Washington Trust(US:WASH)2024-01-25 18:37Financial Data and Key Metrics Changes - In Q4 2023, net income was $12.9 million or $0.76 per diluted share, which included a tax item of $3.3 million that added $0.19 to EPS [13] - Net interest income decreased by $1.1 million or 3% to $32.7 million, with the margin down by nine basis points to $188 [13] - Non-interest income was $13.3 million, down by $1.9 million or 13%, comprising 29% of total revenues [15] Business Line Data and Key Metrics Changes - Wealth management revenues were $8.9 million, down by $67,000 or 1%, reflecting a decrease of $58 million or 1% in average AUA balances [15] - Mortgage banking revenues totaled $1.6 million, down by $554,000 or 26% [16] - Total loans increased by $37 million or 1% from September 30, and by $538 million or 11% from a year ago [19] Market Data and Key Metrics Changes - In-market deposits were down by $53 million or 1% from September 30, but up by $33 million or 1% from a year ago [20] - Average wholesale funding rose by $105 million, while average end market interest-bearing deposits increased by $21 million [14] Company Strategy and Development Direction - The company is focused on ensuring a durable balance sheet and preparing for a steadily improving external environment throughout 2024 [6] - Emphasis is placed on deposit growth, particularly in deposit-oriented segments of the economy, alongside technology investments to support these strategies [8] - The company plans to right-size its real estate footprint to unlock capital and reduce expenses [10] Management's Comments on Operating Environment and Future Outlook - Management noted that while there are signs of a stabilizing economy, short-term certainty about rates, inflation, and the credit cycle remains difficult [9] - The company expects to maintain its dividend despite a high payout ratio, indicating confidence in its capital position [31][32] Other Important Information - Total equity amounted to $473 million, up by $41 million from the end of Q3, including quarterly net income and an increase in AOCI due to fair value appreciation of AFS securities [21] - Non-accruing loans were 79 basis points, with past due loans at 20 basis points of total loans [22] Q&A Session Summary Question: Thoughts on expense growth in 2024 - Management indicated that normalized expenses for Q4 would be a good run rate going into 2024, estimating about $35 million per quarter [24][25] Question: Net interest margin outlook - The expected NIM for Q1 is between $180 to $185, with continued competitive pressure on deposits [25][27] Question: Details on the commercial real estate loan on non-accrual - The exposure is $11 million on a mixed-use property in Greater Boston, with an orderly liquidation process expected to resolve the situation [29][30] Question: Sustainability of the dividend payout ratio - Management believes the dividend is sustainable even if it temporarily exceeds a 100% payout ratio [31][32] Question: Full year loan growth for 2024 - Net loan growth is expected to be about 0%, with commercial growth offset by declines in residential and consumer loans [43][44] Question: Provision expense outlook - A slight build in provision expense is anticipated, estimating around $1 million per quarter [45]