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Edited Transcript of WASH earnings conference call or presentation 28-Jan-20 1:30pm GMT

Q4 2019 Washington Trust Bancorp Inc Earnings Call

WESTERLY Jan 31, 2020 (Thomson StreetEvents) -- Edited Transcript of Washington Trust Bancorp Inc earnings conference call or presentation Tuesday, January 28, 2020 at 1:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Edward O. Handy

Washington Trust Bancorp, Inc. - Chairman & CEO

* Elizabeth B. Eckel

Washington Trust Bancorp, Inc. - Senior VP and Chief Marketing & Corporate Communications Officer

* Mark K. W. Gim

Washington Trust Bancorp, Inc. - President & COO

* Ronald S. Ohsberg

Washington Trust Bancorp, Inc. - Senior EVP, CFO & Treasurer

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Conference Call Participants

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* Erik Edward Zwick

Boenning and Scattergood, Inc., Research Division - Director and Analyst of Northeast Banks

* Laurie Katherine Havener Hunsicker

Compass Point Research & Trading, LLC, Research Division - MD & Research Analyst

* Mark Thomas Fitzgibbon

Piper Sandler & Co., Research Division - MD & Head of FSG Research

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Presentation

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Operator [1]

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Good morning, and welcome to Washington Trust Bancorp, Inc.'s Conference Call. My name is Andrew. I will be your operator today. (Operator Instructions) Today's call is being recorded.

And now I will turn the call over to Elizabeth B. Eckel, Senior Vice President, Chief Marketing and Corporate Communications Officer. Ms. Eckel?

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Elizabeth B. Eckel, Washington Trust Bancorp, Inc. - Senior VP and Chief Marketing & Corporate Communications Officer [2]

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Thank you, Andrew, and good morning, everyone. Welcome to Washington Trust Bancorp, Inc.'s Fourth Quarter 2019 Conference Call. .

Today's call will be hosted by Washington Trust Executive team, Ned Handy, Chairman, Chief Executive Officer; Mark Gim, President and Chief Operating Officer; and Ron Ohsberg, Senior Executive Vice President, Chief Financial Officer and Treasurer.

Before we begin today's call, we would like to remind everyone that the presentation may contain forward-looking statements, and actual results could differ materially from what is discussed on the call. Our complete safe harbor statement appears in our earnings press release and in other documents that we file with the SEC. We encourage you to visit our Investor Relations section at ir.washtrust.com to review the complete safe harbor statement and other documents filed with the SEC. Washington Trust trades on NASDAQ under the symbol WASH.

And now I'm pleased to introduce Washington Trust's Chairman and CEO, Ned Handy.

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Edward O. Handy, Washington Trust Bancorp, Inc. - Chairman & CEO [3]

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Thank you, Beth. Good morning, and thank you for joining us on today's call. This morning, I'll review the highlights for the fourth quarter and full year 2019. Ron will provide an analysis of our financial results, and at the conclusion of our remarks, Ron, Mark and I will answer questions about the fourth quarter 2019 and provide some thoughts on 2020. .

I'm pleased to report that Washington Trust posted record full year 2019 earnings with net income of $69.1 million or $3.96 per diluted share. Our 2019 results reflect the strength and stability of our core business model, which through the year enabled us to generate growth in revenues from our key business lines.

Total deposits amounted to $3.5 billion at year-end. This included a record $3.2 billion of in-market deposits, which grew by 5% during the year. While the current low interest rate environment has made deposit generation a challenge for all banks, we've had consistent deposit growth over time. We've relied on our high service retail team, our effective cash management team supporting commercial, institutional and municipal clients and our customer-facing bankers to bring in deposits. We enjoy a highly efficient branch network with an average branch size of approximately $150 million.

We believe that we have opportunity in Rhode Island to add branches, given our strong brand and service reputation. As you may recall, we opened a branch in North Providence, Rhode Island a year ago. It was our fifth de novo branch in as many years, and the branch is off to a good start. We continue to look for a few more attractive locations in Rhode Island.

