WESTERLY – Washington Trust Bancorp Inc.'s
second-quarter surge, which saw a 22% increase in profit year-over-year, was the result of bold, but proactive and calculated moves to shed low-yielding assets and reinvest at higher rates, Chairman and CEO Edward O. "Ned" Handy III said Tuesday.
After selling five branches in leasebacks in April and incurring $70 million losses in 2024 to reposition the bank for growth, Washington Trust, the parent company of The Washington Trust Co., started the second quarter of 2025 on stronger footing, with improved profits and fresh momentum.
Several key banking metrics for Washington Trust exceeded Wall Street expectations for this quarter, including earnings of 68 cents per diluted share and revenue net of interest expense of $54.3 million. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 63 cents per share.
"We are absolutely seeing the benefits now of both the leasebacks and repositioning from the last few quarters," Handy said in an interview with Providence Business News Tuesday. "We've normalized things enough so that we can focus on revenue streams and growing again."
Deposits have started to stabilize this quarter too, Handy said, up 1.3% from last summer, thanks in part to two new branches the bank opened last year in Smithfield and the Olneyville section of Providence. Now Washington Trust is specifically working on deposits and wealth growth, Handy said.
Expenses are also under control as well, Handy said. Noninterest expense dropped 13% quarter-over-quarter to $36.5 million, a notable reduction from last quarter’s $42.2 million.
"We're not building expenses, and we're not introducing extreme expense cuts," he said. "We want to get the bank back to more historic levels of financial success in an organic, moderate way."
However, despite the solid second-quarter performance, the company, which is celebrating its 225th anniversary, has yet to return to recent highs.
It experienced unprecedented financial growth from 2012 to 2022, peaking with $75.16 million in profit in the second quarter of 2022. This success was fueled by solid interest income and operating-cost control, previous earnings statements show.
However, in 2023, profitability declined due to lower net interest margins and higher loan loss provisions.
In late 2024, the company posted a $60.8 million loss after selling off hundreds of millions in loans and investments as part of a strategy to improve its future performance. That
included the sale of $409 million in debt securities and $345 million in residential mortgage loans, resulting in a pre-tax loss of $93.9 million.
By the second quarter of this year, which ended June 30, Washington Trust reported a profit of $10.4 million.
The turnaround was driven by improved net interest income, increased wealth management revenues, and higher mortgage banking revenues, Handy said.
The company's strategic actions, including the sale of lower-yielding assets and reinvestment into higher-yielding securities, have begun to yield positive results, second quarter earnings show.
Despite the fiscal ebbs and flows in recent years, Washington Trust has historically paid high dividends, even during economic downturns, something Handy doesn't expect to change.
"Investors think this is important, so we haven't changed our dividend payouts, and we have no plans to reduce them," said Handy.
Matthew McNulty is a PBN staff writer. He can be reached at McNulty@PBN.com or on X at @MattMcNultyNYC.
