• Washington Trust Bancorp, Inc.
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  • Washington Trust Announces Increased Second Quarter 2008 Earnings
    Company Release - 07/21/2008 16:03

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

    Washington Trust Bancorp, Inc. (NASDAQ Global Select; symbol: WASH), parent company of The Washington Trust Company, today announced second quarter 2008 net income of $6.1 million, or 45 cents per diluted share; a 12.5 percent increase over the 40 cents per diluted share reported for the second quarter a year ago. The returns on average equity and average assets for the second quarter of 2008 were 12.88% and 0.92%, respectively, compared to 12.57% and 0.92%, respectively, for the same period in 2007.

        Second Quarter 2008 Overview:
    
        --  Net interest income increased by $1.3 million from the second
            quarter last year primarily due to higher earning-asset levels
            and lower deposit costs.
    
        --  The loan loss provision charged to earnings was $1.4 million,
            due largely to growth in the loan portfolio as well as an
            ongoing evaluation of credit quality and general economic
            conditions.
    
        --  Wealth Management revenues for the second quarter of 2008 were
            up by 2 percent from the same quarter a year ago. Wealth
            management assets under administration amounted to
            $3.9 billion at June 30, 2008, up $45 million in the second
            quarter and up $56 million from the June 30, 2007 balance.
    
        --  Net losses on securities for the second quarter of 2008
            totaled $53 thousand as compared to net losses of
            $700 thousand in the same quarter last year.
    
        --  Noninterest expenses for the second quarter of 2008 were up by
            2 percent compared to the same quarter last year.
    
        --  Commercial loan growth continued to be strong with an increase
            of $68.7 million in the quarter, representing the seventh
            consecutive quarter of growth. Commercial loans have increased
            $172.0 million, or 28 percent, from the balance at June 30,
            2007.
    
        --  Nonperforming assets remain at manageable levels with a modest
            increase from $5.7 million, or 0.22% of total assets, at
            March 31, 2008 to $6.2 million, or 0.23% of total assets, at
            June 30, 2008. Net charge-offs were $161 thousand in the
            second quarter of 2008.
    

    Commenting on the quarter, John C. Warren, Chairman and Chief Executive Officer, said, "Washington Trust's second quarter results were particularly noteworthy considering the deterioration of economic conditions and declines in the financial markets. In the face of these strong headwinds we have achieved solid earnings through active management and believe our disciplined credit culture is serving us well."

    Net income for the six months ended June 30, 2008 amounted to $11.9 million, or 88 cents per diluted share, compared to the $11.5 million, or 84 cents per diluted share, for the same period in 2007. Results for the first half of 2007 included $1.1 million in debt prepayment charges, recorded in noninterest expense in the first quarter of 2007 as a result of prepayments of higher cost Federal Home Loan Bank of Boston ("FHLBB") advances. There have been no debt prepayment penalty charges recognized in 2008. The returns on average equity and average assets for the first six months of 2008 were 12.55% and 0.91%, respectively, compared to 13.12% and 0.96%, respectively, for the same period in 2007.

    RESULTS OF OPERATIONS

    Net interest income for the second quarter of 2008 increased $1.1 million, or 7.5 percent, compared to the first quarter of 2008 and $1.3 million, or 8.6 percent, from the second quarter a year ago, due primarily to higher earning-asset levels and lower deposit costs. On a year to date basis, net interest income is up $1.5 million, or 5.0 percent, from 2007, due to growth in interest-earning assets.

    The net interest margin (annualized tax-equivalent net interest income as a percentage of average earning assets) for the second quarter of 2008 was 2.71%, up 12 basis points from the first quarter of 2008 and down 5 basis points from the second quarter of 2007. The increase in the margin on a linked quarter basis was largely attributable to lower deposit and funding costs. For the six months ended June 30, 2008 the net interest margin was 2.65% compared to 2.79% for the same period in 2007. The decline in net interest margin on a year to date basis reflects decreases in yields on prime-related commercial and consumer loans resulting from actions taken by the Federal Reserve to reduce short-term interest rates, with less commensurate reduction in deposit rates paid during the same period.

    For the quarters ended June 30, 2008 and 2007 net losses on securities amounted to $53 thousand and $700 thousand, respectively. Included in the second quarter 2008 net losses of $53 thousand were impairment charges of $1.1 million recognized on three preferred stock holdings and realized gains of $1.1 million on sales of equity securities. Net losses on securities for the second quarter of 2007 included approximately $1.3 million of net losses on sales of certain U.S. Government sponsored agency and mortgage-backed securities, $195 thousand of gains from certain debt and equity securities that were called prior to their maturity by the issuers, and $397 thousand of gains resulting from the Corporation's annual contribution of appreciated equity securities to the Corporation's charitable foundation. For the first six months of 2008, net losses on securities amounted to $98 thousand as compared to net gains of $336 thousand for the same period in 2007.

    Excluding net gains and losses on securities, noninterest income amounted to $12.2 million for the second quarter of 2008, up $389 thousand, or 3 percent, from the same period a year ago. Wealth management revenues for the second quarter of 2008 were up $157 thousand, or 2 percent, from the second quarter of 2007. For the first half of 2008, noninterest income on this basis totaled $23.3 million, up $1.3 million, or 6 percent, from the first half of 2007. Wealth management revenues for the six months ended June 30, 2008 increased by $545 thousand, or 4 percent, from the same period in 2007. Wealth management assets under administration totaled $3.924 billion at June 30, 2008, down $90.8 million, or 2 percent, from December 31, 2007 and up $55.9 million, or 1 percent, from June 30, 2007. The decline in assets under administration in the first six months of 2008 was primarily due to lower valuations in the equity markets.