We've had recent success with attracting checking accounts from new out-of-state residential mortgage customers. As you know, we do a great deal of mortgage lending outside of Rhode Island, but we don't have retail branches in those markets. By offering special pricing and convenient online account opening, we generated some new deposits with those mortgage clients.

Total loans reached a record $3.9 billion at year-end, up 6% during the year. On a year-to-date basis, commercial growth was up $120 million, while residential mortgage growth was $89 million. Early payoffs and prepayment speeds remained a challenge in these businesses.

Commercial lenders generated approximately $400 million in new loan and construction advances to achieve the $120 million of net portfolio growth I referenced earlier. Both areas also generated key revenues for us in 2019 as mortgage banking revenues and loan sales volume hit record levels and loan-related derivative income for the full year 2019 was at an all-time high.

Total commercial loans increased by 6% year-over-year, driven by growth in the commercial real estate portfolio. As we mentioned last quarter, we hired a commercial real estate banker and a C&I banker in the Connecticut market. Both are experienced lenders with strong history in connections with borrowers, developers and centers of influence. They've hit the ground running, and we have optimistic expectations for their production in the year ahead. We entered 2020 with a healthy commercial pipeline and hope to keep the momentum going.

Federal reserve rate cuts kept rates low and our residential mortgage origination, processing and production teams busy throughout the year. Our mortgage banking model is built on speed and service, and we continue to deliver both to our mortgage customers, which has been a competitive advantage for us. Applications were still strong as we entered 2020, and the mortgage pipeline looks good as we enter the first quarter.

Wealth management assets under administration totaled $6.2 billion at December 31, benefiting from strong financial market appreciation in 2019, an organic addition of gross new assets under management in 2019, similar to that in 2018, which helped to offset the business loss due to the departure of 2 senior counselors from our Western Financial Group subsidiary in the second quarter of 2019.

A year ago, we introduced a new private clients initiative aimed at improving the links between our commercial lending and wealth management businesses. We're pleased to report we generated more than $25 million in new assets under management in 2019. In mid-2019, we added a new member to the Private Clients Group in the Boston area. He is working closely with our wealth, commercial and mortgage officers to help build relationships and generate wealth management assets from high net worth clients and business owners. We look forward to further growth from the Private Clients Group as its outreach with prospects, clients and centers of influence continues in 2020.

I'll now turn the call over to Ron for a review of our financial performance.

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Ronald S. Ohsberg, Washington Trust Bancorp, Inc. - Senior EVP, CFO & Treasurer [4]

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Thank you, Ned. Good morning, everyone. Thank you for joining us on our call today. I'll review our fourth quarter 2019 results in some more detail. .

As Ned mentioned, net income was $15.5 million or $0.89 per diluted share for the fourth quarter as compared to $18.8 million and $1.08 for the third quarter. Net interest income for the fourth quarter was $32 million and declined by $984,000. Net interest margin was $2.61, down 11 basis points. Income from loan payoffs and prepayment penalties was modest and totaled $189,000 compared to $130,000 in the third quarter.

Income and margin were affected by the July, September and October, Federal Reserve rate reductions with LIBOR and prime-based loans resetting downward and continuing prepayments in our mortgage-backed securities and residential loan portfolios. The average balance of interest-earning assets increased by $52 million on a linked-quarter basis. Average loan balances were up by $72 million, while average investment securities were down by $46 million. The yield on earning assets decreased by 21 basis points from the third quarter to 3.86% due to lower market interest rates.

On the funding side, average in-market deposits rose by $90 million while the average balance of wholesale funding sources, which includes FHLB borrowings and wholesale brokered deposits declined by $57 million from the third quarter. The cost of interest-bearing liabilities declined by 13 basis points to 1.53%.

