• Washington Trust Bancorp, Inc.
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  • Washington Trust Reports Third Quarter Earnings
    Company Release - 10/23/2006 09:03

    WESTERLY, R.I.--(BUSINESS WIRE)--

    Washington Trust Bancorp, Inc. (NASDAQ Global Market; symbol: WASH), parent company of The Washington Trust Company, today announced third quarter 2006 net income of $6.6 million, up 13.0 percent from the $5.8 million reported for the third quarter of 2005. On a per diluted share basis, net income was 48 cents, up 5 cents, or 11.6 percent, from the 43 cents earned for the same quarter in 2005. For the nine months ended September 30, 2006, net income was $18.8 million compared to $16.9 million reported for the same period a year ago. On a per diluted share basis, net income was $1.37 for the nine months ended September 30, 2006, up 13 cents from the $1.24 reported for the comparable period in 2005.

    Certain non-core items affected the computation of earnings in accordance with generally accepted accounting principles ("GAAP") in both 2005 and 2006. The following items are included (net of tax) in the Corporation's reported GAAP earnings. Share impact is on a diluted share basis.

        --  The Corporation received an additional quarterly dividend of
            approximately $305 thousand (2 cents per share) in the third
            quarter of 2006 from the Federal Home Loan Bank of Boston
            ("FHLBB"), following the decision by the FHLBB to delay its
            normal second quarter dividend on its stock.
    
        --  The Corporation recorded $247 thousand (2 cents per share) in
            net realized losses on sales of securities in the third
            quarter of 2006 in connection with securities portfolio
            deleveraging and other portfolio transactions.
    
        --  Acquisition-related costs of $440 thousand (3 cents per share)
            were recognized in the third quarter of 2005.
    

    All references in this release to adjusted results reflect the exclusion of the impact of the various items noted above. Reconciliations of the items excluded from the Corporation's adjusted earnings for the three and nine month periods ended September 30, 2006 and 2005 are presented in the financial tables which accompany this release under the heading "Reconciliation Tables - Non-GAAP Financial Information".

    Excluding these non-core items, adjusted net income for the quarter and nine month periods ended September 30, 2006 were $6.5 million and $18.8 million, respectively, up 4.1% and 8.5% from the same periods in 2005. On a per diluted share basis, adjusted earnings per share for the quarter and nine month periods ended September 30, 2006 were $.48 and $1.37, respectively, an increase of $.02, or 4. 4%, and $.10, or 7.9%, respectively, from the same periods last year.

    "The third quarter earnings represent a continuation of the strong financial results we have experienced in 2006," stated John C. Warren, Washington Trust Chairman and Chief Executive Officer. "More recently however, loan demand has been weak, competition for loans and deposits has intensified and the inverted yield curve continues to apply pressure to our margins. While these conditions may continue to create a difficult banking environment, we will remain focused on managing our company to enhance the long term value of our shareholders."

    Net interest income totaled $15.9 million for the third quarter of 2006, up $506 thousand from the third quarter a year ago. Included in net interest income is a catch-up for the delayed second quarter dividend on the Corporation's investment in FHLBB stock of approximately $450 thousand. Adjusted net interest income, excluding the impact of the additional FHLBB dividend, was $15.4 million, essentially unchanged from the same period in 2005. The net interest margin (annualized tax-equivalent net interest income as a percentage of average earning assets) for the third quarter of 2006 amounted to 2.86%. The additional FHLBB dividend represented approximately 8 basis points of the third quarter 2006 net interest margin. Excluding the effect of the delay of the second quarter FHLBB dividend until the third quarter, the net interest margin was unchanged from the third quarter of 2005 and down by 5 basis points from the second quarter of 2006. The continued rise in short-term rates in 2006 has caused deposit costs to rise, while yields on loans and securities have remained relatively flat. The Corporation expects that this negative trend will continue.

    Excluding net realized gains and losses on securities, noninterest income amounted to $11.1 million for the third quarter of 2006, an increase of 33 percent from the same quarter of 2005. This increase is primarily attributable to higher revenues from wealth management and trust services, mainly due to the acquisition of Weston Financial Group, Inc. ("Weston Financial"), which was completed on August 31, 2005.

