WESTERLY, R.I., April 22, 2024 /PRNewswire/ -- Washington Trust Bancorp, Inc. (NASDAQ:WASH), parent company of The Washington Trust Company, today announced first quarter 2024 net income of $10.9 million, or $0.64 per diluted share, compared to net income of $12.9 million, or $0.76 per diluted share, for the fourth quarter of 2023. "Washington Trust's first quarter performance reflects the importance of our diversified business model, as we were able to generate solid noninterest income while faced with continued margin pressure associated with higher funding costs," stated Edward O. Handy III, Washington Trust Chairman and Chief Executive Officer.  "We remain focused on managing the balance sheet, maintaining credit quality, and prudently overseeing expenses to ensure we are adequately positioned to meet the challenges ahead." Selected financial highlights for the first quarter of 2024 include: Returns on average equity and average assets for the first quarter were 9.33% and 0.61%, respectively, compared to 11.77% and 0.71%, respectively for the preceding quarter. The net interest margin was 1.84% in the first quarter, compared to 1.88% in the preceding quarter. In the first quarter, a provision for credit losses of $700 thousand was recognized, down by $500 thousand from the provision recognized in the preceding quarter. Wealth management revenues amounted to $9.3 million in the first quarter, up by $457 thousand, or 5%, from the preceding quarter. Mortgage banking revenues totaled $2.5 million for the first quarter, up by $952 thousand, or 61%, from the preceding quarter. Total loans amounted to $5.7 billion, up by $38 million, or 1%, from the end of the preceding quarter. In-market deposits (total deposits less wholesale brokered deposits) amounted to $4.7 billion, down by $20 million, or 0.4%, from December 31, 2023. Net Interest IncomeNet interest income was $31.7 million for the first quarter of 2024, down by $989 thousand, or 3%, from the fourth quarter of 2023.  The net interest margin was 1.84% for the first quarter, a decrease of 4 basis points from the preceding quarter.  These declines reflected the continuation of higher funding costs, which outpaced increases in asset yields.  Linked quarter changes included: Average interest-earning assets increased by $23 million, due to an increase of $46 million in average loans, partially offset by a decline in the average balance of investment securities. The yield on interest-earning assets for the first quarter was 4.93%, up by 12 basis points from the preceding quarter. Average interest-bearing liabilities increased by $100 million as average wholesale funding balances increased by $122 million while average in-market deposits decreased by $21 million. The cost of interest-bearing liabilities for the first quarter of 2024 was 3.63%, up by 14 basis points from the preceding quarter. Noninterest IncomeNoninterest income totaled $17.2 million for the first quarter of 2024, up by $3.9 million, or 29%, from the fourth quarter of 2023.  Included in other noninterest income in the first quarter of 2024 was $2.1 million associated with a litigation settlement.  Excluding this item, noninterest income was up by $1.8 million, or 13%, from the preceding quarter.  Linked quarter changes included: Wealth management revenues amounted to $9.3 million in the first quarter of 2024, up by $457 thousand, or 5%, on a linked quarter basis. This correlated with an increase in the average balance of wealth management assets under administration ("AUA"), which was up by approximately $427 million, or 7%, from the preceding quarter.The end of period AUA balance at March 31, 2024 amounted to $6.9 billion, up by $270 million, or 4%, from December 31, 2023. This increase reflected net investment appreciation of $364 million, partially offset by net client asset outflows of $94 million. Mortgage banking revenues totaled $2.5 million for the first quarter of 2024, up by $952 thousand, or 61%, from the preceding quarter, reflecting higher realized gains on loan sales, as well as a positive change in the fair value of mortgage loans held for sale and forward loan commitments. Realized gains increased by $453 thousand, or 40%, from the preceding quarter, due to a higher sales yield, as well as a higher volume of loans sold. Loans sold amounted to $72.6 million in the first quarter of 2024, up by $5.2 million, or 8%, from the preceding quarter. In the first quarter of 2024, 76% of residential real estate loan originations were originated for sale, compared to 66% in the preceding quarter. Noninterest ExpenseNoninterest expense totaled $34.4 million for the first quarter of 2024, up by $1.8 million, or 5%, from the fourth quarter of 2023.  