Washington Trust(WASH) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net income for Q3 2024 was $11 million, or$0.64 per share [5] - Net interest income increased to $32.3 million, up by$677,000 or 2% from the previous quarter [5] - The net interest margin was 1.85%, an increase of two basis points [5] - Non-interest income comprised 34% of total revenue, amounting to $16.3 million, down by$388,000 or 2% [5] - Non-interest expenses rose by $594,000 or 2$114 million or 2% [6] - In-market deposits increased by $155 million or 3$502 million, up by $31 million from the end of Q2 [6] Business Line Data and Key Metrics Changes - Wealth management revenues were$10 million, up by $311,000 or 3$7.1 billion, an increase of $249 million or 4$2.9 million, up by $105,000 or 4$107 million, up 2% from the end of June [5] - The commercial loan pipeline was $90 million, up from$45 million in Q2 [8] Company Strategy and Development Direction - The company is focused on building balance sheet strength and rebuilding earnings capacity while managing credit closely [3] - A new full-service branch was opened in the Olneyville neighborhood of Providence, seen as a catalyst for community strength [4] - The company plans to ramp up underwriting in Q4 after a period of pulling back on origination activity [16] Management's Comments on Operating Environment and Future Outlook - Management noted that while the margin is not yet where desired, it has stabilized [3] - The company expects muted loan growth in the next quarter or two, with a return to normal growth thereafter [17] - Management anticipates that net interest income will be accretive going forward, despite a slight decline expected in Q4 [18] Other Important Information - The effective tax rate for Q3 was 20.6%, with an expectation of 21% for 2024 [6] - Non-accruing loans were at 55 basis points, and past due loans were at 37 basis points [7] - The allowance for loan losses totaled $42.6 million, providing coverage of 137$90 million, up from $45 million in Q2 [8] Question: Will cash balances normalize in Q4? - Cash balances are expected to normalize to about$100 million [10] Question: What is the outlook for deposit costs and margin trajectory? - The margin is expected to be flat in Q4, with potential expansion in 2025 as rates come down [13] Question: What is the status of the $10.5 million loan that is 30 days delinquent? - Management is confident in resolving this loan in Q4 due to ongoing negotiations [14] Question: Can you provide details on the classified office loans? - There are three classified properties, with one set for resolution this quarter and the others being actively managed [23][24] Question: What is the total exposure for the$20.5 million lab space loan? - The total exposure with all banks is approximately $174 million [26] Question: What is the reserve factor for the office loans? - The office reserve factor is 127 basis points, part of the total commercial real estate segment [27]