Net interest (sic) [noninterest] income comprised 34% of total revenues in the fourth quarter and amounted to $16.6 million, down $1.7 million or 9% from the third quarter. Wealth management revenues were $8.9 million down $259,000 or 3%. This was in line with the average balance of assets under administration, which decreased by $209 million or 3% during the quarter. The December 31 end-of-period balance of assets under administration totaled $6.2 billion, up by $109 million or 2% from September 30 and up $325 million or 5.5% since the end of 2018. This was despite approximately $650 million in cumulative lost client assets through the end of 2019 due to the departure of 2 senior counselors at the end of the second quarter.

Associated lost revenues in the fourth quarter totaled $775,000. We estimate an additional run rate impact of about $100,000 beginning in the first quarter based on current attrition levels. Our mortgage banking revenues totaled $3.7 million in the fourth quarter, which was our second strongest quarter of the year after the third quarter. The linked-quarter decline of $1.2 million was due in part to seasonally lower origination levels and a mix shift in Q4 between loans originated for sale versus portfolio. Additionally, our hedging program does cause some timing volatility, which resulted in some of the decrease in quarter-over-quarter. However, you can see on the mortgage table of our release that our originations were still very strong to close out the year. We expect this momentum to continue into Q1.

Loan-related derivative income amounted to $1.1 million in Q4. This was down by $291,000 from the above-average level recorded in Q3.

Now let me turn to noninterest expenses. Total expenses were up by $1.9 million from Q3. The linked-quarter change was impacted by a couple of items: first, an OREO write-down of $1 million was recognized in Q4, and there were no such adjustments in Q3; and second, FDIC assessment credits, which are a contra expense of $235,000 were recognized in the fourth quarter compared to $895,000 in the third quarter. This was a linked-quarter difference of $660,000. Excluding these 2 items, expenses for Q4 increased by $192,000 or 1%, with modest increases across various noninterest expense categories. Note that no additional FDIC credits remain available to us as they were fully utilized in the fourth quarter.

Income tax expense totaled $4.3 million for the quarter. The effective tax rate for Q4 was 21.8%, flat when compared to Q3. We currently expect our effective tax rate to be about 21.8% for the first half of 2020 and about 20.7% for the second half of the year, resulting in a blended rate of approximately 21.2%.

Turning to the balance sheet. Total loans were up by $115 million or 3% compared to September 30 and up $213 million or 6% from the end of 2018. Residential loans were up by $71 million or 5%. This included purchases of $53 million. Total commercial loans were up $49 million or 2% in the fourth quarter. The commercial real estate portfolio increased by $30 million, while the C&I portfolio increased by $19 million. Consumer loans were down slightly by $5 million. Investment securities were up by $12 million or 1%.

In the fourth quarter, we purchased $123 million of mortgage-backed securities. These purchases were concentrated in December and were largely offset during the quarter by routine pay downs and calls on investment securities. And the securities portfolio represented about 17% of total assets at the end of the year. In-market deposits were up $59 million or 2% from the end of Q3 and by $167 million or 5% from the end of 2018. Wholesale brokered CDs declined by $146 million and FHLB borrowings were up $185 million from September 30.

Our asset quality remains strong. Nonperforming assets declined by $527 million from the end of Q3. This included a $3 million decline in OREO and a $2.5 million increase in nonaccruing loans. The decrease in OREO reflected the sale of a commercial property, had no gain or loss and -- as well as the previously mentioned $1 million write-down. Nonaccruing loans were 0.45% of total loans compared to 0.39% at the end of Q3. The increase was concentrated in residential loans. And loans past due by 30 days or more were 0.40% of total loans compared to 0.38% at the end of Q3.

Net recoveries of $17,000 were recorded in the fourth quarter compared to net charge-offs of $801,000 in the third quarter, and the allowance for loan losses was 0.69% of total loans and provided NPL coverage of 155%. No loan loss provision was necessary in Q4 compared to a provision of $400,000 in Q3.

And shareholders' equity was $503 million at December 31, up by $5.7 million from the end of the third quarter. We remain well capitalized. The total risk-based capital ratio was 12.94%, unchanged from the third quarter, intangible equity to tangible assets declined slightly to 8.28% compared to 8.3 -- 8.28% compared to 8.32% at the end of the third quarter. And finally, our fourth quarter dividend declaration of $0.51 per share was paid on January 10. And at this time, I will turn the call back over to Ned.

