WASH - Earnings call 4 2023 | Washington Trust Bancorp, Inc.

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Operator

Good morning, and welcome to Washington Trust Bancorp, Inc.'s Conference Call. My name is Seb, and I will be your operator today. [Operator Instructions] Today's call is being recorded. I will now turn the call over to Elizabeth B. Eckel, Executive Vice President, Chief Marketing and Corporate Communications Officer. Ms. Eckel.

Elizabeth Eckel

and the Washington XXXX. fourth morning, conference Bancorp Good for call quarter you. welcome Trust to Inc.'s Thank and year-end

us President, Chief members Ned are Officer; and President this results Trust's Senior from Operating Officer Joining team, Executive Ohsberg, executive Vice and may Vice Officer. Please of Chief note Risk Handy, Financial Officer; Executive Washington is Treasurer; and Ron Mary and Chief Noons, contain Chairman statements, today's and forward-looking President call. and materially Bill Wray, Chief could and on discussed actual today's what Senior morning presentation differ Executive that

Our was statement issued is documents harbor complete well as in as other safe with our which yesterday file that earnings release, we contained SEC. the

and Relations Handy. Officer, filings our host, Washington trades public on Washington WASH. the Trust Washington introduce Chairman materials website Executive ir.washtrust.com. the pleased and available Investor Ned NASDAQ on under Trust Trust's I'm symbol are of All to at now these Chief

Edward Handy

everybody, we Thank know our time I you, And Beth. Good morning. morning and interest. appreciate and thanks We this definitely call. joining a your busy for have us for morning,

then Wray into fairly I'm Ron Noons dive So my performance, the Mary will Bill and comments, fourth be in and join will us quarter Q&A. then going quick to for

growth be XXXX. In focused, all resume positioned management, believe external environment external improve. expense improving We're conditions for we'll to durable that of balance capital take company. as profitable, opportunity our deposits relationship-driven be way, remain sheet prepare ensuring and will continue focused We a steadily what to concentrating on of that throughout long-term is to a advantage positioned to credit, we on

base managing to slowed and are and earnings front, asset capacity. capital our we've the expenses On build growth funding

looking investments supplement account to lenders needs an are growth our opening tool. are our some deposit technology strategies, of including We've of customer the automated attending raising of managing and to the growth primarily base. We're and deposit at the credit, economy. particularly deposit-oriented made addition emphasizing Our all-important existing deposits segments on focused deposit omnichannel

understandably to $XXX remain within X committed Our franchise in X branching almost have aggregate newest remains are strong, although that deposit deposits. and more our years branches million opened the pleased expensive. We past incremental

size we million. through We held in in will branch a growth above the steady competitive continued And remains fourth average drive in Our efforts deposits $XXX very focus, and in-market future landscape. our periods. quarter

there gain cycle are a aspects the economy. to about of general credit short-term the While rates, economy, and signs it stabilizing inflation, difficult is other certainty of

the on at owned. and customer look on estate and we is protecting with is focus our footprint, both focus real can our base what our enhancing have and us. Included detailed control Our a and experience in expense leased they

We expenses and able. will our look at unlock capital where rightsize appropriate reduce to footprint ways and

quarters our to our reason to the and Banker the provide always regain ensure to to Cross reflected according and place both summary, positioned employees healthy and the Our Newsweek, in Forbes, we've recognition stability strength ahead. to customers as American optimistic, great be customary are and received in a we work. In Blue from

review it strong sufficient franchise enhance have and dedicated At and quarter. to an statistics detailed brand, point, capital value. We more known the a this strong of challenges to the weather for very a I'll team, current and to short-term strategy appropriate turn Ron a Ron? credit over

Ronald Ohsberg

everyone, us. and morning, for Good Ned. you, thanks Thank Okay. joining

income by EPS. assets $X.X the Net earning basis per This by net million by points. $X.XX yield was interest X.XX%, Average tax up margin quarter mentioned, or million fourth increased those income X.XX%, and $XXX on basis down down X%. The XX million million, that includes added X $XX.X $XX.X $X.XX of $X.X points. was was by diluted to million Ned assets a was or item As share.

