• Washington Trust Bancorp, Inc.
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  • Washington Trust Announces Fourth Quarter 2008 Earnings
    Company Release - 01/28/2009 07:30

    WESTERLY, R.I.--(BUSINESS WIRE)-- Washington Trust Bancorp, Inc. (NASDAQ Global Select(R); symbol: WASH), parent company of The Washington Trust Company, today announced fourth quarter 2008 net income of $4.6 million, or 29 cents per diluted share, compared to fourth quarter 2007 net income of $5.8 million, or 43 cents per diluted share. For the year ended December 31, 2008, net income amounted to $22.6 million, or $1.59 per diluted share, compared to $23.8 million, or $1.75 per diluted share, for the same period in 2007.

    During the fourth quarter of 2008, there were several unusual items affecting net income:

        --  Losses on write-downs of investments to fair value of $2.4 million ($1.7
            million after tax; 10 cents per diluted share) were charged to earnings
            in the fourth quarter of 2008 for securities deemed to be
            other-than-temporarily impaired.
        --  Non-core income tax benefits totaling $1.2 million (7 cents per diluted
            share) were recognized in the fourth quarter of 2008 resulting from the
            resolution of certain tax positions and adjustments to the overall
            effective income tax rate based on full year operating results.
        --  Unrealized losses on interest rate swap contracts of $663 thousand ($468
            thousand after tax; 3 cents per diluted share) were recognized in the
            fourth quarter of 2008, compared to unrealized losses of $24 thousand in
            the third quarter of 2008 and unrealized gains of $27 thousand in the
            fourth quarter of 2007.
    
    

    The combined impact of these unusual items was a reduction in fourth quarter 2008 net income of $973 thousand, or 6 cents per diluted share.

    Fourth quarter 2008 highlights include:

        --  Commercial loan growth continued for the ninth consecutive quarter,
            amounting to $38.5 million, or 5 percent, in the fourth quarter.
            Commercial loans have increased $200.0 million, or 29 percent, from the
            balance at December 31, 2007.
    
    
        --  The loan loss provision charged to earnings in the fourth quarter was
            $1.850 million, an increase of $850 thousand from the fourth quarter of
            2007, largely due to growth in the loan portfolio as well as an ongoing
            evaluation of credit quality and general economic conditions.
        --  Nonperforming assets remain at manageable levels at $8.8 million, or
            0.30% of total assets, at December 31, 2008.
        --  The Corporation remains well-capitalized with an estimated total risk
            based-capital ratio of 12.52% at December 31, 2008. In October 2008, the
            Corporation issued $50.0 million of its Common Stock, with net proceeds
            of $46.7 million received on October 7, 2008.
        --  Wealth management revenues for the fourth quarter of 2008 were down by
            14 percent from the third quarter of 2008 and down 17 percent from the
            fourth quarter of 2007. Assets under administration totaled $3.148
            billion at December 31, 2008, down $476.9 million in the fourth quarter
            and down $866.7 million from the December 31, 2007 balance.
    
    

    "Washington Trust had a very solid year, despite a national recession, a federal banking crisis and a precipitous decline in the financial markets," stated John C. Warren, Washington Trust Bancorp, Inc.'s Chairman and Chief Executive Officer.

    The Corporation also announced that John F. Treanor, President and Chief Operating Officer, has indicated his intent to elect early retirement, effective in October 2009. Mr. Treanor, age 62, will continue to serve as a member of the Board of Directors. The Corporation's Chairman and Chief Executive Officer, John C. Warren, is scheduled to retire in April 2010 when he reaches normal retirement age of 65. As a result, the Board of Directors has initiated the succession process under its executive succession plan to assure an effective management transition.

    RESULTS OF OPERATIONS

    Net interest income for the fourth quarter of 2008 increased $942 thousand, or 6 percent, from the third quarter of 2008 and $2.7 million, or 19 percent, from the fourth quarter a year ago. The increase from the third quarter reflects growth of $112.4 million, or 4 percent, of average interest-earning assets, including the reinvestment of the $46.7 million in net proceeds received from the issuance of Common Stock. The increase from the fourth quarter of 2007 reflects growth in interest-earning assets and lower deposit costs. On a year-to-date basis, net interest income increased $5.6 million, or 9 percent, from 2007.