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Edward O. Handy, Washington Trust Bancorp, Inc. - Chairman & CEO [5]

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Thank you, Ron. So 2019 was another good year for Washington Trust. And as we entered our 220th year of service, we remain committed to providing enhanced value to those who have contributed to our success over time: our employees, our customers, our communities and our shareholders. We know the year ahead will be challenging given the continued low interest rate environment and flat yield curve, but we have the right people, products and technology to continue to achieve positive growth in our markets. We have a dedicated team of employees who work closely with our customers to offer financial solutions backed by top-notch personal service.

As in past years, we will continue to make incremental investments in our people and technology to ensure we have all the tools necessary to deliver the best experience for our employees and our customers. Washington Trust will continue to follow the strategy that has contributed to our success over the past 219 years.

We have a solid financial foundation, strong capital and asset quality and a business model that has provided a consistent stream of revenues during all types of economic cycles. We recently paid a $0.51 per share dividend and have continued to enhance the value of our company for our shareholders. We thank them for their continued support of management and their investment in Washington Trust.

This concludes my prepared remarks. And now Mark, Ron and I will be happy to answer any questions you may have.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question comes from Mark Fitzgibbon of Piper Sandler.

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Mark Thomas Fitzgibbon, Piper Sandler & Co., Research Division - MD & Head of FSG Research [2]

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I wonder if you could update us on the wealth management runoff. Do you think we're getting to the end of that? I know you said there's some residual impact on revenues in the first quarter of $100,000, but are we pretty much through that unique customer runoff, if you will?

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Mark K. W. Gim, Washington Trust Bancorp, Inc. - President & COO [3]

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Mark, this is Mark Gim. It feels like we are through the majority of that, yes. We -- obviously, one can't handicap the amounts of probabilities, but I think that's substantially behind us, yes.

Ron, I don't know if you have anything to add.

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Ronald S. Ohsberg, Washington Trust Bancorp, Inc. - Senior EVP, CFO & Treasurer [4]

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Yes. No, the last couple of months, things have slowed down quite a bit. So I don't think we can say that there will be no more attrition, but it feels pretty good at the moment.

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Mark Thomas Fitzgibbon, Piper Sandler & Co., Research Division - MD & Head of FSG Research [5]

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Okay. And then, Ron, I wondered if you could sort of update us on your thoughts on the expected impact from CECL?

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Ronald S. Ohsberg, Washington Trust Bancorp, Inc. - Senior EVP, CFO & Treasurer [6]

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Yes. So like other banks, we all kind of stick to a range, but we think it's an increase on a nontax-effected basis of 6.9 -- $6 million to $9 million, a range.

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Edward O. Handy, Washington Trust Bancorp, Inc. - Chairman & CEO [7]

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That's the adjustment to equity.

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Ronald S. Ohsberg, Washington Trust Bancorp, Inc. - Senior EVP, CFO & Treasurer [8]

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Yes. Adjustment to equity, Mark.

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Mark Thomas Fitzgibbon, Piper Sandler & Co., Research Division - MD & Head of FSG Research [9]

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Okay, great. And then I was just curious, that $53 million of resi mortgages you bought this quarter at a yield of 3.36%. When you factor in funding costs, it strikes me that, that's going to be degradative to the margin. Can you help us think about sort of the strategy there?

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Ronald S. Ohsberg, Washington Trust Bancorp, Inc. - Senior EVP, CFO & Treasurer [10]

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Well, so we're -- we care about the margin, obviously, but we also care about net income. And certainly, it's accretive to income.

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Mark K. W. Gim, Washington Trust Bancorp, Inc. - President & COO [11]

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Secondly, Mark, this is Mark Gim. We also view it as an opportunity to replace lower-yielding MBS with high-quality end market resi loan purchases that fit our risk profile. So when we see opportunities in terms of low-cost, high-credit quality, attractive markets, we will sometimes make recourse to the purchase resi market as an alternative to reinvesting MBS cash flows.

