Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to the Washington Trust Bank Conference Call. My name is Bruno and I'll be your operator today. [Operator Instructions]. Today's call is being recorded.

And now, I would like to hand over to Elizabeth Eckel, Executive Vice President, Chief Marketing and Corporate Communications Officer. Ms. ahead. go please Eckel,

Elizabeth Eckel

Good quarter welcome XXXX Bruno. Bancorp, Washington Inc.'s fourth conference morning, you, to and Trust Thank call.

Officer; and Gim, Chief Joining Washington us Executive President and and Executive Officer; Vice and and Financial Ohsberg, Vice President Mary Trust's of Senior Officer. Chief Lending Mark Executive Risk Vice Treasurer; executive team, President, Chief Officer; today's Ned and Handy, Senior are Ron Wray, President Chief and members Noons, Bill Officer Executive Operating Chief Chairman Retail Senior

Please results today's presentation on what and note may that call. contain could is statements forward-looking today's from actual differ materially discussed

the Harbor Safe and complete release, well which in issued statement Our with our as earnings that press SEC. is contained documents as yesterday earlier other was filed are

materials are Investor filings these of under available Washington trades public other website Relations symbol on and our the Trust NASDAQ ir.washtrust.com. at on WASH. All

I'm pleased Handy. host, Ned today's Trust's CEO, and Washington Chairman to introduce

Ned Handy

everybody, Thank joining morning, you, you We Trust. Washington interest Beth, call. your for our and time in and good and thank appreciate

Mary will I'll on answer have This thoughts quarter and questions well and fourth as comments financial will the Mark the about Wray to you discuss about our performance afterward Gim, some quarter. Ron Bill our current as then join environment. the us provide Ohsberg may Noons any morning

Operating decades. Trust over to and made Washington President Chief In contributions Mark past brief the I announced Before and that to of like this that retire three turn for he's to our December, we comments. as our Board Directors. Gim I'd he I'd immediately thank a few April quarterly make results, personally Mark like to has will been elected Officer to the all

member he's and look our business great of provided growth. a Board. continued his led During We key guidance vision as tenure, his forward to line strategic

market expansion role another and a Washington Mark's a key female Trust passion her. It's in operations. lending Noons, retail is pleasure will look strategic over the alongside and a her improvement. retirement. history XXX Trust played for leader, has year upon also service Officer process our President become She's the of working introduce Washington to Operating Mary to and XX-year Chief forward career a thinker, who my first growth Mary and veteran revenue excellence and I successful proven in

I'll reaching now turn balance fourth results. sound pleased the at of for Washington quarter $XX.X grew high posted year-end. in X% I'm XX% to million loans net a income our per record $X.XX report to quarter quarterly or share. and full-year XXXX, Trust Total by the diluted that

costs challenged interest While deliver increasing net success. record loan funding wholesale and customers, quarterly income, positioned the balance helped robust new quarter, the sheet balances in long-term for and attracted near net margin growth interest this

pressure interest Our were quarter strong under main wealth banking in drivers, rates both mortgage mortgage loan and expected the our departure management an income QX Wealth advisors in quarter. Rising were by administration in affected comments. pressures impact the despite Wellesley office, on revenues will from details production. previously we client on had management more lower non-interest resulting which market our of his call. of under from and the revenues from facing reported assets Ron provide levels

management associated our remedies growing committed servicing with of matter clients and line to this business. legal key pursuing are remain wealth this We and

our need those health our to other tradition provide that in quarter, assisting the continue us in support the up of were but human a service, to charitable allows foundation. slightly communities. our in This local to included housing, Expenses $XXX,XXX contribution and and organizations

to quarter. an DE&I we benefit I working team that reflect ensure and in I'm is inclusion workplace forward our with the Council launched our look proud our approved much report serve. this and we to built diversity, that the employees, ours strategic very Board to to and and communities equity, employee-driven a customers, accepting plan inclusive

as and the short take credit result to rate avenues view environment protective are in in we unpredictable be The of but and long-term continue challenging will of and We a for run, they're consider the although inflation period temporary. growth. continued, capital moderating current

We support and environment. rational to invest a to on and the technology also are continue focused in investments secure to operating talent improve ensure experience customer growth, to

turn in-depth an At Ron financial the Ron? this for point, to performance. of our I'll call review over

Ron Ohsberg

call and morning, Ned, everyone. good us today. you, you our Thank joining Thank for Yes. on

interest was down As net per or $XX.X Net income million points. preceding or $X.XX was from quarter. interest down Ned the income mentioned, basis fourth was X.XX% XX $XX.X X% quarter diluted million, margin net The share. $XXX,XXX

