Good morning, and welcome to the Washington Trust Bancorp, Inc.'s Conference Call. My name is Emily, and I will be your operator today. If participants need assistance during the call at any time, please press star zero. Participants interested in asking a question at the end of the call should press star one to get into the queue. Today's call is being recorded. Now I will turn the call over to Elizabeth B. Eckel, Executive Vice President, Chief Marketing and Corporate Communications Officer. Ms. Eckel? Thank you, Emily. Good morning, and welcome to Washington Trust Bancorp, Inc.'s Third Quarter 2023 Conference Call. Joining us this morning are members of Washington Trust executive team, Ned Handy, Chairman and Chief Executive Officer; Mary Noons, President, Chief Operating Officer; Ron Ohsberg, Senior Executive Vice President, Chief Financial Officer, and Treasurer; and Bill Wray, Senior Executive Vice President and Chief Risk Officer. Please note that 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 our earnings release, which was issued yesterday, as well as other documents that are filed with the SEC. All of these materials and other public filings are available on our investor relations website at ir.washtrust.com. Washington Trust trades on NASDAQ under the symbol WASH. I'm now pleased to introduce today's host, Washington Trust Chairman and CEO, Ned Handy. Thank you, Beth. Good morning, and thank you for joining our third quarter conference call. We appreciate your time and interest in Washington Trust. During my remarks this morning, I'll provide comments about our third quarter results in context with the market conditions we're seeing, as well as an update on our current focus for value creation. Then Ron Ohsberg will offer more detail regarding our third quarter performance, and after our prepared remarks, Mary Noons and Bill Wray will join us for the Q&A session. In the third quarter, our team did a solid job of managing through the current challenging market dynamics while executing our long, long-term strategy, which is to build a sustainably relevant, consistently profitable, and relationship-driven regional financial services organization. We remain laser-focused on all approaches to achieving in-market deposit growth, including technology investment, product development, branch expansion, and sales management. We grew in-market deposits in the third quarter in a very competitive landscape, and so our continued efforts and focus should drive additional growth in future periods. During this suppressed earnings cycle, we are committed to building capital. In the short run, this means shifting our lending activity to primarily supporting existing customers with high-quality credit that contributes to our capital. As such, we expect loan growth to slow moderately. We remain entirely attentive to high-quality credit, both new and existing. Our underwriting and portfolio management standards, although always prudent, have tightened to reflect the uncertainty of the markets we serve. We will provide more detail in the Q&A session. We continue to operate in a challenging economic environment with financial markets in flux and geopolitical instability increasing. While these macro-level headwinds have affected earnings and do not appear likely to abate for some time, we remain confident that Washington Trust is positioned to weather this storm and emerge even stronger. We have a proven business model with diverse revenue streams, disciplined credit culture, and we continue to make progress executing our strategy to further strengthen our market opportunities and enhance the value that we deliver to our people, our customers, our communities, and our shareholders. Moving on to the quarter. Ron will soon take you through a detailed review of our financial performance, but here are a few high-level points from the quarter. First, our third quarter results. While they were not up to our historical standards, they were in line with both the prior quarter and expectations. We posted third quarter net income of $11.2 million or $0.65 per diluted share, about flat with $11.3 million or $0.66 per diluted share in the second quarter. Our margin remains under pressure from the competitive interest rate environment. On a positive note, our wealth management division delivered steady revenues, and we continue to tightly manage expenses. Turning to deposit growth, which is core to our strategy, we made good progress in the third quarter. Our deposit franchise is strong, intact, and growing, albeit more expensive, with understandable product shift in the current rate environment. Our branching strategy continues to be successful, with average size at $209 million, and deposits at our three newest branches stand at $70 million after two years, $28 million after just one year, and $11 million after only five months. As