    The net interest margin (annualized tax-equivalent net interest income as a percentage of average earning assets) for the fourth quarter of 2008 was 2.65%, up 3 basis points from the third quarter of 2008 and unchanged from the fourth quarter of 2007. The increase on a linked quarter basis reflects a 6 basis point beneficial impact of the reinvestment of the Common Stock issuance proceeds, offset in part by lower yields on variable rate commercial and consumer loans resulting from Federal Reserve actions to reduce short-term interest rates, with less commensurate reduction in deposit and other funding rates. For the year 2008, net interest margin was 2.64%, down 12 basis points from 2007. This 12 basis point decline in net interest margin was primarily attributable to similar compression of asset yields and funding costs resulting from the 450 basis point aggregate impact of Federal Reserve rate cutting actions from October 2007 through December 2008.

    Noninterest income for the fourth quarter of 2008 declined $3.3 million, or 31 percent, from the third quarter of 2008 and $4.0 million, or 35 percent, from the fourth quarter of 2007. For the year 2008, noninterest income was down $4.4 million, or 10 percent, from 2007. Included in noninterest income were write-downs on certain investment securities deemed to be other-than-temporarily impaired of $2.4 million and $5.3 million, respectively, for the quarter and year ended December 31, 2008. Fourth quarter 2008 impairment charges included $1.9 million on a pooled trust preferred debt security and $494 thousand on common and preferred stocks.

    Also included in noninterest income in the fourth quarter of 2008 were realized gains on securities of $315 thousand resulting from a contribution of appreciated equity securities to the Corporation's charitable foundation. For the year 2008, net realized gains on securities amounted to $2.2 million, as compared to $455 thousand in 2007.

    Wealth management revenues for the fourth quarter of 2008 decreased $1.0 million, or 14 percent, on a linked quarter basis and $1.3 million, or 17 percent, from the fourth quarter a year ago. For the year 2008, wealth management revenues were down $743 thousand, or 3 percent, compared to 2007. Wealth management revenues are largely dependent on the value of assets under administration and are closely tied to the performance of the financial markets. Assets under administration totaled $3.148 billion at December 31, 2008, down $476.9 million, or 13 percent, in the fourth quarter of 2008. Assets under administration were down $866.7 million, or 22 percent, from December 31, 2007. The decline in assets under administration was primarily due to lower valuations in the financial markets.

    Included in noninterest income for the fourth quarter of 2008 were unrealized losses on interest rate swap contracts of $663 thousand. This amount includes $638 thousand attributable to an interest rate swap contract executed in April 2008 to hedge the interest rate risk associated with variable rate junior subordinated debentures. Under the terms of this swap, Washington Trust agreed to pay a fixed rate and receive a variable rate based on LIBOR. At inception, this hedging transaction was deemed to be highly effective and therefore valuation changes for this derivative were recognized in the accumulated other comprehensive income component of shareholders' equity. In September 2008, due to a change in the creditworthiness of the derivative counterparty, the hedging relationship was deemed to be not highly effective, with the result that subsequent changes in the derivative valuation are recognized in earnings. The valuation decline in the fourth quarter was attributable to a decline in the swap yield curve during the quarter, which reduced market fixed rates for terms similar to this swap contract. Unrealized gains on other interest rate swap transactions not affected by this matter amounted to $121 thousand for the nine months ended September 30, 2008 and $27 thousand in the year and quarter ended December 31, 2007.

    Noninterest expenses amounted to $18.1 million for the fourth quarter of 2008, down $396 thousand, or 2 percent, from the third quarter of 2008 and up $1.350 million, or 8 percent, from the fourth quarter of 2007. Washington Trust made its annual contribution in the amount of $397 thousand to its charitable foundation in the fourth quarter of 2008. Washington Trust made its 2007 annual contribution in the second quarter of that year. The decline in noninterest expenses on a linked quarter basis reflected a seasonal decline in merchant processing expenses and reductions to employee incentive costs. The year over year increase in fourth quarter noninterest expenses reflected an increase of $211 thousand in FDIC deposit insurance costs, higher recruitment costs of $186 thousand associated with executive management positions, increased outsourced services of $152 thousand associated with wealth management platform and product support costs and an increase of $145 thousand related to foreclosed property costs, asset disposals and one-time costs associated with the relocation of a branch office.

    For the year ended December 31, 2008, noninterest expenses totaled $71.7 million, up $2.8 million, or 4 percent, from 2007. Noninterest expenses for 2007 included $1.1 million in debt prepayment charges recorded as a result of prepayments of higher cost Federal Home Loan Bank of Boston ("FHLBB") advances in the first quarter of 2007. There have been no debt prepayment penalty charges recognized in 2008. Excluding 2007 debt prepayment penalties, noninterest expenses for 2008 increased $3.9 million, or 6 percent, from 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 operating expenses related to a de novo branch opened in June 2007.

