Washington Trust Bancorp, Inc. · NASDAQ:WASH
Washington Trust Bancorp — Q3 2024 Earnings Presentation
33 slides from Washington Trust Bancorp's earnings presentation, Oct 22, 2024
Slide 1: Investor Deck Q3 2024
Investor Deck Q3 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 1 LEVERAGING 1. Relationship‐driven leader with distinguished history and prestigious recognition OUR STRONG 2 MARKET 2. Diverse revenue streams combine core banking, wealth POSITION AND management, and mortgage banking RESILIENT BUSINESS MODEL 33. Strong credit
Slide 4: $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 $7.1B $5.5B $5.2B 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 to the Forbes list of Best‐In‐State Banks 2024 for the 4th consecutive year. Named as one of Rhode Island’s Best Places to Work by Providence Business News for the 14th year in a row. Named as one of the Healthiest Emplo
Slide 6: Earnings Generation and Profitability
P R O F I TA B I L I T Y Historical Earnings Throughout History Earnings Generation and Profitability $5.00 $80.0 $70.0 o Increased earnings pressure in $4.00 financial market and geopolitical $60.0 Net Income ($mil) headwinds Diluted EPS $3.00 $50.0 $40.0 o Demonstrated stability through $2.00 $30.
Slide 7: Generating Diverse Income Sources
R E V E N U E Generating Diverse Income Sources Revenue Contributions From Fee Revenue Outpaces Peer Group All Major Business Lines Better than 93% of peer group (1) ($ in millions) Non‐Interest Income / Operating Income $226.9 $228.8 $218.6 50.0% $193.2 45.0% 40.0% $145.6 35.0% 8% 30.0% 6% 25.0% 20
Slide 8: Challenging Rate Environment
NET INTEREST MARGIN & REPRICING Challenging Rate Environment Net Interest Margin o Fed rate cuts will allow us to reprice 2.50% $50,000 the funding side and improve NIM 2.00% $40,000 1.50% $30,000 o Balance sheet positioned to benefit 1.00% $20,000 from lower rates 0.50% $10,000 o Adjustable‐rate lo
Slide 9: Strong Growth in Quality Loan Portfolio
L O A N S Strong Growth in Quality Loan Portfolio Total Loan Portfolio ($ in billions) $5.6 $5.5 Consumer (6%) 64% $5.1 Variable rate $4.3 loans $4.2 Residential (46%) C&I (10%) 99% Residential CRE (38%) lending in RI, MA, & CT 2020 2021 2022 2023 9/30/2024 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 11.5% $171M #1 ($ in billions) Largest state‐ Market Share Avg. in‐market in Rhode deposits per chartered Island (1) branch bank $5.3 $5.2 $5.0 $5.0 $4.4 Time deposits (31%) MM & Savings (32%) 20% uninsured deposits after Deman
Slide 11: Sizeable Wealth Management Operation
W E A LT H M A N A G E M E N T Sizeable Wealth Management Operation Assets Under Administration (AUA) ($ billions) $7.1B AUA $6.6 $7.1 Asset Mix at September 30, 2024 $6.0 Fixed Other Income 3% 23% Cash 9% 2022 2023 YTD 9/30/2024 Equity 65% Revenues ($ millions) $38.7 $35.5 $29.0 o Key contributor t
Slide 12: Shifting Origination Mix
M O R TG A G E B A N K I N G Shifting Origination Mix Mortgage Banking Revenues (1) ($ millions) $8.7 $8.1 $6.7 o Flexible origination model where loans can be sold or put in portfolio o Strategic approach aimed at 2022 2023 YTD 9/30/2024 developing broader banking relationships Mortgage Origination
Slide 13: Historical Differentiator for Washington Trust: Asset Quality
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 YTD 06/2024 2006 – 6/30/2024 (bps) WASH 162 Average
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% YTD 06/2024 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2006 2007 2008 2009 2