mentioned on previous calls, we plan to open a new branch in the Olneyville section of Providence in early 2024 and one in Smithfield, Rhode Island, also in the first quarter. Finally, our credit remains strong during the quarter, and we consider managing credit risk and overall balance sheet strength through this challenging point in the cycle an imperative for positioning Washington Trust for long-term performance. Before I turn the call over to Ron, I'd like to briefly mention some important progress we made in executing several key strategic priorities during the quarter. These achievements advance our mission to deliver what today's banking consumers want, need, and value: digital offerings, high-touch service, and competitive products and pricing. During the quarter, we made advancements in expanding our digital presence. We understand technology is dominating every aspect of our lives, and banking is no different. Consumers are demanding convenient digital offerings, and Washington Trust is focused on being there with the right offerings to meet that demand, whether it involves enhancing online deposit account opening or providing seamless, continuous, expedited services across delivery channels. Throughout our history, Washington Trust has enjoyed a strong brand reputation in our core markets. Recently, we launched a new brand positioning statement, "What We Value Is You," supported by a multimedia advertising campaign designed to reach and enhance our presence, both digitally and throughout our expanded market area.... What we value is you, is powerful-- is a powerful phrase that embodies the spirit and purpose of Washington Trust and helps illuminate the importance we place on our employees, customers, and communities as drivers of shareholder value. Our new campaign promotes Washington Trust's comprehensive financial solutions, including checking and savings accounts, digital banking services, home lending, and business banking, and it highlights our current deposit special offers. These are certainly unusual times, but we believe we have the right strategy and the right team in place to weather the current macro dynamics while capitalizing on market trends and the strengths of our bank. I'll now turn the call over to Ron for an in-depth review of our financial performance. Ron? Thank you, Ned. Good morning, everyone, and thank you for joining our call. As Ned mentioned, net income was $11.2 million or $0.65 per diluted share. Net interest income was $33.8 million, up by $251,000 or 1% from the preceding quarter. The margin was 1.97%, down by 6 basis points. Average earning assets increased by $167 million, and the yield on earning assets was 4.69%, up by 16 basis points. On the funding side, average in-market interest-bearing deposits increased by $77 million, and average wholesale funding rose by $83 million. The rate on interest-bearing liabilities increased by 24 basis points to 3.26%. Prepayment fee income was $71,000 in the third quarter and $50,000 in the second quarter. Net interest-- excuse me, non-interest income comprised 31% of total revenues and amounted to $15.2 million, up by $901,000, or 6% from Q2. Wealth management revenues were $8.9 million, down by $100,000 or 1%. This included transaction-based revenues, which were down $221,000, primarily in seasonal tax servicing fee income, which is concentrated in the first half of the year. Asset-based revenues were up by $121,000, or 1%, with a corresponding increase in average AUA balances, which were up by $140 million or 2%. End-of-period AUA totaled $6.1 billion, down by $219 million or 3% from June 30, reflecting market depreciation of $154 million and net client asset outflows of $65 million. Mortgage banking revenues totaled $2.1 million, up by $355,000 or 20%. Mortgage loans sold totaled $89 million in the third quarter, up by $24 million. Total originations were $240 million, up by $13 million. Our mortgage pipeline at September 30 was $98 million, down by $67 million or 41% from the end of June. Loan-related derivative income totaled $1.1 million, up by $835,000. Regarding non-interest expenses, these were up by $1.4 million or 4%. Salaries expense increased by $1 million or 5%. In the second quarter, we reduced performance-based compensation accruals by $1.4 million. Advertising and promotion expense also increased by $362,000, primarily due to timing. Now, turning to the balance sheet. Total loans were up by $230 million, or 4% from June 30, and by $762 million, or 16% from a year ago. In the third quarter, total loans increased by $123 million or 5%, essentially all in commercial real estate. Residential loans increased by $101 million or 4%. In-market deposits were up by $35 million, or 1% from June 30, and up by $121 million, or 3% from a year ago. Wholesale broker deposits were up $67 million, and FHLB borrowings were up by $80 million