    Income tax expense amounted to $375 thousand for the three months ended December 31, 2008, as compared to $2.6 million for the same period in 2007. Non-core income tax benefits of $1.2 million were recognized in the fourth quarter of 2008 resulting from the resolution of certain tax positions and adjustments to the overall effective income tax rate based on full year operating results. Excluding these non-core factors, the Corporation's effective tax rate for the fourth quarter of 2008 was 29.4%, as compared to 31.1% for the fourth quarter of last year. Based on the current status of federal and applicable state income tax statutes, the Corporation currently expects the first quarter 2009 effective tax rate to be approximately 30.8%.

    ASSET QUALITY

    Nonperforming assets (nonaccrual loans, nonaccrual investment securities and property acquired through foreclosure) amounted to $8.8 million, or 0.30% of total assets, at December 31, 2008, compared to $6.8 million, or 0.25% of total assets, at September 30, 2008 and $4.3 million, or 0.17% of total assets, at December 31, 2007. Nonaccrual investment securities totaled $633 thousand at December 31, 2008. There were no nonaccrual investment securities as of September 30, 2008 and December 31, 2007. Property acquired through foreclosure or repossession amounted to $392 thousand at December 31, 2008, compared to $113 thousand at September 30, 2008. There was no property acquired through foreclosure on the balance sheet at December 31, 2007.

    While these results reflect increases in the quarter and year-to-date periods, Washington Trust's ratio of nonperforming loans plus accruing troubled debt restructured loans to total loans was 0.47% at December 31, 2008, which was favorable in comparison to the median of 0.72% of total loans as reported by all New England bank and thrift institutions as of September 30, 2008, the most recent date for available statistics.

    Total 30 day+ delinquencies amounted to $17.6 million, or 0.96% of total loans, at December 31, 2008, up $6.4 million in the fourth quarter of 2008 and up $10.6 million from the balance at December 31, 2007. Commercial loan delinquencies amounted to $11.5 million, or 1.31% of total commercial loans, at December 31, 2008. Washington Trust has never offered a subprime residential loan program. Total residential mortgage and consumer loan 30 day+ delinquencies amounted to $6.1 million or 0.64% of these loans, at December 31, 2008, an increase of $3.9 million in the fourth quarter of 2008. Total 90 day+ delinquencies in the residential mortgage and consumer loan categories amounted to $973 thousand (five loans) and $77 thousand (two loans), respectively, at December 31, 2008.

    The Corporation's loan loss provision charged to earnings amounted to $1.850 million for the fourth quarter of 2008, compared to $1.1 million for the third quarter of 2008 and $1.0 million for the fourth quarter of 2007. For the year ended December 31, 2008 and 2007, the loan loss provision totaled $4.8 million and $1.9 million, respectively. 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 $756 thousand in the fourth quarter of 2008, as compared to net charge-offs of $432 thousand in the third quarter of 2008 and $195 thousand in the fourth quarter of 2007. For the year ended December 31, 2008 and 2007, net charge-offs totaled $1.4 million and $517 thousand, respectively. Commercial loan net charge-offs amounted to $682 thousand and $1.1 million for the quarter and year ended December 31, 2008, respectively.

    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 $23.7 million, or 1.29% of total loans, at December 31, 2008, compared to $22.6 million, or 1.28% of total loans, at September 30, 2008 and $20.3 million, or 1.29% of total loans, at December 31, 2007.

    FINANCIAL CONDITION

    Led by growth in commercial loans, total loans grew by $70.1 million, or 4 percent, in the fourth quarter of 2008 and by $265.5 million, or 17 percent, during the year. Commercial loans rose by $38.5 million, or 5 percent, in the fourth quarter of 2008 and by $200.0 million, or 29 percent, in the year 2008. The commercial loan portfolio consists of commercial mortgages, construction and development (together, "commercial real estate") and other commercial loans. Other commercial loans are largely collateralized and in many cases the collateral consists of real estate occupied by the business as well as other business assets.

