefully review all of these factors, and you should be aware that there may be other factors that could cause these differences. These forward-looking statements were based on information, plans, and estimates at the date of this report, and we assume no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.
Supplemental Information - Explanation of Non-GAAP Financial Measures
In addition to results presented in accordance with generally accepted accounting principles ("GAAP"), this press release contains certain non-GAAP financial measures. Washington Trust's management believes that the supplemental non-GAAP information, which consists of measurements and ratios based on tangible equity and tangible assets, is utilized by regulators and market analysts to evaluate a company's financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures, which may be presented by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.
Washington Trust Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; Dollars in thousands)
Sep 30,2024
Jun 30,2024
Mar 31,2024
Dec 31,2023
Sep 30,2023
Assets:
Cash and due from banks
$206,971
$103,877
$102,136
$86,824
$109,432
Short-term investments
3,772
3,654
3,452
3,360
3,577
Mortgage loans held for sale, at fair value
20,864
26,116
25,462
20,077
10,550
Available for sale debt securities, at fair value
973,266
951,828
970,060
1,000,380
958,990
Federal Home Loan Bank stock, at cost
57,439
66,166
55,512
51,893
52,668
Loans:
Total loans
5,514,870
5,629,102
5,685,232
5,647,706
5,611,115
Less: allowance for credit losses on loans
42,630
42,378
41,905
41,057
40,213
Net loans
5,472,240
5,586,724
5,643,327
5,606,649
5,570,902
Premises and equipment, net
32,145
31,866
31,914
32,291
31,976
Operating lease right-of-use assets
27,612
28,387
29,216
29,364
27,882
Investment in bank-owned life insurance
105,998
105,228
104,475
103,736
103,003
Goodwill
63,909
63,909
63,909
63,909
63,909
Identifiable intangible assets, net
3,089
3,295
3,503
3,711
3,919
Other assets
174,266
213,310
216,158
200,653
246,667
Total assets
$7,141,571
$7,184,360
$7,249,124
$7,202,847
$7,183,475
Liabilities:
Deposits:
Noninterest-bearing deposits
$665,706
$645,661
$648,929
$693,746
$773,261
Interest-bearing deposits
4,506,184
4,330,465
4,698,964
4,654,414
4,642,302
Total deposits
5,171,890
4,976,126
5,347,893
5,348,160
5,415,563
Federal Home Loan Bank advances
1,300,000
1,550,000
1,240,000
1,190,000
1,120,000
Junior subordinated debentures
22,681
22,681
22,681
22,681
22,681
Operating lease liabilities
30,237
31,012
31,837
32,027
30,554
Other liabilities
114,534
133,584
139,793
137,293
163,273
Total liabilities
6,639,342
6,713,403
6,782,204
6,730,161
6,752,071
Shareholders' Equity:
Common stock
1,085
1,085
1,085
1,085
1,085
Paid-in capital
126,698
125,898
126,785
126,150
126,310
Retained earnings
505,654
504,350
503,175
501,917
498,521
Accumulated other comprehensive loss
(117,158)
(146,326)
(148,913)
(141,153)
(178,734)
Treasury stock, at cost
(14,050)
(14,050)
(15,212)
(15,313)
(15,778)
Total shareholders' equity
502,229
470,957
466,920
472,686
431,404
Total liabilities and shareholders' equity
$7,141,571
$7,184,360
$7,249,124
$7,202,847
$7,183,475
Washington Trust Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; Dollars and shares in thousands, except per share amounts)
For the Three Months Ended
For the Nine Months Ended
Sep 30,2024
Jun 30,2024
Mar 31,2024
Dec 31,2023
Sep 30,2023
Sep 30,2024
Sep 30,2023
Interest income:
Interest and fees on loans
$75,989
$76,240
$75,636
$74,236
$70,896
$227,865
$196,094
Interest on mortgage loans held for sale
366
392
255
255
332
1,013
725
Taxable interest on debt securities
6,795
6,944
7,096
7,191
7,271
20,835
21,868
Dividends on Federal Home Loan Bank stock
1,262
1,124
1,073
982
878
3,459
2,333
Other interest income
3,174
1,297
1,196
1,282
1,344
5,667
3,693
Total interest and dividend income
87,586
85,997
85,256