    Wealth management and trust services revenues were $6.0 million for the third quarter of 2006, up $2.0 million, or 49 percent, from the third quarter of 2005. As previously stated, this increase was primarily attributable to the acquisition of Weston Financial in the third quarter of 2005. Assets under administration totaled $3.551 billion at September 30, 2006, up $126 million in the third quarter of 2006 and up $279 million, or 9 percent, from $3.272 billion at December 31, 2005. The increase is due to financial market appreciation and business development efforts.

    Noninterest expenses amounted to $16.6 million for the quarter ended September 30, 2006, an increase of $1.8 million, or 12 percent, over the comparable quarter a year ago. Approximately $1.2 million, or 69 percent, of this increase was attributable to the operating expenses of Weston Financial. Included in noninterest expenses in the third quarter of 2005 were direct acquisition and acquisition related costs amounting to $605 thousand and debt prepayment penalty expense of $129 thousand.

    The returns on average equity and average assets for the quarter ended September 30, 2006 were 15.62% and 1.09%, respectively, compared to 14.75% and 0.98%, respectively, for the comparable quarter in 2005. The returns on average equity and average assets for the nine months ended September 30, 2006 were 15.33% and 1.04%, respectively, compared to 14.51% and 0.96%, respectively, for the comparable period in 2005.

    Total assets were $2.403 billion at September 30, 2006, up $1.3 million from December 31, 2005. The Corporation has experienced relatively modest loan demand during 2006 and has also reduced its investment securities portfolio.

    During the first nine months of 2006 total loans increased by $26.6 million, or 1.9 percent. Consumer loans rose by $15.3 million, or 5.8 percent, led by growth in home equity loans. Total commercial and commercial real estate loans rose by $6.6 million, or 1.2 percent. Residential mortgages increased by $4.7 million, or 0.8 percent, for the nine months ended September 30, 2006.

    The investment securities portfolio has declined by $42.6 million since December 31, 2005, primarily resulting from deleveraging transactions in response to the flat to inverted yield curve shape in effect during most of this period. Net realized losses on securities of $365 thousand were recognized in the third quarter of 2006 including sales of mortgage-backed and other debt securities totaling $56.5 million with a realized loss of $2.4 million and sales of equity securities with a realized gain of $2.0 million. For the nine month period in 2006, net realized gains on securities sales amounted to $78 thousand, excluding a realized gain of $381 thousand recognized in the second quarter in connection with the charitable donation of appreciated equity securities. Realized gains and losses on securities sales during the same three and nine month periods in 2005 were insignificant. Proceeds from these sales transactions amounting to $56.8 million during the third quarter were primarily used to reduce advances from the FHLBB, which have declined by $79.4 million and $81.2 million during the three and nine month periods ended September 30, 2006, respectively.

    Deposits totaled $1.700 billion at September 30, 2006, up $60.9 million, or 3.7 percent, from December 31, 2005. Excluding a $13.9 million decrease in brokered certificates of deposit, in-market deposits were up $74.9 million, or 5.2 percent, for the nine months ended September 30, 2006. Due to increases in short-term interest rates, the Corporation has continued to experience a shift in the mix of deposits away from savings accounts and into higher cost money market accounts and certificates of deposit.

    During the third quarter of 2006, the Corporation recognized a liability of $4.6 million, with a corresponding increase in goodwill, related to the contingent payment terms of its August 2005 acquisition of Weston Financial. This amount represents the 2006 payment for the three-year earn-out period ending December 31, 2008.

    Asset quality continues to remain strong , with nonperforming assets (nonaccrual loans and property acquired through foreclosure) amounting to $2.6 million, or 0.11% of total assets, at September 30, 2006, compared to $2.4 million, or 0.10% of total assets at December 31, 2005. Net charge-offs amounted to $173 thousand for the nine months ended September 30, 2006, compared to net loan recoveries of $193 thousand for the same period a year ago.

    The allowance for loan losses was $18.6 million, or 1.31% of total loans, at September 30, 2006, compared to $17.6 million, or 1.26% of total loans, at September 30, 2005. The Corporation's loan loss provision charged to earnings amounted to $300 and $900 thousand, respectively, for the three and nine months ended September 30, 2006, unchanged from the amounts recorded for the same periods in 2005.

