Washington Trust Bancorp (WASH) Q2 2024 earnings summary

Executive summary

• Q2 2024 net income was $10.8 million ($0.63 per share), nearly flat sequentially and down 4% year-over-year; six-month net income was $21.8 million, down 10% year-over-year.

• Focused on strengthening the balance sheet, managing credit, controlling expenses, and investing in technology and marketing for deposit growth.

• Asset and credit quality remained stable, with improved capital ratios and modestly higher expenses.

• Noninterest income benefited from a $2.1 million litigation settlement and a $988,000 gain on sale of a facility.

• New branch opened in Smithfield, RI, with another planned for Providence in Q3 2024; no further branch expansion planned.

Financial highlights

• Net interest income for Q2 2024 was $31.6 million, down 6% year-over-year and 0.3% sequentially; net interest margin was 1.83%.

• Noninterest income was $16.7 million, up 16% year-over-year but down 3% sequentially; adjusted for one-time items, up 4%.

• Total noninterest expense declined by 1% from Q1, mainly due to lower salaries and benefits.

• Provision for credit losses was $500,000 in Q2, down 29% year-over-year and $200,000 from Q1.

• Total assets at June 30, 2024 were $7.18 billion, with total loans at $5.63 billion and deposits at $4.98 billion.

Outlook and guidance

• Q3 net interest margin expected to be in line with Q2, but could be volatile depending on Fed rate cuts and funding costs.

• Q3 expenses projected at ~$35 million, with higher mortgage commissions and advertising; Q4 expenses expected to decline.

• Noninterest income in Q3 expected to be similar to Q2, with mortgage revenue up 5-10%.

• Full-year 2024 effective tax rate estimated at 21.2%.

• Management remains focused on navigating economic headwinds and positioning for future growth.