WESTERLY – Washington Trust Bancorp Inc. has posted a loss of $28.1 million for 2024 after the bank "repositioned" its balance sheet in December and sold low-yielding assets at a significant loss in a bid for improved future earnings.
That result is down 41.7% from the $48.2 million profit the company, the parent of The Washington Trust Co., reported for 2023.
The company reported a loss of $1.63 per diluted share in 2024 compared with a profit of $2.82 the year prior.
The one-time
$70 million hit to the financial statement from selling off low-yielding assets meant the bank finished the fourth quarter and the entire year with a net loss, an extremely rare occurrence for Washington Trust. When asked in December, bank executives could not say the last time a quarterly or yearly loss had been recorded in the Westerly-based institution's 225-year history.
To cover the loss, Washington Trust raised about $70 million in a stock offering of 2.2 million shares in December.
In the earnings report on Wednesday, Edward O. "Ned" Handy III, Washington Trust chairman and CEO, noted that while the bank posted a loss and increased the number of its outstanding shares, he was confident the maneuvers would pay off in the long run.
"The equity offering and repositioning will favorably impact future revenues and provide additional capacity for growth and investment," he said. "This strategy has further strengthened our financial foundation, allowing us to focus on providing enhanced value for our shareholders, as well as the customers and communities we serve."
For the fourth quarter, the company reported a loss of $60.8 million, a decline of 78% from the $12.95 million profit it recorded in the same three-month period a year ago.
Full-year net interest margin for 2024 was 1.87%, down by 18 basis points from the 2.05% reported in the prior year.
The provision for credit losses in 2024 totaled $2.4 million, compared to $3.2 million recognized in the prior year.
Full-year 2024 mortgage banking revenues were $11.0 million, up by 65% from the same period in the prior year.
Total loans were $5.1 billion, down by 7% from Sept. 30 and down by $510 million, or 9%, from Dec. 31, 2023, largely due to the reclassification of residential mortgage loans to "held for sale" in connection with the balance sheet repositioning.
For the fourth quarter, net interest income was $32.9 million, up by $674,000, or 2%, from the third quarter of 2024. The net interest margin was 1.95% for the fourth quarter, an increase of 10 basis points from the preceding quarter. The bank cited the balance sheet repositioning as helping to improve the margin. Also helping was the net effect of lower market rates on deposits, wholesale funds and variable-rate loans, the bank said.
Noninterest income was a loss of $77.9 million for the fourth quarter of 2024, compared with income of $16.3 million in the same period a year prior. Included in noninterest income in the fourth quarter of 2024 was a pre-tax loss of $93.9 million recognized on the repositioning strategy. Adjusted noninterest income was $16.0 million, down by $229,000, or 1%, from the preceding quarter.
Noninterest expense totaled $34.3 million for the fourth quarter of 2024, down by $212,000, or 1%, from the third quarter of 2024. Salaries and employee benefits expense, our largest component of noninterest expense, amounted to $21.9 million, up by $525 thousand, or 2%, from the preceding quarter, largely reflecting adjustments to performance-based compensation accruals.