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Mark Thomas Fitzgibbon, Piper Sandler & Co., Research Division - MD & Head of FSG Research [12]

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Okay. But considering that, we probably should expect the margin to be down a little bit more in coming quarters, would you say?

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Ronald S. Ohsberg, Washington Trust Bancorp, Inc. - Senior EVP, CFO & Treasurer [13]

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Actually, no. For the past couple of quarters, we've said that our loans tend to reprice downward faster than our borrowing costs. We expect to get 4- to 5-basis point NIM expansion in the first quarter, and another 4 to 5 basis points in the second quarter. So that would put us for -- with a second quarter NIM, approximately 2.70% and things would kind of level out from there for the rest of the year.

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Mark K. W. Gim, Washington Trust Bancorp, Inc. - President & COO [14]

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And Mark, that assumes no further action by the Federal Reserve, which is, of course, unknown to us.

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Ronald S. Ohsberg, Washington Trust Bancorp, Inc. - Senior EVP, CFO & Treasurer [15]

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That's right.

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Mark Thomas Fitzgibbon, Piper Sandler & Co., Research Division - MD & Head of FSG Research [16]

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Okay. And then lastly, I'm curious on the expense front. Is there any -- you mentioned, I think, Ned, in your earlier comments about you have, [in the] past, you'd opened some branches in Rhode Island. Should we look for any unique increases in expenses during the course of this year?

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Edward O. Handy, Washington Trust Bancorp, Inc. - Chairman & CEO [17]

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Yes. I mean, I think we are looking at other branch locations. So that's a possibility. The lenders that we hired in Connecticut are revenue generators, customer-facing. If we came across opportunities like that, we might invest in those for revenue growth. The technology has been run, you might...

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Ronald S. Ohsberg, Washington Trust Bancorp, Inc. - Senior EVP, CFO & Treasurer [18]

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Yes. So Ned -- Mark, on a core basis, we see 2020 expenses going up at about a 4% to 5% range. We are seeing some wage pressure. We're also wrapping up the final stages of 3-year technology infrastructure upgrade. We started with desktops and Windows. We moved on to servers. And this year, we'll migrate things out to the cloud. So some, a little bit higher level of core operating expense increase than what we've seen in the past couple of years in the 4% to 5% range. And as Ned said, as always, we will make appropriate strategic investments in the business, such as additional branches, if we find the right opportunities along the way. But there's nothing unusual on the horizon at this point.

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Operator [19]

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The next question comes from Erik Zwick of Boenning and Scattergood.

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Erik Edward Zwick, Boenning and Scattergood, Inc., Research Division - Director and Analyst of Northeast Banks [20]

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Maybe just a follow-up on the loan growth a little bit. Just curious, given the strong finish to the year from an organic growth perspective, a little bit of kind of purchase activity in there as well. What should we be thinking about or kind of how are you targeting loan growth in 2020? And what would you expect the mix to be from an organic versus kind of purchase perspective?

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Ronald S. Ohsberg, Washington Trust Bancorp, Inc. - Senior EVP, CFO & Treasurer [21]

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Yes. So Erik, it's Ron. So our pipelines for both commercial and residential are pretty good right now heading into 2020. As such, we kind of expect a strong mid-single-digit growth heading into 2020. On the resi side, that could be supplemented with some additional purchase activity, as Mark mentioned, and as we did in the third -- the fourth quarter, but that's kind of how we see it.

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Erik Edward Zwick, Boenning and Scattergood, Inc., Research Division - Director and Analyst of Northeast Banks [22]

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Okay. That's helpful. And then given that strong loan growth as well as letting some of the kind of wholesale deposits run-off, the loan deposit ratio ended the year at 111%. Just kind of curious, your thinking around that current level and how that might trend going forward. Do you have a target in mind?

