Washington Trust Bancorp recorded $2.1 million in income in December from settling a lawsuit it filed against four advisors it accused of stealing clients after leaving the firm's wealth management unit in 2022, according to company executives.

The advisors managed about $1.1 billion in client assets for the trust company at the time of their departure.

On a conference call last month with analysts and investors to discuss quarterly results, officials of the Westerly, R.I.-based financial services company acknowledged the settlement was related to litigation from advisors leaving its wealth management arm, Washington Trust Wealth Management.

The trust's advisor unit was rebranded from Weston Financial, an RIA firm in Wellesley, Mass., that was acquired by Washington Trust in 2005 for $20 million. The wealth management division reported $6.9 billion in assets under administration as of the end of March.

The four advisors left the trust company in September 2022 and, in a conference call in October of that year, company executives revealed that of the $1.1 billion the advisors managed, about $413 million had been withdrawn by clients—a total that represented about $2.4 million in annual revenues.

The advisors left to join Northward Financial Group of Needham, Mass., a newly formed subsidiary of Private Advisor Group. It was the third group of advisors to reportedly leave the wealth management business in four years. On last month’s call, analysts questioned Washington Trust management about the outflow in client assets amid advisor departures.

“Client flows have been negative for as far back in time as the eye can see it seems,” said Mark Fitzgibbon, an analyst with Piper Sandler. “Is there a point at which that will stop? Is there some kind of plan to bring in new people to generate new business flows?”

“We do have new business all the time,” answered Chief Financial Officer Ron Ohsberg. “I don’t think that we’re unusual in that regard to see client outflows. But we certainly are disclosing them when they occur.”

Edward Handy, Washington Trust chairman and chief executive officer, added, “I would tell you we’re always looking at staffing levels and looking at incentive plans and whether we’ve got the right mix on both sides.”

In an interview with Financial Advisor, a Washington Trust spokesperson said the company “doesn’t comment on litigation matters.” The spokesperson also declined to confirm the other reported departures from the division or their potential impact on business.

Washington Trust sued the advisors in October 2022, asking U.S. District Court in Massachusetts for injunctive relief against Susan K. Arnold, Ronald D. Halterman, Brett C. Lonergan and Nicholas T. Rossi; Private Advisor Group and Northward Financial.

The firm asked the court to stop the defendants from breaching contracts with the firm, stealing trade secrets, competing with Washington Trust and “stealing” Washington Trust’s clients.

“In addition to injunctive relief, Washington Trust seeks monetary damages including, but not limited to, lost profits that are directly attributable to Defendants’ unlawful competition, solicitation, and misappropriation,” Wealth Trust said in the filing.

The plaintiff also said the $1.1 billion they managed “accounted for a substantial portion of the AUM assigned to the Wellesley office.”

In the third-quarter 2022, Washington Trust reported $6.3 billion in AUA, which was down $327 million from the second quarter due to net investment depreciation and client outflows of $87 million in the third quarter. As a result of the departure of the four advisors, “Washington Trust could experience an increased level of client asset outflows in upcoming months,” the company warned.

In an affidavit filed in November 2022, the four defendants denied the allegations and blamed “unilateral changes to compensation structures” and “disruptive” managerial changes at the wealth management division for their resignation.

The trust company "has submitted no evidence of wrongdoing and there is no basis for granting injunctive relief,” the defendants argued in their affidavit.

In a separate affidavit, Arnold declared, “They have destroyed what was a strong financial planning firm with a Massachusetts presence.”

All four former advisors and the lawyers listed in the affidavit couldn’t be reached for comment.