Washington Trust's Q2 2025: Unpacking Key Contradictions in NIM, Deposit Strategy, and Loan Growth
Generated by AI AgentAinvest Earnings Call Digest
Tuesday, Jul 22, 2025 4:35 pm ET1min read
WASH--
Aime Summary
Aime SummaryNet interest margin expectations, deposit strategy and funding, loan growth and strategy, issues with deposit cost management and liability sensitivity, and broadband contractor exposure are the key contradictions discussed in Washington Trust Bancorp's latest 2025Q2 earnings call.
Financial Performance:
- Washington Trust reported net income of $13.2 million or $0.68 per share for Q2 2025 compared to $12.2 million and $0.63 per share in Q1.
- Excluding infrequent items, adjusted net income increased by $1.5 million or $0.07 per share. The growth was driven by an increase in net interest income and wealth management revenues.
Net Interest Income and Margin:
- Net interest income was $37.2 million, up $763,000 or 2% on a linked quarter basis. The margin was $2.36, up by 7 basis points.
- The increase in net interest income was due to higher interest rates and a shift in the funding mix towards less sensitive funding sources.
Loan and Deposit Growth:
- Total loans increased by $44 million or 1%, with commercial loans up 2% and residential loans down 1%.
- In-market deposits were up $30 million or 1% from the end of Q1, driven by deposit generation efforts and organic growth.
Noninterest Income and Expense Trends:
- Wealth management revenues increased to $10.1 million, up $229,000 or 2%, reflecting higher transaction-based and seasonal tax servicing fee income.
- Noninterest expense totaled $36.5 million, excluding a pension plan settlement charge. The increase was primarily due to volume-related increases in mortgage originator compensation.
Capital and Risk Management:
- Total shareholders' equity increased to $1.8 billion, maintaining a strong capital position.
- The allowance for loan losses was $41.1 million or 80 basis points on total loans, providing NPL coverage of 157%.
- The company extended its mortgage banking pipeline to $102 million, up $6 million or 7%, reflecting increased mortgage origination activity.
Financial Performance:
- Washington Trust reported net income of $13.2 million or $0.68 per share for Q2 2025 compared to $12.2 million and $0.63 per share in Q1.
- Excluding infrequent items, adjusted net income increased by $1.5 million or $0.07 per share. The growth was driven by an increase in net interest income and wealth management revenues.
Net Interest Income and Margin:
- Net interest income was $37.2 million, up $763,000 or 2% on a linked quarter basis. The margin was $2.36, up by 7 basis points.
- The increase in net interest income was due to higher interest rates and a shift in the funding mix towards less sensitive funding sources.
Loan and Deposit Growth:
- Total loans increased by $44 million or 1%, with commercial loans up 2% and residential loans down 1%.
- In-market deposits were up $30 million or 1% from the end of Q1, driven by deposit generation efforts and organic growth.
Noninterest Income and Expense Trends:
- Wealth management revenues increased to $10.1 million, up $229,000 or 2%, reflecting higher transaction-based and seasonal tax servicing fee income.
- Noninterest expense totaled $36.5 million, excluding a pension plan settlement charge. The increase was primarily due to volume-related increases in mortgage originator compensation.
Capital and Risk Management:
- Total shareholders' equity increased to $1.8 billion, maintaining a strong capital position.
- The allowance for loan losses was $41.1 million or 80 basis points on total loans, providing NPL coverage of 157%.
- The company extended its mortgage banking pipeline to $102 million, up $6 million or 7%, reflecting increased mortgage origination activity.
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