    Noninterest expenses amounted to $18.1 million for the second quarter of 2008, up $294 thousand from the same quarter a year ago. Included in noninterest expenses in the second quarter of 2007 was $520 thousand representing the cost of the Corporation's contribution of appreciated equity securities to its charitable foundation. Washington Trust expects to make its annual contribution to the foundation later this year. For the six months ended June 30, 2008, noninterest expenses totaled $35.2 million, up $327 thousand, or 1 percent, from the same period in 2007. Excluding first quarter 2007 debt prepayment penalties and the second quarter 2007 charitable contribution, noninterest expenses for the first six months of 2008 increased $1.9 million, or 6 percent, from the same period in 2007. Approximately 40 percent of the 2008 increase, on this basis, represents costs attributable to our wealth management business, an increase in FDIC deposit insurance costs and to operating expenses related to a de novo branch opened in June 2007.

    Income tax expense amounted to $2.8 million and $5.5 million, respectively, for the three and six months ended June 30, 2008, as compared to $2.5 million and $5.2 million, respectively, for the same periods in 2007. The Corporation's effective tax rate for the three and six months ended June 30, 2008 was 31.6% and 31.7%, respectively, as compared to 31.4% for each of the same periods last year.

    ASSET QUALITY

    Nonperforming assets (nonaccrual loans and property acquired through foreclosure) amounted to $6.2 million, or 0.23% of total assets, at June 30, 2008, compared to $4.3 million, or 0.17% of total assets, at December 31, 2007 and $3.0 million, or 0.12% of total assets, at June 30, 2007. There were no properties acquired through foreclosure on the balance sheet at June 30, 2008, December 31, 2007 and June 30, 2007.

    Nonaccrual loans as a percent of total loans stood at 0.36% at June 30, 2008 compared to 0.27% of total loans at December 31, 2007 and 0.20% of total loans at June 30, 2007. The increase in nonaccrual loans was largely due to certain commercial loan relationships moving into the non-accruing loan classification.

    Total 30 day+ delinquencies amounted to $15.0 million, or 0.88% of total loans, at June 30, 2008, up $8.0 million in the first six months of 2008 and up $5.9 million from the balance a year earlier. Commercial loans represent $12.4 million, or 83%, of total delinquencies at June 30, 2008.

    Washington Trust has never offered a subprime residential loan program. Total residential mortgage and consumer loan 30 day+ delinquencies increased modestly in the first half of 2008 to $2.6 million, or 0.29% of these loans, at June 30, 2008, compared to $2.3 million, or 0.26%, at December 31, 2007. Total 90 day+ delinquencies in the residential mortgage portfolio amounted to $408 thousand (two loans) at June 30, 2008. There were no consumer loans in the 90 day+ delinquency category at June 30, 2008. Total nonaccrual loans, which include the 90 day+ delinquencies, amounted to $1.1 million and $170 thousand in the residential mortgage and consumer loan categories, respectively, at June 30, 2008.

    The Corporation's loan loss provision charged to earnings amounted to $1.4 million and $1.850 million, respectively, for the three and six months ended June 30, 2008, compared to $300 thousand and $600 thousand for the same periods in 2007. The provision for loan losses was based on management's assessment of various factors affecting the loan portfolio, including, among others, growth in the portfolio, ongoing evaluation of credit quality and general economic conditions. Net charge-offs amounted to $161 thousand and $164 thousand, respectively, for the quarter and first six months of 2008, as compared to net charge-offs of $333 thousand and $167 thousand for the same periods in 2007.

    The Corporation will continue to assess the adequacy of its allowance for loan losses in accordance with its established policies. The allowance for loan losses was $22.0 million, or 1.29% of total loans, at June 30, 2008, compared to $20.3 million, or 1.29% of total loans, at December 31, 2007, and $19.3 million, or 1.30% of total loans, at June 30, 2007.

    FINANCIAL CONDITION

    Total assets were $2.733 billion at June 30, 2008, up $193.0 million from December 31, 2007. Total loans grew by $132.0 million, or 8.4 percent, during the first six months of 2008 and amounted to $1.7 billion. Commercial loans rose by $68.7 million, or 9.5 percent, in the second quarter of 2008 and by $114.7 million, or 16.9 percent, in the first six months of 2008. Residential loans increased by $30.5 million, or 5.3 percent, in the second quarter of 2008, including purchases of $30.8 million. On a year to date basis, residential loans increased by $8.7 million, or 1.4 percent. Consumer loans increased by $7.9 million, or 2.7 percent, in the second quarter of 2008 and by $8.6 million, or 2.9 percent, in the first six months of 2008. The investment securities portfolio totaled $790.1 million at June 30, 2008, up $38.3 million from December 31, 2007. This increase includes an increase of $60.9 million in mortgage-backed securities during the second quarter of 2008. At June 30, 2008, the fair value of mortgage-backed securities amounted to $586.1 million. All of the Corporation's mortgage-backed securities are issued by U.S. Government or U.S. Government-sponsored agencies.

    Total deposits decreased by $36.7 million in the first six months of 2008. Excluding brokered certificates of deposit, in-market deposits fell by $20.6 million, or 1.4 percent, from the balance at December 31, 2007. Runoff occurred in money market and time deposits, while demand deposits and NOW account balances rose by $18.1 million in the first half of 2008. FHLBB advances totaled $845.3 million at June 30, 2008, up $228.9 million from the balance at December 31, 2007.

    Total shareholders' equity amounted to $186.4 million at June 30, 2008, compared to $186.5 million at December 31, 2007. Book value per share as of June 30, 2008 and December 31, 2007 amounted to $13.91 and $13.97, respectively. The Corporation's capital ratios at June 30, 2008 place the Corporation in the "well-capitalized" category according to regulatory standards.