    Total shareholders' equity amounted to $172.4 million at September 30, 2006, compared to $158.4 million at December 31, 2005. Book value per share as of September 30, 2006 and December 31, 2005 amounted to $12.82 and $11.86, respectively.

    The Corporation has previously announced its intentions to open two de novo branches, one in Cranston, Rhode Island and one in Warwick, Rhode Island. The expected opening dates for these branches are the second quarters of 2007 and 2008, respectively, and are subject to various regulatory approvals.

    Washington Trust President and Chief Executive Officer John C. Warren, and David V. Devault, Executive Vice President, Secretary, Treasurer, and Chief Financial Officer, will host a conference call on Monday, October 23, at 4:30 p.m. (Eastern Time) to discuss the Corporation's third quarter results. This call is being webcast by VCall and can be accessed through the Investor Relations section of the Washington Trust website, www.washtrust.com. A replay of the call will be posted in this same location on the website shortly after the conclusion of the call. You may also listen to a replay by dialing (877) 660-6853, and entering Account #: 286 and Conference ID #: 215333. The replay will be available until 11:59 p.m. on October 31, 2006.

    Washington Trust Bancorp, Inc. is the parent of The Washington Trust Company, a Rhode Island state-chartered bank founded in 1800. Washington Trust offers personal banking, business banking and wealth management services through its offices in Rhode Island, Massachusetts and southeastern Connecticut. Washington Trust Bancorp, Inc.'s common stock trades on the NASDAQ Global Market(R) under the symbol WASH. Investor information is available on the Corporation's web site: www.washtrust.com.

    This report contains certain statements that may be considered "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, including statements regarding our strategy, effectiveness of investment programs, evaluations of future interest rate trends and liquidity, expectations as to growth in assets, deposits and results of operations, success of acquisitions, future operations, market position, financial position, and prospects, plans, goals and objectives of management are forward-looking statements. The actual results, performance or achievements of the Corporation could differ materially from those projected in the forward-looking statements as a result of, among other factors, changes in general national or regional economic conditions, changes in interest rates, reductions in the market value of wealth management and trust assets under administration, reductions in loan demand, reductions in deposit levels necessitating increased borrowing to fund loans and investments, changes in loan default and charge-off rates, changes in the size and nature of the Corporation's competition, changes in legislation or regulation and accounting principles, policies and guidelines, and changes in the assumptions used in making such forward-looking statements. The Corporation assumes no obligation to update forward-looking statements or update the reasons actual results, performance or achievements could differ materially from those provided in the forward-looking statements, except as required by law.

    Washington Trust Bancorp, Inc. and Subsidiaries
                              FINANCIAL SUMMARY
    
                                                  Three Months Ended
                                             -----------------------------
                                             September   June    September
                                                30,       30,       30,
    (Dollars and shares in thousands, except
     per share amounts)                        2006      2006      2005
                                             --------- --------- ---------
    
    Operating Results
    ----------------------------------------
    Net interest income                       $15,866   $15,217   $15,360
    Provision for loan losses                     300       300       300
    Net realized (1osses) gains on
     securities                                  (365)      765        17
    Other noninterest income                   11,148    10,682     8,357
    Noninterest expenses                       16,611    17,280    14,810
    Income tax expense                          3,160     2,907     2,802
    Net income                                  6,578     6,177     5,822
    
    Per Share
    ----------------------------------------
    Basic earnings                              $0.49     $0.46     $0.44
    Diluted earnings                            $0.48     $0.45     $0.43
    Dividends declared                          $0.19     $0.19     $0.18
    
    Weighted Average Shares Outstanding
    ----------------------------------------
           Basic                             13,436.6  13,419.9  13,330.3
           Diluted                           13,726.3  13,703.2  13,641.9
    
    Key Ratios
    ----------------------------------------
    Return on average assets                     1.09%     1.02%     0.98%
    Return on average equity                    15.62%    15.28%    14.75%
    Interest rate spread (taxable equivalent
     basis)                                      2.51%     2.43%     2.46%
    Net interest margin (taxable equivalent
     basis)                                      2.86%     2.75%     2.78%
    
    Allowance for Loan Losses
    ----------------------------------------
    Balance at beginning of period            $18,480   $18,247   $17,442
    Provision charged to earnings                 300       300       300
    Reclassification of allowance on off-
     balance sheet exposures                        -         -      (250)
    Net (charge-offs) recoveries                 (135)      (67)      122
                                             --------- --------- ---------
    Balance at end of period                  $18,645   $18,480   $17,614
                                             --------- --------- ---------
    
