Washington Trust Bancorp, Inc. · NASDAQ:WASH
Washington Trust Bancorp — Q3 2023 Earnings Presentation
39 slides from Washington Trust Bancorp's earnings presentation, November 2023
Slide 1: Investor Deck Q3 2023
Investor Deck Q3 2023 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: Experienced Leadership Team
Experienced Leadership Team Ned Handy Mary Noons Ron Ohsberg Chairman and Chief President and Chief Senior EVP, Chief Executive Officer Operating Officer Financial Officer and Treasurer 3
Slide 4: The Washington Trust Investment Story
The Washington Trust Investment Story LEVERAGING 1 1. Relationship‐driven leader with distinguished history and prestigious recognition OUR STRONG 2 MARKET 2. Proven performance with diverse revenue streams – POSITION AND consistent results through range of economic cycles RESILIENT 3 3. Effective r
Slide 5: $7B Regional Financial Services Provider
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 $5.6B $5.4B Assets Loans Deposits Premier Regional Consistent Shareholder Diverse Revenue Streams Wealth Manag
Slide 6: Prestigious Recognition
WA S H I N G T O N T R U S T AT ‐ A ‐ G L A N C E Prestigious Recognition Named one of the nation’s Best Banks to Work For by American Banker® magazine for the 5th consecutive year. Named to the Forbes list of Best‐In‐State Banks 2023. Named as one of Rhode Island’s Best Places to Work by Providence
Slide 7: Generating Diverse, High-Quality Revenue
R E V E N U E Generating Diverse, High‐Quality Revenue Revenue Contributions From Quality of Revenue Outpaces Peer Group All Major Business Lines Better than 92% of peer group (1) ($ in millions) Non‐Interest Income / Operating Income $226.9 $228.8 $218.6 50.0% $200.5 45.0% 40.0% $147.3 35.0% 8% 3%
Slide 8: Strong Growth and High-Value Mix in Loan Portfolio
L O A N S Strong Growth and High‐Value Mix in Loan Portfolio Loan Portfolio ($ in billions) 59% 99% Variable rate Residential $5.6 loans lending in RI, MA, $5.1 Consumer (5%) & CT $4.2 $4.3 $3.9 Residential (47%) Well‐diversified Portfolio o Significant growth in C&I (11%) commercial portfolio CRE (
Slide 9: Steady, Balanced Mix of Deposits
D E P O S I T S Steady, Balanced Mix of Deposits Deposit Portfolio 12% $183M #1 ($ in billions) Largest state‐ Market Share Ave. in‐market in Rhode deposits per chartered $5.4 Island (1) branch bank $5.0 $5.0 $4.4 Demand & Now (33%) $3.5 High Quality Assets MM & Savings • 35% of deposits are commerc
Slide 10: A Historical Differentiator for Washington Trust
A S S E T Q U A L I T Y A Historical Differentiator for Washington Trust NCO / Average Loans 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% ‐0.2% 161 bps Cumulative losses 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 YTD 6/30/2023 2006 – YTD 06/30/2023 (bps) WASH 161 Aver
Slide 11: Sizeable Wealth Management Operation
W E A LT H M A N A G E M E N T Sizeable Wealth Management Operation Assets Under Administration (AUA) ($ billions) $6.1B AUA $7.8 $6.2 $6.9 $6.0 Asset Mix at September 30, 2023 $6.1 Fixed Income Other 4.7% 27.7% Cash 10.1% 2019 2020 2021 2022 9/30/2023 Equity 57.5% Revenues ($ millions) $41.3 $36.8
Slide 12: Strategic Funnel for Broader Banking Relationships
MORTGAGE BANKING Strategic Funnel for Broader Banking Relationships Mortgage Banking Revenues (1) ($ millions) $47.4 Mortgage Portfolio $28.6 $14.8 o Flexible origination model $8.7 $5.1 where loans can be sold or put in portfolio 2019 2020 2021 2022 YTD 9/30/23 o Working to shift origination Mortga
Slide 13: Proven Track Record Through All Market Conditions
P R O F I TA B I L I T Y Proven Track Record Through All Market Conditions Earnings Generation and Profitability Consistent Results $5.00 $90.0 o Demonstrated management through $80.0 range of economic conditions $4.00 $70.0 Net Income ($mil) $60.0 o Currently, financial market and $3.00 Diluted EPS
Slide 14: History of Outperforming
P R O F I TA B I L I T Y M E T R I C S H i sto r y o f O u t p e r fo r m i n g Core ROE (1) Risk‐Weighted Core ROA (2) 18.00% 2.50% 15.00% 2.00% 12.00% 1.50% 9.00% Quality Performance 1.00% 6.00% 3.00% 0.50% o Washington has a long track 0.00% 0.00% record of outperforming on 2006 2007 2008 2009 20
Slide 15: Providing Consistent Shareholder Returns
