WASH - Earnings call transcript Q3 2017 | Washington Trust Bancorp, Inc.

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Operator

Good morning. And welcome to Washington Trust Bancorp, Inc.’s Conference Call. My name is Melisa. I will be your operator today [Operator Instructions]. Today’s call is being recorded. turn over will Elizabeth I now, the to call B. And Investor Vice President, Senior Relations. Marketing Eckel, and Ms. Eckel?

Elizabeth Eckel

Thank you, MarcAurele, Senior Ron Trust President Chair, will Treasurer. and Melisa. Secretary Washington and Executive Executive and be Conference Quarter Chief Financial David hosted Vice Call Chief XXXX and Operating President by Devault, Ned Chief Ohsberg, Joseph Officer; Washington Officer; Chairman Bancorp Trust’s Handy, Inc.’s Vice Third and Officer

actual results we contain and Before please forward-looking today’s note differ may presentation could begin, that materially. statements,

Our in and Safe the WASH. introduce Executive symbol and earnings in on entire Investor washtrustbancorp.com our other visit pleased our now Washington Harbor with Trust’s Joseph I’m Chairman and at Relations Safe Please trades statement NASDAQ filed to Statement Harbor under appears materials Trust Officer, Chief to press MarcAurele. review Web site the documents release Washington SEC. these our Trust Washington

Joseph MarcAurele

We quarter third earnings $XX pleased million what of or XXXX. a had good revenues. quarter, questions you released to $XX.X performance. morning Ron any Trust you, quarter generated another share. have join will prepared on we will afternoon, and Trust’s record total insight David thank about Beth. quarterly I report for provide Handy Ned or comments, the answer you today’s our Good us Ohsberg, may Yesterday I per our our and some for into am Thank ahead our This to million joining morning, thoughts Washington call. us After and results earnings. lies and remainder third that in conference diluted Washington $X.XX

success allowing were to lines. maintain profitability us continued our our solid growing at reflects business streams results, our integral metrics. Diversified to strong quarterly revenue performance key Our

few a me positive Let quarter. minutes to for some the highlights discuss take

quarter. There a normal some commercial up real during X% payoff industrial quarter. portfolios. the quarter, in had robust was activity run fairly seems were Commercial was to during and loans commercial more estate through rate. second the and slowed loan but We it from the growth total First, both activity have

pipeline remains XX% loans than refinancings we were quarter. the with a the fourth prior and almost good our year business, production commercial more Our into X% ago. offices. ago. were outpaced Total year the residential Massachusetts healthy from total quarter mortgage Rhode from loan heading the are for during portfolio up and activity a Island, Purchase ahead our quarter mortgage where In of from originations year Connecticut

the mortgage been activity into look we quarter, application fourth has As steady.

$X.X institutional promotional result reported for good quarter deposits money is fourth This third entity. dip and statistics. and development rebound also So large outflows then, increases we’re quarter the XXXX Business optimistic the market from we contributed was October, highlight was in from the efforts In from seasonal which as market which nice a notable share XX, FDIC quarter. both deposit released to demand and the June accounts. healthy of a governmental X% a in total we have deposits, quarter. a A previous balances, that is record billion increase deposit second in

market. when part been in in continue We’re we’ll of within strategy America a Trust new remain and convenience branch build competitive of growth. funding a the challenge in Bank and a existing generation off state. central Coventry, state-wide new to It November, open The Deposit to expansion key relationships. through of share Washington our Rhode branch location growth our pleased the in maintained branch has Island, again Corridor that Organic the key we additional overtime. share early for network, three XX a part and fills of state. Coventry behind deposits our expansion Rhode report located our Citizens In a of our gap increased market is in rank the once just opportunities existing does number loan a highly as deposit source within Island branch for well as customers, future offering

We’re continue year-end. the will pleased through third growth quarter trend and with hope our

Our wealth quarter. had a strong division management

the As reached record and management financial closing to have markets, may signal the high financial David from discussion assets review over turn for both levels, resulting that management note. record from our recent the And a stock division under market, and an the the results. both end should revenues David? administration wealth year surging now Dows’ I’ll wealth market. in-depth appreciation, benefited on clients of our our high

