• Net Loss: $60.8 million or $3.46 per share in the fourth quarter.
• Adjusted Net Income: $10.4 million or $0.59 per share, excluding repositioning asset losses.
• Net Interest Income: $32.9 million, up by $674,000 or 2%.
• Net Interest Margin: 195 basis points, up by 10 basis points.
• Adjusted Non-Interest Income: $16 million, down by $229,000 or 1%.
• Wealth Management Revenues: $10 million, up by $60,000 or 1%.
• Mortgage Banking Revenues: $2.8 million, down by $18,000 or 1%.
• Non-Interest Expenses: $34.3 million, down by $212,000 or 1%.
• Salaries and Benefits Expense: Up by $525,000 or 2%.
• Advertising and Promotion Expense: Decreased by $297,000.
• Adjusted Income Tax Expense: $3.2 million with an effective tax rate of 23.7%.
• Total Loans: Down by $377 million or 7%.
• Residential Loans: Decreased by $403 million or 16%.
• Total Commercial Loans: Increased by $29 million or 1%.
• Market Deposits: Up by $26 million or 1%.
• Broker Deposits: Down by $82 million.
• FHB Borrowings: Down by $175 million.
• Loan to Deposit Ratio: Decreased from 106.2% to 105.5%.
• Non-Accruing Loans: 45 basis points at year-end.
• Past Due Loans: 23 basis points at year-end.
• Allowance for Loan Losses: $42 million, providing NPL coverage of 180%.
• Provision for Credit Losses: $1 million in the fourth quarter.
• Net Charge-Offs: $1.9 million in the fourth quarter and $2 million for the full year 2024.

• Warning! GuruFocus has detected 4 Warning Signs with WASH.

Release Date: January 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Washington Trust Bancorp Inc (NASDAQ:WASH) successfully raised $70.5 million in capital, which is expected to favorably impact future revenues and provide additional capacity for growth and investment.
• Net interest income increased by $674,000 or 2% to $32.9 million, reflecting a positive impact from balance sheet repositioning.
• The company hired a new head of retail banking, Michelle Kyle, to enhance deposit growth strategies.
• Non-accruing loans improved, decreasing from 56 basis points to 45 basis points by the end of the year.
• The company plans to maintain its dividend, indicating confidence in its financial stability.

Negative Points

• Washington Trust Bancorp Inc (NASDAQ:WASH) reported a net loss of $60.8 million or $3.46 per share in the fourth quarter due to balance sheet repositioning asset losses.
• Total loans decreased by $377 million or 7%, with residential loans down by $403 million or 16%.
• Mortgage banking revenues declined by $18,000 or 1%, reflecting challenges in the mortgage market.
• Non-interest income was modestly down by $229,000 or 1%, indicating pressure on revenue streams.
• The company experienced net charge-offs of $1.9 million in the fourth quarter, highlighting ongoing credit challenges.

Q & A Highlights

Q: Can you provide insights on the margin impact and the effect of the balance sheet repositioning? A: Ronald Ohsberg, CFO, explained that the balance sheet repositioning will significantly impact 2025. They project a margin of between 230 and 235 basis points for the first quarter, increasing to about 245 to 250 by the fourth quarter. The spot margin for December was 207 basis points. They plan to pay down wholesale funding over the next few months, and the swap expiration in May 2026 will provide a 12 basis points pickup.

Q: How are you approaching deposits and CDs, and what is the strategy for repricing? A: Ronald Ohsberg noted that with the Fed's rate cuts, they will continue to see repricing of short-term maturing wholesale funding and brokered CDs. Retail CDs will also be repricing down. They will use brokered CDs when it makes sense, but currently, they are more expensive than FHLB funding.

Q: Can you comment on the dividend safety and target payout ratio? A: Edward Handy, CEO, stated that they are not planning any changes to the dividend, and the coverage ratio is better, indicating a more secure dividend position.

Q: What is the outlook for loan growth and opportunities following the balance sheet adjustments? A: Edward Handy mentioned they are building back the pipeline, expecting low-ish 3% loan growth on the commercial side, with a focus on C&I loans. They are cautious with CRE due to concentration limits. Residential loans are expected to see a mild reduction as they focus on sales.

Q: How are you managing expenses, and what is the expected growth rate? A: Ronald Ohsberg indicated that they expect a 2% to 4% growth in expenses year-over-year. They are restoring incentive compensation to normal levels and making some people investments. Salaries and benefits are projected at $23.5 million per quarter, with other expenses at $13.5 million per quarter.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.