2 0 Y E A R T O TA L S T O C K R E T U R N S Providing Consistent Shareholder Returns WASH Total Return (%) versus S&P US BMI Price / Tangible Book Multiple Banks Index 350.0% 350 300 300.0% 250 250.0% 200 200.0% 150 100 150.0% 50 100.0% 0 ‐50 50.0% ‐100 0.0% Oct‐03 Oct‐04 Oct‐05 Oct‐06 Oct‐07 Oct‐0
Slide 16: Adequate Capital to Support Dividend and Growth
C A P I TA L P O S I T I O N / L O W R I S K B A L A N C E S H E E T Adequate Capital to Support Dividend and Growth o Solid balance sheet, fee‐intensive business model Total Risk‐based Capital o Improving NIM by slowing loan growth 20.00% 16.00% o Temporary decline for Tangible Equity / Tangible 12
Slide 17: Long History of Industry-Leading Dividend Yields
DIVIDEND Long History of Industry‐Leading Dividend Yields o Increased dividend in Q4‐22 for 12th consecutive year o Paid consistent dividend for more 9.53% (1) than a century Dividend Yield Tangible Book Value per Share Plus Cash Dividend Declared Cumulative Dividend per Share CAGR $2.18 12/31/2006
Slide 18: Challenging Rate Environment
Net Interest Margin & Repricing Challenging Rate Environment o Adjustable rate loans mainly 1M LIBOR and Prime o Adjustable rate loans largely funded with short‐term adjustable liabilities (<= 1 year) Net Interest Margin Loan & Funding Repricing 3.00% 2.50% $150.0 2.00% $100.0 1.50% 1.00% $50.0 0.50
Slide 19: Accelerating Growth While Enhancing Stakeholder Value
O U R S T R AT E G Y Accelerating Growth While Enhancing Stakeholder Value Strategic Priorities #1 Growing deposits and change mix Return to historical rate of earnings #2 Achieving digital excellence expansion #3 Deepening client relationships Steady growth #4 Expanding brand and market presenc
Slide 20: Accelerating Deposit Growth
S T R AT E G I C P R I O R I T Y # 1 Accelerating Deposit Growth Strategic Initiatives • De Novo branching • Product development Goal: Improve • Account openings Core Bank • Business opportunities Yields • M&A opportunities 20
Slide 21: De Novo Branch Deposit Growth
A CLOSER LOOK AT De Novo Branch Deposit Growth $600,000 Strategy for Growth in $500,000 Market Share o Continued de novo $400,000 branching in RI $300,000 o Planned Smithfield, $200,000 RI location to open 2024 $100,000 o Planned 3rd $0 Providence branch to open 2024 9/30/2023 2011 2012 2013 2014 20
Slide 22: Achieving Digital Excellence
S T R AT E G I C P R I O R I T Y # 2 Achieving Digital Excellence o Approach customers and prospects in high‐touch, ENHANCING digitally adept way D I G I TA L C A PA B I L I T I E S o Develop easy‐to‐use customer applications o Integrate customer profiles across services o Cyber threat intelligence
Slide 23: Deepen Client Relationships
S T R AT E G I C P R I O R I T Y # 3 Deepen Client Relationships o Digital banking enhancements IMPROVE o Financial planning process R E L AT I O N S H I P S o Automated asset verification o Financial wellness center o Business line integration E X PA N D R E L AT I O N S H I P S o Private clients o
Slide 24: Expand Brand & Market Presence
S T R AT E G I C P R I O R I T Y # 4 Expand Brand & Market Presence 26 7 o “What We Value Is You™” Branch Offices Residential Mortgage Loan Offices 5 *Operating as o RI branches Wealth Management Washington Trust Mortgage Offices Company o CT commercial banking 4 Commercial office Lending Offices o
Slide 25: Advancing ESG Priorities that Drive Stakeholder Value
S T R AT E G I C P R I O R I T Y # 5 Advancing ESG Priorities that Drive Stakeholder Value Diversity, Community Employee Corporate Data Security Environmental Equity & Involvement Engagement Governance & Privacy Responsibility Inclusion & Investment Commitment Attract, motivate, Celebrate a Ensure w
Slide 26: Advancing Financial Security & Economic Empowerment
A C L O S E R L O O K AT Advancing Financial Security & Economic Empowerment We have a long‐standing commitment to supporting our customers, their families, and our communities on their journey to financial wellness. Community Lending Program Financial Wellness Centers School Financial Literacy Prog
Slide 27: The Washington Trust Investment Story
IN SUMMARY The Washington Trust Investment Story LEVERAGING 1 1. Relationship‐driven leader with distinguished history and prestigious recognition OUR STRONG 2 MARKET 2. Proven performance with diverse revenue streams – POSITION AND consistent results through range of economic cycles RESILIENT 3 3.
