Washington Trust Bancorp, Inc. · NASDAQ:WASH
Washington Trust Bancorp — Boenning & Scattergood Northeast Community Banks 2020
56 slides from Washington Trust Bancorp's conference presentation, May 5, 2020
Slide 1: Boenning & Scattergood Northeast Community Banks
Boenning & Scattergood Northeast Community Banks May 5, 2020
Slide 2: Agenda and forward-looking statements
Page Executive Team ……….………….…….……….…..…. 3 Who We Are ………………..………………….........… 4 COVID-19 Response ………………………………….. 10 Strategic Priorities .…………….......................... 18 Financial Overview ..……………………………....... 23 Credit Quality …………………………………….....…. 46 Capital Management ……………………………...… 47 Wh
Slide 3: Executive Team
Ned Handy Chairman & Chief Executive Officer Mark Gim President and Chief Operating Officer Ron Ohsberg Senior EVP, Chief Financial Officer and Treasurer Pictured left to right: Mark Gim, Ned Handy, and Ron Ohsberg Investor Information Elizabeth B. Eckel Senior Vice President, Chief Marketing & Corp
Slide 4: Who We Are
[J WASHINGTON TRUST BANCORP, INC.
Slide 5: Oldest community bank in the US
• Oldest community bank in the US • High-performing regional bank • Largest state-chartered bank in RI o $5.6 B assets o $4.1 B loans o $3.7 B deposits • Diversified financial services company • Premier regional wealth management firm o $5.3 B assets under administration • Market capitalization(1):
Slide 6: Awards and recognition
• American Banker “Best Banks to Work For” • American Banker “Top-Performing Mid-Tier Bank” 5th consecutive year • Bank Director “Bank Performance Score Card” 6th consecutive year • Providence Business News “Best Places to Work” 9th consecutive year • S&P Global “Best-Performing Community Banks” • F
Slide 7: Sustainable, Relevant, Scalable
Sustainable Commercial Retail Banking Banking Relevant Scalable Wealth Management 7
Slide 8: Expansion history and branches
RI, CT & MA CT & MA Bank & Wealth Management Acquisitions Mortgage Market 2015 Halsey Associates Rhode Island Expansion 2005 Weston Financial 2002 First Financial Organic Branch 2016 Wellesley, MA Expansion 2014 Braintree, MA 2000 Phoenix Investment 1999 PierBank 2019 North Providence 2011 Burlingto
Slide 9: Market demographics: home prices and household income
Source: Median Median OF Sale Source: Home isREALTORS® Price ASSOCIATION by provided NATIONAL for the 2019 Q4 estimatethe demographic data. performsSNL calculations on the underlying data provided by Source:Household incomeis provided by $95,628 Bridgeport- Stamford- Norwalk, CT Income HouseholdMedi
Slide 10: COVID-19 Response
COVID-19 RESPONSE 10 [J WASHINGTON TRUST BANCORP, INC.
Slide 11: CEO message on COVID-19
“Washington Trust has weathered many storms during our 220+ year history, and has always been there to help our employees, our customers and our communities through difficult times. The COVID-19 pandemic has caused an unprecedented disruption to our economy and has likely changed our lives forever.