    As previously reported, in April 2008, the Corporation sponsored the creation of Washington Preferred Capital Trust ("Washington Preferred"). Washington Preferred is a newly formed Delaware statutory trust created for the sole purpose of issuing trust preferred securities and investing the proceeds in junior subordinated debentures of the Corporation.

    In April 2008, Washington Preferred issued $10,000,000 of trust preferred securities in a private placement to two institutional investors. The proceeds of the trust preferred securities, along with the proceeds of $310,000 from the issuance of common securities by Washington Preferred to the Corporation, were used to purchase $10,310,000 of the Corporation's floating rate junior subordinated debentures. Like the trust preferred securities, the junior subordinated debentures mature in June 2038 and bear interest at a rate equal to the three-month LIBOR rate plus 3.50%. In April 2008, the Corporation also entered into a five-year interest rate swap contract with a notional amount of $10,000,000. Under the terms of this contract, Washington Trust will pay a fixed rate of 6.97% and receive a rate equal to three-month LIBOR plus 3.50%.

    DIVIDENDS DECLARED

    The Board of Directors declared a quarterly dividend of 21 cents per share for the quarter ended June 30, 2008, an increase of one cent per share from the most recent quarterly dividend rate. The dividend was paid on July 11, 2008 to shareholders of record on June 30, 2008. This represents the 16th consecutive year with a dividend increase for Washington Trust shareholders.

    CONFERENCE CALL

    Washington Trust Chairman 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 Tuesday, July 22, 2008 at 8:30 a.m. (Eastern Time) to discuss the Corporation's second quarter results. This call is being webcast by SNL IR Solutions 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) 344-7529 and entering Conference ID #: 420625. The replay will be available until 11:59 p.m. on July 29, 2008.

    BACKGROUND

    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 Select(R) under the symbol WASH. Investor information is available on the Corporation's web site: www.washtrust.com.

    FORWARD-LOOKING STATEMENTS

    This press release 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, reductions in net interest income resulting from interest rate volatility as well as changes in the balance and mix of loans and deposits, reductions in the market value of wealth management assets under administration, reductions in loan demand, changes in loan collectibility, 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. In addition, the factors described under "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2007, as filed with the Securities and Exchange Commission, may result in these differences. You should carefully review all of these factors, and you should be aware that there may be other factors that could cause these differences. 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
                         CONSOLIDATED BALANCE SHEETS
                                                         (unaudited)
                                                                December
    (Dollars in thousands)                          June 30,       31,
                                                      2008        2007
    ----------------------------------------------------------------------
    Assets:
    Cash and noninterest-bearing balances due from
     banks                                         $   39,800  $   30,817
    Interest-bearing balances due from banks              575       1,973
    Federal funds sold and securities purchased
     under resale agreements                            4,959       7,600
    Other short-term investments                        1,236         722
    Mortgage loans held for sale                        2,711       1,981
    Securities available for sale, at fair value;
      amortized cost $799,938 in 2008 and $750,583
       in 2007                                        790,064     751,778
    Federal Home Loan Bank stock, at cost              42,008      31,725
    Loans:
     Commercial and other                             795,013     680,266
     Residential real estate                          608,351     599,671
     Consumer                                         302,286     293,715
    ----------------------------------------------------------------------
     Total loans                                    1,705,650   1,573,652
     Less allowance for loan losses                    21,963      20,277
    ----------------------------------------------------------------------
     Net loans                                      1,683,687   1,553,375
    Premises and equipment, net                        25,170      25,420
    Accrued interest receivable                        10,617      11,427
    Investment in bank-owned life insurance            42,262      41,363
    Goodwill                                           50,479      50,479
    Identifiable intangible assets, net                10,781      11,433
    Other assets                                       28,640      19,847
    ----------------------------------------------------------------------
     Total assets                                  $2,732,989  $2,539,940
    ----------------------------------------------------------------------
    
    Liabilities:
    Deposits:
     Demand deposits                               $  187,865  $  175,542
     NOW accounts                                     170,733     164,944
     Money market accounts                            305,860     321,600
     Savings accounts                                 177,490     176,278
     Time deposits                                    767,594     807,841
    ----------------------------------------------------------------------
     Total deposits                                 1,609,542   1,646,205
    Dividends payable                                   2,819       2,677
    Federal Home Loan Bank advances                   845,291     616,417
    Junior subordinated debentures                     32,991      22,681
    Other borrowings                                   26,484      32,560
    Accrued expenses and other liabilities             29,440      32,887
    ----------------------------------------------------------------------
     Total liabilities                              2,546,567   2,353,427
    ----------------------------------------------------------------------
    
    Shareholders' Equity:
    Common stock of $.0625 par value; authorized
     30,000,000 shares;
     issued 13,503,876 shares in 2008 and
      13,492,110 shares in 2007                           844         843
    Paid-in capital                                    34,852      34,874
    Retained earnings                                 160,593     154,647
    Accumulated other comprehensive loss               (7,098)       (239)
    Treasury stock, at cost; 105,677 shares in
     2008 and 137,652 in 2007                          (2,769)     (3,612)
    ----------------------------------------------------------------------
     Total shareholders' equity                       186,422     186,513
    ----------------------------------------------------------------------
     Total liabilities and shareholders' equity    $2,732,989  $2,539,940
    ----------------------------------------------------------------------
    
    Washington Trust Bancorp, Inc. and Subsidiaries
                      CONSOLIDATED STATEMENTS OF INCOME
    