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% Sep‐04 Sep‐05 Sep‐06 Sep‐07 Sep‐08 Sep‐09 Sep‐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 6.95% (1) Dividend Yield Cash Dividend Declared Tangible Book Value per Share Plus $2.24 Cumulative Dividend per Share CAGR 12/31/2006 to 06/30/2024 $1.68 10.43% 7.71% 7.08% 16¢ 1992 93 94 95 9
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 #2 Rapid deployment of technology Return to historical investments to enhance customer rate of earnings 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 opened in Q3 2024 East Providence Plainfi
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 (CRE): $2.1 billion % of CRE Portfolio by Segment as of 9/30/24 Multi‐Family (26%) $540,792 Retail (20%) $428,217 Industrial & Warehouse (16%) $337,950 Office (14%) $296,545 Hospitality (10%) $203,972 Healthcare facility (10%) $202,854 Mixed Use (1
Slide 24: Office Portfolio
Office Portfolio o Office portfolio consists of 49 loans with o Approximately 40% of the total commercial a Carry Value of $297 million. real estate office balance will mature before September 30, 2026. Asset Quality Weighted Average Debt Non‐Accrual Avg Loan Loan to Service Special (included in Bal
Slide 25: Residential & Home Equity
Residential & Home Equity Residential Home Equity Total portfolio ($ millions) $ 2,529.4 $ 299.4 FICO score* 765 755 Total delinquencies 0.27% 0.94% Nonperforming 0.42% 0.58% Net charge‐offs to average loans 0.00% 0.00% LTV (1) 55.0% 19.3% CT 6% Other 1% MA RI 74% 19% At or for the nine months ended
Slide 26: ACL Rollforward
$ thousands $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 $55,000 $60,000 $65,000 December 31, 2019 $27,014 2020 CECL Adop on $6,501 2020 Provision $11,736 2020 Charge‐offs ($1,317) ACL Rollforward 2020 Recoveries December 31, 2020 $172 $44,106 2021 Provision 2021 Charge‐offs
Slide 27: Income Statement
Income Statement For the Quarter Ended Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, $s in thousands 2024 2024 2024 2023 2023 Interest and dividend income $ 87,586 $ 85,997 $ 85,256 $ 83,946 $ 80,721 Interest expense 55,324 54,412 53,591 51,292 46,970 Net interest income 32,262 31,585 31,665 32,654 33,751
Slide 28: Balance Sheet
Balance Sheet Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, $s in thousands 2024 2024 2024 2023 2023 Assets: Cash and cash equivalents $ 210,743 $ 107,531 $ 105,588 $ 90,184 $ 113,009 Total securities 973,266 951,828 970,060 1,000,380 958,990 Total loans 5,514,870 5,629,102 5,685,232 5,647,706 5,611,115 L
Slide 29: Non-GAAP Financial Measures
Non‐GAAP Financial Measures Sep 30, 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 at end of period $502,229 $472,686 $453,669 $564,808 Less: Goodwill 63,909 63,909 63,909 63,909 Identifiab
Slide 30: Non-GAAP Financial Measures
Non‐GAAP Financial Measures Nine months ended FYE Sep 30, 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 $ 32,732 $ 48,176 $ 71,681 $ 76,870 Total average assets, as reported 7,238,020 6,
Slide 31: Non-GAAP Financial Measures
Non‐GAAP Financial Measures As calculated by S&P Global Market Intelligence YTD FYE Jun 30, Dec 31, Dec 31, Dec 31, 2024 2023 2022 2021 Calculation of adjusted return on average tangible equity Net income available to common shareholders $21,731 $48,091 $71,479 $76,648 Adjustments: Amortization* 329
Slide 32: 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 2024 2023 2022 2021 2020 2019 Calculation of core return on average equity Net income, as reported $21,751 $48,176 $71,681 $76,870
Slide 33: 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 2024 2023 2022 2021 2020 2019 Calculation of risk weighted core return on average assets Net income, as reported $21,751 $48,176 $
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