Slide 12: Response for employees, customers and community
Employees Customers Community • Followed CDC’s social distancing protocol: • Maintain regular communications with State • Separated key operating functions. • Accommodate customers through drive-up and local government leaders, health officials, • Closed branch lobbies and and by appointment after t
Slide 13: Paycheck Protection Program and loan modifications
Paycheck Protection Program (PPP) • Began accepting PPP applications on April 3 • 1,604 applications received for over $223 million • 1,345 loans registered with the SBA totaling $211 million Loan Modifications to Borrowers • Granting deferrals and short-term interest only periods • Modified 158 com
Slide 14: Commercial real estate portfolio overview
Portfolio Overview as of March 31, 2020 (outstandings) and May 1, 2020 (deferments) • Total portfolio: $1.6 billion, 83% non-deferred • No PPP loan requests % of CRE Portfolio by Segment as of 3/31 Multi-family dwelling (29%) $450 6% Retail (19%) $216 31% Office (18%) $264 10% Hospitality (8%) $56 5
Slide 15: Commercial and industrial portfolio overview
Portfolio Overview as of March 31, 2020 (outstandings) and May 1, 2020 (deferments) • Total portfolio: $655 million, 93% non-deferred Paycheck Protect Program (PPP) • 1,345 SBA approved loans totaling $211 million • 247 pending loans totaling $12 million % of C&I Portfolio by Segment as of 3/31 Heal
Slide 16: Residential and home equity portfolios
Residential Home Equity Total portfolio ($ millions) $1,510.5 $287.1 FICO score* 746 755 CT Total delinquencies 0.8% 0.9% 9% Other Nonperforming 1.0% 0.6% 1% Net charge-offs to average loans 0.00% 0.24% RI MA 24% Average LTV/combined LTV 58.2% 63.4% 63% • Home Equity deferments: 63 loans for $5.3 mi
Slide 17: CECL allowance methodology
• Used the Current Expected Credit Loss (CECL) methodology. • Quantitative modeling relied on the baseline national unemployment rate forecast from Moody’s publication of 3/27/20, which showed unemployment peaking at just under 9%. • Qualitative factors were adjusted to address the unprecedented nat
Slide 18: Credit quality
Incr / (Decr) $12,651 $ thousands 18
Slide 19: Net charge-offs to average loans
NCO / Average Loans 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 WASH NCO/Avg Loans Median NCO/Avg Loans Average NCO/Avg Loans Percentile ranking for the year ended December 31st unless otherwise noted among public banks & thrifts with
Slide 20: Asset quality trends
0.76% 0.63% 0.58% 0.59% 0.53% 0.48% 0.58% 0.40% 0.40% 0.37% 0.34% 0.32% 0.28% 0.35% 0.21% 0.07% 0.07% 0.06% 0.06% 0.03% 0.04% 2014 2015 2016 2017 2018 2019 3/31/2020 Nonperforming assets / total assets Total past due loans / total loans YTD net charge-offs as a percentage of average loans (annualize
Slide 21: Strategic Priorities
STRATEGIC PRIORITIES 21 [J WASHINGTON TRUST BANCORP, INC.
Slide 22: Geographic diversification
• Enhanced lending activity into adjacent New England states • Reduced dependence on Rhode Island asset generation • Develop greater presence in attractive markets 22
Slide 23: Growth in competitive markets
• Expand into markets dominated by key competitors • Continue organic and contiguous growth • Leverage key deposit relationships • Capitalize on brand strength and service quality reputation 23
Slide 24: Client experience and technology
• Blend high service solutions with clients’ technology needs • Create seamless client experiences across all channels • Deepen client relationships • Optimize branch delivery • Invest in key technology 24
Slide 25: Performance, technology and efficiency
• Top-quartile performance • Pristine asset quality • Consistent profitability • Managed risk EPS Technology Efficiency 25
Slide 26: Financial Overview
FINANCIAL OVERVIEW 26 [J WASHINGTON TRUST BANCORP, INC.
Slide 27: Proven track record of earnings growth
Proven track record of earnings growth $68.4 $69.1 $46.5 * $43.5 $45.9 $11.9 2015 2016 2017 2018 2019 YTD 03/31/20 Diluted EPS $2.54 $2.70 $2.64 $3.93 $3.96 $0.68 Net income $ millions; for years ended December 31st unless otherwise noted * Includes $6.2 million deferred tax asset write-down resulti
