Washington Trust reports $19M Q3 earnings amid record loans, interest income


WESTERLY – The Washington Trust Bancorp Inc. brought in $18.7 million in third-quarter earnings, alongside record net interest income and loans, the company reported on Monday.

Despite these quarterly highs, the parent company for The Washington Trust Co. saw its profit margin tick down 0.4%, driven by loss in mortgage banking revenue and stockpiling of reserves for a potential economic downtown.

Earnings per diluted share rose 1 cent to $1.08 per share.

The latest earnings report comes as the Westerly-based company expands its physical footprint, with a new branch in Cumberland and a commercial lending office in New Haven, Conn., each opening during the third quarter. The company also recently announced plans to add three more branches in Rhode Island next year.

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As its branch and office locations have grown, so has its balance sheet, with the $4.8 billion in total loans marking a new quarterly record. The 13.1% growth compared with a year ago reflects increases in commercial and residential real estate loans.

At the same time, recent federal interest rate hikes boosted net interest income to another record, with the $42 million in quarterly net interest income marking a 16.6% increase year over year. Also a reflection of higher interest rates, net interest margin –  the difference between interest income generated and the amount paid out to lenders – rose 24 basis points to 2.82%

However, these gains were offset by losses to mortgage banking income, which plummeted 67.9% to $2.0 million as the housing market cooled off. Wealth management revenue also fell 8.9%, partly because of losing client investments after four investment advisors resigned. Continued loss of client assets could continue in upcoming months as a result of these resignations, the company stated.

Overall net interest income fell by 23%, to $15.8 million. 

Meanwhile, noninterest expenses ticked up 1.7% to $33.1 million, including a slight increase in employee salaries and benefits due to adjustments to performance-based compensation, the company stated.  

The company also added $800,000 to its quarterly credit loss provisions, mirroring moves made by financial institutions nationwide in anticipation of a potential economic downturn. The larger reserved pile is also intended to cover the growing loan balance, the company stated.

Total assets stood at $6.4 billion, up 6.8% over a year ago. Quarterly deposits remained flat at $5.1 billion.

“Washington Trust reported solid third quarter results, a testament to our diversified business model,” Edward O. Handy III, Washington Trust chairman and CEO, said in a statement. “We remain committed to our customers and expanding our presence within our geographic footprint.”

As of June 30, 2022 – the most recent available – Washington Trust had the third-highest share of in-market deposits in Rhode Island, with 11.1%, according to the Federal Deposit Insurance Corp.

Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.

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