Washington Trust Bancorp, Inc. · NASDAQ:WASH
Washington Trust Bancorp — Q1 2024 Earnings Presentation
33 slides from Washington Trust Bancorp's earnings presentation, Jun 18, 2024
Slide 1: Investor Deck Q1 2024
Investor Deck Q1 2024 NASDAQ: WASH
Slide 2: Safe Harbor
Safe Harbor This presentation contains certain statements that may be considered “forward‐looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results, performance or achievements o
Slide 3: The Washington Trust Investment Story
The Washington Trust Investment Story LEVERAGING 11. Relationship‐driven leader with distinguished history and prestigious recognition OUR STRONG MARKET POSITION AND 22. management, Diverse revenue streams combine core banking, wealth and mortgage banking RESILIENT BUSINESS MODEL 3 3. Strong Credit
Slide 4: Washington Trust At-a-Glance
WA S H I N G T O N T R U S T AT ‐ A ‐ G L A N C E $7B Regional Financial Services Provider Founded in 1800 Oldest Community bank in the US Largest State‐Chartered Bank In Rhode Island $7.2B $5.7B $5.3B Assets Loans Deposits Diverse Revenue Streams Premier Regional Shareholder Returns Wealth Manageme
Slide 5: Prestigious Recognition
WA S H I N G T O N T R U S T AT ‐ A ‐ G L A N C E Prestigious Recognition Named one of the nation’s Best Banks to Work For by American Banker® magazine for the 5th consecutive year. Named to the Forbes list of Best‐In‐State Banks 2023. Named as one of Rhode Island’s Best Places to Work by Providence
Slide 6: Consistent Record of Earnings Growth
P R O F I TA B I L I T Y Consistent Record of Earnings Growth Earnings Generation and Profitability $5.00 $80.0 o Financial market and geopolitical $70.0 headwinds have increased $4.00 earnings pressure $60.0 Net Income ($mil) Diluted EPS $3.00 $50.0 o Demonstrated stability through $40.0 range of e
Slide 7: Generating Diverse Revenue
R E V E N U E Generating Diverse Revenue Revenue Contributions From Fee Revenue Outpaces Peer Group All Major Business Lines Better than 92% of peer group (1) ($ in millions) Non‐Interest Income / Total Revenue $226.9 $228.8 $218.6 50.0% $193.2 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% $48.8 11% 15.0% 5%
Slide 8: Challenging Rate Environment
NET INTEREST MARGIN & REPRICING Challenging Rate Environment o Higher rates have put pressure on NIM Net Interest Margin 2.50% $50,000 2.00% $40,000 o Balance sheet positioned to benefit 1.50% $30,000 from lower rates 1.00% $20,000 0.50% $10,000 o Adjustable‐rate loans mainly 1‐month SOFR and Prime
Slide 9: Strong Growth in Quality Loan Portfolio
L O A N S Strong Growth in Quality Loan Portfolio Total Loan Portfolio ($ in billions) $5.6 $5.7 Consumer (6%) 64% $5.1 Variable rate $4.3 loans $4.2 Residential (45%) C&I (11%) 99% Residential CRE (38%) lending in RI, MA, & CT 2020 2021 2022 2023 3/31/2024 CRE C&I Residential Consumer At December 3
Slide 10: Steady, Balanced Mix of Deposits
D E P O S I T S Steady, Balanced Mix of Deposits Total Deposit Portfolio 12% $173M #1 ($ in billions) Largest state‐ Market Share Avg. in‐market in Rhode deposits per chartered Island (1) branch bank $5.3 $5.3 $5.0 $5.0 $4.4 Time deposits (34%) MM & Savings (30%) 18% uninsured deposits after Demand
Slide 11: Sizeable Wealth Management Operation
W E A LT H M A N A G E M E N T Sizeable Wealth Management Operation Assets Under Administration (AUA) ($ billions) $6.9B AUA $7.8 $6.9 $6.0 $6.6 $6.9 Asset Mix at March 31, 2024 Fixed Other Income 3% 24% Cash 9% 2020 2021 2022 2023 3/31/2024 Equity 64% Revenues ($ millions) $41.3 $38.7 $35.5 $35.5 o