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Ronald S. Ohsberg, Washington Trust Bancorp, Inc. - Senior EVP, CFO & Treasurer [23]

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Right. So we track loan-to-deposits on both a total deposit as well as an end market deposit basis. So the increase that you're seeing in the loan-to-deposit ratio to $111 million really reflects the runoff of the wholesale brokered CDs, which we consider kind of interchangeable with FHLB advances. And FHLB was just cheaper in the fourth quarter. So we allowed some of that CD runoff to be replaced by FHLB.

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Erik Edward Zwick, Boenning and Scattergood, Inc., Research Division - Director and Analyst of Northeast Banks [24]

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Okay. And so you expect to -- if I think about it in terms of loans to the end market deposits, try -- kind of that level should be more constant and then the kind of total ratio may just fluctuate based on kind of the cost of the funding alternative funding, okay?

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Ronald S. Ohsberg, Washington Trust Bancorp, Inc. - Senior EVP, CFO & Treasurer [25]

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Yes. Yes. And as we've talked about many times, deposits are a priority for us. That's why we're doing the de novo branching. It's a difficult deposit environment out there. We recognize that, and we're doing everything we can to increase our deposit growth rate.

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Erik Edward Zwick, Boenning and Scattergood, Inc., Research Division - Director and Analyst of Northeast Banks [26]

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Sure. And then on the fee income side, obviously, a great year in 2019 for mortgage revenue, $14.8 million. Your expectations, you mentioned that the pipeline is strong, kind of heading into the beginning of the year. Would you expect to be able to approach that number again in 2020 or too early to tell at this point?

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Mark K. W. Gim, Washington Trust Bancorp, Inc. - President & COO [27]

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Erik, this is Mark Gim. So I think what you've said is pretty accurate. We believe that the first and second quarters of 2020 will be strong based both on current pipeline volume and on the strength of the resi housing market in our lending areas, where there really aren't any signs of decreased demand and pressure on supply. And given the level and trend of the long end of the yield curve, we don't have a -- any major expectation that rates would trend up from here.

The crystal ball is a little less clear on the second half of the year just because it's further out, and we're late in the in the growth cycle. But at least for the first half of the year, from a color standpoint, it seems strong. Ron, I don't know if you have anything to add?

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Ronald S. Ohsberg, Washington Trust Bancorp, Inc. - Senior EVP, CFO & Treasurer [28]

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Yes. No, I mean, we had a record year. We don't necessarily think that mortgage revenue is going to go up 40% again. But we have much stronger volumes and pipeline levels than we normally do at this time of the year. So it's -- things are pretty good on mortgage.

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Erik Edward Zwick, Boenning and Scattergood, Inc., Research Division - Director and Analyst of Northeast Banks [29]

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I appreciate the color there. And maybe just one last one for me. As I think about kind of the bigger picture, it's obviously a tough operating environment given the shape of the curve, the low interest rate environment certainly putting pressure a little bit on earnings as well as profitability. I guess, in terms of how you think about success in 2020 in terms of either earnings growth or ROA or some other profitability measurement, kind of how are you shaping your expectations for 2020?

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Edward O. Handy, Washington Trust Bancorp, Inc. - Chairman & CEO [30]

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Yes. Let me start with that, Erik, it's Ned. And thanks for the question. I think we feel well positioned. Certainly, credit quality is great. We don't have anything to worry about on that front. I think the growth rates that Ron has talked about are achievable. We do know that deposits is our -- it continues to be our #1 priority. And so we're thinking about that strategically.

As we talked about earlier, if a great branch location comes up that we think we're prepared to pull the trigger on that, M&A, our view on M&A hasn't changed. We're going to be very cautious and thoughtful about it, both on the bank and wealth side. So we were obviously generating capital and we've got the capital to do some things. How we deploy it, we think about all the time and look for ways to continue to continue growth off of what we think is just a great foundation.

