On Tuesday, Piper Sandler maintained its Underweight rating on Washington Trust Bancorp (NASDAQ:WASH), with a steady price target of $30.00. The third quarter of 2024 earnings per share (EPS) for Washington Trust Bancorp came in at $0.64, aligning with core results, surpassing Piper Sandler's estimate by $0.04 and the street consensus by $0.08.
The earnings beat was attributed to a combination of factors, including a lower loan loss provision (LLP) contributing $0.02 to the beat, an increase in net interest income (NII) by $0.01, and an additional $0.01 from higher fees and miscellaneous other items.
The bank's core results indicated a return on assets (ROA) of 60 basis points and a return on tangible common equity (ROTCE) of 10%. Piper Sandler acknowledged the third quarter as "pretty good" for Washington Trust Bancorp, noting solid trends in fees, net interest margin (NIM), and credit. Despite the positive performance indicators and the expectation for the company's shares to outperform on the following day, the firm's stance on the stock remains unchanged.
Washington Trust Bancorp's recent quarterly performance reflects resilience amidst ongoing challenges in the banking sector. The firm's analysis suggests a cautious outlook, although the bank demonstrated strength in key financial areas. The $30.00 price target suggests that Piper Sandler's view on the stock's valuation has not shifted in light of the recent earnings report.
Investors will likely monitor Washington Trust Bancorp's stock performance in the wake of these results, as the company has shown the ability to exceed expectations in a competitive environment. Piper Sandler's unchanged Underweight rating indicates a belief that, despite the strong quarter, there may be factors that could limit the stock's upside potential.
In other recent news, Washington Trust Bancorp reported mixed second quarter financial results for 2024, with a net income of $10.8 million, or $0.63 per share. The company also noted a net interest income of $31.6 million, but a decrease in non-interest income by 3% and a $56 million reduction in total loans were also reported. Despite these figures, Washington Trust Bancorp has launched new deposit growth initiatives and is actively managing its loan-to-deposit ratio.
Furthermore, the company's Board of Directors declared a quarterly dividend of 56 cents per share, reflecting its commitment to delivering shareholder value. In addition, Washington Trust Bancorp provided insights into its real estate portfolio, with plans to maintain stable revenue streams, and disclosed that there are no current plans for selling additional facilities.
Lastly, the company anticipates third quarter expenses to be around $35 million.
InvestingPro Insights
Washington Trust Bancorp's recent performance, as highlighted in Piper Sandler's analysis, can be further contextualized with real-time data from InvestingPro. The company's market capitalization stands at $543.99 million, with a P/E ratio of 11.93, indicating a relatively modest valuation compared to its earnings. This aligns with the cautious outlook presented in the article.
InvestingPro Tips reveal that Washington Trust Bancorp has maintained dividend payments for 41 consecutive years and has raised its dividend for 13 consecutive years. This impressive track record of dividend consistency is particularly noteworthy given the current dividend yield of 7.02%, which InvestingPro classifies as significant. These factors may appeal to income-focused investors, despite Piper Sandler's Underweight rating.
However, it's important to note that InvestingPro also flags weak gross profit margins and an expected drop in net income this year. These insights corroborate Piper Sandler's cautious stance and provide additional context to the firm's unchanged Underweight rating.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into Washington Trust Bancorp's financial health and future prospects.
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