Slide 12: Shifting Origination Mix
M O R TG A G E B A N K I N G Shifting Origination Mix Mortgage Banking Revenues (1) ($ millions) $47.4 $28.6 o Flexible origination model where loans can be sold or put $8.7 in portfolio 6.7 $2.5 2020 2021 2022 2023 YTD o Strategic approach aimed at 3/31/2024 developing broader banking relationships
Slide 13: Asset Quality: Historical Differentiator
A S S E T Q U A L I T Y Historical Differentiator for Washington Trust NCO / Average Loans 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% ‐0.2% 162 bps Cumulative losses 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2006 – 2023 (bps) WASH 162 Average peer 602 Non‐Accr
Slide 14: Peer Comparisons
P R O F I TA B I L I T Y M E T R I C S Peer Comparisons Core ROE (1) Risk‐Weighted Core ROA (2) 18.00% 2.50% 15.00% 2.00% 12.00% 1.50% 9.00% 1.00% 6.00% 0.50% 3.00% 0.00% 0.00% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2006 2007 2008 2009 2010 2011 201
Slide 15: Delivering Shareholder Value
2 0 Y E A R T O TA L S T O C K R E T U R N S Delivering Shareholder Value WASH Total Return (%) versus S&P US BMI Price / Tangible Book Multiple Banks Index 350.0% 400 350 300.0% 300 250.0% 250 200 200.0% 150 150.0% 100 50 100.0% 0 50.0% ‐50 ‐100 0.0% Mar‐04 Mar‐05 Mar‐06 Mar‐07 Mar‐08 Mar‐09 Mar‐10
Slide 16: Capital Supports Dividend
C A P I TA L P O S I T I O N / B A L A N C E S H E E T Capital Supports Dividend o Solid balance sheet, fee‐intensive business model Total Risk‐based Capital o Slowing loan growth to improve capital ratios 20.00% 16.00% o Temporary decline in Tangible Equity / Tangible 12.00% Assets ratio due to AFS
Slide 17: Long History of Industry-Leading Dividend Yields
DIVIDEND Long History of Industry‐Leading Dividend Yields Paid consistent dividend for more than a century 8.33% (1) Dividend Yield Cash Dividend Declared Tangible Book Value per Share Plus $2.24 Cumulative Dividend per Share CAGR 12/31/2006 to 12/31/2023 10.61% 7.82% 7.16% 56¢ 16¢ 1992 93 94 95 96
Slide 18: Selective Growth While Enhancing Stakeholder Value
O U R S T R AT E G Y Selective Growth While Enhancing Stakeholder Value Strategic Priorities #1 Growing deposits and improving the mix Return to historical #2 Rapid deployment of technology investments rate of earnings to enhance customer experience expansion #3 Deepening client relationships thro
Slide 19: Addressing Market Challenges
F I N A N C I A L G O A L S A N D S T R AT E G I E S Addressing Market Challenges Underwrite at higher spreads Reduce residential portfolio originations Amortize low‐yielding investments and residential mortgages (~$150m/yr) De‐lever and pay down wholesale advances #1 Improve NIM Improve f
Slide 20: De Novo Branch Deposit Growth
A CLOSER LOOK AT De Novo Branch Deposit Growth $700,000 Strategy for Growth in $600,000 Market Share $500,000 o Continued de novo branching in RI $400,000 $300,000 o 27th branch opened in Smithfield, RI in $200,000 Q1 2024 $100,000 o 3rd Providence $0 branch to open Q3 2024 3/31/2024 2011 2012 2013
Slide 21: Advancing Stakeholder Value
ESG PRIORITIES Advancing Stakeholder Value Diversity, Community Employee Corporate Data Security Environmental Equity & Involvement Engagement Governance & Privacy Responsibility Inclusion & Investment Commitment Attract, motivate, Celebrate a Ensure we operate Safeguard Be an Bring sustainable & re
Slide 22: Supplemental Information
Supplemental Information 22
Slide 23: Commercial Lending Portfolio
