Washington Trust (WASH) to Settle Lending Law Violation Claims – September 29, 2023

Washington Trust Bancorp, Inc.’s (WASH – Free Report) wholly-owned subsidiary, The Washington Trust Company, has agreed on a settlement with the U.S. Department of Justice. The settlement will resolve allegations that Washington Trust violated fair lending laws in Rhode Island between 2016 and 2021.

Per the agreement, Washington Trust will provide $7 million in mortgage loan subsidies for mortgage, home improvement or refinance loans in specific census tracts in Rhode Island over five years.

Also, the company will commit $2 million for focused community outreach and marketing efforts.

However, the settlement does not include any civil monetary penalties.

While Washington Trust does not approve of the allegations, it has agreed on the settlement to avoid expenses and the distraction of potential ligation.

Also, WASH wants to focus only on serving the needs of its customers and communities.

Edward O. “Ned” Handy III, the chairman and CEO of Washington Trust, stated, “We believe we have been fully compliant with the letter and spirit of fair lending laws, and the agreement will further strengthen our focus on an area that has always been important to us. Rhode Island has been home to Washington Trust for 223 years and our neighbors count on us to provide affordable loan opportunities no matter where they live.”

Handy added, “We care about all of our communities across Rhode Island, and we demonstrate our commitment through a number of proactive state-wide and corporate initiatives. For example, our Washington Trust RI Community Lending Program offers a variety of creative affordable loan opportunities, and our financial literacy and educational programs help potential borrowers prepare for home ownership. We believe it is as a result of our proactive community efforts that we have steadily increased our lending in Majority-Minority Census Tracts as we’ve expanded our branch network.”

Handy further said, “As the oldest community bank in the nation, we were founded to provide people with a trustworthy and local financial partner, and that mission continues to guide us today. We deliver a consistently superior banking experience to each and every member of the community, and that contributes directly to our solid financial foundation and the steady performance that we have achieved for more than two centuries.”

Over the past six months, WASH shares have lost 21.6% compared with the industry’s decline of 6.8%.

Currently, Washington Trust carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Financial Misconduct by Other Companies

Recently, Goldman Sachs (GS – Free Report) agreed to pay $6 million to the Securities and Exchange Commission (“SEC”) for not providing complete and accurate information in the blue sheets, which contain information regarding securities trading and transactions that are provided to various regulatory authorities.

Per the SEC’s findings, GS made more than 22,000 inadequate blue sheet submissions between 2012 and 2022, comprising 43 different types of errors that affected more than 163 million transactions.

The SEC stated that GS did not have adequate processes that could verify the accuracy of its electronic blue sheet submissions. Moreover, per the SEC, Goldman knowingly violated the recordkeeping and reporting provisions of the federal securities laws.

Hence, GS agreed to pay the fine levied on it and has undertaken remedial actions to rectify and improve the reporting systems and controls of the blue sheet submissions.

Earlier this month, a lawsuit was filed in the New York state court against Morgan Stanley (MS – Free Report) by private equity firms Certares Management LLC and Knighthead Capital Management LLC. The firms claimed that MS used deceptive practices in relation to a credit agreement investment for a luxury high-speed rail line.

Certares and Knighthead claimed that MS illicitly restructured a deal by which they invested in a loan to Miami-based Brightline Holdings.

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