    Washington Trust Bancorp, Inc. and Subsidiaries
                              FINANCIAL SUMMARY
    
                                                      Nine Months Ended
                                                    ----------------------
                                                    September  September
                                                       30,        30,
    (Dollars and shares in thousands, except per
     share amounts)                                   2006       2005
                                                    --------- ------------
    
    Operating Results
    -----------------------------------------------
    Net interest income                              $46,498      $44,953
    Provision for loan losses                            900          900
    Net realized gains on securities                     459           20
    Other noninterest income                          31,291       21,427
    Noninterest expenses                              49,595       40,627
    Income tax expense                                 8,925        8,002
    Net income                                        18,828       16,871
    
    Per Share
    -----------------------------------------------
    Basic earnings                                     $1.40        $1.27
    Diluted earnings                                   $1.37        $1.24
    Dividends declared                                 $0.57        $0.54
    
    Weighted Average Shares Outstanding
           Basic                                    13,414.6     13,303.2
           Diluted                                  13,708.2     13,615.8
    
    Key Ratios
    -----------------------------------------------
    Return on average assets                            1.04%        0.96%
    Return on average equity                           15.33%       14.51%
    Interest rate spread (taxable equivalent basis)     2.49%        2.48%
    Net interest margin (taxable equivalent basis)      2.82%        2.77%
    
    Allowance for Loan Losses
    -----------------------------------------------
    Balance at beginning of period                   $17,918      $16,771
    Provision charged to earnings                        900          900
    Reclassification of allowance on off-balance
     sheet exposures                                       -         (250)
    Net (charge-offs) recoveries                        (173)         193
                                                    --------- ------------
    Balance at end of period                         $18,645      $17,614
                                                    --------- ------------
    
    Washington Trust Bancorp, Inc. and Subsidiaries
                              FINANCIAL SUMMARY
    
                                       September      Dec.     September
                                           30,         31,         30,
    (Dollars and shares in thousands,
     except per share amounts)            2006        2005        2005
                                       ----------- ----------- -----------
    Period-End Balance Sheet
    ----------------------------------
    Assets                             $2,403,266  $2,402,003  $2,403,161
    Total securities                      741,350     783,941     782,207
    Loans:
           Commercial and other:
             Mortgages                    274,635     291,292     285,450
             Construction and
              development                  29,653      37,190      33,862
             Other                        257,026     226,252     235,457
           Total commercial and other     561,314     554,734     554,769
           Residential real estate:
             Mortgages                    572,399     565,680     568,675
             Homeowner construction        14,973      17,028      16,302
           Total residential real
            estate                        587,372     582,708     584,977
           Consumer:
             Home equity lines            147,897     161,100     163,727
             Other                        131,901     103,366      92,639
           Total consumer                 279,798     264,466     256,366
           Total loans                  1,428,484   1,401,908   1,396,112
    
    Deposits:
           Demand deposits                189,329     196,102     216,061
           NOW accounts                   172,317     178,677     186,615
           Money market accounts          295,431     223,255     219,982
           Savings accounts               193,029     212,499     227,834
           Time deposits                  850,080     828,725     759,746
           Total deposits               1,700,186   1,639,258   1,610,238
    Brokered deposits included in time
     deposits                             186,184     200,115     172,598
    Federal Home Loan Bank advances       464,148     545,323     577,936
    Shareholders' equity                  172,420     158,446     157,251
    
    Capital Ratios
    ----------------------------------
    Tier 1 risk-based capital                9.55%       9.06%       8.82%
    Total risk-based capital                10.97%      10.51%      10.31%
    Tier 1 leverage ratio                    5.81%       5.45%       5.32%
    
    Share Information
    ----------------------------------
    Shares outstanding at end of
     period                              13,445.1    13,361.8    13,347.0
    Book value per share                   $12.82      $11.86      $11.78
    Tangible book value per share           $8.53       $7.79       $7.68
    Market value per share                 $26.51      $26.18      $27.19
    
