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WT

WASHINGTON TRUST BANCORP INC (WASH)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 reported a net loss of $60.8M (−$3.46 diluted EPS) driven by deliberate balance sheet repositioning; adjusted net income was $10.4M ($0.59 diluted EPS), with net interest margin rising 10 bps to 1.95% .
  • Management executed a $70.5M equity raise, sold $409M of low-yielding securities and committed to sell $345M of 3.02% residential mortgages (sale closed Jan 24, 2025), reinvesting into 5.30% securities and paying down wholesale funding—expected to lift NIM through 2025 .
  • CFO guided NIM to 2.30–2.35% in Q1 2025, improving to 2.45–2.50% in Q4 2025; FY25 effective tax rate ~22.5%; quarterly salaries/benefits ~$23.5M and other expenses ~$13.5M; dividend maintained at $0.56/share .
  • Asset quality improved: nonaccrual loans fell to 0.45% of loans (from 0.56% in Q3), past dues dropped to 0.23% (from 0.37%); office CRE resolution and lab leasing progress support credit normalization into 2025 .

What Went Well and What Went Wrong

What Went Well

  • Net interest margin expanded to 1.95% (+10 bps q/q) as lower deposit/wholesale costs and repositioning benefits began to accrue; NII rose 2% q/q to $32.9M .
  • Credit metrics improved: nonaccrual loans down to $23.3M (0.45% of loans) and past due loans to $12.0M (0.23% of loans); office CRE classifications declined q/q .
  • Management executed strategic capital actions: $70.5M equity raise and asset sales expected to “favorably impact future revenues and provide additional capacity for growth and investment” (CEO quote) .

What Went Wrong

  • Reported noninterest income swung to a loss (−$77.9M) due to $93.9M pre-tax losses on securities and loan sales tied to repositioning, producing a GAAP net loss of $60.8M .
  • Book value per share fell to $25.93 from $29.44 q/q, reflecting the GAAP loss, despite capital raise; tangible book per share dropped to $22.46 .
  • Net charge-offs rose to $1.9M in Q4 (full-year $2.0M), concentrated in office CRE; provision increased to $1.0M (vs. $0.2M in Q3) .

Financial Results

MetricQ2 2024Q3 2024Q4 2024Q4 2023
Net Interest Income ($USD Millions)$31.6 $32.3 $32.9 $32.7
Noninterest (Loss) Income ($USD Millions)$16.7 $16.3 ($77.9) $13.3
Total Revenues ($USD Millions)$48.3 $48.5 ($45.0) $46.0
Diluted EPS (GAAP, $)$0.63 $0.64 ($3.46) $0.76
Adjusted Diluted EPS (Non-GAAP, $)$0.59 $0.64 $0.59 $0.57
Net Interest Margin (%)1.83% 1.85% 1.95% 1.88%
Efficiency Ratio (GAAP, %)70.3% 71.1% (76.3%) 70.9%
Adjusted Efficiency Ratio (%)71.8% 71.1% 70.0% 70.9%

Note: Total Revenues = Net Interest Income + Noninterest Income (GAAP) .

Segment and KPI detail:

MetricQ2 2024Q3 2024Q4 2024
Wealth Management Revenues ($USD Millions)$9.68 $9.99 $10.05
Mortgage Banking Revenues ($USD Millions)$2.76 $2.87 $2.85
Assets Under Administration (AUA) ($USD Billions, EOP)$6.80 $7.05 $7.08
Loans Sold ($USD Millions, quarterly)$110.1 $120.3 $113.1
Total Loans ($USD Billions, EOP)$5.63 $5.51 $5.14
In-Market Deposits ($USD Billions, EOP)$4.64 $4.79 $4.82
Wholesale Brokered Deposits ($USD Millions, EOP)$339.2 $380.0 $297.5
FHLB Advances ($USD Billions, EOP)$1.55 $1.30 $1.13
Nonaccrual Loans ($USD Millions; % of loans)$30.5; 0.54% $31.1; 0.56% $23.3; 0.45%
Total Past Due Loans ($USD Millions; % of loans)$11.9; 0.21% $20.3; 0.37% $12.0; 0.23%
ACL on Loans ($USD Millions; % of loans)$42.4; 0.75% $42.6; 0.77% $42.0; 0.82%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Margin (NIM)Q1 2025Not previously quantified2.30%–2.35%Raised trajectory
Net Interest Margin (NIM)Q4 2025Not previously quantified2.45%–2.50%Raised trajectory
Average Earning Assets2025 run-rateNot previously quantified~$6.3B–$6.4B after loan saleSet baseline
Effective Tax RateFY 2025~21% (FY24 context)~22.5%Raised modestly
Salaries & BenefitsQuarterly FY 2025~$21.9M in Q4 2024 actuals~$23.5M per quarterHigher run-rate (reset incentives, reinvest)
Other ExpensesQuarterly FY 2025~$13.0–$14.0M historical~$13.5M per quarterClarified baseline
Wealth Mgmt RevenuesFY 2025Market-dependent~+5% YoYPositive
Mortgage RevenuesFY 2025Market-dependent~+5%–10% YoYPositive
Commercial Loan GrowthFY 2025Low single-digit (Q3 commentary)~3% with C&I emphasisCalibrated growth
Residential Mortgage Mix2025N/A~75% of originations for saleStrategic tilt
Dividend2025$0.56/shareMaintain $0.56/share (no change)Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2, Q3)Current Period (Q4)Trend
NIM trajectoryQ2 NIM 1.83%; Q3 1.85% with expectation to be flat near-term Q4 NIM 1.95%; guide to 2.30–2.35% (Q1’25) and 2.45–2.50% (Q4’25) Improving into 2025
Wholesale funding paydownQ3: FHLB −$250M q/q; brokered CDs +$41M Q4: FHLB −$175M; brokered −$82M; further paydowns expected De-leveraging
Deposit repricingQ3: managing money market rates, betas to lag loans Retail CDs and brokered CDs repricing down; brokered currently > FHLB cost Reducing funding costs
CRE office exposureQ3: $42.2M classified; $10.5M resolution imminent Resolution occurred; new $3.3M nonaccrual under agreement; classifications down Improving
Lab space leasingQ3: 52% leased with $20M equity injection >50% leased; leasing activity expected to pick up in 2025 Stabilizing
Loan growth outlookQ3: pipeline rebuilding; muted near-term growth ~3% commercial growth target, emphasize C&I and deposit-linked relationships Gradual acceleration
Dividend policyQ3: $0.56 declared Maintain dividend at $0.56/share Stable
Expense trajectoryQ3: ~$34.5M total, in line next quarter FY25 run-rate salaries/benefits ~$23.5M/qtr; other ~$13.5M/qtr Higher investment