83,946
80,721
258,839
224,713
Interest expense:
Deposits
37,203
36,713
38,047
37,067
34,069
111,963
83,362
Federal Home Loan Bank advances
17,717
17,296
15,138
13,814
12,497
50,151
35,775
Junior subordinated debentures
404
403
406
411
404
1,213
1,132
Total interest expense
55,324
54,412
53,591
51,292
46,970
163,327
120,269
Net interest income
32,262
31,585
31,665
32,654
33,751
95,512
104,444
Provision for credit losses
200
500
700
1,200
500
1,400
2,000
Net interest income after provision for credit losses
32,062
31,085
30,965
31,454
33,251
94,112
102,444
Noninterest income:
Wealth management revenues
9,989
9,678
9,338
8,881
8,948
29,005
26,659
Mortgage banking revenues
2,866
2,761
2,506
1,554
2,108
8,133
5,106
Card interchange fees
1,321
1,275
1,145
1,254
1,267
3,741
3,667
Service charges on deposit accounts
784
769
685
688
674
2,238
2,118
Loan related derivative income
126
49
284
112
1,082
459
1,278
Income from bank-owned life insurance
770
753
739
734
710
2,262
2,754
Other income
416
1,375
2,466
83
437
4,257
1,252
Total noninterest income
16,272
16,660
17,163
13,306
15,226
50,095
42,834
Noninterest expense:
Salaries and employee benefits
21,350
21,260
21,775
18,464
21,622
64,385
63,994
Outsourced services
4,185
4,096
3,780
3,667
3,737
12,061
10,854
Net occupancy
2,399
2,397
2,561
2,396
2,387
7,357
7,240
Equipment
924
958
1,020
1,133
1,107
2,902
3,185
Legal, audit, and professional fees
836
741
706
959
1,058
2,283
2,932
FDIC deposit insurance costs
1,402
1,404
1,441
1,239
1,185
4,247
3,428
Advertising and promotion
857
661
548
938
789
2,066
1,624
Amortization of intangibles
206
208
208
208
211
622
635
Other expenses
2,345
2,185
2,324
3,583
2,294
6,854
7,078
Total noninterest expense
34,504
33,910
34,363
32,587
34,390
102,777
100,970
Income before income taxes
13,830
13,835
13,765
12,173
14,087
41,430
44,308
Income tax expense (benefit)
2,849
3,020
2,829
(774)
2,926
8,698
9,079
Net income
$10,981
$10,815
$10,936
$12,947
$11,161
$32,732
$35,229
Net income available to common shareholders
$10,973
$10,807
$10,924
$12,931
$11,140
$32,732
$35,160
Weighted average common shares outstanding:
Basic
17,058
17,052
17,033
17,029
17,019
17,048
17,034
Diluted
17,140
17,110
17,074
17,070
17,041
17,115
17,063
Earnings per common share:
Basic
$0.64
$0.63
$0.64
$0.76
$0.65
$1.92
$2.06
Diluted
$0.64
$0.63
$0.64
$0.76
$0.65
$1.91
$2.06
Cash dividends declared per share
$0.56
$0.56
$0.56
$0.56
$0.56
$1.68
$1.68
Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited; Dollars and shares in thousands, except per share amounts)
Sep 30,2024
Jun 30,2024
Mar 31,2024
Dec 31,2023
Sep 30,2023
Share and Equity Related Data:
Book value per share
$29.44
$27.61
$27.41
$27.75
$25.35
Tangible book value per share - Non-GAAP (1)
$25.51
$23.67
$23.45
$23.78
$21.36
Market value per share
$32.21
$27.41
$26.88
$32.38
$26.33
Shares issued at end of period
17,363
17,363
17,363
17,363
17,363
Shares outstanding at end of period
17,058
17,058
17,033
17,031
17,019
Capital Ratios (2):
Tier 1 risk-based capital
11.39 %
11.01 %
10.84 %
10.86 %
10.77 %
Total risk-based capital
12.21 %
11.81 %
11.62 %
11.58 %
11.48 %
Tier 1 leverage ratio
7.85 %
7.82 %
7.81 %
7.80 %
7.87 %
Common equity tier 1
10.95 %
10.59 %
10.42 %
10.44 %
10.35 %
Balance Sheet Ratios:
Equity to assets
7.03 %
6.56 %
6.44 %
6.56 %
6.01 %
Tangible equity to tangible assets - Non-GAAP (1)
6.15 %
5.67 %
5.56 %
5.68 %
5.11 %
Loans to deposits (3)
106.2 %
112.8 %
106.0 %
105.2 %
103.1 %
For the Nine Months Ended
For the Three Months Ended
Sep 30,2024
Jun 30,2024
Mar 31,2024
Dec 31,2023
Sep 30,2023
Sep 30,2024
Sep 30,2023
Performance Ratios (4):
Net interest margin (5)
1.85 %
1.83 %
1.84 %
1.88 %
1.97 %
1.84 %
2.11 %
Return on average assets (net income divided by average assets)
0.60 %
0.60 %
0.61 %
0.71 %
0.62 %
0.60 %
0.68 %
Return on average tangible assets - Non-GAAP (1)
0.61 %
0.61 %
0.61 %
0.72 %
0.63 %
0.61 %
0.69 %
