- Net Income: $12.2 million or $0.63 per share; adjusted net income of $11.8 million or $0.61 per share.
- Net Interest Income: $36.4 million, up by $3.5 million or 11% quarter-over-quarter.
- Net Interest Margin (NIM): 2.29%, up by 34 basis points.
- Non-Interest Income: Includes a pre-tax net gain of $7 million from sale leaseback transactions.
- Wealth Management Revenues: $9.9 million, down by $158,000 or 2%.
- Mortgage Banking Revenues: $2.3 million, down by $544,000 or 19%.
- Mortgage Pipeline: $95 million, up by $35 million or 59% from December.
- Non-Interest Expenses: Adjusted to $35.8 million, up by $1.5 million or 4% excluding pension settlement charge.
- Income Tax Expense: $3.5 million with an effective tax rate of 22.3%.
- Total Loans: Down by $42 million or 1% from December 31.
- In-Market Deposits: Up by $195 million or 4%.
- Loan to Deposit Ratio: Decreased from 105.5% to 100.7%.
- Total Equity: $522 million, up by $22 million from Q4.
- Dividend: $0.56 per share.
- Common Equity Tier 1 (CET1): Improved 56 basis points to 11.76%.
- Total Risk-Based Capital: Improved by 66 basis points to 13.13%.
- Non-Occurring Loans: 0.42% of total loans.
- Past Due Loans: 0.20% of total loans.
- Allowance for Loan Losses: $41.1 million or 81 basis points of total loans.
- Provision for Credit Losses: $1.2 million.
- Net Charge Offs: $2.3 million in the first quarter.
Release Date: April 21, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Washington Trust Bancorp Inc (WASH, Financial) reported a net income of $12.2 million or $0.63 per share for the first quarter.
- Net interest income increased by $3.5 million or 11% on a quarter basis, reflecting benefits from recent balance sheet repositioning.
- In-market deposits reached an all-time high of $513 million, demonstrating successful deposit growth strategies.
- The company's loan to deposit ratio improved from 105.5% to 100.7%, indicating better balance sheet management.
- Capital ratios improved, with CET1 increasing by 56 basis points to 11.76% and total risk-based capital improving by 66% to 13.13%.
Negative Points
- Total loans decreased by $42 million or 1% from December 31, with reductions in both residential and commercial loans.
- Wealth management revenues declined by $158,000 or 2%, and mortgage banking revenues fell by $544,000 or 19%.
- A pre-tax non-cash pension settlement charge of $6.4 million was recognized within non-interest expenses.
- Net charge-offs amounted to $2.3 million in the first quarter, reflecting some credit quality challenges.
- The dividend payout ratio remains high, which could constrain future growth opportunities if not managed carefully.
Q & A Highlights
Q: How will the quarterly operating costs be impacted by the sale leaseback and pension curtailment?
A: Ronald Ohsberg, CFO, stated that the sale leaseback will add about $700,000 annually to occupancy and equipment costs, which was included in the January guidance. There is no ongoing expense related to the pension curtailment, and the guidance for expenses remains consistent.
Q: Can you provide more details on the current loan pipelines?
A: Edward Handy, CEO, mentioned that the commercial pipeline is over $100 million, which is not at historic highs but is maintaining despite $50 million of formation in Q1. The early stages of the pipeline are strong, and they expect low single-digit growth. Mary Noons, President and COO, added that the residential side is seeing seasonal growth.
Q: What are your expectations for the net interest margin (NIM) going forward?
A: Ronald Ohsberg, CFO, indicated that they expect the NIM to rise by a few basis points each quarter, with a projection of 235 basis points for Q2. However, future increases depend on the Fed's rate policy.
Q: What are your longer-term expectations for the dividend payout ratio?
A: Ronald Ohsberg, CFO, stated that they aim to lower the payout ratio, targeting the mid to low 80s by year-end. They do not plan to increase the dividend soon and will focus on improving income to reduce the ratio.
Q: How has your interest rate sensitivity changed after recent restructuring?
A: Ronald Ohsberg, CFO, explained that they have moved from being asset-sensitive to more rate-neutral due to restructuring. While they benefited from past Fed rate cuts, future rate reductions may not significantly improve the margin.
Q: What drove the in-market core deposit growth this quarter?
A: Ronald Ohsberg, CFO, noted that about half of the growth was from a single relationship, with the rest from strong organic growth. They have hired retail sales officers and tried deposit promotions to enhance deposit gathering.
Q: Can you provide an update on the credit quality and specific office properties?
A: William Wray, Chief Risk Officer, mentioned a reduction in non-accrual loans due to a pending sale. They took a charge-off on another loan secured by two properties. The large asset is over half leased, with active lease proposals, and the borrower has been supportive.
Q: What are your thoughts on stock buybacks given the current stock price?
A: Ronald Ohsberg, CFO, stated that they are considering buybacks as a use of capital, although no current plan is in place. They are evaluating the best use of capital in the current environment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