Strong sources. loan wholesale also growth were betas than was funded expensive Deposit mainly higher from expected. increasingly

assets assets earning XX earning The by $XXX X.XX%, million. basis on yield was up points. by increased Average

modest the On in the average average PPP bearing fee $XX XX,XXX and the margin. and basis liabilities by side, in-market increased $XXX funding the that increased collectively rose funding by million, deposits fees at basis sources quarter and XX,XXX was rate to wholesale million, added interest on to Repayment points X.XX%. income X were by point XX

X% $X $XXX of the This million XX million, income. balances, million fourth corresponded the XX% company This billion outflows down or in revenues end by client related appreciation investment X%. by reduction be revenue the QX. asset left prorated at quarter. QX. $XXX,XXX declined rate from fourth $XXX totaled million. loss is were full in or comprised approximately to due and $X.X $XXX amounted decrease withdrawals of September $XXX to the QX. of estimated in $X reflecting non-interest of XX% to in total a down the net The a AUA which management end offset partially run million revenues that Wealth million AUA period AUA of of of to over withdrawals quarterly $XXX,XXX advisors $XXX,XXX million, in The incremental $XXX,XXX asset revenues an by or resulted $XX.X these with related or quarter to down million down Turning net revenues from client or to were XX, December decrease X%. average $XXX

of of QX loss $XX,XXX. the totaling additional with been XXXX, have Since end notified revenue million an withdrawals prorated $XX client we of approximately estimated

million down Mortgage $XX by mortgage gains million fourth XX%. banking down -- down XX%. or sold in totaled by totaled $X $XXX,XXX revenues quarter or XX%. totaled or the were Realized loans $XX Mortgage $XXX,XXX loans million $X.X million

Market XX% were in compared competition quarter. has XX% and into down continued to portfolio placed sales mortgage compress the million Total by we originations preceding to $XXX the mortgage yield. originations XX%, of

at December was end Our XX% million, which $XX was million mortgage the $XXX pipeline origination September. from or down XX of

we charitable Regarding our contributed to non-interest fourth during expenses foundation. $XXX,XXX quarter, the

down expenses non-interest item X%. this Excluding were $XXX,XXX or

adjustments $XXX,XXX management wealth expenses. performance-based volume-related compensation Legal, fees compensation accruals, mortgage reflecting audit reflecting compensation. $XXX,XXX to legal professional decreases by by Salaries or expense decreased higher lower XX% increased and or in X%, and

to In real X%. from million and million $XXX offset with balance volume $XXX additions by million $XX of million of quarter, end growth as commercial Within a payments million. the C&I XX, Residential Now increased XX% $XXX from ago. or by $XXX from by of million million, was loans $XX and or loans by sheet. $XX increased total Total partially from were offset new the strong. year this increased payments by X% or increased up of September by was million; $XXX loans million XXXX. about of by or estate million XX% $X turning $XX the Loan XX, and category September commercial loans X% million fourth or $XX by

or up deposits XX to In-market $XXX were million year by X% X% by or compared $XX ago. and million a September from

million. while $XXX borrowings Broker fourth the were up down by by quarter, were deposits FHLB $XX million in

We The quality, charge $XXX,XXX asset consistent loans growth loan quarter provided fourth and the had NPL remained for total macroeconomic and in with or credit loans. reflects it credit net and Regarding asset loans of XX due strong. a trends X.XX% were million The quality and $XXX,XXX was provision of losses Non-accruing net totaled coverage XXX%. conditions, of of recoveries basis loans points allowance recoveries past quarter $XX X.XX% $XXX,XXX. negative strong of total continued in of forecast year-to-date and were fourth of and QX metrics.

Ned. I time, this at call the back will turn to And

Ned Handy

now questions. Ron, we you, Thank will and Okay. take

Operator

Instructions]. [Operator

go Our first from from your is now today is question Point. open. Hunsicker ahead. Compass Laurie, Please Laurie line

Laurie Hunsicker

with been on working Board, you just Glad staying the I say best. And Mark, wishing you're lovely all just Mary. the to welcome it's want -- and I and you absolutely

maybe and how forward be funding, helpful. CDs using Can there. like? will margin start can that And can margin you of on guidance spot we take And So super you what would any trajectory brokered December? thoughts on us there spot give maybe the for your to continue, through look that the month us a going is

Ron Ohsberg

Sure.