from June 30. As far as deposit and liquidity metrics are concerned, uninsured and uncollateralized deposits are estimated to be 18% of total deposits. Our average deposit size is $37,000, and we have $1.8 billion in contingent liquidity. Total equity amounted to $431 million at September 30, down by $28 million from the end of Q2. This included a decrease in the AOCI component of shareholders' equity, largely due to a decline in the fair value of available-for-sale securities. It also declined due to $9.6 million in quarterly dividend declarations, and these decreases were partially offset by quarterly net income of $11.2 million. Regarding asset quality, non-accruing loans were 0.60%, and past due loans were 0.17% of total loans. The increase in non-accruing loans was largely due to 2 commercial real estate loans that were placed on non-accrual status in the third quarter. Both of these loans are current. The allowance totaled $40.2 million, or 72 basis points on total loans, and provided NPL coverage of 119%. The third quarter provision for credit losses was a charge of $500,000, down by $200,000 from the provision recognized in the second quarter. The provision for credit losses in the third quarter was composed of a provision for credit losses on loans of $900,000 and a negative provision for credit losses on unfunded commitments of $400,000. We had net charge-offs of $30,000 in the third quarter, compared to $37,000 in Q2, and year-to-date net charge-offs totaled $114,000. At this point, I'll turn the call back to Ned. Thank you, Ron. We'll now take questions. Thank you. If you would like to ask a question today, please do so now by pressing star, followed by the number one on your telephone keypad. If you change your mind and would like to be removed from the queue, that is star followed by two. When preparing to ask your question, please ensure that your device and your microphone are unmuted locally.... Our first question today comes from the line of Mark Fitzgibbon with Piper Sandler. Mark, please go ahead. Your line is now open. Hey, guys. Good morning. Morning, Mark. Ron, good morning. Ron, I wondered if you could help us think about, you know, the margin and maybe how much—I know that, you know, the rate of decline in the margin slowed, but- Yeah. Where do you think the margin ultimately bottoms out? How much lower is it likely to go? Yeah. Yeah, we expect it to trend lower in the fourth quarter towards the 1.9%. So kind of lower from here. Call it 1.9,plus or minus. You think that's a sort of a bottoming point for the, for the margin? No, I don't know if it's a bottom. I mean, we continue to see migration of deposits from lower-cost options to higher-cost products. So, I don't think we're unusual in that regard, but, yeah, we continue to see some funding pressure. Okay. And secondly, on sort of the cost side of things, you know, given the margin pressure, and your plans to open some new branches, it strikes me that it'll be hard to reduce costs. Can you talk about what your plans are there? Maybe what a trajectory might be, whether you have a you know, a sort of a target in mind for your costs going forward? Yeah. So we're not ready really to talk about 2024 yet. Ned mentioned, you know, our, our marketing push. Yeah, I would expect marketing to go up somewhat in the fourth quarter as, as we continue to roll that campaign out. The branches that we're opening in the first quarter will have an impact on Q4, to about $200,000 worth, in the fourth quarter. We also are committed to increasing our, charitable foundation contribution. So, haven't decided exactly how much that would be, but we're thinking it's at least $500,000 in the fourth quarter. Okay. But Mark, this is- I mean, given that, you know- Yeah, Mark, I just wanted to add, I mean, we're looking at everything we can on the expense side. Attrition, you know, whether we fill positions, we're looking at all of the real estate that we still own, and whether, you know, there's strategies around that that make sense. So we are focused on everything we can be focused on to control expenses. Okay. But it feels like, Ned, you know, there's not as much wiggle room on the cost side, maybe as you'd like, and, you know, the margin continues to be pressured, the wealth business continues to be pressured, and mortgages is, you know, rate dependent. So I guess the question I have is, you know, if earnings fall below the dividend, would you cut the dividend? Yeah. So, Mark, the dividend is really capital related, so, as long as we have sufficient capital to pay the dividend, we're committed to paying the dividend. Okay. And you talked a little bit about slowing the growth. Does that mean stopping the growth? I mean, because your capital ratios are optically pretty light already and have come down a lot by some of the growth that you've put on. What should we assume for