Washington Trust Bancorp (WASH) Q1 2025 earnings summary

Executive summary

• Q1 2025 net income was $12.2 million ($0.63/share), up 11% year-over-year, with adjusted net income of $11.8 million ($0.61/share), reflecting a $7.0 million gain from branch sale-leasebacks and a $6.4 million pension settlement charge.

• Net interest margin expanded to 2.29%, up 34 bps sequentially and 45 bps year-over-year, driven by balance sheet restructuring.

• In-market deposits reached a record $5.013 billion, up 4% sequentially, with strong growth in both deposits and new households.

• Loan balances declined 1% due to intentional reductions and elevated payoffs, but pipelines are building and low single-digit loan growth is expected.

• Book value per share increased to $27.06; tangible book value per share was $23.61.

Financial highlights

• Net interest income rose to $36.4 million, up 11% sequentially and 15% year-over-year; yield on interest-earning assets increased to 4.98%.

• Noninterest income was $22.6 million, including a $7.0 million gain from sale-leasebacks; adjusted noninterest income was $15.6 million.

• Noninterest expense was $42.2 million, up 23% due to the pension charge; adjusted noninterest expense rose 4% to $35.8 million.

• Provision for credit losses was $1.2 million, up from $0.7 million year-over-year; net charge-offs were $2.3 million, mainly in commercial real estate office loans.

• Return on average assets was 0.73% (adjusted: 0.71%); return on average equity was 9.63% (adjusted: 9.30%).

Outlook and guidance

• Management expects continued focus on deposit growth, digital banking, and prudent risk management amid competitive and uncertain market conditions.

• Low single-digit loan growth remains achievable, with commercial and residential pipelines strengthening.

• Net interest margin guidance for Q2 is 2.35%, with future margin expansion dependent on Fed policy.

• Dividend payout ratio targeted to decline to mid to low 80% by year-end, with no plans to increase the dividend.

• Full-year 2025 effective tax rate expected to be approximately 22.4%.