Brokered CDs there's CDs lower So from funding And what lately CDs and it's lower we less trended kind out sources. inventory fungible FHLB, always We separate we out but view call cost deposits. in-market we of there. than brokered FHLB. and FHLB; brokered view -- have that

all advantage I So that a instantaneous. would of we can the more is full collect. And we little FHLB brokered say would take CDs

them. same would competition as more the a get out those to call; in funding you as You there's would much It's can. little I CDs harder we we and to those brokered day. say But in the get market rely the get on

in range guidance at of $XXX for million the a quarter looking million. to first $XXX We're about

Laurie Hunsicker

you can know $XXX balances it came remind was CD September, brokered me then million, where And just December? Great. at at it your I in

Ron Ohsberg

Yes.

Laurie Hunsicker

any I get go offline. thoughts you Maybe to ahead. with follow-up can I Or just wanted -- that.

Ron Ohsberg

of December. end yes, million Laurie, at $XXX the

Laurie Hunsicker

Thank your parts? on obviously about how for Thanks. Great. on XXXX, the just plans also how expenses, then, that should pressure full-year we that? branch lot growth you. at comment of lastly, And a slid just And should all about you Okay. or with wondering can we has expense think expenses think moving

Ron Ohsberg

Yes.

guidance X.X% And keep our we payroll we're resets and quarter. have we'll increases implemented at in mainly that looking first those a QX. things. types in of merit to think I X%, So expense, tax as the increase Mainly on

have that million the new branch, and coming the open the we full-year, year $X new the expect was the on that's those And not million. later we run $X.X XXXX will insurance expense For branches in in impact that rate. also at FDIC branch

Laurie Hunsicker

Perfect. Thanks. I'll leave at that.

Mark Gim

we I'll of long-term deposit the of scope. this radius I Laurie, Mark. the branches opening on timing. -- the against and just balance is value in the gathering to expense comment our have short-term branch increasing

a of are in environment funding priority cost base, which we challenging to against trying So remains balance of near-term I mindful strategic us. value our a think the for long-term improving economic

of part are Branches that.

is we strategic from deposit So point cash on focus gathering view. have commercial of and substantial a management, really that a and

would might little, opening branch really vary as opposed near-term desire to So it minimize when cost. be to timing but on based more a feasible a it's

Laurie Hunsicker

Thanks Mark. Great.

Mark Gim

you, Thank Laurie.

Operator

Thank you, Laurie.

from now Mark, go ahead. next Our Piper Sandler. from your Please Mark question open. line is is Fitzgibbon

Mark Fitzgibbon

Congratulations me role. comments. Good to Mark you. and your on echo Thank also new to morning, and congratulations Laurie's everybody, let Mary

Ned Handy

you. Thank

Mary Noons

you. Thank

Mark Gim

Thanks Mark.

Mark Fitzgibbon

thinking about you're loan Ned, I wonder how deposit help us ratio. your you if can about think

X.XX its think likely on Is I that sort loan sheet serve of in coming as governor quarters? growth a balance to right now. and

Ned Handy

got in funds a think growth prospects Yes. better in I in don't think serve we've fashion not pipeline have I to not to borrowed base, and growth at -- think fourth as our huge had and us quarter. certainly historic continue I the marketplace. -- need recent in source strong we're the we perfect available so. was we when on time the scenario. resi commercial deposit to and And increasingly customers fund loan deposit that than a in focus the quarter a so strong as We gathering, pipeline. have mean the the to strong we funding -- expensive we been Mark, Obviously loan and/or to able

we service a and of the on at stay stay be for So We on is run. short that long-term important. And important. see focused need that of But side some focus in end to can't when them, Serving day, choose the the think to to do have customers loan positioning the reducing near-term. in question, governor. I point, deposit in loan-to-deposit side think I could ratio. continues the it the the to sheet growing balance we the be active. We marketplace the more the become at than don't

Mark Fitzgibbon

Okay. catch-up like wondered know historically of been your I as just are high I it the just thinking let side if sense kind going about they've made we're not slow as was more capital loan ratios difficult deposits into growth particularly capital a may period. little let bit economic I guess TCE ratio. regulatory ratios XXX good. if the of look to ratios be to build, on and sort I But a

Mark Gim

in this is terms to how long-term Mark of about the So it a loan take Gim. opportunities. shot I'll Mark, and growth kind question just of we think at try of

changed not the economies all, worsen have if and and XXXX U.S. the into slip at quality and credit environment in of we're economic recession. global Our standards very might mindful XXXX

commercial the might seeing not we on. high to have for very house on said, opportunity some from before, we relationships to credit we are And is side who the particularly the opportunities ability not we of who we're have those That think the that when customers need had establish something of follow-up seen long-term, quality.