Slide 28: Core ROE, ROA, ROATCE and dividend yield versus peers
Core ROE (2) Core ROA (2) 14.52% 1.35% 1.29% 10.87% WASH United States WASH United States ROATCE Dividend Yield 17.03% 5.83% 13.30% 2.92% WASH United States WASH United States (1) For the twelve months ended 12/31/2020; Dividend yield as of April 30, 2020 (1) Public banks & thrifts with $3 billion t
Slide 29: Performance versus peer group
Better than 72% of peer group (1) 70.0% 65.6% 65.0% 59.5% 60.0% 58.1% 55.0% 54.4% 50.0% 45.0% 40.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 WASH Peer Group Median (1) Percentile ranking for the year ended December 31st unless otherwise noted among public banks & thrifts with $3 billion to
Slide 30: Net interest income and margin
3.10% 200 3.02% 3.01% 3.00% 180 2.93% 2.90% 160 $133.6 $134.7 140 2.80% 2.77% $121.9 $113.2 120 2.70% 2.61% 100 2.60% 80 2.50% 60 2.40% $32.90 40 2.30% 20 2.20% 0 2016 2017 2018 2019 YTD 3/31/20 Net Interest Income (FTE) YTD 3/31 Net Interest Income (FTE) Net Interest Margin (FTE) $ millions; as of
Slide 31: Repricing of loans and funding
Q2 2020 Q3 2020 Q4 2020 Q1 2021 Total Adjustable rate loans $1,950 83 73 73 2,179 Wholesale funding 759 371 345 113 1,588 Retail CDs 191 107 104 59 461 Adjustable rate loans Wholesale funding Retail CDs $ millions 31
Slide 32: Diversified revenue stream
Diversified revenue stream All Other Deposit 8% Fees Fee Income 2% Net Interest 38% Income Mortgage 62% Banking 12% Wealth Management 16% For the three months ended March 31, 2020 32
Slide 33: Performance versus peer group
Better than 92% of peer group (1) 50% 40% 38% 30% 33% 20% 20% 20% 10% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 WASH Peer Group Median (1) Percentile ranking for the twelve months ended December 31, 2019 among public banks & thrifts with $3 billion to $10 billion in total assets excluding
Slide 34: Wealth management
Assets Under Administration (AUA) ($ billions) $6.7 • Key contributor to pre-tax income $5.9 $6.2 $5.3 • Average client size $2.3 million • 79% high net worth individuals 2017 2018 2019 3/31/2020 Asset Mix Revenues ($ millions) Other $39.3 $38.3 $36.8 Fixed 7% Income Cash 36% 9% Equity 63% $8.7 2017
Slide 35: Mortgage banking
Mortgage Banking Revenues (1) Mortgage Originations (2) $14.8 $945.5 $852.6 $11.4 $10.4 $762.6 37% $6.1 $291.7 63% 37% 63% 2017 2018 2019 YTD 2017 2018 2019 YTD 3/31/20 3/31/20 Originated for Sale Originated for Portfolio • Expense base is variable with volumes • Current pipeline is healthy $ millio
Slide 36: Residential mortgage loan amounts by state
As % of Total Loan Amount Range CT MA NH RI Total % < $250,000 2% 2% 0% 8% 13% > $250,000 up to $484,350 2% 22% 1% 14% 39% > $484,350 (Jumbo) up to 1M 1% 24% 0% 5% 30% > 1 Million 1% 13% 1% 4% 19% Grand Total 5% 62% 2% 31% 100% By State Loan Amount Range CT MA NH RI < $250,000 32% 4% 14% 27% > $250,
Slide 37: Residential portfolio geography
• Primarily in home territory • 99% in RI, CT and MA 37
Slide 38: Total loans
$4.1 $3.9 $3.7 7% $3.4 $3.2 16% $3.0 Consumer 10% 18% C&I 40% 37% CRE 37% Residential 35% 2015 2016 2017 2018 2019 3/31/20 • Well-diversified portfolio • 74% variable loans $ billions; at December 31st unless otherwise noted 38
Slide 39: Loan geographic mix
Residential Mortgages Residential Mortgages Commercial Loans & Commercial Loans 5% 2% 1% 7% 61% 39% 5% 3% 56% 75% 48% 64% 54% 37% 39% 24% 47% 33% 12/31/2015 3/31/2020 12/31/2015 3/31/2020 12/31/2015 3/31/2020 • Enhanced lending activity into adjacent New England states • Reduced dependence on Rhode
Slide 40: Commercial real estate property mix
Diversified Property Mix Multi-Family Dwelling • Total portfolio: $1.6 billion 29% Retail • Percent of total loans: 40% 19% • Portfolio yield: 4.09% Office 18% • Construction: $175 million Hospitality 8% Healthcare 7% • Total delinquencies: 0.1% Industrial & Warehouse • Nonperforming: 0.0% 5% Commer