    (Dollars and shares in
     thousands, except per
     share amounts)                             (unaudited)
                                    Three Months           Six Months
    Periods ended June 30,         2008       2007       2008       2007
    ----------------------------------------------------------------------
    Interest income:
     Interest and fees on loans $  24,406  $  24,414  $  49,376  $  48,348
     Interest on securities:
       Taxable                      8,302      7,839     16,718     15,631
       Nontaxable                     786        759      1,566      1,427
     Dividends on corporate
      stock and Federal Home
      Loan Bank stock                 489        685      1,109      1,403
     Other interest income             50        184        190        375
    ----------------------------------------------------------------------
     Total interest income         34,033     33,881     68,959     67,184
    ----------------------------------------------------------------------
    Interest expense:
     Deposits                       9,248     13,215     21,147     26,192
     Federal Home Loan Bank
      advances                      7,794      5,112     15,093     10,080
     Junior subordinated
      debentures                      509        338        847        676
     Other interest expense           275        289        589        439
    ----------------------------------------------------------------------
     Total interest expense        17,826     18,954     37,676     37,387
    ----------------------------------------------------------------------
    Net interest income            16,207     14,927     31,283     29,797
    Provision for loan losses       1,400        300      1,850        600
    ----------------------------------------------------------------------
    Net interest income after
     provision for loan losses     14,807     14,627     29,433     29,197
    ----------------------------------------------------------------------
    Noninterest income:
     Wealth management
      services:
       Trust and investment
        advisory fees               5,321      5,252     10,663     10,290
       Mutual fund fees             1,445      1,352      2,786      2,614
       Financial planning,
        commissions and other
        service fees                  884        889      1,459      1,459
    ----------------------------------------------------------------------
         Wealth management
          services                  7,650      7,493     14,908     14,363
     Service charges on deposit
      accounts                      1,208      1,220      2,368      2,345
     Merchant processing fees       1,914      1,829      3,186      3,033
     Income from bank-owned
      life insurance                  453        399        900        790
     Net gains on loan sales
      and commissions on loans
      originated for others           433        510        924        774
     Net (losses) gains on
      securities                      (53)      (700)       (98)       336
     Other income                     554        372      1,015        730
    ----------------------------------------------------------------------
     Total noninterest income      12,159     11,123     23,203     22,371
    ----------------------------------------------------------------------
    Noninterest expense:
     Salaries and employee
      benefits                     10,411     10,285     20,754     20,097
     Net occupancy                  1,064      1,038      2,202      2,055
     Equipment                        977        861      1,921      1,693
     Merchant processing costs      1,598      1,558      2,666      2,577
     Outsourced services              742        535      1,378      1,054
     Advertising and promotion        467        572        853      1,001
     Legal, audit and
      professional fees               430        404        973        854
     Amortization of
      intangibles                     326        348        652        716
     Debt prepayment penalties          -          -          -      1,067
     Other expenses                 2,039      2,159      3,797      3,755
    ----------------------------------------------------------------------
     Total noninterest expense     18,054     17,760     35,196     34,869
    ----------------------------------------------------------------------
    Income before income taxes      8,912      7,990     17,440     16,699
    Income tax expense              2,817      2,508      5,529      5,242
    ----------------------------------------------------------------------
     Net income                 $   6,095  $   5,482  $  11,911  $  11,457
    ----------------------------------------------------------------------
    
    Weighted average shares
     outstanding - basic         13,381.1   13,339.6   13,369.6   13,375.7
    Weighted average shares
     outstanding - diluted       13,567.0   13,616.4   13,550.9   13,667.6
    Per share information:
     Basic earnings per share   $    0.45  $    0.41  $    0.89  $    0.86
     Diluted earnings per share $    0.45  $    0.40  $    0.88  $    0.84
     Cash dividends declared
      per share                 $    0.21  $    0.20  $    0.41  $    0.40
    
    Washington Trust Bancorp, Inc. and Subsidiaries
                  SELECTED FINANCIAL HIGHLIGHTS (unaudited)
    
                                At or for the Quarters Ended
    ----------------------------------------------------------------------
                    June 30,   Mar. 31,   Dec. 31,   Sept. 30,  June 30,
    (Dollars in
     thousands,
     except per
     share amounts)   2008       2008       2007       2007       2007
    ----------------------------------------------------------------------
    Financial Data
    ---------------
    Total assets   $2,732,989 $2,564,387 $2,539,940 $2,431,762 $2,393,882
    Total loans     1,705,650  1,598,582  1,573,652  1,514,493  1,489,174
    Total
     securities       790,064    747,053    751,778    688,709    676,204
    Total deposits  1,609,542  1,635,025  1,646,205  1,655,887  1,669,089
    Total
     shareholders'
     equity           186,422    191,219    186,513    177,897    171,188
    Net income          6,095      5,816      5,787      6,556      5,482
    
    Per Share Data
    ---------------
    Basic earnings
     per share     $     0.45 $     0.44 $     0.43 $     0.49 $     0.41
    Diluted
     earnings per
     share         $     0.45 $     0.43 $     0.43 $     0.48 $     0.40
    Dividends
     declared per
     share         $     0.21 $     0.20 $     0.20 $     0.20 $     0.20
    Book value per
     share         $    13.91 $    14.30 $    13.97 $    13.33 $    12.87
    Tangible book
     value per
     share         $     9.34 $     9.70 $     9.33 $     8.66 $     8.61
    Market value
     per share     $    19.70 $    24.82 $    25.23 $    26.97 $    25.21
    
    Key Ratios
    ---------------
    Return on
     average assets      0.92%      0.90%      0.94%      1.10%      0.92%
    Return on
     average equity     12.88%     12.22%     12.73%     14.99%     12.57%
    
    Capital Ratios
    ---------------
    Tier 1 risk-
     based capital       9.44%      9.23%      9.10%      9.11%      9.40%
    Total risk-
     based capital      10.69%     10.49%     10.39%     10.43%     10.73%
    Tier 1 leverage
     ratio               6.32%      5.93%      6.09%      6.11%      6.16%
    
