Joseph J. MarcAurele is chairman and CEO of Washington Trust Bancorp Inc., parent of The Washington Trust Co. in Westerly.
The company last week reported record-breaking second-quarter profit, which totaled $13.2 million, or 76 cents per diluted share, compared with $11.1 million, or 64 cents per diluted share, a year earlier.
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MarcAurele talks with Providence Business News about the quarterly results, how rates are affecting profitability, trends in wealth management and federal policy.
PBN: What can you tell our readers about the quarter?
MARCAURELE: More than anything it showed off our diversified earning streams. Even though commercial loans were down a little bit, wealth-management revenues and mortgage-banking revenues, and our fee-based income and derivative income, really proved to outweigh our commercial real estate. That indicates that we have a pretty powerfully diversified portfolio.
PBN: How much have you benefited from the rise in short-term interest rates?
MARCAURELE: It’s pretty difficult to analyze. Of course, one increase happened before the quarter, and another hike happened during the quarter, so I’m not sure I can quantify it in dollars.
PBN: Considering so many people have taken advantage of the low-rate environment and purchased mortgages, which has helped your bottom line, do you really want to see short-term rates go up?
MARCAURELE: I think there’s certainly aspects of the business that are being helped by lower rates. But even though short-term rates have gone up, the long-term rates have maintained consistently low levels. That’s somewhat of an anomaly and right now it’s kind of the best of both worlds. How long that will hold? I really can’t say.
PBN: Turning to wealth management, the business continues to grow steadily for Washington Trust; what’s working there for you? And how do you compete with large investment banks that only concentrate on building wealth?
MARCAURELE: One thing is we do a very good job on the expansion and growth on existing customers, and we work hard to expand our brand to new customers. On balance, we’ve also been helped by the market, which has been pretty strong. I would also say that it’s a proposition based on our personal service. The big-investment institutions may not pay too much attention to you unless you are a significant customer, in excess of $20 million, so you wouldn’t get the same type of individual service that you would from us with a much smaller account. On balance, growing customers is a challenge because it’s a competitive business. We don’t tend to compete against the really big players because we feel like our proposition is different than theirs, but our ability to bring in new customers has a lot to do with our reputation.
PBN: With an eye to national politics and the possibility of financial regulatory reform perhaps somewhere out there on the horizon, what are you looking for?
MARCAURELE: There’s a lot of expectation from the banks. But from our standpoint, I don’t think we should base our business on things that might happen. We have to play with the cards we’re dealt, and improve profitability. That’s what our job is. There’s always going to be Wall Street pundits who place a lot of emphasis on saying politically what will happen, but there’s pretty good checks and balances in this country, so even if you say you’re going to get something done, actually achieving it is a long-term battle.
Eli Sherman is a PBN staff writer. Email him at Sherman@PBN.com, or you can follow him on Twitter @Eli_Sherman.
