Washington Trust Bancorp, Inc. (NASDAQ: WASH) has announced significant balance sheet repositioning transactions to support continued organic growth and capital generation. The repositioning involves the sale of low-yielding assets and reinvestment into higher-yielding assets, aiming to improve earnings and profitability in 2025 and beyond.
As part of the transactions, the bank sold approximately $409 million of available for sale debt securities with a weighted average yield of 2.65% and has agreed to sell approximately $345 million in residential mortgage loans with a weighted average rate of 3.03%. The bank has reinvested approximately $378 million into available for sale debt securities with a weighted average yield of 5.30%.
In addition, the bank expects to pay down approximately $352 million of wholesale funding balances with an estimated weighted average rate of 4.50% in the first quarter of 2025.
These repositioning transactions are expected to result in a net after-tax loss of approximately $70 million, to be recognized in the fourth quarter of 2024. While this will lead to a net loss for the fourth quarter and the full year of 2024, the $70 million loss has been entirely funded by the capital raised through a previously disclosed equity offering.
The repositioning is a strategic move to address the impact of low-yielding assets on earnings and the ability to reinvest and expand the business. According to Edward "Ned" O. Handy III, Washington Trust Chairman and CEO, this repositioning will support growth and investment, benefiting shareholders, employees, customers, and the communities served by the bank.
Washington Trust Bancorp, Inc., with $7.1 billion in assets as of September 30, 2024, is recognized as 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. Today the company's shares have moved 2.0% to a price of $31.37. Check out the company's full 8-K submission here.
