Washington Trust Bancorp, Inc.

Good morning and welcome to Washington Trust Bancorp, Inc.' 's conference call. My name is Rocco. I will be your operator today. If participants need assistance during the call at any time, please press star zero. Participants interested in asking the question at the end of the call should press star one to get in the queue. Today's call is being recorded. And now I will turn the call over to Elizabeth B. Edwards, Senior Vice President, Chief Marketing, and Corporate Communications Officer. Ms. Echol, please go ahead.

Thank you, Rocco. Good morning, everyone, and welcome to Washington Trust Bank Bank's third quarter 2020 conference call. We'd like to remind everyone that today's presentation may contain forward-looking statements, and our actual results could differ materially from what is discussed on the call. Our complete safe harbor statement is contained in Washington Trust earnings press release and other documents that we file with the SEC. We encourage you to visit our investor relations website at ir.washtrust.com to visit the complete safe harbor statement and other public filings. Washington Trust trades on NASDAQ under the symbol WASH. Today's call will be hosted by Washington's Trust Executive Team, Ned Handy, Chairman and Chief Executive Officer, Ron Osberg, Senior Executive Vice President, Chief Financial Officer and Treasurer, and they will review our second quarter financial performance. Excuse me, a third quarter financial performance. At the conclusion of their remarks, Mark Gim, President and Chief Operating Officer, and Bill Ray, Senior Executive Vice President and Chief Officer, will join Ned and Ron for our question and answer session. And I'm now pleased to introduce Washington Trust Chairman and CEO, Ned Handy. Ned?

Thank you, Beth. Good morning, and thank you all for joining us on today's call. Yesterday, we released our third quarter earnings. This morning, I'll review the quarter's highlights, and Ron Osberg will discuss our financial performance. We will then answer any questions you may have about the third quarter or our outlook for the remainder of 2020. I'm pleased to report that Washington Trust posted net income of $18.3 million, or $1.06 per diluted share, for the quarter ended September 30, 2020. Our key performance measures remain strong. We are well capitalized. And while our asset quality indicators improved in the quarter, we continue to be highly focused on our loan portfolios and very close to our borrowers as we work through the challenges of the pandemic. Our third quarter performance reflects our success at generating solid earnings during extremely challenging economic times. It's amazing to think about what we've experienced so far this year. Near record low interest rates, financial market volatility, social and political unrest, and a global pandemic. Fortunately, Washington Trust's business continuity and pandemic planning, diverse business model, and strong balance sheet have enabled us to manage our way through these difficult times. I couldn't be more proud of our team and the work they have done and continue to do to ensure the well-being of our Washington Trust family, our customers, and our communities. Let me take a moment to review some of the highlights from our key business lines. Total deposits amounted to $4.3 billion at September 30th, up 4 percent from the previous quarter and nearly 20 percent from a year ago. We had strong in-market deposit growth and had seasonal inflows from institutional and municipal customers during the quarter. We had increases across all deposit categories, checking, now, savings, money markets, and CDs. The increase in low-cost core deposits allowed us to reduce federal home loan bank borrowings, which helped stabilize the margin. There's been some indication that customers are saving more than usual, perhaps a result of reduced spending during COVID or need to set aside emergency funds. We are fortunate to be in a position to help our customers manage their funds in whatever way their condition mandates. During the pandemic, we temporarily closed our branch lobbies for health and safety reasons and saw an increase in the use of drive-through digital and telephone banking services. Now that our lobbies are open, We've seen an uptick in branch traffic but haven't seen a corresponding decrease in other delivery channel usage. We believe a high-tech, high-touch service model fits well with our community banking strategy. We found that our customers enjoy the convenience technology offers but also want face-to-face conversations with our trusted advisors as needed. And during these turbulent times, our team has been there for them. Branch expansion has been a key part of our growth in recent years, and I'm pleased to announce that we recently broke ground for a new branch in East Greenwich, Rhode Island. This is one of a handful of remaining vibrant suburban communities in Rhode Island where Washington Trust does not currently have a presence. We anticipate the branch will open towards the end of the first quarter of 2021. Total loans amounted to $4.3 billion at quarter's end, which was essentially unchanged from the previous quarter. Year over year, we had double-digit growth as total loans were up 13% from September 30, 2019. Commercial loan activity was relatively flat during the quarter, which was not unexpected given market conditions. We continue to work one-on-one with borrowers to help with PPP forgiveness, applications, and assist with loan deferrals, modifications, and extensions. Our team has been working around the clock, and I've been pleased to speak with borrowers who are grateful for the support and attention that we've provided them. It's been a difficult time for local businesses, and as a community bank, it is our responsibility to do whatever we can to help keep businesses open and the economy moving forward. Ron will provide more detail about our credit portfolio, including an update on loan deferments. The residential mortgage story continues to be a good one, as mortgage banking activity was outstanding during the quarter. Both mortgage originations and mortgage loans sold to the secondary market reached all-time quarterly high levels, with mortgage originations surpassing the $1 billion mark. Mortgage revenues totaled $12.4 million for the third quarter, up a remarkable 155% over the same period last year. Year-to-date mortgage revenue has tripled the amount earned in 2019. Housing demand is very strong, but inventory is low in the areas where we originate. Rates are anticipated to be low for the coming months, and we anticipate that there will be continued demand for refinancing as well as purchases. We continue to be very active in the greater Boston area where low inventory levels support a robust and fast-paced sales market. We've also seen an increase in second home purchases in our market as borrowers look for green space properties. It's been a busy year for our mortgage team, and they work closely with borrowers to ensure they receive the right product and best pricing. We've introduced technology to make the process faster, easier, and more efficient for employees and customers, but personal service plays a key role in retaining and building mortgage relationships. The unprecedented volume and pace has been exhausting, and I want to acknowledge the hard work and dedication of our mortgage team, from the front lines to the back offices, as they've worked tirelessly to ensure homebuyers' needs were met while producing record results. Our mortgage pipeline remains strong going into the fourth quarter. so we believe volume should continue at a good pace through year end. Wealth management assets under administration amounted to $6.4 billion at September 30th, up 4% from the previous quarter. Wealth management revenues amounted to $9 million and were also up by 4%. As we found with other business lines, our wealth management clients continue to seek personal advice and attention during these uncertain economic times. Our wealth team has done an outstanding job of meeting clients safely in person or through online conferencing to ensure their financial plans and investments are in order. I'll now turn the discussion over to Ron for a more in-depth review of our financial performance. Ron?