Linked quarter changes included: Salaries and employee benefits expense amounted to $21.8 million, up by $3.3 million, or 18%. In the preceding quarter, performance-based compensation accruals were reduced by $3.4 million. Excluding this item, salaries and employee benefits expense was essentially flat on a linked quarter basis. Other noninterest expenses totaled $2.3 million, down by $1.3 million, or 35%, from the preceding quarter, largely due to a $1.0 million contribution made by Washington Trust to its charitable foundation in the fourth quarter of 2023. Income TaxIn the first quarter of 2024, income tax expense totaled $2.8 million, reflecting an effective tax rate of 20.6%.  In the preceding quarter, an income tax benefit of $774 thousand was recognized, reflecting an effective rate of negative 6.4%.  In the fourth quarter of 2023, income tax expense was reduced by a net $3.3 million adjustment to net deferred tax assets that was largely associated with an enacted change in state tax law.  Excluding this adjustment, the effective tax rate for the fourth quarter of 2023 would have been 20.4%.  Based on current federal and applicable state income tax statutes, the Corporation currently expects its full-year 2024 effective tax rate to be approximately 21.0%. Investment SecuritiesThe securities portfolio totaled $970 million at March 31, 2024, down by $30 million, or 3%, from December 31, 2023, reflecting a decrease of $15 million in the fair value of available for sale debt securities due to changes in market interest rates, as well as routine pay-downs and maturities.  The securities portfolio represented 13% of total assets at March 31, 2024, compared to 14% of total assets at December 31, 2023. LoansTotal loans amounted to $5.7 billion at March 31, 2024, up by $38 million, or 1%, from the end of the preceding quarter.  These changes included: Commercial loans increased by $60 million, or 2%, from December 31, 2023, reflecting advances and originations of $108 million, partially offset by principal payments of $48 million. Residential real estate loans decreased by $19 million, or 0.7%, from December 31, 2023. In the first quarter of 2024, residential real estate loans originated for portfolio amounted to $24 million, down by $15 million, or 39%, from the preceding quarter. The consumer loan portfolio decreased by $4 million, or 1%, from December 31, 2023, largely reflecting a decrease in home equity lines. Deposits and BorrowingsTotal deposits amounted to $5.3 billion at both March 31, 2024 and December 31, 2023.  Uninsured deposits, after exclusions (as detailed in the financial tables below) amounted to $965 million, or 18% of total deposits, at March 31, 2024. In-market deposits, which exclude wholesale brokered deposits, amounted to $4.7 billion at March 31, 2024, down by $20 million, or 0.4%, from December 31, 2023.  As of March 31, 2024, in-market deposits were approximately 61% retail and 39% commercial.  The average size of our in-market deposit accounts was approximately $36 thousand at March 31, 2024. Wholesale brokered deposits amounted to $674 million and were up by $20 million, or 3%, from December 31, 2023.  FHLB advances totaled $1.2 billion at March 31, 2024, up by $50 million, or 4%, from December 31, 2023.  As of March 31, 2024, contingent liquidity amounted to $1.8 billion and consisted of noninterest-bearing cash, unencumbered securities, and unused collateralized borrowing capacity. Asset QualityNonaccrual loans were $30.7 million, or 0.54% of total loans, at March 31, 2024, compared to $44.6 million, or 0.79% of total loans, at December 31, 2023.  The decrease in nonaccrual loans was largely due to one commercial real estate loan that returned to accruing status in the quarter.  