    Credit Quality
    ----------------------------------
    Nonaccrual loans                       $2,180      $2,414      $1,873
    Other real estate owned, net              402           -           -
    Nonperforming assets to total
     assets                                  0.11%       0.10%       0.08%
    Nonaccrual loans to total loans          0.15%       0.17%       0.13%
    Allowance for loan losses to
     nonaccrual loans                      855.28%     742.25%     940.42%
    Allowance for loan losses to total
     loans                                   1.31%       1.28%       1.26%
    
    Assets Under Administration
    ----------------------------------
    Market value                       $3,550,965  $3,271,756  $3,219,011
    
    Washington Trust Bancorp, Inc. and Subsidiaries
            RECONCILIATION TABLES - NON-GAAP FINANCIAL INFORMATION
    
    (Dollars and shares in thousands,     Three Months      Nine Months
     except per share amounts)                 Ended            Ended
                                          September 30,    September 30,
                                         ---------------- ----------------
                                          2006    2005     2006    2005
                                         ---------------- ----------------
    NET INCOME (GAAP)                     $6,578  $5,822  $18,828 $16,871
    Add: Acquisition costs, net of tax         -     440        -     440
    Add: Net realized loss on sales of
     securities, net of tax                  247       -        -       -
    Less: Net realized gain on sales of
     securities, net of tax (1)                -       -      (53)      -
    Less: Additional FHLBB dividend
     received                               (305)      -        -       -
                                         ---------------- ----------------
    ADJUSTED NET INCOME (NON-GAAP)        $6,520  $6,262  $18,775 $17,311
                                         ---------------- ----------------
    
    DILUTED EARNINGS PER SHARE (GAAP)       $.48    $.43    $1.37   $1.24
    Add: Acquisition costs, net of tax         -    $.03        -    $.03
    Add: Net realized loss on sales of
     securities, net of tax                  .02       -        -       -
    Less: Net realized gain on sales of
     securities, net of tax (1)                -       -        -       -
    Less: Additional FHLBB dividend
     received                               (.02)      -        -       -
                                         ---------------- ----------------
    DILUTED EARNINGS PER SHARE, ADJUSTED
     (NON-GAAP)                             $.48    $.46    $1.37   $1.27
                                         ---------------- ----------------
    
    NET INTEREST INCOME (GAAP)           $15,866 $15,360  $46,498 $44,953
    Less: Additional FHLBB dividend
     received                               (450)      -     (450)      -
                                         ---------------- ----------------
    NET INTEREST INCOME, ADJUSTED (NON-
     GAAP)                               $15,416 $15,360  $46,048 $44,953
                                         ---------------- ----------------
    
    RETURN ON AVERAGE ASSETS (GAAP)         1.09%   0.98%    1.04%   0.96%
    Add: Acquisition costs, net of tax         -%   0.02%       -%   0.02%
    Add: Net realized loss on sales of
     securities, net of tax                 0.01%      -%       -%      -%
    Less: Net realized gain on sales of
     securities, net of tax (1)                -%      -%    0.00%      -%
    Less: Additional FHLBB dividend
     received                             (0.01%)      -%       -%      -%
                                         ---------------- ----------------
    ADJUSTED RETURN ON AVERAGE ASSETS
     (NON-GAAP)                             1.09%   1.00%    1.04%   0.98%
                                         ---------------- ----------------
    
    RETURN ON AVERAGE EQUITY (GAAP)        15.62%  14.75%   15.33%  14.51%
    Add: Acquisition costs, net of tax         -%   0.28%       -%   0.28%
    Add: Net realized loss on sales of
     securities, net of tax                 0.15%      -%       -%      -%
    Less: Net realized gain on sales of
     securities, net of tax (1)                -%      -%  (0.03%)      -%
    Less: Additional FHLBB dividend
     received                             (0.18%)      -%       -%      -%
                                         ---------------- ----------------
    ADJUSTED RETURN ON AVERAGE EQUITY
     (NON-GAAP)                            15.59%  15.03%   15.30%  14.79%
                                         ---------------- ----------------
    

    (1) Excludes $258 realized gains on equity securities, net of tax, realized in connection with charitable donation of appreciated securities in the second quarter of 2006.

