Washington Trust Bancorp, Inc.

Good morning, and welcome to Washington Trust Bancorp's Incorporated Conference Call. My name is Chuck, and I'll be your operator today. If participants need assistance during the call at any time, please press star, then zero. Participants interested in asking a question at the end of the call should press star, then one, to get into the question queue. Today's call is being recorded, and I will turn the call over to Ms. Elizabeth B. Echol, Senior Vice President, Chief Marketing and Corporate Communications Officer. Ms. Echol.

Thank you, Chuck. Good morning and welcome to Washington Trust Bancorp Bank's conference call in fourth quarter and full year 2020. Joining us on today's call are members of Washington Trust Executive Team, Ned Handy, Chairman and Chief Executive Officer, Mark Kim, President and Chief Operating Officer, Ron Osberg, Senior Executive Vice President, Chief Financial Officer and Treasurer, and Bill Ray, Senior Executive Vice President and Chief Risk Officer. As a reminder, today's presentation may contain forward-looking statements, and actual results could differ materially from what is discussed on today's call. Our complete safe harbor statement is contained in Washington Trust earnings press release that was issued yesterday and with other documents that we filed with the SEC. We encourage you to visit our investor relations site at ir.wash.com to view our complete safe harbor statement and all of these public filings. Washington Trust trades on NASDAQ under the symbol WASH. And now I'm pleased to introduce the host for today's call, Washington Trust Chairman and CEO, Ned Handy.

