WESTERLY – Washington Trust Bancorp. Inc., the parent company for Westerly-based The Washington Trust Co., saw a 32% drop in profit compared to the first quarter of last year, the company reported on Monday.
First-quarter earnings were $11.9 million, versus $17.5 million for quarter one of 2019. Earnings per diluted share were 68 cents versus $1.00 a year ago.
The drop in profit margins stemmed primarily from a $6.4 million bump in the company’s provision for credit losses – bringing the total to just over $7 million – which was “mainly attributable to the significant deterioration in the economic forecast due to the COVID-19 pandemic,” the company stated. Other local and national banks reported similar boosts to their credit loss funds anticipating bad loans due to the new coronavirus, as well as changes in federal accounting standards.
Total revenue increased $1.5 million from the first quarter of 2019 to $67.0 million, despite a nearly $2 million drop in net interest income to $32.6 million. The decrease in net interest income reflected lower income on interest and fees on loans and taxable interest on debt securities – a result of the impact of lower market interest rates. Noninterest income of $19.9 million was $4.6 million higher than the first quarter of 2016, driven primarily by a 130% spike in mortgage banking revenues which was partially offset by a decrease in wealth management revenues due to a declining financial market, the company stated. Non-interest expenses totaled $30.5 million, an increase of $3.5 million from the same time last year, including a $1.8 million bump in salaries and employee benefits.
Net interest margin – the difference between interest income generated and the amount paid out to lenders – decreased 32 basis points to 2.61%.
Total loans reached $4.1 billion, increasing $353 million or 9% from a year ago, driven primarily by a $158 million increase in residential real estate loans as well as $155 million more in commercial real estate loans. Total assets stood at $5.6 billion, an increase from $5.2 billion in quarter one of 2019.
Total deposits reached $3.7 billion, an increase of $200 million from a year ago.
“Washington Trust reported good balance sheet growth during the quarter, while overall earnings were impacted by several extraordinary factors, including continued Federal Reserve interest rate cuts, the implementation of CECL and the COVID-19 pandemic,” Edward O. Handy III, Washington Trust chairman and CEO, said in a statement. “We believe our strong financial foundation, solid capital position, disciplined credit culture and diversified business model will help us navigate through the challenging times ahead.”
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