sort of balance sheet or loan growth going forward? Yeah, Mark. Mark, this is Ned. We have construction loans in process, so stopping the growth is probably not realistic, but low, you know, very low single-digit growth I expect here forward. But for taking care of existing customers and booking accretive assets that help earnings, we are just kind of pencils down. So, we had a big pipeline coming into this quarter that, you know, mostly existing customers that we took care of. But we recognize the levels of growth that we showed in the quarter. We will not be showing that going forward. We need to, we need to rebuild earnings and capital and, and, you know, we need to, we need to make sure that the loan books help in that—on that front. Ned, I guess I'm curious. I'm sort of scratching my head. You guys have grown your office loan portfolio this year by 12%. It just seems like an inopportune time to be doing that. Can you help us sort of understand better, you know, why you would want to do that, given the capital ratios are tight and you're trying to conserve capital there? That's a fair question. We have no expectations of growing the office book. I'm going to ask Bill to just talk about the details on the office project- Right that we did in the quarter. It was really one deal with an extremely strong sponsor and amazing deal metrics. So in the never-say-never category, this is one we felt it was the right thing to do. It had a 16% going in debt yield, about a 50% LTV, you know, 2.0 coverage, no tenant concentrations. So it was a deal that made sense. And so it's certainly—we never want to be a bank that's- ... just puts up the Heisman and says, "Stay away." And that's just not the right way to treat our market. So this was one of those deals that was a real cherry to pick, and we also got really good structure in terms of a guarantee on this. So, we certainly—I haven't seen any office deals in a while. This got in the pipeline quite a while ago. Yeah. And just to give you a sense, Mark, we came into the quarter with a pipeline that was north of $300 million. Our pipeline right now is below $100 million. On total real- Okay. [crosstalk] Last question. Okay, last question is, I wonder if you could give us a little more detail on those two non-performing loans in the commercial real estate bucket, maybe some color around, you know, what's going on there, 'cause you, I think, Ron mentioned that they're performing, but you put them on nonaccrual. What's, what's going on with those? Right. This is Bill again. One of them is a senior housing facility, LTV of 59%, been challenged on vacancy, been challenged also with staffing costs. A lot of these places have had a real difficulty hiring people, have had huge agency staffing, which has put a lot of pressure on their bottom line. It's had millions and millions of sponsor support over the last couple of years, but was it matured, and the nonaccrual was based on that. It is current. We're now discussing, you know, a forbearance, possibly going to IO for a while till that's on recover. You know, again, a solid deal with a strong sponsor, but the nonaccrual was tripped by the maturity and then the fact that we had to get the forbearance in place. The other one is, a couple of Class B office properties. You know, occupancy around 60%, still getting sponsor support, still current. We believe that they'll get through this okay, and we're, we're talking right now about a potential, modification to interest only for a while. But again, we felt it was prudent on those, to go nonaccrual as well. So but as I said, both of them, as, as you noted, are fully performing and haven't missed a payment. Thank you. Thanks, Mark. Our next question comes from the line of Damon Del Monte with KBW. Please go ahead. Your line is now open. Hey, good morning, guys. Thanks for taking my call. Just to kind of follow up on the- Good morning ... the credit discussion there. You know, if you look at the—Morning, Ned. If you look at the loan loss reserve, you know, it's around 72 basis points. You know, are there any other credits, I guess, first, that are starting to pop up on the screen as maybe being concerning? And then as you look at the kind of broader credit picture and economic picture, do you still feel comfortable with the reserve, you know, that's well below 1%? Yeah, Damon, I'll start with that, and I'll hand it off to Bill. Yeah, I mean, we do a very, very detailed review of our portfolio each quarter. You know, yes, we know 72 is probably on the lower end of the peer group range, but given the quality of our portfolio and our understanding of it, we're comfortable with that level. Yeah, Bill? Sure. Again, very comfortable with the level. It's, you know, under CECL, it's a forward-looking estimate of lifetime losses in the portfolio. If you look at our losses, and we tend to be aggressive about