    Washington Trust Bancorp, Inc. and Subsidiaries
                         CONSOLIDATED BALANCE SHEETS
                                                   (Unaudited)
                                                   September    December
    (Dollars in thousands)                             30,         31,
                                                      2006        2005
                                                   ----------- -----------
    Assets:
    Cash and due from banks                           $52,862     $48,997
    Federal funds sold and other short-term
     investments                                       15,923      17,166
    Mortgage loans held for sale                        2,913         439
    Securities:
     Available for sale, at fair value; amortized
      cost $581,154 in 2006 and $620,638 in 2005      580,506     619,234
     Held to maturity, at cost; fair value
      $159,099 in 2006 and $162,756 in 2005           160,844     164,707
                                                   ----------- -----------
      Total securities                                741,350     783,941
    Federal Home Loan Bank stock, at cost              31,966      34,966
    Loans:
      Commercial and other                            561,314     554,734
      Residential real estate                         587,372     582,708
      Consumer                                        279,798     264,466
                                                   ----------- -----------
      Total loans                                   1,428,484   1,401,908
      Less allowance for loan losses                   18,645      17,918
                                                   ----------- -----------
      Net loans                                     1,409,839   1,383,990
    Premises and equipment, net                        24,068      23,737
    Accrued interest receivable                        11,441      10,594
    Investment in bank-owned life insurance            39,374      30,360
    Goodwill                                           44,558      39,963
    Identifiable intangible assets, net                13,200      14,409
    Other assets                                       15,772      13,441
                                                   ----------- -----------
     Total assets                                  $2,403,266  $2,402,003
                                                   ----------- -----------
    
    Liabilities:
    Deposits:
     Demand deposits                                 $189,329    $196,102
     NOW accounts                                     172,317     178,677
     Money market accounts                            295,431     223,255
     Savings accounts                                 193,029     212,499
     Time deposits                                    850,080     828,725
                                                   ----------- -----------
     Total deposits                                 1,700,186   1,639,258
    Dividends payable                                   2,558       2,408
    Federal Home Loan Bank advances                   464,148     545,323
    Junior subordinated debentures                     22,681      22,681
    Other borrowings                                   14,928       9,774
    Accrued expenses and other liabilities             26,345      24,113
                                                   ----------- -----------
     Total liabilities                              2,230,846   2,243,557
                                                   ----------- -----------
    
    Shareholders' Equity:
    Common stock of $.0625 par value; authorized
     30,000,000 shares;
      issued 13,459,740 shares in 2006 and
       13,372,295 in 2005                                 841         836
    Paid-in capital                                    35,096      32,778
    Retained earnings                                 137,900     126,735
    Accumulated other comprehensive loss               (1,050)     (1,653)
    Treasury stock, at cost; 14,676 shares in 2006
     and 10,519 in 2005                                  (367)       (250)
                                                   ----------- -----------
     Total shareholders' equity                       172,420     158,446
                                                   ----------- -----------
     Total liabilities and shareholders' equity    $2,403,266  $2,402,003
                                                   ----------- -----------
    
    Washington Trust Bancorp, Inc. and Subsidiaries
                      CONSOLIDATED STATEMENTS OF INCOME
    
