Washington Trust Bancorp ((WASH)) has held its Q1 earnings call. Read on for the main highlights of the call.
The recent earnings call of Washington Trust Bancorp presented a balanced sentiment, highlighting both positive strides and existing challenges. The company reported significant deposit growth, improved capital and equity metrics, and an increased net interest margin. However, these positive developments were countered by reduced loan amounts, decreased revenue from wealth and mortgage banking, and an increase in net charge-offs.
In-Market Deposit Growth
Washington Trust Bancorp achieved a milestone with its in-market deposits reaching an all-time high of $5.13 billion, marking an increase of $195 million or 4% from the previous quarter. This growth underscores the company’s successful deposit strategies and its ability to attract and retain customer funds.
Net Interest Margin Improvement
The company reported a notable improvement in its net interest margin, which increased by 34 basis points to 2.29%. This enhancement reflects the benefits of strategic balance sheet restructuring, contributing positively to the company’s financial health.
Sale Leaseback Gain
Washington Trust Bancorp completed sale leaseback transactions that resulted in a pre-tax net gain of $7 million. This gain was recognized within non-interest income, showcasing the company’s ability to leverage its assets for financial gain.
Capital and Equity Improvement
The company’s total equity saw an increase of $22 million, with the CET1 ratio improving by 56 basis points to 11.76%. Additionally, the total risk-based capital improved by 66% to 13.13%, reflecting a strong capital position and enhanced financial stability.
Improved Loan to Deposit Ratio
The loan to deposit ratio improved significantly, decreasing from 105.5% to 100.7%. This improvement indicates a more balanced and sustainable approach to managing loans and deposits.
Decrease in Total Loans
Despite the positive developments, total loans decreased by $42 million or 1% from December 31, with both residential and commercial loans experiencing a 1% reduction. This decline highlights the challenges faced in loan growth amidst higher paydowns.
Decreased Wealth and Mortgage Banking Revenues
The company experienced a decrease in wealth management revenues by $158,000 or 2%, and mortgage banking revenues fell by $544,000 or 19%. These declines point to challenges in these sectors, impacting overall revenue.
Net Charge-Offs Increase
Net charge-offs increased to $2.3 million in the first quarter, indicating rising challenges in credit quality and loan performance.
Non-Cash Pension Settlement Charge
A pre-tax non-cash pension settlement charge of $6.4 million was recognized within non-interest expenses, impacting the company’s financial results.
Forward-Looking Guidance
Looking ahead, Washington Trust Bancorp provided detailed financial guidance, projecting a net income of $12.2 million or $0.63 per share, with an adjusted net income of $11.8 million or $0.61 per share after excluding infrequent transactions. The company aims to continue enhancing deposit strategies, maintaining strong asset quality, and navigating economic conditions with strategic foresight.
In summary, Washington Trust Bancorp’s earnings call highlighted a mix of positive developments and challenges. The company demonstrated strong deposit growth and improved financial metrics, while also facing hurdles in loan growth and revenue from certain sectors. The forward-looking guidance suggests a focus on strategic enhancements and maintaining financial stability.