recognizing losses when they occur, we're almost literally none for the year. We haven't lost the $40 million we have on our reserve over the last 20 years, and so we're in no way complacent about credit, but our quantitative models are built to have conservative estimates in them. We've got, you know, good qualitative reserves as well, so we are extremely comfortable where we are, and we have outperformed the industry on credit issues, you know, through ups and downs for quite a while. If you look at our delinquencies, they're essentially, you know, nonexistent on the commercial side, are light on the others. We do stress tests consistently, both top down and bottom up, using a third party, and the numbers tell us that we are in good shape on the reserve side. So yes, we do feel comfortable. Okay, that's helpful. Appreciate that color. And then I guess on the, on the margin front, to go back to that, I guess, Ron, you know, you guys have added a lot of wholesale borrowings, and if, if loan growth is slowing, you know, is there an opportunity to maybe take cash flows from the securities portfolio and reduce some of the higher cost borrowings? Or have you even considered maybe selling a portion of the securities to kind of accelerate the ability to repay borrowings and, and get some relief on the margin? Yeah. We've been not reinvesting our investment security cash flows since the first quarter. So the securities portfolio is in runoff mode at the moment to do just exactly what you said, to use that to pay down those wholesale borrowings. And as Ned mentioned, we're slowing the loan growth down right now, so you know, the growth and reliance on wholesale should be coming down. Okay. And then, you know, if the Fed does end up cutting rates in the back half of 2024, how do you feel the balance sheet is positioned for something like that? You think your, your margin would- Yeah. I mean, could that be like a built-in inflection point for you if nothing else changes, if the margin just keeps drifting lower, like at that point, you're poised to benefit. Yeah. Yeah, you know, so an abrupt change in rates is, you know, felt immediately in our SOFR book.... you know, our prime and SOFR loans are about $1.8 billion. So those tend to reprice, you know, immediately. We would have to ratchet down our deposit and wholesale borrowing costs. It doesn't happen quite as quickly as it does with the loan book. Overall, I think that would be a net positive for us. It wouldn't happen immediately, though. It would bleed in over a period of quarters. Got it. Okay. And then just lastly, on the expense front, yeah, I appreciate the commentary before on that. So you kind of feel like this mid-$34-ish range to $30-$35 million a quarter is a reasonable level, given what you guys have going on with the branch openings and other, you know- Yeah strategic efforts? Yeah. Well, like I said, you know, the fourth quarter should look like the third quarter, except for the few items that I mentioned. And then, you know, things will reset, you know, with merit raises and so forth back in the first quarter. And then, you know, branch costs will be higher in the first quarter than they were in the fourth quarter, but not really prepared to go into 2014 on this call. 2024. Oh, what did I say? 24. 20, 2024. [crosstalk] Um- I knew what you were saying. Thank you. Back to that. Yeah. Yeah. We're just kind of looking at the Q4 right now and just positioning ourselves for next year. Got it. Okay. That's all that I had. Thank you very much. Okay. Thanks, Damon. Our next question comes from the line of Laurie Hunsicker with Seaport Research Partners. Laurie, please go ahead. Your line is now open. Great. Hi, thanks. Good morning. Good morning, Laurie. Just to follow up on expenses, I know you guys used to do the charitable foundation contribution. Are you thinking about that more as that'll be an ongoing fourth quarter event, or is that going to bleed through into all quarters, so there'd just be a ongoing quarterly contribution? Or how should we be thinking about modeling that? I think we're going to do a kind of a single contribution to the foundation to keep it going for a while. And so we just need to determine how big that contribution will be in the fourth quarter, and I think it'll be at least $500,000. Okay. But, I mean, that'll be an ongoing fourth quarter event as we look out, similar to- I think- How you've done it historically or? As of today, that's a fair assumption, yeah. Got it. Got it. Okay. And then just going back to deposits, you had a really nice jump in deposits. Can you talk about, sort of two things? Number one is, how should we think about when you're going to start to, to clip broker deposits? And then also, how should we be thinking about your growth in core deposits? I know that's a real emphasis, but, you know, specifically, this is a challenging