    The investment securities portfolio amounted to $866.2 million at December 31, 2008, up by $112.8 million in the fourth quarter of 2008. The fair value of mortgage-backed securities amounted to $683.6 million at December 31, 2008. All of the Corporation's mortgage-backed securities are issued by U.S. Government agencies or U.S. Government-sponsored enterprises. At December 31, 2008, the net unrealized losses on the investment securities portfolio amounted to $3.8 million and included gross unrealized losses of $23.7 million. Approximately 73% of the gross unrealized losses on the investment securities portfolio were concentrated in variable rate trust preferred securities issued by financial services companies. These trust preferred securities holdings consist of seven individual name issuers in the financial industry, including, where applicable, the impact of mergers and acquisitions of issuers subsequent to original purchase, and two pooled trust preferred securities in the form of collateralized debt obligations. All of these trust preferred securities holdings have investment grade credit ratings. The pooled trust preferred holdings consist of trust preferred obligations of banking industry companies and, to a lesser extent, insurance industry companies. For both of its pooled trust preferred holdings, Washington Trust's investment is senior to one or more subordinated tranches that have first loss exposure. One of the pooled trust preferred securities held by the Corporation continues to accrue and make payments as expected. The other pooled trust preferred security began deferring interest payments until future periods and based on the financial condition and operating outlook of the issuers, was deemed to be other-than-temporarily impaired in the fourth quarter of 2008.

    Total deposits increased by $53.6 million in the fourth quarter of 2008 and increased by $144.7 million during the year. Excluding out-of-market brokered certificates of deposit, in-market deposits grew by $53.6 million, or 3 percent, in the fourth quarter and $86.5 million, or 6 percent, from the balance at December 31, 2007. Deposit growth was largely concentrated in in-market time deposits, which grew by $52.7 million, or 7 percent, in the fourth quarter of 2008 and $101.4 million, or 15 percent, during the year.

    Federal Home Loan Bank advances totaled $829.6 million at December 31, 2008, up $82.2 million in the fourth quarter and up $213.2 million from the balance at December 31, 2007. During the fourth quarter of 2008, Washington Trust recognized a liability of $2.0 million classified in Other Borrowings, with a corresponding increase to Goodwill, related to the 2005 acquisition of Weston Financial Group, Inc. This represents an amount earned under the terms of the acquisition agreement, which provided for a contingent annual earn-out payment during the three-year period ending December 31, 2008. Also in the fourth quarter of 2008, Washington Trust paid approximately $7.1 million, in settlement of a portion of the 2008 earn-out liability. The balance of the 2008 earn-out liability will be paid in the first quarter of 2009.

    DIVIDENDS DECLARED

    The Board of Directors declared a quarterly dividend of 21 cents per share for the quarter ended December 31, 2008. The dividend was paid on January 12, 2009 to shareholders of record on January 5, 2009.

    CONFERENCE CALL

    Washington Trust Chairman and Chief Executive Officer John C. Warren, and David V. Devault, Executive Vice President, Chief Financial Officer and Secretary, will host a conference call on Wednesday, January 28, 2009 at 8:30 a.m. (Eastern Time) to discuss the Corporation's fourth 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 #: 426606. The replay will be available until 9:00 a.m. on February 12, 2009.

    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) Market 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, regional or international economic conditions or conditions affecting the banking or financial services industries or financial capital markets, volatility and disruption in national and international financial markets, government intervention in the U.S. financial system, 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, changes in the value of securities and other assets, 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. These forward-looking statements were based on information, plans and estimates at the date of this press release, and the Corporation assumes no obligation to update forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

    Washington Trust Bancorp, Inc. and Subsidiaries
    
    CONSOLIDATED BALANCE SHEETS
    
                                                          (unaudited)
    
    (Dollars in thousands)                                December 31,  December 31,
    
                                                          2008          2007
    
    Assets:
    
    Cash and noninterest-bearing balances due from banks  $11,644       $30,817
    
    Interest-bearing balances due from banks              41,780        1,973
    
    Federal funds sold and securities purchased under     2,942         7,600
    resale agreements
    
    Other short-term investments                          1,824         722
    
    Mortgage loans held for sale                          2,543         1,981
    
    Securities available for sale, at fair value;
    
    amortized cost $870,028 in 2008 and $750,583 in 2007  866,219       751,778
    
    Federal Home Loan Bank stock, at cost                 42,008        31,725
    
    Loans:
    
    Commercial and other                                  880,313       680,266
    
    Residential real estate                               642,052       599,671
    
    Consumer                                              316,789       293,715
    
    Total loans                                           1,839,154     1,573,652
    
    Less allowance for loan losses                        23,725        20,277
    
    Net loans                                             1,815,429     1,553,375
    
    Premises and equipment, net                           25,102        25,420
    
    Accrued interest receivable                           11,036        11,427
    
    Investment in bank-owned life insurance               43,163        41,363
    
    Goodwill                                              58,114        50,479
    
    Identifiable intangible assets, net                   10,152        11,433
    
    Other assets                                          33,514        19,847
    
    Total assets                                          $2,965,470    $2,539,940
    
    Liabilities:
    