David Devault

$XXX,XXX of the $XXX,XXX second net results Net the I’ll income margin, The operating fee per income up compares quarter. these $XXX,XXX The and review item, $XX.X in quarter and financial million remain revenue prepayment basis was our considered That impact Thank the income second interest was press third described second also $X.XX everyone. release you, diluted points as results. our for The the or reflect of X.XX%, expense net $XX margin, the was results to equity quarter. share latest return compared interest strong Good position XX.XX%, quarter Included of of latest most XXXX from Net in $XXX,XXX. in with a we quarter across non-core. Joe. in contributed the X.XX%. quarter. morning a Increases in with yesterday. third be issued the which $X.XX metrics by of was to profitability X assets return to decline categories or interest on in quarter. on quarter

on basis. declined by up income prepayment net linked amounts, in and The X point, about fee margin to assets earning down income yield those on million, a Excluding X.XX%. basis on and investment loan interest rose excluding assets X by point by X the average balance earning interest interest The $XX points X.X%, in offset the basis quarters, assets a growth both was reflecting portfolio, X% decline by yield was by interest the quarter securities. earning partially average of in basis increased

declined Loan wholesale seasonal broker side, and wholesale $XX balance funding in-market the deposits, including outflows Federal of towards quarter. Home $XX second million points by borrowings just wholesale deposits quarter, and while by deposits end cost meanwhile cost increased second wholesale all basis basis balance of the in point reflects deposits, the and that the deposits end was the the On average million X Bank rose of which the the includes average the sources, broker the The the basis market up less quarter. X by latest of of points XX in funding funding

X%, stands market of assets Wealth The with banking fees, appreciation level related in had quarter. the X% second of volume management service revenue based second up typically balance million million, and from X% commercial good rebuilding modest was a primarily a quarter. important, increase Loan about was increased the institutional were in and Non-interest to in we basis. sheet; at $XXX,XXX into also X%, a management there concentrated loans quarter external charge related portfolio in quarter the basis. $X.X X%; the XX% matter. fraud just those it latest And under was by In That latest of in relationships, up decline revenues, income revenues isolated was a In a our by Investment the was total XX% total derivative good seasonal quarter asset represent represents $X.X million to the million a income latest the secondary market non-interest second second service the market and of to portfolio $XX some the $XXX were linked be to loans the and strong in X% by offset by second by by on wealth quarter. up million, related latest the the total at securities. expenses, following assets by increase record be C&I declined residential the Included decline was management are $XX as we the deposits end Wealth in for a The quarter shape. from increase to X% rose under pipeline revenues of the X%. benefitting an securities fees, includes up $XXX,XXX the a real-estate On mortgage very increase; $XXX,XXX portfolio. managed governmental X% linked outflows the over $XXX,XXX quarter. at income X% rose which quarter. consumer backed assets. on securities third rose X%; sold of $XX by Total quarter. very billion business tax administration municipal quarter, And due mortgage increase during $XX X% the loans consider the over million, mortgage in a second rose from Non-interest amortization and quarter increased by deposits saw on quarter on depositor the total continues quarter. the up was in quarter. called

expenses that linked charge, basis. Excluding were non-interest quarter a about on down X.X%

effective income stock-base is current Our of fourth depending in tax excess benefits XX.X% in about the could was quarter XX.X%, the with incentives. and the associated forecast settlement for that on the rate amount effective tax our vary the of rate

past XX X.XX% of X total to the by quality. X.XX% points XX to loans asset at Looking of basis at by or due Total basis September. delinquencies declined only through non-performing end loans one the by And loans charge-offs September, quarter charge-off days credit. of declined charge-offs were estate more, $XXX,XXX, loans amounted for commercial loans to including Net the annualized an X.X% of end on basis. average on total of September. And $XXX,XXX have net at real points

in required at for be X.XX% $X.XX declaration our back that the loan XXth. $X per second point dividend X the this CEO, At the total to on and share, September. time, levels assets consolidated end in September, paid Joe our third million October for The end MarcAurele. the shareholders’ capitalized. that subsidiary to Both rate the and the provision in was of of and during quarter. the $X.X $XXX we total Total And continued X tangible up The quarterly loan exceed the to tangible $XXX,XXX corporation stands With to increased by well quarter points ratio down at and and capital risk call losses was by million, XX.XX% I’ll in up based $X.XX bank X.XX% stands quarter. allowance ratio of for dividend was capital the basis million the the was turn the September, quarter. to at equity by Chairman equity Our quarter. considered corporation levels compares losses loans, the basis at

