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On Wednesday, BofA Securities analyst Brandon Berman introduced a new coverage on Washington Trust Bancorp, trading on (NASDAQ:WASH), with a Neutral rating and a price target of $28.00. Currently trading at $28.49, with analyst targets ranging from $29 to $35, Berman’s initiation of coverage suggests a modest 6% total return potential for the bank’s shares. According to InvestingPro data, three analysts have recently revised their earnings expectations downward for the upcoming period.
Washington Trust Bancorp, recognized as the second-largest bank based in Rhode Island, has recently undergone balance sheet repositioning in the fourth quarter of 2024. This strategic move is seen to mitigate net interest margin (NIM) headwinds and provide the institution with a buffer to sustain its dividend payouts, which Berman notes could have been perceived as at risk. Notably, InvestingPro data shows the bank has maintained dividend payments for 42 consecutive years, currently offering a substantial 7.86% yield.
Berman believes that the current lower interest rates will yield benefits over time for Washington Trust by easing credit risk, reducing deposit costs, and potentially spurring a recovery in mortgage activity. Despite these potential advantages, the analyst also points out that the lower rates are expected to pose a challenge to near-term earnings due to the bank’s balance sheet, which is relatively asset-sensitive.
The demographic challenges faced by the bank are also expected to limit its ability to leverage deposit beta, according to Berman’s analysis. This factor could influence the bank’s ability to adjust deposit interest rates in response to changes in the broader interest rate environment.
In summary, while BofA Securities acknowledges Washington Trust Bancorp’s efforts to reposition its balance sheet and the potential long-term benefits of a lower rate environment, the firm also highlights the immediate challenges that may weigh on the bank’s earnings and its capacity to adjust deposit rates effectively. InvestingPro’s analysis indicates the bank’s overall financial health score is currently weak, though net income is expected to grow this year. For deeper insights into Washington Trust’s financial metrics and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Washington Trust Bancorp reported its financial results for the first quarter of 2025, revealing mixed outcomes. The company posted an earnings per share (EPS) of $0.61, slightly below the forecasted $0.64. However, revenue exceeded expectations, coming in at $59.07 million compared to the anticipated $50.2 million. This was supported by an 11% increase in net interest income quarter-over-quarter. Additionally, the company announced a new stock repurchase program, set to begin on May 15, 2025, allowing the repurchase of up to 850,000 shares, approximately 4.4% of its outstanding shares. The Board of Directors authorized this initiative as part of a broader capital management strategy. In other developments, Washington Trust’s shareholders elected three directors and ratified an independent auditor at the recent annual meeting. Analysts at Keefe, Bruyette & Woods maintained a Market Perform rating for Washington Trust, reflecting a steady outlook amidst these updates.
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