Management Commentary

  • CEO: “Though the sales resulted in a loss recognized in the fourth quarter, the equity offering and repositioning will favorably impact future revenues and provide additional capacity for growth and investment.”
  • CFO: “We’re projecting a NIM of between 2.30 and 2.35 for the first quarter… increasing to about 2.45 to 2.50 in the fourth quarter [2025].”
  • CEO: “We’re kind of thinking about low-ish, 3%-ish loan growth… lean towards C&I… priority is on the funding side of things and making sure we fund loan growth appropriately.”
  • CFO: “We’re not planning on making any changes to the dividend.”

Q&A Highlights

  • Margin outlook: NIM expected to step up to 2.30–2.35% in Q1’25 and 2.45–2.50% in Q4’25; December spot margin was 2.07% .
  • Funding strategy: Pay down FHLB and brokered CDs over the next months; retail CDs repricing down; brokered CDs currently more expensive than FHLB .
  • Credit update: Office CRE resolution (~$10.5M) comprised about half of charge-offs; another $3.3M office nonaccrual under agreement for resolution .
  • Loan growth: Rebuild pipeline with ~3% commercial growth targeted; resi portfolio modestly reducing with ~75% of originations for sale .
  • Expense guidance: Quarterly salaries/benefits ~$23.5M and other expenses ~$13.5M; wealth +5% YoY, mortgage +5–10% YoY in FY25 .

Estimates Context

  • Wall Street consensus estimates (S&P Global) were unavailable at the time of analysis due to provider limits; therefore, we cannot assess beats/misses versus consensus for Q4 2024. If you would like, we can refresh and add comparisons once access is restored.

Key Takeaways for Investors

  • Near-term margin expansion catalyst: Repositioning plus lower funding costs and guided NIM step-up (2.30–2.35% Q1’25 to 2.45–2.50% Q4’25) offer a clear inflection in earnings power despite the Q4 GAAP loss .
  • Balance sheet strengthening: $70.5M equity raise and asset sales enable paydown of high-cost wholesale funds, reducing liability sensitivity and supporting NIM .
  • Credit stabilization: Nonaccruals and past dues improved; office CRE resolutions in flight reduce tail risk and support valuation multiple normalization .
  • Capital return continuity: Dividend held at $0.56; with rising adjusted earnings capacity, coverage improves, aiding investor confidence .
  • Fee franchises steady: Wealth revenues and AUA resilient (+7% YoY AUA), mortgage banking revenues stable, with FY25 guidance to modest growth .
  • Operating investment: Higher expense run-rate (reset incentives, targeted reinvestment) is a trade-off to drive franchise growth; monitor operating leverage as NIM improves .
  • Tactical positioning: Emphasis on C&I growth (deposit-linked), continued resi sale mix (~75%), and deposit repricing down should support spread and liquidity metrics through 2025 .

Additional Q4 2024 Primary Sources Reviewed

  • 8-K Results and Exhibit 99.1 with full financial tables and credit data .
  • Q4 2024 earnings press release (Jan 29, 2025) .
  • Q4 2024 earnings call transcript (Jan 30, 2025) .
  • Related Q4 press releases: balance sheet repositioning (Dec 20), stock offering announcements (Dec 12–16), dividend declaration (Dec 19) .
  • Prior quarter references: Q3 2024 press release and call for trend analysis .