WESTERLY – Washington Trust Bancorp Inc. reported an $18.3 million profit for the third quarter, propelled by new records within mortgage banking activity, the company announced on Monday.
The parent company for The Washington Trust Co. saw year-over-year earnings tick down 2.6% over the $18.8 million profit in the third quarter of 2019. Earnings per diluted share also decreased two cents compared with a year ago to $1.06.
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The latest earnings report includes a $1.3 million provision for credit losses, less than the $2.2 million allocated the prior quarter but more than three times the $400,000 charged in quarter three 2019, amid assessments for continued potential losses posed by the COVID-19 pandemic.
Total quarterly revenue decreased 2.3% year over year to $66.3 million amid lower interest income which was partially offset by a 38.9% jump in noninterest income. The $25.5 million in noninterest income was driven by mortgage banking revenues, which at $12.4 million, increased 155% from a year ago. The company attributed this growth to increase sales volume as well as an all-time quarterly high in mortgage loans sold to the secondary market. Total mortgage loan originations also reached a new record of $510 million.
Interest income totaled $40.8 million, a decline of 17.5% over a year ago due to lower yield on interest earning assets amid a continued low interest-rate environment, the company said,
Interest expenses also decreased by 44.5% to $9.2 million amid decreasing wholesale funding balances such as wholesale brokered time deposits, Federal Home Loan Bank advances and Paycheck Protection Program Lending Facility borrowings.
Noninterest income was $25.5 million, a 38.9% year-over-year increase that included $21.9 million in salaries and employee benefit expenses.
Quarterly net interest margin – the difference between interest income generated and the amount paid out to lenders – declined 41 basis points to 2.31%.
Total assets stood at $5.8 billion, a 12.5% year-over-year increase driven by increases in commercial loans. Of the $4.3 billion in total loans, commercial real estate and industrial loans accounted for $2.5 billion, 16.7% increase over a year ago. This included the 1,770 loans through the PPP program, worth a collective $21.8 million.
Total deposits amounted to $4.3 billion, up 22.5%.
“Washington Trust’s third quarter results reflect our success at generating solid earnings during the most challenging of economic times,” Edward O. Handy III, chairman and CEO, said in a statement. “We had good performances across key business lines, led by strong mortgage banking activity, increases in wealth management assets under administration, and in-market deposit growth. As we move forward, we do so cautiously, but with confidence in our team, our business model and our strong financial foundation.”
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.
