Washington Trust reports record in-market deposits as 1st quarter earnings decline

WASHINGTON TRUST BANCORP INC. posted profits of $16.5 million in the first quarter of 2022 and a record amount of in-market deposits. / PBN FILE PHOTO/SCOTT KINGSLEY
WASHINGTON TRUST BANCORP INC. posted profits of $16.5 million in the first quarter of 2022 and a record amount of in-market deposits. / PBN FILE PHOTO/SCOTT KINGSLEY

WESTERLY – Washington Trust Bancorp Inc. continues to stake its claim in the Rhode Island market, boasting a quarterly record of $4.7 billion in-market deposits for the first quarter of 2022, the company reported on Monday.

Despite the 17.7% growth of in-market deposits from a year ago, the Washington Trust Co. parent company saw its year-over-year profits decline as mortgage banking revenue sank by nearly two-thirds. The $16.5 million quarterly profits marked a 19.5% cut to earnings compared with the first quarter of 2021.

Earnings per diluted share also fell by 23 cents to 94 cents. 

Washington Trust, the third-largest bank in Rhode Island by deposits as of June 2021, saw its noninterest income decrease by 40% to $17.2 million in the first quarter of 2022 compared with the same period a year ago, mainly due to a decline in its mortgage banking revenue as loans sold to the secondary market and sales yield both declined.

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That was partially offset by a 6.4% increase in wealth management income, which reached a quarterly record of $10.5 million in part due to seasonally higher activity. 

Interest expenses fell 32.9% to $3.4 million, and interest income increased 1.4% to $38.5 million reflecting the early gains from rising interest rates as well as deferred amortization fee income from forgiven Paycheck Protection Program loans. That resulted in a net interest income of $35.1 million for the quarter, a $2.2 million gain from a year ago.

The bank also added $100,000 to its loan loss provisions, versus the $2 million released from its reserves in the first quarter of 2021, to help shield against volatile markets. 

Net interest margin – the difference between interest income generated and the amount it pays out – rose 6 basis points to 2.57%.

Noninterest expenses declined 10% to $31.2 million, driven in part by the absence of debt prepayment advances, which amounted to $3.3 million in the first quarter of 2021. 

Quarterly assets stood at $5.8 billion, a 2.2% increase over a year ago that included a nearly-$100 million increase in total loans. The $4.3 billion in loans included growth in residential real estate loans, which was partially offset by declines in commercial and industrial and other loans. The bank also reported a $13 million carrying value in PPP loans as of March 31.

Thanks to record in-market deposits, total deposits rose 12.7% from a year ago to $5.1 billion.

“Washington Trust posted solid first-quarter results and, while overall earnings were impacted by market volatility and economic uncertainty, our balance sheet, capital position, and credit quality remain strong,” Edward O. Handy III, Washington Trust chairman and CEO, said in a statement.  “We successfully met the challenges posed by the COVID-19 pandemic and believe our diversified business model positions us well in a rising rate environment.”

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

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