Joseph MarcAurele

on as Chairman contemplating have is it’s given and and the to XXXX. at David. Ned honored who recognized you, role for past me top place, over obviously done as David President last over on on the us take like for today’s is moment XX, January Officer the X, CEO take intention all of David. some me decision. country. XXXX. early professionals, years XX been to to as several conference could and will a ago, retire one would XXX will Chief us I Operating And on years both from Officer Chief would Ron Handy, comment that who for my and for Company. serve has traveling been will years. and Company it’s was Financial take easy Ned’s Washington retires institutions our weeks without been and a is few the some Mark job not Chief years Devault thank -- to I call I Operating financial This changes Officer, in announced I, over retire as A I’ve Chairman has Trust Ohsberg Devault, leaving Chief will has time. corporation. particularly David as Executive leadership work President faithfully to when today, will Thank not why in of like join to and XXXX. the the served joined to personally currently Officer. some David was over the But David I for help Gim, he who’s alongside around place take served who and and outstanding an just succeed March unable several I when special and which David as Treasurer, have retirement

As the Ned, David, thank again, have I Washington travel, of bags management particular. had you confident, team to years time morning. successfully often I leadership I Thank team guide very ahead. they his and confident in Thank any are of we’re will the for David Mark, Trust support given and for Ron this me, all you. your the now, and questions. all answer the that to your entire And packs in And help Ron happy Ned,

Operator

you. Thank

Thank Instructions]. the will begin question-and-answer [Operator We now you. session

first question. & proceed O’Neill question Mark Fitzgibbon from Our comes the line your Please with of Sandler with Partners.

Mark Fitzgibbon

a your retirement And of on I Good luck press you congratulations best I in mentioned Dave, question wonder asking and Mark could about roles. Ron, your and if in that Joe fraud external the start quick and Ned, morning. new by the release.

maybe could us give might and coming be a that, that? little pipe the there down on you whether any more If detail additional on charges

David Devault

It's kind of unusual item. an

don’t -- item additional I continuing it's for cyber We’re to just matter. any it's exposure. the I problem, consider a internal through we be to can it an is us. control unusual an don’t nor work not matter related believe there say and

Mark Fitzgibbon

long Was event? a related it

David Devault

system. it the has to No, do with to banking a something fraud perpetrated

Mark Fitzgibbon

by Were other it? institutions effected there

David Devault

No, no. the answer is

Mark Fitzgibbon

Okay, on you just detail can’t give it. more

David Devault

the and it there hoping that some we’re through work future. at in will be to continuing recovery point some We’re

Joseph MarcAurele

that quarter potential This point. to charge happened of but really it. and this we working isolated don’t took We we feel Joe. event we was this. like wouldn’t just is now, this with that through the an extent that we one about of predict recovery be working is we’re too are that, the that at cryptic this incident through want Mark want And to a

Mark Fitzgibbon

couple wondered secondly to then think over likely margin can net next the about that’s And I us interest if quarters. you trend? Where help the Dave, of

David Devault

in the future representative the at assuming the the that say of on and trends was And higher as the we both increase, see pressure, to which effected banks would that next other are a happen expect community some costs look well. we you in would we rates Without in fed saw Sure. quarters, growth third what them I fair as reporting a northeast, few regional of number deposit deposit us rate quarter fairly helpful. loan that

And be depends But deposit period of flat funding costs so basis margin that. couple on again, time. of increase overall, what over the that could about improve would that next a that be would the fed rate I would potentially on of quarters, rate say, during

Mark Fitzgibbon

on results curious banking else there. peers than then you have of had better is or more mortgage something the volume you your there? And there the you purchase is think line, much peers, guys some than that because just I'm

David Devault

secondary market the has of portion purchase The good. originations been fairly

And origination system a refined able is individual to who well have business overtime believe we the diversified investors what investors. our of are going have buy meet good a and of our a -- We with know base to product. run be we product needs our to

also Southern good and We in the operate in market a area Boston other New England markets.

works just us. for So it well

Ned Handy

it’s Ned. Mark,

been I remains think has plus David very is Boston pipeline been supportive, Connecticut right. the The has robust. strong, market fairly

if which said, expect do quarters next as great -- the be own, and be strong. branch dependent, refi those are, to in independent they And not purchase we so, And market. we continue itself their to And few business. are of to David will, tends we the contractors, you to networks to well they’re have

market. taking advantage full the So they’re of

Mark Fitzgibbon

of much wealth on the way side? management seeing are of lastly, you then the opportunities And M&A

