Five Questions With: Joseph J. MarcAurele

JOSEPH J. MARCAURELE is chairman and CEO of Washington Trust Bancorp Inc. / COURTESY WASHINGTON TRUST BANCORP INC.
JOSEPH J. MARCAURELE is chairman and CEO of Washington Trust Bancorp Inc. / COURTESY WASHINGTON TRUST BANCORP INC.

Joseph J. MarcAurele is chairman and CEO of Washington Trust Bancorp Inc. The parent company of The Washington Trust Co., of Westerly, recently reported record year-end profit totaling $46.5 million. MarcAurele talks with Providence Business News, as he does at the end of each quarter, to talk about trends he sees at Washington Trust and within the banking industry at large.

PBN: What can you tell me about what worked well for Washington Trust in the fourth quarter and for the year?

MARCAURELE: I think this was a year and certainly a quarter of what I would call good, solid performance on the part of all of our business lines. Most pointedly our residential mortgage business, which had an outstanding quarter and outstanding year; mortgage banking fees were in excess of $13 million for the year, and we did report overall record earnings for the company of $46 million, so we feel good about that. There was also very good performance from the commercial banking group, the wealth management group, the retail banking group. We feel like last year, which unfortunately is over, we operated on all cylinders.

PBN: What would you say most challenged the company in 2016?

MARCAURELE: Probably the biggest challenge that all banks are going to have going forward is a continued squeezing of our net interest margin to some extent. Also, the pressure around growing deposits to more efficiently [feed] what we believe will be continued loan growth will be a challenge. We feel as if we’re well positioned to do that and we are going to open a new branch in Coventry later on in the year, as we have been successful with the branches we’ve opened so far.

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PBN: With the changing nature of retail banking, is opening new branches an effective way to grow deposits?

MARCAURELE: We have a terrific statewide brand, but we just don’t have statewide presence. We’re conscious about this. We know the trend around retail banking, and people coming into banks is changing. All of that being said, so far, it’s worked for us, and while we don’t have huge plans to open lots of branches, we think that we will proceed at the one-or-so-a-year until we feel as though it’s no longer viable.

PBN: I want to talk to you quickly about your balance sheet, it looks like you’ve nearly doubled your securities portfolio. What’s going on there?

MARCAURELE: Our securities portfolio had actually run down significantly to where it was essentially about 10 percent of our assets. That’s low for a bank. We felt from a liquidity perspective, because we can pledge these securities for the federal home loan bank and then borrow, we had room to take on some brokered CDs and buy some additional securities, which would bring us more in line to where the balance sheet should be.

PBN: How do you carry this momentum through 2017?

MARCAURELE: I would say in the immortal words of [New England Patriots coach] Bill Belichick, ‘Last year was last year, this year is this year.’ We feel good about where we’re positioned, and we don’t see any significant reasons to be concerned. We have to keep a close eye on all of the opportunities on all of our business lines and pay attention to our expense base. I don’t see why there’s any reason why performance realized over the last few years can’t continue.

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