    (Dollars and shares in
     thousands, except per share
     amounts)                                    (Unaudited)
                                      Three Months         Nine Months
    Periods ended September 30,      2006      2005      2006      2005
                                   --------- --------- --------- ---------
    Interest income:
     Interest and fees on loans     $23,430   $20,418   $68,457   $57,339
     Interest on securities
       Taxable                        8,493     8,085    25,553    24,804
       Nontaxable                       405       221     1,104       610
     Dividends on corporate stock
      and Federal Home Loan Bank
      stock                           1,197       594     2,124     1,838
     Interest on federal funds
      sold and other short-term
      investments                       252       187       517       321
                                   --------- --------- --------- ---------
     Total interest income           33,777    29,505    97,755    84,912
                                   --------- --------- --------- ---------
    Interest expense:
     Deposits                        12,473     8,241    33,872    22,800
     Federal Home Loan Bank
      advances                        5,011     5,741    16,115    16,960
     Junior subordinated
      debentures                        338       124     1,014       124
     Other                               89        39       256        75
                                   --------- --------- --------- ---------
     Total interest expense          17,911    14,145    51,257    39,959
                                   --------- --------- --------- ---------
    Net interest income              15,866    15,360    46,498    44,953
    Provision for loan losses           300       300       900       900
                                   --------- --------- --------- ---------
    Net interest income after
     provision for loan losses       15,566    15,060    45,598    44,053
                                   --------- --------- --------- ---------
    Noninterest income:
     Wealth management and trust
      services                        6,040     4,066    18,099    10,764
     Service charges on deposit
      accounts                        1,312     1,158     3,667     3,337
     Merchant processing fees         2,125     1,932     4,828     4,047
     Income from bank-owned life
      insurance                         389       282     1,014       833
     Net gains on loan sales            417       415     1,029     1,320
     Net realized (losses) gains
      on securities                    (365)       17       459        20
     Other income                       865       504     2,654     1,126
                                   --------- --------- --------- ---------
     Total noninterest income        10,783     8,374    31,750    21,447
                                   --------- --------- --------- ---------
    Noninterest expense:
     Salaries and employee
      benefits                        9,651     8,194    29,100    23,103
     Net occupancy                      934       828     2,906     2,483
     Equipment                          872       832     2,552     2,583
     Merchant processing costs        1,796     1,623     4,090     3,357
     Advertising and promotion          371       460     1,489     1,496
     Outsourced services                490       406     1,504     1,263
     Legal, audit and professional
      fees                              563       513     1,342     1,425
     Amortization of intangibles        398       196     1,209       442
     Other                            1,536     1,758     5,403     4,475
                                   --------- --------- --------- ---------
     Total noninterest expense       16,611    14,810    49,595    40,627
                                   --------- --------- --------- ---------
    Income before income taxes        9,738     8,624    27,753    24,873
    Income tax expense                3,160     2,802     8,925     8,002
                                   --------- --------- --------- ---------
     Net income                      $6,578    $5,822   $18,828   $16,871
                                   --------- --------- --------- ---------
    
    Weighted average shares
     outstanding - basic           13,436.6  13,330.3  13,414.6  13,303.2
    Weighted average shares
     outstanding - diluted         13,726.3  13,641.9  13,708.2  13,615.8
    Per share information:
     Basic earnings per share         $0.49     $0.44     $1.40     $1.27
     Diluted earnings per share       $0.48     $0.43     $1.37     $1.24
     Cash dividends declared per
      share                           $0.19     $0.18     $0.57     $0.54
    
    Washington Trust Bancorp, Inc. and Subsidiaries
                     CONSOLIDATED AVERAGE BALANCE SHEETS
    
                                           (Unaudited)
    Three months ended
     September 30,               2006                      2005
                       ---------------------------------------------------
                         Average          Yield/   Average          Yield/
    (Dollars in
     thousands)          Balance  Interest Rate    Balance  Interest Rate
                       ------------------------- -------------------------
    Assets:
    Residential real
     estate loans        $588,488  $7,596  5.12%   $574,344  $7,104  4.91%
    Commercial and
     other loans          564,804  10,990  7.72%    539,145   9,684  7.13%
    Consumer loans        278,864   4,898  6.97%    251,540   3,677  5.80%
                       ------------------------- -------------------------
     Total loans        1,432,156  23,484  6.51%  1,365,029  20,465  5.95%
    Federal funds sold
     and other short-
     term investments      20,132     252  4.96%     22,562     186  3.27%
    Taxable debt
     securities           706,319   8,493  4.77%    764,617   8,085  4.19%
    Nontaxable debt
     securities            42,842     622  5.76%     23,467     341  5.76%
    Corporate stocks
     and FHLBB stock       48,704   1,289 10.50%     49,828     677  5.40%
                       ------------------------- -------------------------
     Total securities     817,997  10,656  5.17%    860,474   9,289  4.28%
                       ------------------------- -------------------------
     Total interest-
      earning assets    2,250,153  34,140  6.02%  2,225,503  29,754  5.30%
    Non interest-
     earning assets       160,883                   142,845
                       ------------------------- -------------------------
     Total assets      $2,411,036                $2,368,348
                       ------------------------- -------------------------
    Liabilities and
     Shareholders'
     Equity:
    NOW accounts         $174,740     $78  0.18%   $180,292     $76  0.17%
    Money market
     accounts             281,559   2,584  3.64%    203,149   1,141  2.23%
    Savings deposits      191,232     327  0.68%    229,049     332  0.58%
    Time deposits         868,487   9,484  4.33%    741,127   6,692  3.58%
    FHLBB advances        480,033   5,011  4.14%    609,050   5,741  3.74%
    Junior subordinated
     debentures            22,681     338  5.91%      8,136     124  6.04%
    Other                   7,624      89  4.66%      3,514      40  4.55%
                       ------------------------- -------------------------
     Total interest-
      bearing
      liabilities       2,026,356  17,911  3.51%  1,974,317  14,146  2.84%
    Demand deposits       192,626                   214,256
    Other liabilities      23,589                    21,936
    Shareholders'
     equity               168,465                   157,839
                       ------------------------- -------------------------
      Total liabilities
       and
       shareholders'
       equity          $2,411,036                $2,368,348
                       ------------------------- -------------------------
      Net interest
       income (FTE)               $16,229                   $15,608
                       ------------------------- -------------------------
    Interest rate
     spread                                2.51%                     2.46%
    Net interest margin                    2.86%                     2.78%
    