Slide 41: Commercial real estate geography
• Predominantly in RI, CT and MA • Concentration: ~329% • 39% in CT • 30% in MA • 26% in RI 41
Slide 42: Commercial and industrial industry representation
Broad Industry Representation Health care & social assistance 21% Manufacturing • Total portfolio: $655.2 million 10% Retail • Percent of total loans: 16% 9% Educational Services • Portfolio yield: 4.34% 9% Owner occupied & other real estate • Location: RI, CT, MA 8% Accommodation & food services 7%
Slide 43: Deposits
$3.5 $3.5 $3.7 $3.2 $3.1 $2.9 33% Time deposits 28% Money market & savings 31% 39% Demand & NOW 36% 32% 2015 2016 2017 2018 2019 3/31/2020 • 36% of deposits are commercial-based • 11% market share in RI; rank 3rd $ billions; at December 31st unless otherwise noted (1) Excludes wholesale brokered CDs
Slide 44: Rhode Island deposit market share
Total Total Deposits in Market Rank Institution (ST) Branch Count Market ($B) Share 1 Citizens (RI) 73 $10.6 34% 2 Bank of America (NC) 29 $7.0 23% 3 Washington Trust (RI) 22 $3.4 11% 4 Santander 29 $2.3 7% 5 Bank Rhode Island (MA) 20 $1.8 6% 6 TD Bank 9 $1.6 5% 7 BankNewport (RI) 17 $1.4 4% 8 Centr
Slide 45: Deposits by branch
$300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1-2020 East Providence Plainfield Pike Johnston Rumford East Side Coventry North Providence 45
Slide 46: Securities portfolio
Largely Agency MBS • Fair value: $917.4 million • Amortized cost: $896.4 million • Yield on securities: 2.59% (yield as of Q1-20) • Duration of 1.20 years • Limited extension potential US Agency Agency MBS Corporate Bonds 14.6% 83.3% 0.9% Trust Preferred - Individual Issuers 1.2% As of March 31, 202
Slide 47: Capital Management
CAPITAL MANAGEMENT 47 [J WASHINGTON TRUST BANCORP, INC.
Slide 48: Capital ratios and book value
3/31/2020 12/31/19 12/31/18 Total risk-based capital 12.42% 12.94% 12.56% Tangible equity / tangible assets (1) 7.89% 8.28% 7.62% Book value per share $29.48 $29.00 $25.90 Tangible book value per share (1) $25.37 $24.94 $21.74 • Suits solid balance sheet, fee-intensive business model • Supports divi
Slide 49: Dividends
• Important contributor to shareholder value • Q1-2020 dividend of 51¢ per share $2.00 • Dividend yield 5.83% (1) 51¢ 16¢ As of April 30, 2020 49
Slide 50: Total return versus SNL U.S. Bank index
WASH Total Return (%) versus SNL U.S. Bank 400 350 300 250 200 150 100 50 0 -50 WASH SNL U.S. Bank Source: S&P Global Market Intelligence as of April 30, 2020 50
Slide 51: Why Washington Trust
WHY WASHINGTON TRUST 51 [J WASHINGTON TRUST BANCORP, INC.
Slide 52: Why Washington Trust
• Unique business model with diverse revenue streams • Strong credit profile throughout all economic cycles • Consistent top quartile returns and robust dividend payout • Distinguished history with demonstrated track record • Clear vision with proven growth strategy • Committed to enhancing sharehol
Slide 53: Supplemental Information
SUPPLEMENTAL INFORMATION 53
Slide 54: Quarterly income statement
For the Quarter Ended Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, $s in thousands 2020 2019 2019 2019 2019 Interest and dividend income $ 47,116 $ 47,383 $ 49,527 $ 50,559 $ 50,194 Interest expense 14,514 15,389 16,549 16,701 15,610 Net interest income 32,602 31,994 32,978 33,858 34,584 Provision for lo
Slide 55: Quarterly balance sheet
Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, $s in thousands 2020 2019 2019 2019 2019 Assets: Cash and cash equivalents $ 185,269 $ 138,455 $ 146,104 $ 119,814 $ 91,559 Mortgage loans held for sale 49,751 27,833 44,657 39,996 14,608 Total securities 917,392 899,490 887,020 969,168 994,881 FHLB stock 53,5
Slide 56: Non-GAAP reconciliation
Mar 31, Dec 31, Dec 31, Dec 31, $s in thousands, except per share amounts 2020 2019 2018 2017 Calculation of tangible book value per share Total shareholders’ equity at end of period $508,597 $503,492 $448,184 $413,284 Less: Goodwill 63,909 63,909 63,909 63,909 Identifiable intangible assets, net 6,
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