in million $XXX points by was rose by funding wholesale X.XX%. Prepayment XX% increased reflecting total $X.X or market in to down were management to average balances. End-of-period XX amounted third Mortgage million. XX% of end-market $XX,XXX million, revenues decrease liabilities in impact improvement down million, $X.X quarter by in continue. Derivative rate we billion, down fee $XXX and $XXX million. side, expect our million or and quarter, X%, AUA comprised income or X% in income XX%. fourth AUA totaled up of in by the banking totaled interest-bearing fourth appreciation interest-bearing Of derivative by deposits having margin. or $XX.X average originations down or $XX $XXX,XXX. the to the to basis million million, QX on saleable X%, expect increased average XX% was and revenues $X.X do were XXXX. Noninterest funding any in $XX,XXX $XXX,XXX income by million that The $XX neither Wealth of ratio $XX,XXX reflecting note, revenues the to a the On quarter of $XXX,XXX $X.X XX%. and by minimal We in quarter, gains to the compared mainly see totaled

or Salaries were a XX% Regarding expense million reductions in accruals. $X.X $X.X by $X.X QX. reflected down million X% and performance-based to expenses, from or decreased these compensation million

or were totaled the million $XXX,XXX. contribution benefit foundation. For charitable a our these expenses taxes were net XX%, of Income million. Other up reflecting year, a reductions by noninterest to million $X.X $X.X $X

expense this tax full and release, $X.XX. in reduction to EPS year our -- due increased included in increase a law. This in tax QX $X.X by change million a this noted Massachusetts As

to would tax the to adjustment, be QX tax XXXX have our compared And for this for been Excluding XX.X% XX.X% QX. rate effective estimate year XX.X%. we effective rate full

ago. Uninsured and billion $XX,XXX, Total account we end due decreased End from $XX million of X% essentially million This up were million. down a in $XX balance $XXX deposits $XXX by our September in commercial commercial year QX. by X% fourth $X total the by XX% are contingent to XX% from or the ago. In estate. $XX million an income the partially $X.X liquidity. increase increase million or by XX in estimated and increased million year and by to to and up securities. This average loans quarter, million included XX were $XX September up from to $X $XX uncollateralized or were up X% loans balance from offset AOCI Consumer equity a in million, deposits by by $XX.X have a of fair net of and turning quarterly or million. deposits, Residential all by is real loans be from and was or million total sheet. by of Now market loans million amounted deposit Total $X.X $XX million AFS X% dividends. the value of

was in net And loans. turn to The fourth million, I compared And this due $XX.X from provision XX $XXX,XXX at Regarding Ned. loans X were in The that for of back totaled the of by The asset Nonaccruing and points a past December points charge-offs loans on loans due total nonaccruing losses loans. $XX,XXX points quality, placed was will charge-offs QX. recognized the charge quarter and fourth we time, nonaccrual basis at loan totaled of the call was year-to-date to credit was allowance basis the provision QX XX up XX. $XXX,XXX. largely basis of $XXX,XXX were in current fourth million quarter in in loan CRE to net $X.X increase had or quarter. This XX total

Edward Handy

go can we and Ron, right to you, questions. Thank

Operator

from Mark comes first [Operator Instructions] today The from Sandler. question Fitzgibbon Piper

Mark Fitzgibbon

did thoughts guys was quarter. nice in a your XXXX. expenses You job I fourth I expense growth curious the in on guess on for

Ronald Ohsberg

Yes.

back back you the out the So and that's if charitable contribution reversal, expenses you and into run you take XXXX. our out fourth a good quarter going total incentive rate

and normalized quarter the our fourth year. that's that for estimate annualize So expense

so flat So, [ ].

Mark Fitzgibbon

I'm sorry.