    Washington Trust Bancorp, Inc. and Subsidiaries
                     CONSOLIDATED AVERAGE BALANCE SHEETS
    
                                           (Unaudited)
    Nine months ended
     September 30,               2006                      2005
                       ---------------------------------------------------
                         Average          Yield/   Average          Yield/
    (Dollars in
     thousands)          Balance  Interest Rate    Balance  Interest Rate
                       ------------------------- -------------------------
    Assets:
    Residential real
     estate loans        $589,635 $22,505  5.10%   $554,771 $20,498  4.94%
    Commercial and
     other loans          563,284  32,294  7.67%    523,242  27,032  6.91%
    Consumer loans        272,960  13,819  6.77%    242,084   9,945  5.49%
                       ------------------------- -------------------------
     Total loans        1,425,879  68,618  6.43%  1,320,097  57,475  5.82%
    Federal funds sold
     and other short-
     term investments      14,416     517  4.79%     15,127     320  2.83%
    Taxable debt
     securities           727,175  25,553  4.70%    799,620  24,804  4.15%
    Nontaxable debt
     securities            39,254   1,697  5.78%     21,338     938  5.88%
    Corporate stocks
     and FHLBB stock       49,723   2,393  6.44%     51,386   2,122  5.52%
                       ------------------------- -------------------------
     Total securities     830,568  30,160  4.86%    887,471  28,184  4.25%
                       ------------------------- -------------------------
     Total interest-
      earning assets    2,256,447  98,778  5.85%  2,207,568  85,659  5.19%
    Non interest-
     earning assets       155,006                   132,209
                       ------------------------- -------------------------
     Total assets      $2,411,453                $2,339,777
                       ------------------------- -------------------------
    Liabilities and
     Shareholders'
     Equity:
    NOW accounts         $174,156    $225  0.17%   $177,201    $231  0.17%
    Money market
     accounts             247,979   6,026  3.25%    195,585   2,900  1.98%
    Savings deposits      197,035     888  0.60%    239,794   1,081  0.60%
    Time deposits         863,831  26,733  4.14%    721,502  18,588  3.44%
    FHLBB advances        527,108  16,115  4.09%    631,831  16,960  3.59%
    Junior subordinated
     debentures            22,681   1,014  5.98%      2,742     124  6.04%
    Other                   7,331     256  4.67%      2,311      76  4.37%
                       ------------------------- -------------------------
     Total interest-
      bearing
      liabilities       2,040,121  51,257  3.36%  1,970,966  39,960  2.71%
    Demand deposits       185,088                   195,451
    Other liabilities      22,517                    18,366
    Shareholders'
     equity               163,727                   154,994
                       ------------------------- -------------------------
      Total liabilities
       and
       shareholders'
       equity          $2,411,453                $2,339,777
                       ------------------------- -------------------------
      Net interest
       income (FTE)               $47,521                   $45,699
                       ------------------------- -------------------------
    Interest rate
     spread                                2.49%                     2.48%
    Net interest margin                    2.82%                     2.77%
    

    Source: Washington Trust Bancorp, Inc.


    Contact: Washington Trust Bancorp, Inc. Elizabeth B. Eckel, 401-348-1309 Senior Vice President, Marketing ebeckel@washtrust.com