Safe and Sound

The Washington Trust Company, of Westerly

Westerly, RI
4
Star Rating
The Washington Trust Company, of Westerly is an FDIC-insured bank started in 1800 and currently based in Westerly, RI. As of December 31, 2017, the bank held equity of $433.0 million on $4.53 billion in assets.

U.S. bank customers have $3.25 billion on deposit at 24 offices in multiple states run by 590 full-time employees. With that footprint, the bank holds loans and leases worth $3.37 billion, $3.03 billion of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, The Washington Trust Company, of Westerly exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the bank fared on the three important criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial fortitude, capital is essential. It acts as a cushion against losses and provides protection for accountholders during periods of financial trouble for the bank. When it comes to safety and soundness, more capital is better.

On our test to measure the adequacy of a bank's capital, The Washington Trust Company, of Westerly received a score of 8 out of a possible 30 points, failing to reach the national average of 13.13.

One important measure of this buffer is a bank's Tier 1 capital ratio. The Washington Trust Company, of Westerly's Tier 1 capital ratio was 11.58 percent, above the 6 percent level considered adequate by regulators, but less than the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather economic challenges.

Overall, The Washington Trust Company, of Westerly held equity amounting to 9.56 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as past-due mortgages.

A bank with lots of these types of assets may eventually be required to use capital to absorb losses, shrinking its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, resulting in depressed earnings and potentially more risk of a future failure.

On Bankrate's asset quality test, The Washington Trust Company, of Westerly scored 40 out of a possible 40 points, beating out the national average of 37.49 points.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.45 percent of The Washington Trust Company, of Westerly's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.01 percent.

Banks keep a reserve to deal with problem assets known as an "allowance for loan and lease losses." The size of that reserve can be a handy indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on The Washington Trust Company, of Westerly's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, likely making the bank more resilient in times of trouble. Losses, on the other hand, lessen a bank's ability to do those things.

The Washington Trust Company, of Westerly scored 20 out of a possible 30 on Bankrate's test of earnings, exceeding the national average of 15.12.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one widely used measure of a bank's earnings. The Washington Trust Company, of Westerly's most recent annualized quarterly return on equity was 10.84 percent, above the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $46.1 million on total equity of $433.0 million. The bank experienced an annualized return on average assets, or ROA, of 1.04 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.