    Deposits:
    
    Demand deposits                                       $172,771      $175,542
    
    NOW accounts                                          171,306       164,944
    
    Money market accounts                                 305,879       321,600
    
    Savings accounts                                      173,485       176,278
    
    Time deposits                                         967,427       807,841
    
    Total deposits                                        1,790,868     1,646,205
    
    Dividends payable                                     3,351         2,677
    
    Federal Home Loan Bank advances                       829,626       616,417
    
    Junior subordinated debentures                        32,991        22,681
    
    Other borrowings                                      26,743        32,560
    
    Accrued expenses and other liabilities                46,776        32,887
    
    Total liabilities                                     2,730,355     2,353,427
    
    Shareholders' Equity:
    
    Common stock of $.0625 par value; authorized
    30,000,000 shares;
    
    issued 16,018,868 shares in 2008 and 13,492,110       1,001         843
    shares in 2007
    
    Paid-in capital                                       82,095        34,874
    
    Retained earnings                                     165,066       154,647
    
    Accumulated other comprehensive loss                  (10,841    )  (239       )
    
    Treasury stock, at cost; 84,191 shares in 2008 and    (2,206     )  (3,612     )
    137,652 in 2007
    
    Total shareholders' equity                            235,115       186,513
    
    Total liabilities and shareholders' equity            $2,965,470    $2,539,940
    
    
    
    
    Washington Trust Bancorp, Inc. and Subsidiaries
    
    CONSOLIDATED STATEMENTS OF INCOME
    
    (Dollars and shares in thousands,     (unaudited)
    except per share amounts)
    
                                          Three Months          Twelve Months
    
    Periods ended December 31,            2008        2007      2008        2007
    
    Interest income:
    
    Interest and fees on loans            $26,043     $25,340   $100,939    $98,720
    
    Interest on securities:
    
    Taxable                               9,160       7,967     34,382      31,163
    
    Nontaxable                            781         775       3,125       2,983
    
    Dividends on corporate stock and      366         665       1,882       2,737
    Federal Home Loan Bank stock
    
    Other interest income                 16          181       334         831
    
    Total interest income                 36,366      34,928    140,662     136,434
    
    Interest expense:
    
    Deposits                              10,164      13,090    41,195      52,422
    
    Federal Home Loan Bank advances       7,790       6,318     30,894      21,641
    
    Junior subordinated debentures        508         338       1,879       1,352
    
    Other interest expense                318         345       1,181       1,075
    
    Total interest expense                18,780      20,091    75,149      76,490
    
    Net interest income                   17,586      14,837    65,513      59,944
    
    Provision for loan losses             1,850       1,000     4,800       1,900
    
    Net interest income after provision   15,736      13,837    60,713      58,044
    for loan losses
    
    Noninterest income:
    
    Wealth management services:
    
    Trust and investment advisory fees    4,415       5,498     20,316      21,124
    
    Mutual fund fees                      1,036       1,430     5,205       5,430
    
    Financial planning, commissions and   723         547       2,752       2,462
    other service fees
    
    Wealth management services            6,174       7,475     28,273      29,016
    
    Service charges on deposit accounts   1,198       1,154     4,781       4,713
    
    Merchant processing fees              1,493       1,425     6,900       6,710
    
    Income from bank-owned life           448         427       1,800       1,593
    insurance
    
    Net gains on loan sales and
    commissions on loans originated for   233         288       1,396       1,493
    others
    
    Net realized gains on securities      315         119       2,224       455
    
    Losses on write-downs of investments  (2,353   )  -         (5,342   )  -
    to fair value
    
    Net unrealized gains (losses) on      (663     )  27        (542     )  27
    interest rate swap contracts
    
    Other income                          477         373       1,625       1,502
    
    Total noninterest income              7,322       11,288    41,115      45,509
    
    Noninterest expense:
    
    Salaries and employee benefits        9,703       9,791     41,037      39,986
    
    Net occupancy                         1,211       1,074     4,536       4,150
    
    Equipment                             961         909       3,838       3,473
    
    Merchant processing costs             1,246       1,193     5,769       5,686
    
    Outsourced services                   781         570       2,859       2,180
    
    Advertising and promotion             500         557       1,729       2,024
    
    Legal, audit and professional fees    726         463       2,325       1,761
    
    Amortization of intangibles           309         326       1,281       1,383
    
    Debt prepayment penalties             -           -         -           1,067
    
    Other expenses                        2,638       1,842     8,368       7,196
    
    Total noninterest expense             18,075      16,725    71,742      68,906
    
    Income before income taxes            4,983       8,400     30,086      34,647
    
    Income tax expense                    375         2,613     7,527       10,847
    
    Net income                            $4,608      $5,787    $22,559     $23,800
    
    Weighted average shares outstanding   15,765.4    13,347.5  13,981.9    13,355.5
    - basic
    