    Average Yields
     (taxable
     equivalent
     basis)
    ---------------
    Assets
    Residential
     real estate
     loans               5.55%      5.55%      5.41%      5.35%      5.31%
    Commercial and
     other loans         6.51%      6.95%      7.39%      7.62%      7.64%
    Consumer loans       5.48%      6.18%      6.74%      7.01%      6.98%
     Total loans         5.98%      6.28%      6.51%      6.62%      6.59%
    Short-term
     investments,
     federal funds
     sold
     and other           1.64%      2.69%      4.72%      5.10%      4.36%
    Taxable debt
     securities          4.86%      5.06%      5.19%      5.16%      5.17%
    Nontaxable debt
     securities          5.67%      5.68%      5.59%      5.61%      5.65%
    Corporate
     stocks and
     FHLBB stock         4.46%      5.89%      7.00%      7.03%      7.15%
     Total
      securities         4.87%      5.11%      5.33%      5.31%      5.32%
     Total
      interest-
      earning
      assets             5.60%      5.89%      6.12%      6.20%      6.16%
    Liabilities
    NOW accounts         0.19%      0.19%      0.20%      0.17%      0.15%
    Money market
     accounts            1.79%      3.13%      3.93%      3.90%      3.92%
    Savings
     accounts            0.50%      1.00%      1.32%      1.32%      1.35%
    Time deposits        3.88%      4.38%      4.55%      4.60%      4.61%
    FHLBB advances       4.15%      4.37%      4.56%      4.44%      4.35%
    Junior
     subordinated
     debentures          6.34%      5.99%      5.91%      5.91%      5.98%
    Other                4.60%      4.32%      4.36%      4.47%      4.51%
     Total
      interest-
      bearing
      liabilities        3.18%      3.63%      3.85%      3.78%      3.77%
    
    Interest rate
     spread
     (taxable
     equivalent
     basis)              2.42%      2.26%      2.27%      2.42%      2.39%
    Net interest
     margin
     (taxable
     equivalent
     basis)              2.71%      2.59%      2.65%      2.81%      2.76%
    
    Washington Trust Bancorp, Inc. and Subsidiaries
                  SELECTED FINANCIAL HIGHLIGHTS (unaudited)
    
    
                                          At or for the Quarters Ended
    ----------------------------------------------------------------------
                                       June 30,   Mar. 31,    Dec. 31,
    (Dollars in thousands)               2008       2008        2007
    ----------------------------------------------------------------------
    Wealth Management Assets Under
     Administration
    ---------------------------------
    Balance at beginning of period    $3,878,746 $4,014,352  $4,025,877
    Net investment (depreciation)
     appreciation & income                10,420   (201,915)    (11,751)
    Net customer cash flows               34,429     66,309         226
    ----------------------------------------------------------------------
    Balance at end of period          $3,923,595 $3,878,746  $4,014,352
    ----------------------------------------------------------------------
    
    Period End Balances
    ---------------------------------
    Loans
     Commercial:        Mortgages     $  361,623 $  309,684  $  278,821
                        Construction
                         and
                         development      60,606     62,489      60,361
                        Other            372,784    354,142     341,084
    ----------------------------------------------------------------------
                        Total
                         commercial      795,013    726,315     680,266
     Residential:       Mortgages        593,995    565,031     588,628
                        Homeowner
                         construction     14,356     12,861      11,043
    ----------------------------------------------------------------------
                        Total
                         residential
                         real estate     608,351    577,892     599,671
                        Home equity
     Consumer:           lines           152,339    146,471     144,429
                        Home equity
                         loans            94,316     96,883      99,827
                        Other             55,631     51,021      49,459
    ----------------------------------------------------------------------
                        Total
                         consumer        302,286    294,375     293,715
    ----------------------------------------------------------------------
                        Total loans   $1,705,650 $1,598,582  $1,573,652
    ----------------------------------------------------------------------
    Deposits
     Demand deposits                  $  187,865 $  165,822  $  175,542
     NOW accounts                        170,733    174,146     164,944
     Money market accounts               305,860    327,562     321,600
     Savings accounts                    177,490    177,110     176,278
     Time deposits                       767,594    790,385     807,841
    ----------------------------------------------------------------------
     Total deposits                   $1,609,542 $1,635,025  $1,646,205
    ----------------------------------------------------------------------
    
    Brokered deposits included in
     time deposits                    $  113,725 $  126,972  $  129,798
    
    Securities Available for Sale                 Amortized  Unrealized
    (Dollars in thousands)                          Cost        Gains
    ----------------------------------------------------------------------
    At June 30, 2008
     U.S. Treasury obligations and
      obligations of U.S.
      government-sponsored agencies              $   82,002  $    2,448
     Mortgage-backed securities
      issued by U.S.
      government and government-
       sponsored agencies                           588,967       2,445
     States and political
      subdivisions                                   81,645          81
     Trust preferred securities                      37,985           -
     Corporate bonds                                  1,746           -
     Common and preferred stocks                      7,593         337
    ----------------------------------------------------------------------
     Total securities available for
      sale                                       $  799,938  $    5,311
    ----------------------------------------------------------------------
    
    At December 31, 2007
     U.S. Treasury obligations and
      obligations of U.S.
      government-sponsored agencies              $  136,721  $    2,888
     Mortgage-backed securities
      issued by U.S.
      government and government-
       sponsored agencies                           469,197       2,899
     States and political
      subdivisions                                   80,634         499
     Trust preferred securities                      37,995           -
     Corporate bonds                                 13,940         161
     Common and preferred stocks                     12,096       2,974
    ----------------------------------------------------------------------
     Total securities available for
      sale                                       $  750,583  $    9,421
    ----------------------------------------------------------------------
    