The composition of nonaccrual loans at March 31, 2024 was 63% commercial and 37% residential and consumer. Past due loans were $10.0 million, or 0.18% of total loans, at March 31, 2024, compared to $11.3 million, or 0.20% of total loans, at December 31, 2023.  The composition of past due loans at March 31, 2024 was largely concentrated in the residential and consumer loan portfolios. The allowance for credit losses ("ACL") on loans amounted to $41.9 million, or 0.74% of total loans, at March 31, 2024, compared to $41.1 million, or 0.73% of total loans, at December 31, 2023.  The ACL on unfunded commitments, included in other liabilities on the Consolidated Balance Sheets, was $1.7 million at March 31, 2024, compared to $1.9 million at December 31, 2023. The provision for credit losses totaled $700 thousand in the first quarter of 2024, down by $500 thousand from the preceding quarter.  The provision for credit losses in the first quarter of 2024 was composed of a provision for credit losses on loans of $900 thousand and a negative provision (or a benefit) for credit losses on unfunded commitments of $200 thousand.  Net charge-offs amounted to $52 thousand in the first quarter of 2024, compared to $406 thousand in the preceding quarter. Capital and DividendsTotal shareholders' equity was $466.9 million at March 31, 2024, down by $5.8 million, or 1%, from December 31, 2023.  Net income of $10.9 million was offset by $9.7 million in dividend declarations and a decline of $7.8 million in the accumulated other comprehensive income ("AOCI") component of shareholders' equity.  The decline in AOCI largely reflected a decrease in the fair value of available for sale debt securities due to changes in market interest rates. The Board of Directors declared a quarterly dividend of 56 cents per share for the quarter ended March 31, 2024.  The dividend was paid on April 12, 2024 to shareholders of record on April 1, 2024. Capital levels at March 31, 2024 exceeded the regulatory minimum levels to be considered well capitalized, with a total risk-based capital ratio of 11.62% at March 31, 2024, compared to 11.58% at December 31, 2023.  Book value per share was $27.41 at March 31, 2024, compared to $27.75 at December 31, 2023. Conference CallWashington Trust will host a conference call to discuss its first quarter results, business highlights, and outlook on Monday, April 22, 2024 at 10:00 a.m. (Eastern Time).  Individuals may dial in to the call at 1-833-470-1428 and enter Access Code 041815.  An audio replay of the call will be available, shortly after the conclusion of the call, by dialing 1-866-813-9403 and entering the Replay Access Code 539231.  The audio replay will be available through May 6, 2024.  Also, a webcast of the call will be posted in the Investor Relations section of Washington Trust's website, https://ir.washtrust.com, and will be available through June 30, 2024. BackgroundWashington Trust Bancorp, Inc. is the parent of The Washington Trust Company.  Founded in 1800, Washington Trust is the oldest community bank in the nation, the largest state-chartered bank headquartered in Rhode Island and one of the Northeast's premier financial services companies.  Washington Trust offers a full range of financial services, including commercial banking, mortgage banking, personal banking, and wealth management and trust services through its offices located in Rhode Island, Connecticut, and Massachusetts.  The Corporation's common stock trades on NASDAQ under the symbol WASH.  Investor information is available on the Corporation's website at https://ir.washtrust.com. Forward-Looking StatementsThis press release contains statements that are "forward-looking statements."  We may also make forward-looking statements in other documents we file with the U.S. Securities and Exchange Commission ("SEC"), in our annual reports to shareholders, in press releases and other written materials, and in oral statements made by our officers, directors, or employees.  You can identify forward-looking statements by the use of the words "believe," "expect," "anticipate," "intend," "estimate," "assume," "outlook," "will," "should," and other expressions that predict or indicate future events and trends and which do not relate to historical matters.  