    Weighted average shares outstanding   15,871.6    13,580.7  14,146.3    13,604.1
    - diluted
    
    Per share information:
    
    Basic earnings per share              $0.29       $0.43     $1.61       $1.78
    
    Diluted earnings per share            $0.29       $0.43     $1.59       $1.75
    
    Cash dividends declared per share     $0.21       $0.20     $0.83       $0.80
    
    
    
    
    Washington Trust Bancorp, Inc. and Subsidiaries
    
    SELECTED FINANCIAL HIGHLIGHTS(unaudited)
    
                          At or for the Quarters Ended
    
                          Dec. 31,    Sept. 30,   June 30,    Mar. 31,    Dec. 31,
    
    (Dollars in
    thousands, except     2008        2008        2008        2008        2007
    per share amounts)
    
    Financial Data
    
    Total assets          $2,965,470  $2,767,882  $2,732,989  $2,564,387  $2,539,940
    
    Total loans           1,839,154   1,769,041   1,705,650   1,598,582   1,573,652
    
    Total securities      866,219     753,456     790,064     747,053     751,778
    
    Total deposits        1,790,868   1,737,251   1,609,542   1,635,025   1,646,205
    
    Total shareholders'   235,115     184,762     186,422     191,219     186,513
    equity
    
    Net income            4,608       6,040       6,095       5,816       5,787
    
    Per Share Data
    
    Basic earnings per    $0.29       $0.45       $0.45       $0.44       $0.43
    share
    
    Diluted earnings per  $0.29       $0.44       $0.45       $0.43       $0.43
    share
    
    Dividends declared    $0.21       $0.21       $0.21       $0.20       $0.20
    per share
    
    Book value per share  $14.75      $13.76      $13.91      $14.30      $13.97
    
    Tangible book value   $10.47      $8.80       $9.34       $9.70       $9.33
    per share
    
    Market value per      $19.75      $26.60      $19.70      $24.82      $25.23
    share
    
    Key Ratios
    
    Return on average     0.64%       0.88%       0.92%       0.90%       0.94%
    assets
    
    Return on average     0.66%       0.90%       0.94%       0.92%       0.96%
    tangible assets
    
    Return on average     7.98%       12.94%      12.88%      12.22%      12.73%
    equity
    
    Return on average     11.19%      19.25%      19.07%      18.09%      19.32%
    tangible equity
    
    Capital Ratios
    
    Tier 1 risk-based     11.29% (i)  9.18%       9.44%       9.23%       9.10%
    capital
    
    Total risk-based      12.54% (i)  10.43%      10.69%      10.49%      10.39%
    capital
    
    Tier 1 leverage       7.53% (i)   6.09%       6.32%       5.93%       6.09%
    ratio
    
    Tangible equity to    5.76%       4.38%       4.68%       5.18%       5.03%
    tangible assets
    
    (i) - estimated
    
    Average Yields
    (taxable equivalent
    basis)
    
    Assets
    
    Residential real      5.50%       5.54%       5.55%       5.55%       5.41%
    estate loans
    
    Commercial and other  6.19%       6.28%       6.51%       6.95%       7.39%
    loans
    
    Consumer loans        5.00%       5.38%       5.48%       6.18%       6.74%
    
    Total loans           5.74%       5.86%       5.98%       6.28%       6.51%
    
    Short-term
    investments, federal  0.30%       1.63%       1.64%       2.69%       4.72%
    funds sold and other
    
    Taxable debt          4.87%       4.85%       4.86%       5.06%       5.19%
    securities
    
    Nontaxable debt       5.64%       5.63%       5.67%       5.68%       5.59%
    securities
    
    Corporate stocks and  3.29%       3.58%       4.46%       5.89%       7.00%
    FHLBB stock
    
    Total securities      4.74%       4.74%       4.87%       5.11%       5.33%
    
    Total
    interest-earning      5.41%       5.49%       5.60%       5.89%       6.12%
    assets
    
    Liabilities
    
    NOW accounts          0.17%       0.18%       0.19%       0.19%       0.20%
    
    Money market          1.91%       1.79%       1.79%       3.13%       3.93%
    accounts
    