comments I'll again, But capital and with long quality ratios. the and that proactive on turn with before Ron our risks potential we're capital to it between regulatory identify happen. -- very to for on a we're very focused they credit TCE just, about trying comment difference

lightly. we this So don't go into

Ned Handy

where point at was of growth resi those large a Ned. strong prior a And and in not the the the obviously, we're fourth the balance hopeful quarter some we we'll selling loans And that Obviously, much have back and road, is lot two as resi. Mark, the the growing point sheet of this at high-quality asset down majority in we're quarters. be as

will that it's is when So happen, anybody's obviously rate-related. guess,

it’s have to and those good front? the thoughtful So think angles on capital we question, about be Ron a I and all

Ron Ohsberg

fine. Yes, about that enough And is. your been is to share of it Mark, GAAP as growth I the we've Yes. we regulatory support capital agree have capital know kind we we that capital do concern booking. believe I still

capital the that as far have As implications. residential favorable those regulatory

our on any the activities. capital for So side I us necessarily don't to see the curtail or side funding reason on either lending

Mark Fitzgibbon

risk another view It question of the is relationship those looked it wealth quarter, there's million million full Okay. sounds much you is like $XXX beyond realistically leaving? had side. on at and with last coming in leave How $XX then, like. this people, your And that

Mark Gim

So difficult take leave. we It's to as will Mark, this predict Mark. is that how I'll much can. as best

to with even non-compete -- the be that to will that with having we doesn't them we're are us that in though know they service ensure been being know, for they in -- to out clients clients you necessarily remain very a active firm As have serviced. agreements place us non-solicited remaining will reaching to continuing they and time

to it's So hard predict.

would runoff don't end in -- I we to that closer beginning, certainly much say think to the specific any guidance. of the it's we're have give we difficult but

Mark Fitzgibbon

know what's you billion. past that? it's the the I group that mean not of four book to for people sense did we But sort of of size a going have us a go were? total $X of can give that Or relationships

Mark Gim

Yes.

approximately XX, think As managed September disclosed, billion collectively, they or of client were associated as how in And I there. withdrawals are Ron disclosed about $X of asset XXXX. with has assets much

at who much we I is matter, a what try to clients, in refresh continually time will a As to number reluctant have risk existing they stay we we're affirmed guidance with while outreach and practical for But to we're us how being. our very out measure and those remains. as -- to efforts, give outreach the that our of confident think

Operator

you, [Operator Instructions]. Mark. Thank

line Damon, now ahead. from open. go question next from KBW. DelMonte is is your Damon Please Our

Damon DelMonte

Hey, here. with everyone everybody’s welcome meet Congrats, echoing good you you thoughts the forward and morning, future. and Mark, to look getting Mary, in and work to

Mark Gim

you. Thank

Damon DelMonte

a to the of stabilize and in Or how quarter, Does about that? trend this first wanted point should first So course does back Or XX you little give you're off we on I here million margin the guidance forward start quarter. said hikes? actually rates I kind reverse the raising here just point? more million circling think to $XXX stops Fed and it up? think more assuming the in to the two you Can at maybe outlook. guidance basis expecting by $XXX Ron, bit margin start

Ron Ohsberg

Yes.

think couple stabilizes the still which have a QX. it the QX in dip of quite kind lot a the come, We quarters. to over best case; I of of re-pricing first next bit kind and of explains liability quarter, between that of

ways a the of out interest of So number year. we're mean there's I about the a little different could play rates this. course guarded over

a of we to stick why now. to one just that's really kind time quarter So prefer right at

Damon DelMonte

of production? you what on the on you're getting Okay. loan those? color the yields coming loans little new rate kind that What are books, give of the new on Can a

Ron Ohsberg

Yes.

commercial So X.XX%. at weighted X.XX%, loans a in came came in the average about fourth quarter, of in mortgages total about

Mark Gim

rate then quarter, mortgage obviously, the And coming loans average short-term to trended it's a production important commercial higher the are to that have are the October. at LIBOR-related reflects of you decisions. current lead sheet that perspective, prior XX be maybe they a book of also a up days, time for balance going Damon; the December in as locks XX in in means might balance portfolio the Mary, rates note at rate some on rates sheet the can hitting days give that the And are will that were typically indication our than ballpark. from jumbo be loans that terms pricing XX to mortgage what

Mary Noons

Yes.

of I'd So and will a the dip increases costs quarter what had across rates, for because in in certainly have seen be adjusted the rates implemented Even we've not you higher went mortgage this that conforming Board funding portfolio overall rates. our year first though say quarter saw in as fourth we up went rates we rate up. the

to first the quarter. attractive will for be those So continue

Damon DelMonte

Got it.