You should not rely on forward-looking statements, because they involve known and unknown risks, uncertainties, and other factors, some of which are beyond our control.  These risks, uncertainties, and other factors may cause our actual results, performance, or achievements to be materially different from the anticipated future results, performance, or achievements expressed or implied by the forward-looking statements. Some of the factors that might cause these differences include the following: changes in general business and economic conditions on a national basis and in the local markets in which we operate; changes in customer behavior due to political, business, and economic conditions, including inflation and concerns about liquidity; interest rate changes or volatility, as well as changes in the balance and mix of loans and deposits; changes in loan demand and collectability; the possibility that future credit losses are higher than currently expected due to changes in economic assumptions or adverse economic developments; ongoing volatility in national and international financial markets; reductions in the market value or outflows of wealth management AUA; decreases in the value of securities and other assets; increases in defaults and charge-off rates; changes in the size and nature of our competition; changes in legislation or regulation and accounting principles, policies, and guidelines; operational risks including, but not limited to, changes in information technology, cybersecurity incidents, fraud, natural disasters, war, terrorism, civil unrest, and future pandemics; regulatory, litigation, and reputational risks; and changes in the assumptions used in making such forward-looking statements. In addition, the factors described under "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as updated by our Quarterly Reports on Form 10-Q and other filings submitted to the SEC, may result in these differences. You should carefully review all of these factors, and you should be aware that there may be other factors that could cause these differences. These forward-looking statements were based on information, plans, and estimates at the date of this report, and we assume no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes. Supplemental Information - Explanation of Non-GAAP Financial MeasuresIn addition to results presented in accordance with generally accepted accounting principles ("GAAP"), this press release contains certain non-GAAP financial measures.  Washington Trust's management believes that the supplemental non-GAAP information, which consists of measurements and ratios based on tangible equity and tangible assets, is utilized by regulators and market analysts to evaluate a company's financial condition and therefore, such information is useful to investors.  These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures, which may be presented by other companies.  Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.   Washington Trust Bancorp, Inc. and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited; Dollars in thousands) Mar 31,2024 Dec 31,2023 Sep 30,2023 Jun 30,2023 Mar 31,2023 Assets: Cash and due from banks $102,136 $86,824 $109,432 $124,877 $134,989 Short-term investments 3,452 3,360 3,577 3,439 3,291 Mortgage loans held for sale, at fair value 25,462 20,077 10,550 20,872 7,445 Available for sale debt securities, at fair value 970,060 1,000,380 958,990 1,022,458 1,054,747 Federal Home Loan Bank stock, at cost 55,512 51,893 52,668 45,868 42,501 Loans: Total loans 5,685,232 5,647,706 5,611,115 5,381,113 5,227,969 Less: allowance for credit losses on loans 41,905 41,057 40,213 39,343 38,780 Net loans 5,643,327 5,606,649 5,570,902 5,341,770 5,189,189 Premises and equipment, net 31,914 32,291 31,976 32,591 31,719 Operating lease right-of-use assets 29,216 29,364 27,882 28,633 26,170 Investment in bank-owned life insurance 104,475 103,736 103,003 102,293 101,782 Goodwill 63,909 63,909 63,909 63,909 63,909 Identifiable intangible assets, net 3,503 3,711 3,919 4,130 4,342 Other assets 216,158 200,653 246,667 220,920 199,098 Total assets $7,249,124 $7,202,847 $7,183,475 $7,011,760 $6,859,182 Liabilities: Deposits: Noninterest-bearing deposits $648,929 $693,746 $773,261 $758,242 $829,763 Interest-bearing deposits 