                                                   At or for the Quarters
                                                            Ended
    ----------------------------------------------------------------------
                                                     Sept. 30,   June 30,
    (Dollars in thousands)                             2007        2007
    ----------------------------------------------------------------------
    Wealth Management Assets Under Administration
    -----------------------------------------------
    Balance at beginning of period                  $3,867,674  $3,715,987
    Net investment (depreciation) appreciation &
     income                                            122,424     113,656
    Net customer cash flows                             35,779      38,031
    ----------------------------------------------------------------------
    Balance at end of period                        $4,025,877  $3,867,674
    ----------------------------------------------------------------------
    
    Period End Balances
    -----------------------------------------------
    Loans
     Commercial:                      Mortgages     $  276,995  $  265,560
                                      Construction
                                       and
                                       development      48,899      43,755
                                      Other            324,129     313,673
    ----------------------------------------------------------------------
                                      Total
                                       commercial      650,023     622,988
     Residential:                     Mortgages        566,776     572,321
                                      Homeowner
                                       construction     12,040      11,071
    ----------------------------------------------------------------------
                                      Total
                                       residential
                                       real estate     578,816     583,392
                                      Home equity
     Consumer:                         lines           139,732     139,256
                                      Home equity
                                       loans            99,798      97,253
                                      Other             46,124      46,285
    ----------------------------------------------------------------------
                                      Total
                                       consumer        285,654     282,794
    ----------------------------------------------------------------------
                                      Total loans   $1,514,493  $1,489,174
    ----------------------------------------------------------------------
    Deposits
     Demand deposits                                $  182,830  $  177,210
     NOW accounts                                      172,378     174,715
     Money market accounts                             312,257     290,046
     Savings accounts                                  189,157     196,105
     Time deposits                                     799,265     831,013
    ----------------------------------------------------------------------
     Total deposits                                 $1,655,887  $1,669,089
    ----------------------------------------------------------------------
    
    Brokered deposits included in time deposits     $  130,017  $  159,297
    
    Securities Available for Sale                   Unrealized     Fair
    (Dollars in thousands)                            Losses      Value
    ----------------------------------------------------------------------
    At June 30, 2008
     U.S. Treasury obligations and obligations of
      U.S.
      government-sponsored agencies                 $        -  $   84,450
     Mortgage-backed securities issued by U.S.
      government and government-sponsored agencies      (5,298)    586,114
     States and political subdivisions                  (1,465)     80,261
     Trust preferred securities                         (7,627)     30,358
     Corporate bonds                                       (13)      1,733
     Common and preferred stocks                          (782)      7,148
    ----------------------------------------------------------------------
     Total securities available for sale            $  (15,185) $  790,064
    ----------------------------------------------------------------------
    
    At December 31, 2007
     U.S. Treasury obligations and obligations of
      U.S.
      government-sponsored agencies                 $      (10) $  139,599
     Mortgage-backed securities issued by U.S.
      government and government-sponsored agencies      (2,708)    469,388
     States and political subdivisions                    (239)     80,894
     Trust preferred securities                         (3,541)     34,454
     Corporate bonds                                         -      14,101
     Common and preferred stocks                        (1,728)     13,342
    ----------------------------------------------------------------------
     Total securities available for sale            $   (8,226) $  751,778
    ----------------------------------------------------------------------
    
    Washington Trust Bancorp, Inc. and Subsidiaries
                  SELECTED FINANCIAL HIGHLIGHTS (unaudited)
    
                                     At or for the Quarters Ended
    ----------------------------------------------------------------------
                             June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
    (Dollars in thousands)     2008     2008     2007      2007     2007
    ----------------------------------------------------------------------
    Asset Quality Data
    ------------------------
    Allowance for Loan
     Losses
    Balance at beginning of
     period                  $20,724  $20,277  $19,472   $19,327  $19,360
    Provision charged to
     earnings                  1,400      450    1,000       300      300
    Charge-offs                 (219)    (106)    (225)     (182)    (346)
    Recoveries                    58      103       30        27       13
    ----------------------------------------------------------------------
    Balance at end of period $21,963  $20,724  $20,277   $19,472  $19,327
    ----------------------------------------------------------------------
    
    Past Due Loans
     Loans 30-59 Days Past
      Due
      Commercial categories  $ 6,682  $ 2,240  $ 1,450   $   726  $ 5,123
      Residential mortgages    1,624      475    1,620     2,744      883
      Consumer loans             476       43       73       282       92
    ----------------------------------------------------------------------
      Loans 30-59 days past
       due                   $ 8,782  $ 2,758  $ 3,143   $ 3,752  $ 6,098
    ----------------------------------------------------------------------
    
     Loans 60-89 Days Past
      Due
      Commercial categories  $ 2,091  $ 3,715  $ 1,313   $   166  $   443
      Residential mortgages        1      344       39       220      512
      Consumer loans              87       22       38         -        -
    ----------------------------------------------------------------------
      Loans 60-89 days past
       due                   $ 2,179  $ 4,081  $ 1,390   $   386  $   955
    ----------------------------------------------------------------------
    
     Loans 90 Days or more
      Past Due
      Commercial categories  $ 3,625  $ 3,088  $ 1,963   $ 1,347  $ 1,658
      Residential mortgages      408      441      441       302      302
      Consumer loans               -       36       86        76       53
    ----------------------------------------------------------------------
      Loans 90 days or more
       past due              $ 4,033  $ 3,565  $ 2,490   $ 1,725  $ 2,013
    ----------------------------------------------------------------------
    