    Savings accounts      0.48%       0.47%       0.50%       1.00%       1.32%
    
    Time deposits         3.51%       3.68%       3.88%       4.38%       4.55%
    
    FHLBB advances        4.05%       4.20%       4.15%       4.37%       4.56%
    
    Junior subordinated   6.13%       6.31%       6.34%       5.99%       5.91%
    debentures
    
    Other                 4.20%       4.68%       4.60%       4.32%       4.36%
    
    Total
    interest-bearing      3.09%       3.16%       3.18%       3.63%       3.85%
    liabilities
    
    Interest rate spread
    (taxable equivalent   2.32%       2.33%       2.42%       2.26%       2.27%
    basis)
    
    Net interest margin
    (taxable equivalent   2.65%       2.62%       2.71%       2.59%       2.65%
    basis)
    
    
    
    
    Washington Trust Bancorp, Inc. and Subsidiaries
    
    SELECTED FINANCIAL HIGHLIGHTS(unaudited)
    
                               At or for the Quarters Ended
    
                               Dec. 31,      Sept. 30,     June 30,    Mar. 31,      Dec. 31,
    
    (Dollars in thousands)     2008          2008          2008        2008          2007
    
    Wealth Management Assets
    Under Administration
    
    Balance at beginning of    $3,624,502    $3,923,595    $3,878,746  $4,014,352    $4,025,877
    period
    
    Net investment
    (depreciation)             (466,461   )  (322,953   )  10,420      (201,915   )  (11,751    )
    appreciation & income
    
    Net customer cash flows    (10,392    )  23,860        34,429      66,309        226
    
    Balance at end of period   $3,147,649    $3,624,502    $3,923,595  $3,878,746    $4,014,352
    
    Period End Balances
    
    Loans
    
    Commercial:  Mortgages     $407,904      $394,085      $361,623    $309,684      $278,821
    
                 Construction
                 and           49,599        51,592        60,606      62,489        60,361
                 development
    
                 Other         422,810       396,161       372,784     354,142       341,084
    
                 Total         880,313       841,838       795,013     726,315       680,266
                 commercial
    
    Residential: Mortgages     626,663       604,205       593,995     565,031       588,628
    
                 Homeowner     15,389        14,124        14,356      12,861        11,043
                 construction
    
                 Total
                 residential   642,052       618,329       608,351     577,892       599,671
                 real estate
    
    Consumer:    Home equity   170,662       158,837       152,339     146,471       144,429
                 lines
    
                 Home equity   89,297        93,690        94,316      96,883        99,827
                 loans
    
                 Other         56,830        56,347        55,631      51,021        49,459
    
                 Total         316,789       308,874       302,286     294,375       293,715
                 consumer
    
                 Total loans   $1,839,154    $1,769,041    $1,705,650  $1,598,582    $1,573,652
    
    Deposits
    
    Demand deposits            $172,771      $187,839      $187,865    $165,822      $175,542
    
    NOW accounts               171,306       164,829       170,733     174,146       164,944
    
    Money market accounts      305,879       298,106       305,860     327,562       321,600
    
    Savings accounts           173,485       171,856       177,490     177,110       176,278
    
    Time deposits              967,427       914,621       767,594     790,385       807,841
    
    Total deposits             $1,790,868    $1,737,251    $1,609,542  $1,635,025    $1,646,205
    
    Out-of-market brokered
    certificates of deposits   $187,987      $187,925      $113,725    $126,972      $129,798
    included in time deposits
    
    In-market deposits (1),
    excluding out of market    $1,602,881    $1,549,326    $1,495,817  $1,508,053    $1,516,407
    brokered certificates of
    deposit
    
    (1) Includes in-market CDARS reciprocal time deposits of $86.2 million at December 31, 2008
    and $21.7 million at September 30, 2008. Beginning in the third quarter of 2008, Washington
    Trust became a member of the Certificate of Deposit Account Registry Service ("CDARS")
    network. Washington Trust uses CDARS to place customer funds into certificates of deposit
    issued by other CDARS network banks in increments less than FDIC insurance limits. We receive
    a reciprocal amount of deposits from other network members who do the same with their
    customer deposits. While CDARS deposits are considered to be brokered deposits for banking
    regulatory purposes, we consider reciprocal CDARS balances to be in-market deposits as
    distinguished from traditional out-of-market brokered deposits.
    