4,698,964 4,654,414 4,642,302 4,556,236 4,438,751 Total deposits 5,347,893 5,348,160 5,415,563 5,314,478 5,268,514 Federal Home Loan Bank advances 1,240,000 1,190,000 1,120,000 1,040,000 925,000 Junior subordinated debentures 22,681 22,681 22,681 22,681 22,681 Operating lease liabilities 31,837 32,027 30,554 31,302 28,622 Other liabilities 139,793 137,293 163,273 144,138 149,382 Total liabilities 6,782,204 6,730,161 6,752,071 6,552,599 6,394,199 Shareholders' Equity: Common stock 1,085 1,085 1,085 1,085 1,085 Paid-in capital 126,785 126,150 126,310 125,685 127,734 Retained earnings 503,175 501,917 498,521 496,996 495,231 Accumulated other comprehensive loss (148,913) (141,153) (178,734) (148,827) (141,760) Treasury stock, at cost (15,212) (15,313) (15,778) (15,778) (17,307) Total shareholders' equity 466,920 472,686 431,404 459,161 464,983 Total liabilities and shareholders' equity $7,249,124 $7,202,847 $7,183,475 $7,011,760 $6,859,182   Washington Trust Bancorp, Inc. and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited; Dollars and shares in thousands, except per share amounts) For the Three Months Ended Mar 31,2024 Dec 31,2023 Sep 30,2023 Jun 30,2023 Mar 31,2023 Interest income: Interest and fees on loans $75,636 $74,236 $70,896 $65,449 $59,749 Interest on mortgage loans held for sale 255 255 332 241 152 Taxable interest on debt securities 7,096 7,191 7,271 7,403 7,194 Dividends on Federal Home Loan Bank stock 1,073 982 878 858 597 Other interest income 1,196 1,282 1,344 1,279 1,070 Total interest and dividend income 85,256 83,946 80,721 75,230 68,762 Interest expense: Deposits 38,047 37,067 34,069 29,704 19,589 Federal Home Loan Bank advances 15,138 13,814 12,497 11,652 11,626 Junior subordinated debentures 406 411 404 374 354 Total interest expense 53,591 51,292 46,970 41,730 31,569 Net interest income 31,665 32,654 33,751 33,500 37,193 Provision for credit losses 700 1,200 500 700 800 Net interest income after provision for credit losses 30,965 31,454 33,251 32,800 36,393 Noninterest income: Wealth management revenues 9,338 8,881 8,948 9,048 8,663 Mortgage banking revenues 2,506 1,554 2,108 1,753 1,245 Card interchange fees 1,145 1,254 1,267 1,268 1,132 Service charges on deposit accounts 685 688 674 667 777 Loan related derivative income 284 112 1,082 247 (51) Income from bank-owned life insurance 739 734 710 879 1,165 Other income 2,466 83 437 463 352 Total noninterest income 17,163 13,306 15,226 14,325 13,283 Noninterest expense: Salaries and employee benefits 21,775 18,464 21,622 20,588 21,784 Outsourced services 3,780 3,667 3,737 3,621 3,496 Net occupancy 2,561 2,396 2,387 2,416 2,437 Equipment 1,020 1,133 1,107 1,050 1,028 Legal, audit, and professional fees 706 959 1,058 978 896 FDIC deposit insurance costs 1,441 1,239 1,185 1,371 872 Advertising and promotion 548 938 789 427 408 Amortization of intangibles 208 208 211 212 212 Other expenses 2,324 3,583 2,294 2,353 2,431 Total noninterest expense 34,363 32,587 34,390 33,016 33,564 Income before income taxes 13,765 12,173 14,087 14,109 16,112 Income tax expense (benefit) 2,829 (774) 2,926 2,853 3,300 Net income $10,936 $12,947 $11,161 $11,256 $12,812 Net income available to common shareholders $10,924 $12,931 $11,140 $11,237 $12,783 Weighted average common shares outstanding:   Basic 17,033 17,029 17,019 17,011 17,074   Diluted 17,074 17,070 17,041 17,030 17,170 Earnings per common share:   Basic $0.64 $0.76 $0.65 $0.66 $0.75   Diluted $0.64 $0.76 $0.65 $0.66 $0.74 Cash dividends declared per share $0.56 $0.56 $0.56 $0.56 $0.56   Washington Trust Bancorp, Inc. and Subsidiaries SELECTED FINANCIAL HIGHLIGHTS (Unaudited; Dollars and shares in thousands, except per share amounts) Mar 31,2024 Dec 31,2023 Sep 30,2023 Jun 30,2023 Mar 31,2023 Share and Equity Related Data: Book value per share $27.41 $27.75 $25.35 $26.98 $27.37 Tangible book value per share - Non-GAAP (1) $23.45 $23.78 $21.36 $22.98 $23.36 Market value per share $26.88 $32.38 $26.33 $26.81 $34.66 Shares issued at end of period 17,363 17,363 17,363 17,363 17,363 Shares outstanding at end of period 17,033 17,031 17,019 17,019 16,986 Capital Ratios (2): Tier 1 risk-based capital 10.84 % 10.86 % 10.77 % 11.09 % 11.28 % Total risk-based capital 11.62 % 11.58 % 11.48 % 11.81 % 12.01 %