     Total Past Due Loans
      Commercial categories  $12,398  $ 9,043  $ 4,726   $ 2,239  $ 7,224
      Residential mortgages    2,033    1,260    2,100     3,266    1,697
      Consumer loans             563      101      197       358      145
    ----------------------------------------------------------------------
      Total past due loans   $14,994  $10,404  $ 7,023   $ 5,863  $ 9,066
    ----------------------------------------------------------------------
    
    Nonperforming Assets
    Commercial mortgages     $ 1,991  $ 1,300  $ 1,094   $ 1,099  $ 1,385
    Commercial construction
     and development               -        -        -         -        -
    Other commercial           2,948    3,081    1,781       581      645
    Residential real estate    1,072    1,111    1,158       731      698
    Consumer                     170      208      271       262      241
    ----------------------------------------------------------------------
    Total nonaccrual loans   $ 6,181  $ 5,700  $ 4,304   $ 2,673  $ 2,969
    Other real estate owned,
     net                           -        -        -         -        -
    ----------------------------------------------------------------------
    Total nonperforming
     assets                  $ 6,181  $ 5,700  $ 4,304   $ 2,673  $ 2,969
    ----------------------------------------------------------------------
    
    Total past due loans to
     total loans                0.88%    0.65%    0.45%     0.39%    0.61%
    Nonperforming assets to
     total assets               0.23%    0.22%    0.17%     0.11%    0.12%
    Nonaccrual loans to
     total loans                0.36%    0.36%    0.27%     0.18%    0.20%
    Allowance for loan
     losses to nonaccrual
     loans                    355.33%  363.58%  471.12%   728.47%  650.96%
    Allowance for loan
     losses to total loans      1.29%    1.30%    1.29%     1.29%    1.30%
    
    Washington Trust Bancorp, Inc. and Subsidiaries
                  SELECTED FINANCIAL HIGHLIGHTS (unaudited)
    
                                                      Six Months Ended
    ----------------------------------------------------------------------
                                                    June 30,    June 30,
    (Dollars and shares in thousands, except per
     share amounts)                                   2008        2007
    ----------------------------------------------------------------------
    
    Operating Results
    ----------------------------------------------
    Net interest income                            $   31,283  $   29,797
    Provision for loan losses                           1,850         600
    Net (losses) gains on securities                      (98)        336
    Other noninterest income                           23,301      22,035
    Noninterest expenses                               35,196      34,869
    Income tax expense                                  5,529       5,242
    Net income                                         11,911      11,457
    
    Basic earnings per share                       $     0.89  $     0.86
    Diluted earnings per share                     $     0.88  $     0.84
    Dividends declared per share                   $     0.41  $     0.40
    
    Weighted average shares outstanding - basic      13,369.6    13,375.7
    Weighted average shares outstanding - diluted    13,550.9    13,667.6
    Shares outstanding at end of period              13,398.2    13,305.1
    
    Key Ratios
    ----------------------------------------------
    Return on average assets                             0.91%       0.96%
    Return on average equity                            12.55%      13.12%
    Interest rate spread (taxable equivalent
     basis)                                              2.34%       2.43%
    Net interest margin (taxable equivalent basis)       2.65%       2.79%
    
    Allowance for Loan Losses
    ----------------------------------------------
    Balance at beginning of period                 $   20,277  $   18,894
    Provision charged to earnings                       1,850         600
    Charge-offs                                          (326)       (370)
    Recoveries                                            162         203
    ----------------------------------------------------------------------
    Balance at end of period                       $   21,963  $   19,327
    ----------------------------------------------------------------------
    
    Net charge-offs to average loans                      .01%        .01%
    
    Wealth Management Assets Under Administration
    ----------------------------------------------
    Balance at beginning of period                 $4,014,352  $3,609,180
    Net investment (depreciation) appreciation and
     income                                          (191,495)    161,725
    Net customer cash flows                           100,738      96,769
    ----------------------------------------------------------------------
    Balance at end of period                       $3,923,595  $3,867,674
    ----------------------------------------------------------------------
    

    The following tables present average balance and interest rate information. Tax-exempt income is converted to a fully taxable equivalent basis using the statutory federal income tax rate. For dividends on corporate stocks, the 70% federal dividends received deduction is also used in the calculation of tax equivalency. Unrealized gains (losses) on available for sale securities are excluded from the average balance and yield calculations. Nonaccrual and renegotiated loans, as well as interest earned on these loans (to the extent recognized in the Consolidated Statements of Income) are included in amounts presented for loans.

    Washington Trust Bancorp, Inc. and Subsidiaries
               CONSOLIDATED AVERAGE BALANCE SHEETS (unaudited)
    