Joseph MarcAurele

lot we of age is a the price business with those the structure in it say probably little I wealth that things on a really companies management has can frankly, how something is that we We this lot I like Halsey and things of us bit restructured that. geographic shown a deal. for us. that. a and comment Joe. to prejudice quite of that And have things principals distance the interested. these to would the we the do like would striking like is actual to the a remain within of be consistently. way fairly are, -- with us it these We We principals, a keeps Mark, if

certainly as would So that we forward. we go yes, consider

Operator

line from DelMonte Please Our comes next of proceed with question your Damon question. KBW. with the

Damon DelMonte

drove first you putting estate my So quarter? kind on? talk dealing you’re credit What guys and commercial Could of the question a just classes with of what little growth. loan about growth real types bit during the asset

Ned Handy

estate $XXX a real commercial are the towards the across new bit during on we about property mix had, Probably originations million. and the construction. side. We board multifamily and good a commercial It’s little side, had quarter,

million some have still did about payoffs the we unexpected quarter, So $XX in payoffs.

formation that payoffs have our the and taking I very rates new some real the top office credit estate still Island, think in strong. within be advantage some Rhode all short of the distance. well highlight of market. selling and striking very mostly was So so was the to where borrowers Those all continued cap at But multifamily, construction, are retail, Connecticut, Massachusetts

more say but borrowers to broad than I participation participations would Some certainly. direct

and had loans in during C&I So for balance I the mixture. XX million so CRE new pretty on about, construction $XX good -- think between million $XX credits, a million let’s good quarter C&I C&I us. about we had see, We in advances about and

Damon DelMonte

as growth, payoffs we the And half Obviously, struggling probably ’XX. you and of first but origination this the into the more the was go on year, as side. quarter then look you’re into of function fourth loan for it

So the what you and as into quarter fourth XXXX? go do into you seeing

Ned Handy

more slowed refinancing fair those formation. was million, somewhat, an we’ve rate keep growth have actually are into at get be share of we with You’re to pretty that for CMBS. about or either credit XXXX. there $XXX or for companies year. selling the point. They the we loan is about And and long-term team continue And which payoffs deals are going activity why won't think generally correct. projected busy. is to on pay-offs we our Joe’s The The eye have so insurance to non-recourse still that. good earlier reason us. don’t digit We is about new It see that any we'll than mid-single hit this pipeline But

keep keep we wanted So if or to. that wanted deals should they’re we if to we could

turns. have rather the past, I've than said early challenge to ongoing too the extent the And too going the So real-estate to as to in be loans late. portfolio pay-off that's which

So deals. I'm replace hard that with okay to and high-quality run

Damon DelMonte

that If related And other charge, question base is build-off this to a going forward? of core we out expenses. to fraud then my take $XXX,XXX is relates good

Joseph MarcAurele

one would nothing I so. that the would I expect There’s quarters? few than that mentioned. say We numbers growth those unusual other in really item over normal next

Operator

[Operator you Instructions]. Thank

your question from proceed Please next Compass the Hunsicker Point. line Laurie with with of Our comes question.

Laurie Hunsicker

to it to working Ron, David real been echo I of best Joe a luck, that, and Mark want just makes pleasure say and and and it Ned with guys, wanted you has just special. congratulations

So just this really for much quarter. that annualized Obviously, a XX% going back participations? How loan of to moment. was strong CRE growth was

David Devault

The me, don’t of in exact dollar amount I front paid, it. have may but have

Laurie Hunsicker

can of it back And with I Okay, resi you Massachusetts. know offline. then Any quarter your the purchased residential loans, you follow-up have growth in question, purchased? this same book I primarily

David Devault

done quarter Laurie. we any No, this purchases past haven't

Laurie Hunsicker

that And I about mean of overall loan should guess I How for next growth, quarter annualized, linked park. you’re as your think overall it about just we we hitting XX% think the out year?

David Devault

we get But think have that year, that digit. don’t the into we Laurie. think year I we next I mid-single numbers do year-over-year confident will this solid for feel

little better would the Next our don’t be But us see for year. growth goal. hitting a year, than we if that, that I could do annualized next bit that XX%

outsize think an be number. would I that

Laurie Hunsicker

Okay.