Slide 28: Supplemental Information
Supplemental Information 28
Slide 29: Commercial Lending Portfolio
Commercial Lending Portfolio Commercial real estate: $2.1 billion % of CRE Portfolio by Segment as of 9/30/23 Multi‐Family Dwelling (27%) $552,819 Retail (20%) $421,882 Office (14%) $289,011 Industrial & Warehouse (13%) $272,216 Hospitality (12%) $237,578 Healthcare (8%) $168,653 Commercial Mixed Us
Slide 30: Office Portfolio
Office Portfolio o Office portfolio consists of 53 loans and o Weighted Average LTV = 62.1% 47 relationships with a Carry Value of $289 million and Exposure of $323 o Average DSCR is 1.48x million. o Weighted Average DSCR 2.86x (Carry o Average loan size = $6.9mm original Value on mortgages, and Com
Slide 31: Residential & Home Equity
Residential & Home Equity Residential Home Equity Total portfolio ($ millions) $ 2,611.1 $ 305.7 FICO score* 764 760 Total delinquencies 0.30% 0.63% Nonperforming 0.36% 0.29% Net charge‐offs to average loans 0.00% 0.00% LTV (1) 56.0% 25.8% CT 6% Other 1% RI MA 18% 75% At or for the nine months ended
Slide 32: ACL Rollforward
ACL Rollforward Incr / (Decr) $13,199 $ thousands 32
Slide 33: Mortgage Execution
Mortgage Execution o Expense base is largely variable with volumes o Fintech processing provides speed of execution and closing reliability $9,000 $600,000 $8,000 $500,000 $7,000 Total originations $6,000 $400,000 Expenses $5,000 $300,000 $4,000 $3,000 $200,000 $2,000 $100,000 $1,000 $0 $0 Q3 2018 Q
Slide 34: Income Statement
Income Statement For the Quarter Ended Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, $s in thousands 2023 2023 2023 2022 2022 Interest and dividend income $ 80,721 $ 75,230 $ 68,762 $ 61,761 $ 52,138 Interest expense 46,970 41,730 31,569 20,419 10,096 Net interest income 33,751 33,500 37,193 41,342 42,042
Slide 35: Balance Sheet
Balance Sheet Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, $s in thousands 2023 2023 2023 2022 2022 Assets: Cash and cash equivalents $ 113,009 $ 128,316 $ 138,280 $ 118,422 $ 132,839 Total securities 1,011,658 1,068,326 1,097,248 1,037,391 1,015,513 Total loans 5,611,115 5,381,113 5,227,969 5,110,139 4,
Slide 36: Non-GAAP Financial Measures
Non‐GAAP Financial Measures Sep 30, Dec 31, Dec 31, Dec 31, $s in thousands, except per share amounts 2023 2022 2021 2020 Calculation of tangible book value per share Total shareholders’ equity at end of period $431,404 $453,669 $564,808 $534,195 Less: Goodwill 63,909 63,909 63,909 63,909 Identifiab
Slide 37: Non-GAAP Financial Measures
Non‐GAAP Financial Measures Quarter Ended FYE Sep 30, Dec 31, Dec 31, Dec 31, $s in thousands, except per share amounts 2023 2022 2021 2020 Calculation of return on average tangible assets: Net income, as reported $ 11,161 $ 71,681 $ 76,870 $ 69,829 Total average assets, as reported 7,115,157 6,102,
Slide 38: Non-GAAP Financial Measures
Non‐GAAP Financial Measures As calculated by S&P Global Market Intelligence YTD FYE June 30, Dec 31, Dec 31, Dec 31, $s in thousands, except per share amounts 2023 2022 2021 2020 Calculation of adjusted return on average tangible equity Net income available to common shareholders $24,020 $71,479 $76
Slide 39: Non-GAAP Financial Measures
Non‐GAAP Financial Measures As calculated by S&P Global Market Intelligence YTD Jun 30, 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 $24,068 $71,681 $76,870 $69,829
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