$XX about a million roughly So quarter.

Ronald Ohsberg

I about it's $XX quarter. think million a

Mark Fitzgibbon

right. sorry, I'm Yes. you're

is then -- does And or outlook next that two? And are for actions? Okay. interest margin the quarter net over secondly, how assume Fed what you your what

Ronald Ohsberg

Yes.

So X.XX% a the in we're X.XX%. looking at first to quarter of NIM

of competitive of on. see pressure pricing going to continue exception lot We a There's a deposits. on lot

We continue shift from to DDA CDs, cetera. into et mix see

in first So quarter. we margin, to expect the pressure continued that least the at see on

the should reductions. year. that, Fed in We are we the X of And us some think budgeting second lift rate that half give

Mark Fitzgibbon

Okay. And...

Ronald Ohsberg

lot have we of... then a And

Mark Fitzgibbon

share us Can -- any color you with sorry.

Ronald Ohsberg

I was Mark, a little on going just give bit that. color Yes, more to

portfolio. billion, X-month a have large SOFR do we So $X.X $X.X billion

if immediately, wholesale funding does we short. most our rates, So begin that of do, pretty will cut keep Fed reprice when the to they

it it be instantaneous. catch won't will up, but So

on So cut they if X, and reprice reset book we'll on April March, then our just in need to loan that we'll see a down. liabilities

Mark Fitzgibbon

could real put Okay. one And you I that on if that you on give then us wondered nonaccrual. estate any color loan commercial

Ronald Ohsberg

handle to want you do that? Bill, Yes,

William Wray

to is difficulty in X Boston. Greater Sure. had $XX up retail with office office basically, leased floor they've floors first recently other exposure a building getting the our It's tenants. mixed-use restaurant, million. renovated a -- They had the line It's

gone this a lot got we So very liquidation this an through the more process. orderly at money are he's has than do deal -- borrower of in point,

bids. incredible have We

We to expect this will this quarter take us it loss. to out without close principal sale a close quarter, that

always first the at there's is quarter. never know on resolution close. within point, when you However, But going this deal to path the a -- to it's

Mark Fitzgibbon

And last had. Great. then Okay. question I

kind the go about first a core coming Your $XX and the million dividend of the payout the quarter How imply this pressure under feel level, over of it sustainability was payout margin do And the you'd with in XXX% basis more or you ratio that would in quarter. ratio level? expenses payout likely that come dividend ratio on quarters little a XX%. in to

Ronald Ohsberg

say, Yes. our the capitalized, ratio expecting -- that maintain to that. if we and payout we're mean believe believe still we sustainable is to that -- remain I even We prepared would I Sure. are over well are dividend realized We we XXX%, high. maintain was dividend. we we, that fully go temporarily the

Operator

from Seaport comes Laurie from Partners. question next Research Hunsicker Your

Laura Havener Hunsicker

back here. expenses going to Just

how going year? should the it how forward? less, think foundation going something fourth Is quarter do you see think that? surge Is of that about going to that every So $X the numbers charitable be we're to about your million, recurring in we in

Ronald Ohsberg

Yes.

would benefit $X more up And I that we we guided of to in say, this. with that Laurie, tax recorded, about the the talked $XXX last we So range the we million time kind to million. topped

XXXX carry through and into us XXXX. should that So

in million $X contribution this expecting intentionally funds. XXXX calendar really point, But this at put yes, the $X million. at we're disburse some we more to to not So more have up to we as that point. we'll year that in -- add topped point, to that At

Laura Havener Hunsicker

Got it. Got it.

