WESTERLY – Washington Trust Bancorp. Inc, the parent company for Westerly-based The Washington Trust Co., saw second-quarter earnings increase 21% year over year, including record-high quarterly mortgage banking revenues, the company reported on Monday.
Second-quarter profits were $21 million, compared with $17.3 million a year ago. Earnings per diluted share were $1.21 compared with 99 cents a year ago.
The company also saw significant earnings increases over the first quarter of the year, which were slashed due to a $7 million provision for credit losses in anticipation of bad loans due to COVID-19. For the three months that ended June 30, the company cut its credit loss provision to $2.2 million – still more than 300% above the credit loss fund at the same time a year ago. The provision for credit losses reflects management’s assessment of loss exposure amid the pandemic, the company stated.
Total revenue inched up 2.4% to $68.9 million, driven primarily by a 57% increase in noninterest income year over year. More than half of the $26.3 million in noninterest income came from mortgage banking revenues, which reached a quarterly record of $14.9 million, according to the company.
Interest income totaled $42.6 million, down 15.7% from a year ago, with lower yield reflecting the low interest-rate environment, the company stated. The drop in net interest income was only 8.6%, however, totaling $30.9 million, thanks to 30% cuts in interest expenses.
Noninterest expenses totaled $28.5 million, a 1.2% increase over the second quarter of 2019. Of that, $19.5 million went to salaries and employee benefits, compared with $18.4 million a year ago.
Quarterly net interest margin – the difference between interest income generated and the amount paid out to lenders – declined 50 basis points to 2.31%.
Total loans reached $4.3 billion, a 15% increase driven by increases in commercial loans. The $2.5 billion in total commercial loans includes $212 million across 1,690 loans to small businesses through the U.S. Small Business Administration’s Paycheck Protection Program.
Total quarterly assets stood at $5.9 billion, up from $5.2 billion a year ago. Total deposits reached $4.1 billion, an 18% bump over the second quarter of 2019.
“Washington Trust reported strong second-quarter earnings, a testament to our success at executing a business continuity plan that allowed our employees to safely provide banking services and maintain a high level of personal customer service during the COVID-19 pandemic,” Edward O. Handy III, Washington Trust chairman and CEO, said in a statement. “While there is still uncertainty regarding the severity and duration of the COVID-19 pandemic and its related economic effects, we believe that Washington Trust is well-positioned with strong capital and ample sources of liquidity to handle these challenges as we move forward during this unprecedented time.”
Washington Trust, the nation’s oldest community bank, is the third-largest bank in Rhode Island, based on market share of deposits, according to Federal Deposit Insurance Corp. statistics.
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