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Mark K. W. Gim, Washington Trust Bancorp, Inc. - President & COO [31]

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And Erik, this is Mark. Our goal, as always, is to remain in the top quartile of community banks are -- in our peer group and this challenging rate environment, certainly for all of them. We think that some of the differentiators we have, the wealth management business, the mortgage banking business are worth emphasizing in environments like this. And lastly, we, as Ned said, have enough routes to deploy capital, whether through dividend or through M&A or through the opportunistic use of repurchase to manage those profitability levers.

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Operator [32]

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The next question comes from Laurie Hunsicker of Compass Point.

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Laurie Katherine Havener Hunsicker, Compass Point Research & Trading, LLC, Research Division - MD & Research Analyst [33]

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Just wanted to go back to expenses. When you said a 4% to 5% increase in core expenses, I just wondered what you're using as your core base for 2019. Because certainly, there was some noise, whether it was the outside vehicle fees or the OREO? Or if you're just looking at this on a more reported level?

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Ronald S. Ohsberg, Washington Trust Bancorp, Inc. - Senior EVP, CFO & Treasurer [34]

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It's basically on a reported level that the OREO write-down -- the OREO write-down that we took in December kind of offsets the benefit that we had on the FDIC. So on a full year basis, I think our reported expense base is pretty representative of the things that we have going forward.

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Laurie Katherine Havener Hunsicker, Compass Point Research & Trading, LLC, Research Division - MD & Research Analyst [35]

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Okay. And then for your full year '20 guide, does that assume any de novo branches are opened or more than likely if you would identify?

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Ronald S. Ohsberg, Washington Trust Bancorp, Inc. - Senior EVP, CFO & Treasurer [36]

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No.

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Laurie Katherine Havener Hunsicker, Compass Point Research & Trading, LLC, Research Division - MD & Research Analyst [37]

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Okay. So it would be 2021. Okay. And then just jumping back to the comments around about selective buyback. Can you help us think about, as you rank use of capital, where you would stand in terms of buyback versus dividend versus M&A? And how we should think about that with your stock sitting here at $51?

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Ronald S. Ohsberg, Washington Trust Bancorp, Inc. - Senior EVP, CFO & Treasurer [38]

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Yes. So I mean where we trade relative to tangible book value seems like buyback doesn't necessarily make a lot of sense at these levels. I mean we would be looking closely at our share price when making that decision and just considering what we think is important overall to investors in terms of whether a dividend would be preferable or not.

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Laurie Katherine Havener Hunsicker, Compass Point Research & Trading, LLC, Research Division - MD & Research Analyst [39]

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Okay. And so what is...

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Edward O. Handy, Washington Trust Bancorp, Inc. - Chairman & CEO [40]

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Sorry, Laurie, it's Ned. I was just going to say that the value of the dividend, which we've paid historically is, we think, a big part of investing in our stock, and that's, obviously, to us, is a priority, but it doesn't mean that we don't think about other alternatives for capital deployment.

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Laurie Katherine Havener Hunsicker, Compass Point Research & Trading, LLC, Research Division - MD & Research Analyst [41]

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Okay, great. And then...

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Mark K. W. Gim, Washington Trust Bancorp, Inc. - President & COO [42]

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And lastly, Laurie, M&A is, as you know, opportunistic. We are -- we have historically been a disciplined acquirer and would put money to work as appropriate on the bank or wealth side when those opportunities are a good fit for us.

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Laurie Katherine Havener Hunsicker, Compass Point Research & Trading, LLC, Research Division - MD & Research Analyst [43]

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Okay, great. And just last question around the buyback. What price point do you become more constructive?

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Ronald S. Ohsberg, Washington Trust Bancorp, Inc. - Senior EVP, CFO & Treasurer [44]

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Yes. I don't know that we would get into that.

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Operator [45]

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This concludes our question-and-answer session. I would like to turn the conference back over to Ned Handy for any closing remarks.

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Edward O. Handy, Washington Trust Bancorp, Inc. - Chairman & CEO [46]

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Well, thank you all for your time and your interest in Washington Trust. We appreciate it. And we know you have a lot on your plate. So with that, I will say thank you, and we'll talk to you again soon. Thanks very much.

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Operator [47]

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The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. .