    
    Three months
     ended June 30,            2008                       2007
    ----------------------------------------------------------------------
                      Average            Yield/  Average            Yield/
    (Dollars in
     thousands)       Balance   Interest  Rate   Balance   Interest  Rate
    ----------------------------------------------------------------------
    Assets
    Residential real
     estate loans    $  598,274  $ 8,257  5.55% $  590,226  $ 7,812  5.31%
    Commercial and
     other loans        749,468   12,135  6.51%    615,606   11,730  7.64%
    Consumer loans      297,802    4,059  5.48%    282,408    4,911  6.98%
    ----------------------------------------------------------------------
     Total loans      1,645,544   24,451  5.98%  1,488,240   24,453  6.59%
    Short-term
     investments,
     federal funds
     sold
     and other           12,214       50  1.64%     16,951      184  4.36%
    Taxable debt
     securities         687,461    8,302  4.86%    608,223    7,839  5.17%
    Nontaxable debt
     securities          81,649    1,152  5.67%     78,964    1,112  5.65%
    Corporate stocks
     and FHLBB stock     49,169      546  4.46%     42,806      763  7.15%
    ----------------------------------------------------------------------
     Total
      securities        830,493   10,050  4.87%    746,944    9,898  5.32%
    ----------------------------------------------------------------------
     Total interest-
      earning assets  2,476,037   34,501  5.60%  2,235,184   34,351  6.16%
    Non interest-
     earning assets     165,806                    158,903
    ----------------------------------------------------------------------
     Total assets    $2,641,843                 $2,394,087
    ----------------------------------------------------------------------
    Liabilities and
     Shareholders'
     Equity
    NOW accounts     $  167,755  $    81  0.19% $  168,742  $    64  0.15%
    Money market
     accounts           315,075    1,399  1.79%    293,245    2,869  3.92%
    Savings accounts    174,897      218  0.50%    196,647      661  1.35%
    Time deposits       782,825    7,550  3.88%    837,223    9,621  4.61%
    FHLBB advances      755,455    7,794  4.15%    471,026    5,112  4.35%
    Junior
     subordinated
     debentures          32,311      509  6.34%     22,681      338  5.98%
    Other                24,016      275  4.60%     25,764      289  4.51%
    ----------------------------------------------------------------------
     Total interest-
      bearing
      liabilities     2,252,334   17,826  3.18%  2,015,328   18,954  3.77%
    Demand deposits     171,613                    173,473
    Other
     liabilities         28,607                     30,852
    Shareholders'
     equity             189,289                    174,434
    ----------------------------------------------------------------------
     Total
      liabilities
      and
      shareholders'
      equity         $2,641,843                 $2,394,087
    ----------------------------------------------------------------------
     Net interest
      income (FTE)               $16,675                    $15,397
    ----------------------------------------------------------------------
    Interest rate
     spread                               2.42%                      2.39%
    Net interest
     margin                               2.71%                      2.76%
    

    Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:

    (Dollars in thousands)
    
    Three months ended June 30,                                  2008 2007
    ----------------------------------------------------------------------
    Commercial and other loans                                    $45  $39
    Nontaxable debt securities                                    366  353
    Corporate stocks                                               57   78
    ----------------------------------------------------------------------
     Total                                                       $468 $470
    ----------------------------------------------------------------------
    
    Washington Trust Bancorp, Inc. and Subsidiaries
               CONSOLIDATED AVERAGE BALANCE SHEETS (unaudited)
    
    
    Six months ended
     June 30,                  2008                       2007
    ----------------------------------------------------------------------
                      Average            Yield/  Average            Yield/
    (Dollars in
     thousands)       Balance   Interest  Rate   Balance   Interest  Rate
    ----------------------------------------------------------------------
    Assets
    Residential real
     estate loans    $  599,919  $16,554  5.55% $  591,138  $15,585  5.32%
    Commercial and
     other loans        728,270   24,356  6.73%    601,425   23,102  7.75%
    Consumer loans      295,301    8,556  5.83%    281,992    9,736  6.96%
    ----------------------------------------------------------------------
     Total loans      1,623,490   49,466  6.13%  1,474,555   48,423  6.62%
    Short-term
     investments,
     federal funds
     sold
     and other           16,600      190  2.30%     15,231      375  4.97%
    Taxable debt
     securities         678,081   16,718  4.96%    615,562   15,631  5.12%
    Nontaxable debt
     securities          81,337    2,295  5.67%     74,332    2,090  5.67%
    Corporate stocks
     and FHLBB stock     48,014    1,232  5.16%     43,136    1,563  7.30%
    ----------------------------------------------------------------------
     Total
      securities        824,032   20,435  4.99%    748,261   19,659  5.30%
    ----------------------------------------------------------------------
     Total interest-
      earning assets  2,447,522   69,901  5.74%  2,222,816   68,082  6.18%
    Non interest-
     earning assets     167,258                    164,934
    ----------------------------------------------------------------------
     Total assets    $2,614,780                 $2,387,750
    ----------------------------------------------------------------------
    Liabilities and
     Shareholders'
     Equity
    NOW accounts     $  165,132  $   159  0.19% $  169,206  $   132  0.16%
    Money market
     accounts           321,476    3,951  2.47%    293,613    5,680  3.90%
    Savings accounts    174,815      650  0.75%    201,086    1,371  1.38%
    Time deposits       797,296   16,387  4.13%    834,870   19,009  4.59%
    FHLBB advances      713,786   15,093  4.25%    469,246   10,080  4.33%
    Junior
     subordinated
     debentures          27,496      847  6.20%     22,681      676  6.01%
    Other                26,631      589  4.45%     19,316      439  4.58%
    ----------------------------------------------------------------------
     Total interest-
      bearing
      liabilities     2,226,632   37,676  3.40%  2,010,018   37,387  3.75%
    Demand deposits     168,773                    172,232
    Other
     liabilities         29,571                     30,786
    Shareholders'
     equity             189,804                    174,714
    ----------------------------------------------------------------------
     Total
      liabilities
      and
      shareholders'
      equity         $2,614,780                 $2,387,750
    ----------------------------------------------------------------------
     Net interest
      income (FTE)               $32,225                    $30,695
    ----------------------------------------------------------------------
    Interest rate
     spread                               2.34%                      2.43%
    Net interest
     margin                               2.65%                      2.79%
    

    Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:

    (Dollars in thousands)
    
    Six months ended June 30,                                    2008 2007
    ----------------------------------------------------------------------
    Commercial and other loans                                    $90$75
    Nontaxable debt securities                                    729  663
    Corporate stocks                                              123  160
    ----------------------------------------------------------------------
     Total                                                       $942$898
    ----------------------------------------------------------------------
    

    Source: Washington Trust Bancorp, Inc.


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