this And past around cumulatively XX% guys quarter as That's quarter, Thank beta your total about deposit deposit think then, you. and Okay. around helpful. I you your XX%. betas, was linked sold think

beta kind you funding out? first see costs do in With your playing big quarter, like the the overall cycle during here of ramp-up expected what in the

Ron Ohsberg

out competition beta have to with call, a clearly, Yes. But this on lot don't Damon. calculated is there. a share market you I number of there

And I will asking that nature the to the say I exceptions competitive. We -- think grant of on think betas deposits retain we go relationships, just will have those the customers from rate let's here, coming up depending it's that. for in

Mark Gim

little little Damon, on to is a to that. try give I’ll I this Mark. color if I'll try -- a give can,

cost the maintaining front on as side of lower public but keep retail consistent edge could fair for ways. those those has with an municipal and fund different institutional to two as funds deposits, deposit stance Our customers Probably rates type between providing betas at and eye to we the been highest the view of practices. perhaps one rate or can, competitor be not retention to are

for higher example, released the but are to at As with non-interest-bearing to states, short-term, in. in the cost ARPA for type a also opportunity been bring funds get there example. has bring certainly They in to bring opportunity those them relationships,

And value while on high those betas the in yield we inverted be and see on in those environment or the might so curve either maintaining flat Board. them then bringing to long-term,

have commercial it we than in and letting as but funding, on accounts, while that on beta the long then losing grow business interest-bearing So wholesale walk priced or opportunity equally a rather using higher kind the relationship. sound to try of it a side, to renew view to we maintain run potentially the municipal the

Ned Handy

about have and to short But are Island. We've relationships of that be relatively those of deposits We'd in third the like with a we're Rhode cities State got in towns Yes. on seeing run. success the front. the more that expensive and

or tend deposit DDA to On interest-bearing come they operating side, accounts accounts, accounts. the do with

might strategies betas the short one of in again, that's point, they that be up. several Mark's helpful in the drive we to long run. run, hope will But So

Damon DelMonte

million. kind mean to of in at belabor notes sizable came I'm mean my like last here. connect here. guys -- on think and pretty trying million for don't dots the I looking But to from the And discussion million quarter, quarter, the fourth the of a I guidance to Okay. turn was came that's I events. it back $XXX $XXX at you the just $XXX margin

the is was pretty to Is tap loan and just just margin? sources you simple? like fair and So say it it to -- impact much immediate growth higher it really funding strong just that on and that forced had the outside you're cost

Ron Ohsberg

what That's happened. exactly

Damon DelMonte

growth right. All on loan appreciate Okay. outlook. just I then, And lastly, that.

portfolio? guys You expectations for Any on into pretty optimistic full-year seem guidance the XXXX. here overall of going kind

Ned Handy

kind Ned. Damon, is of then. level. The Yes. the at It pipeline grown was It's strong. year-end, in million $XXX it's strong since

seeing We we sort of So be we'll opportunity. are again. in think the growth mid-single-digit range

payoff a We off on have the tapering somewhat side. seen

be helpful. So that could

got a going ramped early we'll year, see we So yes, Last year. we're did strong think the And end some of up of the part pipeline that's into going last frankly, better strong year with we think year, the than to the I year towards I momentum. we've growth see the growth. in but

bit want course and think to I Mary, you will out comment little strong. be year to resi? spread it a do continue on So of the over the be more

Mary Noons

Yes.

But we What we resi, a go for in believe have will XX% that, that's I'm have, for to working what lower on So certain sales, for I portfolio. increase and is already salable hit outlets we're increase a for we're those. channels volume our hoping yield and -- avenues. curve our little a more on structured very in diverse salable fronts hit the to a have have just our to kink we outlet; multiple little production. We've

production. strong to is our and very have purchase we'll in think market way. stay that I purchase to it's the and market strong, anticipated We're very region So very oriented

Damon DelMonte

you you it. thank questions. Well, Great. all and color Got for taking for the my thank

Ned Handy

Damon. Thanks,

Operator

for have hand final comments. I go ahead. Thank We questions. Elizabeth, speaker currently back you, to our will Damon. now please further no

Elizabeth Eckel

Ned?

Ned Handy

well for to always. again look and you to time, we'll your all as in coming you forward focused down us. your on thank serving joining quarters. Well, interest our and appreciate the head customers be We Meanwhile, and talking we

day, have So a great everybody.

Ron Ohsberg

Thank you.

Operator

and this Ladies today's concludes joining. you call. for gentlemen, Thank

now lines. You disconnect your may Thank you.

Washington Trust Bancorp (WASH) 26 Jan 232022 Q4 Earnings call transcript