Thank you, Beth, and good morning, and thank you for joining us on today's call. I'd like to start by wishing you all the very best in this new year. We're all thrilled we're in the new year. We hope that you and your families have stayed safe throughout this pandemic, and we're all grateful that the vaccination campaign is underway with hopes that it will bring some normality back to us all soon. So 2020 was a year like no other, marked by unprecedented challenges, disruption, and uncertainty, yet Washington Trust stood strong and prevailed, just as we've done so many times before in our 220-year history. I'm really proud of the work our team has done to help our customers and our communities get through these ongoing challenges. I know that by embracing our responsibility and being a proactive part of the solution, we've created more value in the Washington Trust franchise. This morning, I'll provide some 2020 highlights, and Ron Osberg will review our fourth quarter and year-end financial results. After our prepared remarks, Mark Gimm and Bill Ray will join us for a question-and-answer session. I'm pleased to report that Washington Trust ended 2020 with another solid performance posting fourth quarter earnings of $18.6 million or $1.07 per diluted share. These results contributed to a strong full year 2020 earnings of $69.8 million or $4 per diluted share compared to $69.1 million or $3.96 per diluted share reported for 2019. Our success in 2020 was due to several things, the spirit and resilience of our dedicated team of employees who maintained high service levels and business as usual operations during a major pandemic. The strength, stability and improvement in our balance sheet and the multiple facets of our business which during continued low interest rates and an uncertain operating environment enabled us to achieve these earnings. And the loyalty and perseverance of our customers who have trusted us to help them through these difficult times. Washington trusts strong corporate governance and enterprise risk management practices, which specifically address and test our business continuity plan, ensured our preparedness for this crisis. Strategic technological investments made in recent years also enabled us to quickly, securely, and flawlessly transition business operations to a remote working environment. Over the past year, we've learned many lessons, including just how much our customers value our personal service. In 2020, Washington Trust, like the rest of the industry, saw increased customer use of digital banking, online account opening, and other technological conveniences. We remain committed to and will keep pace with these technological developments as we know this trend will continue. However, we also know that when customers need financial advice, they prefer a human connection and want to have a real conversation with a trusted advisor, whether it's in person, by phone, or through video conferencing. We take great pride in the relationships we've built with our customers and strive to provide a high level of personal service. In fact, our net promoter scores, which consistently rank us higher than the industry averages for customer satisfaction, actually increased during the pandemic. Looking forward, we will continue to measure customer satisfaction and monitor trends to ensure we're consistently improving the customer experience across all delivery channels and business lines. Let me take a few moments to share some of the business line highlights from 2020. Loan outstandings grew 8% in 2020 aided by PPP fundings, but challenged by prepayment speeds on the retail side and payoffs on the commercial side. Our credit formation was up about 35% over 2019. I'd like to take a moment to acknowledge the efforts of our lending team, branch staff, customer service center, and all of the employees throughout the bank who went the extra mile to assist borrowers, both customers and non-customers, with PPP loans. I've personally spoken with several local borrowers who were grateful for the advice and guidance they received from us, and as a result of the personal attention they received, have committed to further building their banking relationships with us. We continue to assist local borrowers with PPP forgiveness and with the second round of PPP loans. And Ron will provide a more detailed update of our PPP lending program shortly. We continue to be satisfied with overall credit quality of our loan portfolios and Ron will provide some more details in his comments. We also recognize that we're not through with this pandemic. We've cleared about 500 million in deferments through year end and have another 200 million or so to clear. We know the assets and follow them very closely. Ron will give you some more information and we'll be happy to answer any questions you may have during the Q&A session. Total deposits at December 31, 2020 were up 25% from a year prior, and in-market deposits, which exclude wholesale brokered time deposits, grew by 18% in 2020. The growth in deposits allowed us to reduce federal home loan bank borrowings, improve our loan-to-deposit ratio, and since interest rates have remained low, decrease our funding costs to help offset continued margin pressure and improve our balance sheet for what comes ahead. A year ago, we were discussing the industry-wide need for deposits. Today, we're reporting all-time high level of deposits, including low-cost core checking and savings accounts and increased money market balances. Consumers started curtailing their spending habits and shifted to saving and liquid deposit accounts given the continued economic uncertainty resulting from the pandemic. In 2020, we found new ways to encourage customers to save. We introduced Add It Up, a program which automatically rounds up debit card purchases to the next dollar and transfers the difference into another Washington Trust account. The program has not only helped increase savings balances, but also improved debit card and checking account activation. As I've mentioned on previous calls, we consider our branch employees frontline heroes as they have continued to work throughout the pandemic, smiling beneath their masks and assisting customers through plexiglass dividers and drive-through banking windows. And while banks across the nation and locally have announced plans to close branches, Washington Trust remains committed to expanding our network as branch banking remains an important part of our community engagement and our delivery strategy. In 2020, we broke ground for our East Greenwich branch. We believe there's a great deal of opportunity in this market and look forward to a spring 2021 opening. And while the pandemic and social distancing protocols may still be in place when we open our East Greenwich branch doors, I know customers will be welcomed into a safe and friendly environment and feel a human connection with our team. Our mortgage banking team also deserves recognition for the incredible results they produced in 2020. Not only did mortgage originations and sales volumes reach record levels in 2020, but mortgage banking revenues totaled a record $47.4 million. for the full year 2020, up 220% from 2019. Low interest rates drove increased mortgage demand in early 2020, but the onset of the pandemic was a cause for concern. Our residential mortgage team continued to work diligently and didn't miss a beat when employees were forced to work remotely. Throughout the pandemic, rates remained low, and a new work-from-home trend resulted in significant new growth in single-family home purchases and mortgage refinancing. Our mortgage team has worked extremely hard and there's some indication that mortgage banking activities may start to normalize in 2021, but it's difficult for us to predict what will happen for the full year. Ron will provide some further color in his comments. Our Wealth Management Division's assets under administration reached a record $6.9 billion at December 31st, up 7% from the end of 2019, positioning us very well to head into 2021. Throughout the year, we provided ongoing advice and guidance to help our clients plan and better understand market volatility and economic uncertainty. Once our wealth management advisors began working remotely, we became even more attentive with our clients and proactive with our communications, conducting video conferences and webinars and providing frequent market updates. We also saw an increase in our clients' use of our online portals, viewing their portfolio status, accessing statements, and communicating with our advisors. Our wealth management division continues to be a key part of our diversified business model, providing a consistent stream of non-interest income to our company. Ron will provide more detail on our expenses, but I'm proud that we continue to operate our business efficiently while prioritizing expenditures to ensure outstanding and safe customer experiences, as well as the continued well-being and development of our employee team. As a testament to these efforts, we are recognized as one of the best places to work in Rhode Island for the 10th straight year and one of the best banks to work for by American Banker, being the only bank in Rhode Island on that list. I'll now turn the call over to Ron for a review of our financial performance.