environment. How should we think about that as we look forward? So I missed the part about the brokered deposits. Yeah, I... Well, your brokered deposits last quarter, you went from 601 to 668. I mean, where, where is that going? Yeah. Oh, okay. Yeah. Oh, okay. And then obviously, you had a jump in core deposits, too. Yeah, that's probably- Help us think about that a little. Yeah. Yeah. Yeah, Yeah. Yeah, we're going to manage brokered deposits to about 10% of total assets. So we're near the kind of topped out on brokered. Okay. General deposit growth, I mean, I guess I should, you know, point out in the quarter, we had one large institutional deposit withdrawal. It wasn't an inexpensive deposit, but that was $100 million of institutional money that had been placed with us, which we knew was somewhat temporary in nature, but it did leave in the third quarter. So you know, that contributed to our more muted deposit growth in the quarter. We're very focused on deposit growth and have a number of internal things that we're looking at to increase that going forward. So we're not prepared to talk about what, you know, what the numbers of that might look like, but I can assure you it's an important priority for us right now. Rhode Island market, deposit market does not grow very much, and our internal analysis shows that we, you know, grow, you know, considerably faster than the market as a whole. It has not grown fast enough to keep up with the loan growth that we've been posting. You know, that's pretty evident. But, loan growth will be coming down and hopefully, if we do what we're intent to do, deposit growth will pick up. Okay. Great, thanks. And then, just going back to the commercial real estate non-performers, you know, Ron and Bill, can you help us think about what was the balance on the senior housing facility and then the balance on, you mentioned a couple of Class C offices. What was the dollar balance, and then what's the debt service coverage ratio looking like? What's the vacancy looking like? Hold on. Sure. Maybe while you're grabbing those, Ned, can you just comment? Oh, go ahead. Yeah, I'm sorry. No, I'm still looking for the... Hold on a sec. Got them. Okay, on the- You are? Okay, good. Well, maybe- Senior- Oh, yeah, go ahead. The senior housing facility is, was $13.9 million. That was our share. It's a participation. And then the other is the office property is $8.7 million, and that's secured by two office buildings. ...Secured by two. Okay, and what's the vacancy on both of those, and what's the debt service coverage? Or I can follow up with you after if that's more helpful. Yeah, I want to make sure I give you, you know, current versus pro forma on each of those, so we can follow up and give you those stats. Okay, great. And then just one last question. Obviously, very, very well capitalized here. You know, I realize earnings are bumping up against dividend, but yeah, how do you think about the buyback? I mean, you've got all your peers, seemingly in your geography, are now active in some form in a buyback. Your stock is very, very discounted from the last point you were looking at. Can you just help us think about that a little bit from the standpoint of your capital? Thanks. Yeah. Yeah, we, we have no intention of doing any buybacks. Okay, great. Thanks. I'll leave it there. Thanks, Laurie. We do not currently have any further questions registered, so as a final reminder, if you would like to ask a question today, please do so now by pressing star followed by the number one on your telephone keypads. We have no further questions, so I'll turn the call back over to the management team for any further remarks. Thank you, Emily, and thank you all for your time today. This is certainly, these are uncertain times and, but we're confident that Washington Trust is the best alternative for people, business, and organizations who seek a higher level of personal guidance, competitive products, and stability to make the most of their financial well-being. I want to take this moment to thank our employees for the incredible amount of work they've done through these difficult times. We have a long, long history of managing through challenges, so I'm confident we'll fare well here. I also want to thank our customers for knowing us as well as we know you. We learn and get stronger with each experience, and we'll do so here as well. And we appreciate the support and assurances we've received from our shareholders and the investor community. Global unrest, economic uncertainty, and a stubborn inverted yield curve are hardships we all have to endure, but with strong partners, patience, prudent decisions, and disciplined hard work, we will gain strength and be positioned well for much better times ahead. Thank you all for your time this morning. Have a great day. Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.