Joseph MarcAurele

the participations Laurie, back down to million. $X actually the are quarter participation by question, in

Laurie Hunsicker

total what participations? So, the was

David Devault

is $XXX the number the Total is in portfolio million quarter. -- for

Laurie Hunsicker

was much of how put that on this quarter? And

Joseph MarcAurele

net during the The declined by in million Washing $X banks Trust’s in loans change other question. by participation led

our self originated is increase that the from products. So

Laurie Hunsicker

same $XX quarter. million Of the

-- lot mean the loan And had to fraud? -- understandably charge here. that so of so there that nothing expense anything you provision about was appreciate loan the obviously, I have growth the line? anything loss related was the I disclose over a there the it. line going you in get you in provision a chunk the so fraud Was to don’t But down in non-interest But provision, in was related provision want anything loan there there and line. I fraud was loss

Joseph MarcAurele

Absolutely not.

Laurie Hunsicker

wealth the you But And is a can just charts. at just off management -- bit, then look as outflows. your you have little comment larger you

about outflows $XX This that? net around client around quarter, Any you million. had color

Joseph MarcAurele

outflow in Rhode Laurie, are Island, of one things some older is the we to that Southern face on perspective of particularly from say balance, an that our accounts part are I in extent. and customers would mode the that a of depleting somewhat their

that It’s have lost things part of the constantly not more of issue. one that battle. our we account really to it’s It’s business. about So a

we we a as relationships, So that’s that to of very continue through forward. extent what important new the can we grow part go to do developing

Laurie Hunsicker

the -- question, Mark us And share at I know last you acquisition. you’re currencies in how and then have asked RAA, you just the one looking about strongest that, the of in shelf. and Can potentially you every you New X with asking about can almost an filed share now quarter, obviously, times. us almost you’re we’re you’re that how thinking now acquisition? have but England, with But this And

approaching Just you how acquisition are that bank potentially?

David Devault

either management the talk Joe at shelf capital. appetite or we raise The that to overall in have potential position that to Well, It’s in banks part ability our I’ll the something debt have about something that regional the was really was way the is look capital acquisitions. community issue decided we have let and and we to needed Company, place, of strategy. most to

Joseph MarcAurele

on we would from would efficiencies get that to grow we of something I a an from. that in what level felt -- obviously, is could cost bank and look we acquisition the is would side Laurie, be some whole say, perspective market

One to England. very a had of favorable loan is something very would lot to attractive There of us not the we’ll things be ratio. that be in obviously a deposit New that that

before, having So reasonable of think say extent we do. we function is a very it’s we good to conscious of that to and of are also And very we’ve to. dilution anything it’s, we with would type do stock And even said mindful how, currency, would something certainly though are value that we’ve of our I could price. franchise an as add got I the

Laurie Hunsicker

how would us that. question last smaller deal think in around large asset parameters at on of side, terms how just and you about? Would you remind of you And look the would

Joseph MarcAurele

at we I they it. not it would the things doing that see an made that approximately worth do a are sense. level us or say be do the that close deal to Well, some $X things bet enough kind that were than $X.X we’re smaller would if we necessarily clearly, are was do somewhat $XXX million. that But of not would would Halsey to things don’t side. to would think combination whole billion the a on if -- bank us addressed bank billion you I

Operator

session. This concludes question-and-answer would any back Joseph to the MarcAurele over closing you. Thank turn like remarks. our I for conference to

Joseph MarcAurele

everyone Thank and feel Great. to though think as for today. we momentum as year-end. participating We we’re going you we we through had quarter a solid good very have

variables. Looking that our appointment affect there fed obviously, ahead, rates. interest tax are effect some chairman a of may obviously, know We could whole reform, And the potential new industry. on have

also We think Company be confidence and team, continue lot in I of to remised confidence diversified to in if confident I the positioned economic success. navigate I’d we’re our in swings and I helped of well through those new continue model. didn’t personally past It’s the business us our whether say changes. is we’ll a that have that management lot its have a

So very thank much. you

Operator

you attending presentation. Thank conference. you. concludes Thank today's This today's for

and may have disconnect, You wonderful now a day.

Washington Trust Bancorp (WASH) 24 Oct 172017 Q3 Earnings call transcript