Okay.

guide So to to sort that just through of gave that. trying here. Mark sort you expense back the I'm just

at on quarter am million. realize from out am coming What How going that? million online, I I'm maybe go from some per Can you $XX.X comment that, million, $X down so but branches up $XX.X I quarter. I So to think do backing new $XX.X And got missing? $XX.X million? million per to about us $XX you can how you help looking million, you've

Ronald Ohsberg

-- so yes. Yes,

Yes, -- So yes.

credit in Laurie, a $X.X the So quarter. line fourth million of the we had expense go through

in strip So like yes. that more million. $X.X out fourth $XX [Indiscernible] quarter million, reverse is

Laura Havener Hunsicker

then of the charges other, through onetime line was Okay. like, any Great. looks $XX,XXX there that? income And that other ran

Ronald Ohsberg

Yes. an asset we on There a a -- up $XXX,XXX a in there. we did set set $XXX,XXX valuation up reserve. reserve Yes, valuation was

Laura Havener Hunsicker

Okay. Great.

Okay. have And NIM, then back margin? over you spot December a to do

Ronald Ohsberg

was X.XX%. it Yes,

Laura Havener Hunsicker

just How seen book. securities Okay. take guys And some maybe that banks their about then We've some last question. you general think of do look forward? you sort as restructuring within

Ronald Ohsberg

are a going we're I we've of -- fourth in Yes. We portfolio of not We've don't to the investment it, quarter. we're our do that banks think had that. merits recovery a I understand to it. the doubt kicked lot. do I why planning some that. but decided that it mean do around in I doing to nice

Operator

The from DelMonte Damon KBW. next comes question from

Matthew Renck

This is Damon in Matt for Renck DelMonte. filling

through you're came that guys growth loan slowing You in this mentioned growth quarter. asset

your XXXX. hoping get was could I growth So loan for -- just full just thoughts hoping year we on

Ronald Ohsberg

Yes. about I net would to say going basis, it's on X%. a be

decline originations at consumer. -- going add did commercial that fairly $XXX We paydowns. but previously we're million about We in construction have of X% resi sizable give to during about we'll of growth us X%, doing advances But the -- So not growth. a amortization and committed by partially we're construction have and looking a will about commercial now. year. That lot That's had pipeline. then of offset be will a right

a So basis, about net on X%.

Matthew Renck

loan starts slower expense? Got then holding we or as maybe with how about slight we think it. provision Okay. steady just credit of follow-up should as normalize? build reserves it a the And a to on credit Should think growth,

Ronald Ohsberg

million rate $X the we're not a run if little be thinking say, had. think slight a in just wanted trouble. and like particular build million feels it that we've you I like It put needs seeing we're quarter, to $X.X higher to any than, a

little a to bit But just was want a we're Okay. expenses. give a color more higher. this -- course, Matt, you million thinking quarter. on little Of quarter about I $X said

-- Yes. that So

also a to the $X.X X% expense includes branches. related expense that de growth million So about additional novo

covered. So that's

Operator

a have from follow-up Seaport at Laurie question We Research.

Laura Havener Hunsicker

actually Yes. Yes, the to guys back I just expense you on related branches. was hitting

So on de that? about branches thinking what you in is the novo are How timing opening XXXX?

Ronald Ohsberg

Yes...

Edward Handy

Laurie, as actually, covered of -- in expense it's comments, Ron Ned. one of And out And in at cost the first first his one we one end January new branches. the and April. quarter, Pointed have potentially of just those end

So into they're base. built that expense

Operator

a have Sandler. Piper of from follow-up Also Mark Fitzgibbon

Mark Fitzgibbon

on I you position were raising capital your was whether wondering thinking additional comment capital. and if you could about

Ronald Ohsberg

Yes. We're not.

significantly. loan pretty We our are curtailing originations

to to stabilize over expecting and we're to half the they of are begin the ratios improve second close So capital pretty where year.

Operator

Instructions] [Operator Okay.

on the questions further have We call. no

Edward Handy

you time with soon. Have to everybody. got know I a day, appreciate forward taking great all. and again you us, a to look the We talking busy be morning. to you Thank you've

Operator

the joining, disconnect. concludes very all much you Thank may call. and This you conference for now

Washington Trust Bancorp (WASH) 25 Jan 242023 Q4 Earnings call transcript