Commercial Lending Portfolio Commercial real estate: $2.2 billion % of CRE Portfolio by Segment as of 3/31/24 Multi‐Family (27%) $574,284 Retail (20%) $438,422 Industrial & Warehouse (15%) $325,695 Office (13%) $284,675 Hospitality (10%) $225,608 Healthcare facility (9%) $196,117 Mixed Use (2%) $52,
Slide 24: Office Portfolio
Office Portfolio o Office portfolio consists of 47 loans with o Approximately 33% of the balance of a Carry Value of $285 million. total commercial real estate office balance will mature in two years. Asset Quality Weighted Average Debt Balance Avg Loan Loan to Service Special Non‐Accrual (included
Slide 25: Residential & Home Equity
Residential & Home Equity Residential Home Equity Total portfolio ($ millions) $ 2,585.5 $ 309.3 FICO score* 763 758 Total delinquencies 0.27% 0.93% Nonperforming 0.38% 0.51% Net charge‐offs to average loans 0.00% 0.00% LTV (1) 59.8% 25.2% CT 6% Other 1% MA RI 74% 19% At or for the three months ende
Slide 26: ACL Rollforward
ACL Rollforward Incr / (Decr) $14,891 $ thousands 26
Slide 27: Income Statement
Income Statement otal n For the Quarter Ended Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, $s in thousands 2024 2023 2023 2023 2023 Interest and dividend income $ 85,256 $ 83,946 $ 80,721 $ 75,230 $ 68,762 Interest expense 53,591 51,292 46,970 41,730 31,569 Net interest income 31,665 32,654 33,751 33,500
Slide 28: Balance Sheet
Balance Sheet Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, $s in thousands 2024 2023 2023 2023 2023 Assets: Cash and cash equivalents $ 105,588 $ 90,184 $ 113,009 $ 128,316 $ 138,280 Available for sale debt securities, at fair value 970,060 1,000,380 958,990 1,022,458 1,054,747 Total loans 5,685,232 5,64
Slide 29: Non-GAAP Financial Measures
Non‐GAAP Financial Measures Mar 31, Dec 31, Dec 31, Dec 31, $s in thousands, except per share amounts 2024 2023 2022 2021 Calculation of tangible book value per share Total shareholders’ equity, as reported $466,920 $472,686 $453,669 $564,808 Less: Goodwill 63,909 63,909 63,909 63,909 Identifiable i
Slide 30: Non-GAAP Financial Measures
Non‐GAAP Financial Measures For the three months ended For the twelve months ended Mar 31, Dec 31, Dec 31, Dec 31, $s in thousands, except per share amounts 2024 2023 2022 2021 Calculation of return on average tangible assets: Net income, as reported $ 10,936 $ 48,176 $ 71,681 $ 76,870 Total average
Slide 31: Non-GAAP Financial Measures
Non‐GAAP Financial Measures As calculated by S&P Global Market Intelligence FYE Dec 31, Dec 31, Dec 31, Dec 31, 2023 2022 2021 2020 Calculation of adjusted return on average tangible equity Net income available to common shareholders $48,091 $71,479 $76,648 $69,678 Adjustments: State tax credit (3,2
Slide 32: Non-GAAP Financial Measures
Non‐GAAP Financial Measures As calculated by S&P Global Market Intelligence Dec, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, $s in thousands, except per share amounts 2023 2022 2021 2020 2019 2018 Calculation of core return on average equity Net income, as reported $48,176 $71,681 $76,870 $69,829 $69,11
Slide 33: Non-GAAP Financial Measures
Non‐GAAP Financial Measures As calculated by S&P Global Market Intelligence Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, $s in thousands, except per share amounts 2023 2022 2021 2020 2019 2018 Calculation of risk weighted core return on average assets Net income, as reported $48,176 $71,681 $76,8
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