Washington Trust(WASH) - 2025 Q1 - Quarterly Report

PART I. Financial Information This section covers the unaudited financial statements, management's analysis, market risk, and internal controls for the quarter ended March 31, 2025 Item 1. Financial Statements (Unaudited) Unaudited Q1 2025 financial statements show total assets decreased to $6.59 billion, net income rose to $12.2 million, and shareholders' equity increased to $521.7 million Consolidated Balance Sheet Highlights (Unaudited) | (In millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $6,586.015 | $6,930.647 | | Net Loans | $5,055.154 | $5,095.878 | | Available for sale debt securities | $917.545 | $916.305 | | Total Liabilities | $6,064.335 | $6,430.919 | | Total Deposits | $5,040.581 | $5,115.800 | | Federal Home Loan Bank advances | $850.000 | $1,125.000 | | Total Shareholders' Equity | $521.680 | $499.728 | Consolidated Income Statement Highlights (Unaudited) | (In millions) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net Interest Income | $36.422 | $31.665 | | Provision for credit losses | $1.200 | $0.700 | | Total Noninterest Income | $22.643 | $17.163 | | Total Noninterest Expense | $42.196 | $34.363 | | Net Income | $12.179 | $10.936 | | Diluted EPS | $0.63 | $0.64 | - In Q1 2025, the company completed sales-leaseback transactions for five branch locations, resulting in a pre-tax net gain of $7.0 million[83][139] - Concurrently, the termination of the qualified pension plan led to a pre-tax non-cash settlement charge of $6.4 million[83][139] Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion highlights Q1 2025 net income of $12.2 million, driven by increased net interest income and NIM expansion, alongside a 5% decrease in total assets due to strategic balance sheet repositioning Q1 2025 vs Q1 2024 Performance Summary | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $12.2 million | $10.9 million | +11% | | Adjusted Net Income (non-GAAP) | $11.8 million | $9.4 million | +26% | | Diluted EPS | $0.63 | $0.64 | -1.6% | | Adjusted Diluted EPS (non-GAAP) | $0.61 | $0.55 | +10.9% | | Net Interest Margin (FTE) | 2.29% | 1.84% | +45 bps | - The improvement in net interest income and NIM was largely driven by balance sheet repositioning transactions from December 2024, which included selling lower-yielding assets and paying down higher-cost FHLB advances and wholesale deposits[200] - Total assets decreased by $344.6 million (5%) from year-end 2024, primarily due to a $275.0 million (24%) reduction in FHLB advances and a $75.2 million (1%) decrease in total deposits, reflecting a strategic shift from wholesale to in-market funding[237] Results of Operations Q1 2025 net income was $12.2 million, influenced by a $7.0 million gain on property sales and a $6.4 million pension charge, with adjusted net income rising 26% - Q1 2025 results include a $7.0 million pre-tax gain on the sale of bank-owned properties and a $6.4 million pre-tax pension plan settlement charge[194] Q1 2025 vs Q1 2024 Key Metrics | (In millions) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Interest Income | $36.422 | $31.665 | | Noninterest Income | $22.643 | $17.163 | | Noninterest Expense | $42.196 | $34.363 | | Net Income | $12.179 | $10.936 | Financial Condition Total assets decreased 5% to $6.59 billion due to strategic loan sales and debt reduction, while shareholders' equity increased 4% to $521.7 million - The sale of residential mortgage loans held for sale was completed on January 24, 2025[237] - The proceeds, along with in-market deposit growth, were used to pay down FHLB advances and wholesale brokered time deposits[237] Key Balance Sheet Changes (Q1 2025 vs YE 2024) | (In millions) | March 31, 2025 | December 31, 2024 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | Total Assets | $6,586.015 | $6,930.647 | ($344.632) | (5%) | | Total Loans | $5,096.210 | $5,137.838 | ($41.628) | (1%) | | Total Deposits | $5,040.581 | $5,115.800 | ($75.219) | (1%) | | FHLB Advances | $850.000 | $1,125.000 | ($275.000) | (24%) | Asset Quality Asset quality remained stable, with nonperforming assets decreasing to $21.6 million and ACL coverage of nonaccrual loans strengthening to 189.85% Asset Quality Metrics | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Nonperforming assets | $21.626 million | $23.307 million | | Nonperforming assets to total assets | 0.33% | 0.34% | | ACL to total loans | 0.81% | 0.82% | | ACL to nonaccrual loans | 189.85% | 180.03% | - Net charge-offs for Q1 2025 were $2.3 million, compared to just $0.052 million in Q1 2024[212][288] - The increase was mainly from a $2.4 million partial charge-off on one CRE office loan[212][288] - Potential problem loans, which are not included in nonperforming assets, were identified at $27.8 million, slightly down from $28.2 million at year-end 2024[297] Liquidity and Capital Resources The Corporation maintained strong liquidity, with total contingent liquidity increasing to $1.75 billion, and remains 'well capitalized' with a 13.13% total risk-based capital ratio Contingent Liquidity Sources | (In millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | FHLB of Boston | $1,047.209 | $752.951 | | Federal Reserve Bank of Boston | $113.746 | $70.286 | | Available cash liquidity | $43.350 | $36.647 | | Unencumbered securities | $548.483 | $597.771 | | Total contingent liquidity | $1,752.788 | $1,457.655 | - The Corporation and the Bank are considered 'well capitalized,' with a total risk-based capital ratio of 13.13% at March 31, 2025[329] - Total shareholders' equity increased by $22.0 million from year-end 2024, due to $12.2 million in net income and a $20.0 million improvement in AOCL, partially offset by $11.0 million in dividends[327] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's market risk profile indicates short-term asset sensitivity, with net interest income projected to increase in a rising rate environment over 12 months, becoming liability-sensitive thereafter - The company's interest rate risk profile is asset-sensitive in the near term (1-12 months) and becomes liability-sensitive in the medium term (13-24 months)[340] Estimated Change in Net Interest Income from Parallel Rate Shifts (as of March 31, 2025) | Rate Change | Months 1 - 12 | Months 13 - 24 | | :--- | :--- | :--- | | +300 bps | +3.49% | -1.36% | | +200 bps | +2.01% | -1.02% | | +100 bps | +0.55% | -1.09% | | -100 bps | -1.99% | -1.90% | Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the Corporation's disclosure controls and procedures are effective as of March 31, 2025[349] - No changes in internal controls over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[350] PART II. Other Information This section covers legal proceedings, risk factors, equity sales, other information, and exhibits for the reporting period Item 1. Legal Proceedings Management anticipates no material financial impact from ongoing legal proceedings arising in the ordinary course of business - Management does not expect ongoing legal proceedings to materially affect the Corporation's financial condition or results[351] Item 1A. Risk Factors No material changes to previously disclosed risk factors were reported for the quarter - No material changes to risk factors were reported for the quarter[352] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The Corporation reported no unregistered sales of equity securities during the period - None[353] Item 5. Other Information No directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q1 2025 - No directors or officers adopted, terminated, or modified any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q1 2025[354] Item 6. Exhibits The report includes various exhibits, such as CEO and CFO certifications and Inline XBRL financial data - Exhibits filed include CEO/CFO certifications (31.1, 31.2, 32.1) and financial data in Inline XBRL format (101, 104)[355]