Washington Trust eyes new markets

WASHINGTON TRUST Bancorp. Chairman and CEO Joseph J. MarcAurele said the bank will open a new branch in Coventry. / PBN FILE PHOTO/HILARY ROSENTHAL
WASHINGTON TRUST Bancorp. Chairman and CEO Joseph J. MarcAurele said the bank will open a new branch in Coventry. / PBN FILE PHOTO/HILARY ROSENTHAL

With a $2.9 billion asset level, Washington Trust Bancorp Inc. is not your usual community bank.
The bank goes into the new year looking to maintain it’s calculated and conservative reactions to the markets, the global economy, customer needs and positioning itself to continue competing with big banks, said Joseph J. MarcAurele, chairman, president and CEO of Washington Trust.
MarcAurele has kept his finger on the pulse of the global economy over the last year, making sure Washington Trust was in line with reality.
He sees continued slow growth in the economy but thinks his bank in 2012 will improve on this year’s strong performance.

PBN: It seems like big banks took a very public pounding in 2011, more so than previous years. Is that your perception?
MARCAURELE: It’s really taken the better part of three years for particularly the larger banks to kind of right themselves. I think what you see now is really a consumer backlash to some extent that has to do with activities that took place at banks that led to the financial crisis in 2008. What I think you will see going forward is the banks will straighten out, they will rectify a lot of the problems that existed pre-2008. And to some extent they will be more cautious and more straightforward in the way they deal particularly with consumers. … All that being said, there is going to remain a strain on the system that has lot to do with the ongoing slowness of the economy, which in my opinion will take at least another couple of years to gather real momentum.

PBN: Do you think businesses have more of a comfort level with a community bank than a mega-bank?
MARCAURELE: I think clearly, particularly for small and mid-size businesses, there has been a flight to community banks where people sense they have a better chance to have a personal relationship with their banker and where they know the senior management of the bank. Over time the larger banks will more than likely get better at that but I think right now we have an opportunity as a community bank to grow our business.

PBN: How do you think the $234 million purchase of Bancorp Rhode Island Inc. will play out in the state over the coming year? MARCAURELE: Well, BankRI has always been a good competitor. It is a very well-run bank. Clearly anytime you go through an acquisition, it probably will create some opportunity within the customer base of BankRI. I’m sure that most of the employees at BankRI will stay. The acquirer – Brookline Bank – is a very well-run bank. They’re very well-capitalized. My sense is they will continue to be a good competitor.

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PBN: Do you foresee more of those types of acquisitions in Rhode Island?
MARCAURELE: It is very difficult for a smaller bank to remain independent. I think Washington Trust is big enough that our revenue base is strong enough that we should be to some extent immune to that. But it is difficult for a very small bank to spread the expenses that are associated particularly with new regulation and compliance issues. It could be possible that some of those banks will be forced to look for someone to merge with or to sell.

PBN: Many Rhode Island banks are opening new branches, including Washington Trust. Is that risky?
MARCAURELE: For Washington Trust, in particular, I think it’s important for us to continue to expand our retail branches. We have a statewide brand right now. We don’t have statewide convenience. We, to some extent, dominate the market in southern Rhode Island. Our real opportunity to grow is to go north. … We have to get to markets that we are not in. … The reality is that when the business customers or retail customers want to make a big transaction, if they want to open a large deposit account, or they want to get a home mortgage or a car loan, they want to talk to a person. … And that’s how we deliver our product.

PBN: Do you see commercial lending as a continued growth area for you?
MARCAURELE: We believe that commercial banking will be a big driver of our growth. There are still a lot of opportunities to make good commercial loans and good commercial real estate loans within the markets that we operate in. And our commercial customers are also a very good source of new deposit business for us. Our goal is to get all of our customers’ business. PBN: Your wealth management has fluctuated over the past few years. That’s normally an area of steady growth for you. How do you see that playing out in 2012?
MARCAURELE: Wealth management has everything to do with how the market goes. We’ve done a very good job of not only growing from the perspective of getting new customers, but we also have done a good job of retaining the customers that we have. …What we can’t control is what the market does. So when you see swings in our assets under management, it has more to do with the market at any given point, rather than if we’re losing or gaining customers. The goal is to always get new customers. We are doing that. … We’ve done a pretty good job of holding our assets under management around the $4 billion mark. Again, that’s a very large wealth-management business for a bank our size.

PBN: Last year, you committed to lending small businesses $20 million. Did you do that and is it something that you will commit to again next year?
MARCAURELE: If you go back about a year ago, there was a lot of concern in the market that there was not going to be credit available to small businesses. So what we did was we made a conscious effort to assure small businesses in the state that we were open for business and we announced that we would set aside $20 million in lending capacity to make sure we could take care of the needs of small businesses. And we did end up doing that. I think we ended up the year at just about that number. I think what we have proven to people is that we’re in the market and we certainly have the capacity to do that or more going forward. A lot of it will hinge on loan demand.

PBN: Where will Washington Trust and other banks come out at the end of next year?
MARCAURELE: I believe 2012 will be better than 2011. I think it will be only incrementally better though. Washington Trust is in a very good position in this market. We certainly feel as though we will have improved financial performance in 2012 versus what we will do in 2011. And 2011 will be a very good year. I do believe that other banks in the market will probably experience the same thing. •

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