"The majority of loans most banks are seeing are refinancings."
COURTESY WASHINGTON TRUST
By Michael Souza PBN Staff Writer
Joseph J. MarcAurele is the chairman, president and CEO of Westerly-based Washington Trust. He joined Washington Trust in September 2009 as president and CEO. In April 2010, he became chairman, president and CEO. Previously, he served as president of Citizens Bank from 2001-2009, and is a well-known and respected leader within the New England banking industry.
He discussed the bank’s third-quarter results and the bank’s presence in the community.
PBN: The third quarter results show that the net gains on loan sales and commissions on loans originated for others, tripled from the same time last year. Is this an indication of an increase in the number of mortgages being issued?
MARCAURELE: There has been a lot of refinancing activity on the residential loan side because people are taking advantage of the low interest rates and we have been in position to take advantage of that. We have done an outsized share of that business – essentially, we originate mortgages and sell them on the secondary market to investors.
PBN: While Washington Trust’s consumer loans have remained stable, equity loans have been slowly decreasing over the last year. Is a recovery happening?
MARCAURELE: Not yet. Housing values have not gone up to any great degree. Also, people are now able to “de-leverage” by refinancing their existing homes at a lower rate and either using the additional cash flow to pay down some of the other debt they have.
PBN: Residential real estate mortgages showed less restructuring. Will that trend continue?
MARCAURELE: Ideally, 50 percent of the mortgages should be for the purchase of new homes and the other 50 percent for a refinance, or expansion of a mortgage so that people can do work on their homes. We’re not there right now. The majority of loans most banks are seeing are refinancings. The purchasing of new homes and new mortgages is picking up to a certain extent, and it certainly is the case in the Boston market. It is also the case in areas of Connecticut and southern Rhode Island.
PBN: Could you speak to the fact that net charge offs have been halved over the last year?
MARCAURELE: Our credit quality has always been good, and in many cases best in class for banks of our size. The fact they are going down against what was always a very positive base indicates improvement in our loan portfolio. My hope is that it happens everywhere.
PBN: The bank recently purchased a property in the heart of downtown, on Main Street, across from the Washington Trust community skating rink. Do you have any plans for it?
MARCAURELE: No, that is something that needs to be studied. We have already committed to the town, the preservation society and other organizations that we will do something that is appropriate, attractive and makes the downtown area better. We’re fully committed to Westerly, this is our roots, our headquarters; we are here to stay and we want to sent that message to the community.