Safe and Sound

Washington Trust Bank

Spokane, WA
4
Star Rating
Washington Trust Bank is an FDIC-insured bank started in 1902 and currently headquartered in Spokane, WA. Regulatory filings show the bank having equity of $517.1 million on assets of $6.23 billion, as of December 31, 2017.

Thanks to the work of 955 full-time employees in 43 offices in multiple states, the bank has amassed loans and leases worth $3.85 billion, including $2.39 billion worth of real estate loans. U.S. bank customers currently have $5.45 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, Washington Trust Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for an analysis of how the bank did on the three key criteria Bankrate used to grade U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a crucial measurement of an institution's financial resilience. It works as a cushion against losses and as protection for depositors during periods of economic trouble for the bank. When looking at safety and soundness, more capital is better.

Washington Trust Bank finished below the national average of 13.13 on our test to measure capital adequacy, receiving a score of 8 out of a possible 30 points.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. Washington Trust Bank's Tier 1 capital ratio was 12.14 percent, higher than the 6 percent level regulators consider adequate, but under the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to weather financial headwinds.

Overall, Washington Trust Bank held equity amounting to 8.30 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

Bankrate uses this test to estimate the effect of problem assets, such as unpaid mortgages, on the bank's capitalization and allocated loan loss reserves.

Having large numbers of these types of assets could eventually force a bank to use capital to cover losses, shrinking its cushion of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, resulting in lower earnings and potentially more risk of a future failure.

On Bankrate's asset quality test, Washington Trust Bank scored 40 out of a possible 40 points, exceeding the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a useful indicator of asset quality.As of December 31, 2017, 0.29 percent of Washington Trust Bank's loans were noncurrent, meaning 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 known as an "allowance for loan and lease losses" to deal with troubled assets . How large that reserve is can be a widely used indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on Washington Trust Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance has an effect on its safety and soundness. Earnings can be retained by the bank, expanding its capital buffer, or be used to address problematic loans, potentially making the bank better prepared to withstand financial shocks. However, banks that are losing money are less able to do those things.

On Bankrate's test of earnings, Washington Trust Bank scored 16 out of a possible 30, exceeding the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for Washington Trust Bank was 8.11 percent, above the national average of 8.10 percent.

The bank earned net income of $41.3 million on total equity of $517.1 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.71 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below 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.