    
    
    
    Washington Trust Bancorp, Inc. and Subsidiaries
    
    SELECTED FINANCIAL HIGHLIGHTS(unaudited)
    
    Commercial Real Estate Loans by Property Location
    
    (Dollars in thousands)                                   Balance   % of Total
    
    At December 31, 2008
    
    Rhode Island, Connecticut, Massachusetts                 $405,040  88.5%
    
    New York, New Jersey, Pennsylvania                       37,448    8.2%
    
    New Hampshire, Maine                                     13,384    2.9%
    
    Other                                                    1,631     0.4%
    
    Total                                                    $457,503  100.0%
    
    Residential Mortgages by Property Location
    
    (Dollars in thousands)                                   Balance   % of Total
    
    At December 31, 2008
    
    Rhode Island, Connecticut, Massachusetts                 $566,857  88.3%
    
    New York, Virginia, New Jersey, Maryland, Pennsylvania,  28,252    4.4%
    District of Columbia
    
    Ohio, Michigan                                           19,940    3.1%
    
    California, Washington, Oregon                           12,678    2.0%
    
    Colorado, Texas, New Mexico, Utah                        8,623     1.3%
    
    Georgia                                                  2,539     0.4%
    
    New Hampshire, Vermont                                   2,055     0.3%
    
    Other                                                    1,108     0.2%
    
    Total                                                    $642,052  100.0%
    
    
    
    
    
    Securities Available for Sale        Amortized  Unrealized  Unrealized  Fair
    
    (Dollars in thousands)               Cost*      Gains       Losses      Value
    
    At December 31, 2008
    
    U.S. Treasury obligations and
    obligations of U.S.                  $59,022    $5,355      $ −       $64,377
    government-sponsored agencies
    
    Mortgage-backed securities issued
    by U.S. government and               675,159    12,543      (4,083   )  683,619
    government-sponsored agencies
    
    States and political subdivisions    80,680     1,348       (815     )  81,213
    
    Trust preferred securities           36,158     −         (17,425  )  18,733
    
    Corporate bonds                      12,973     603         −         13,576
    
    Common stocks                        942        50          −         992
    
    Perpetual preferred stocks           5,094      2           (1,387   )  3,709
    
    Total securities available for sale  $870,028   $19,901     $(23,710 )  $866,219
    
    Securities Available for Sale        Amortized  Unrealized  Unrealized  Fair
    
    (Dollars in thousands)               Cost*      Gains       Losses      Value
    
    At December 31, 2007
    
    U.S. Treasury obligations and
    obligations of U.S.                  $136,721   $2,888      $(10     )  $139,599
    government-sponsored agencies
    
    Mortgage-backed securities issued
    by U.S. government and               469,197    2,899       (2,708   )  469,388
    government-sponsored agencies
    
    States and political subdivisions    80,634     499         (239     )  80,894
    
    Trust preferred securities           37,995     -           (3,541   )  34,454
    
    Corporate bonds                      13,940     161         -           14,101
    
    Common stocks                        3,931      2,850       -           6,781
    
    Perpetual preferred stocks           8,165      -           (1,604   )  6,561
    
    Total securities available for sale  $750,583   $9,297      $(8,102  )  $751,778
    
    * Net of other-than-temporary impairment write-downs recognized in earnings.
    
    
    
    
    Washington Trust Bancorp, Inc. and Subsidiaries
    
    SELECTED FINANCIAL HIGHLIGHTS(unaudited)
    
    The following is supplemental information concerning the securities portfolio:
    
                       At December 31, 2008
    
                       Number      Credit      Amortized  Unrealized         Fair
    
    (Dollars in        of Issuers  Rating (a)  Cost*      Gains  Losses      Value
    thousands)
    
    Trust preferred
    securities:
    
    Individual name    2           Aa          $15,421    $ -    $(7,484  )  $7,937
    issuers (b):
    
                       4           A           13,195     -      (4,880   )  8,315
    
                       1           Baa         1,909      -      (1,368   )  541
    
    Total individual   7                       30,525     -      (13,732  )  16,793
    name issuers
    
    Collateralized
    debt obligations
    (CDO):
    
    Pool issue 1 (c)               Baa         5,000      -      (3,693   )  1,307
    
    Pool issue 2 (d)               Baa         633        -      -           633
    
    Total
    collateralized                             5,633      -      (3,693   )  1,940
    debt obligations
    
    Total trust
    preferred                                  $36,158    $ -    $(17,425 )  $18,733
    securities
    
    Corporate bonds:   1           Aaa         $2,784     $167   $ -         $2,951
    
                       2           A           10,189     436    -           10,625
    
    Total corporate    3                       $12,973    $603   $ -         $13,576
    bonds
    
    (a) Source: Moody's; as of December 31, 2008
    
    (b) We own various series of trust preferred securities issued by seven
    corporate financial institutions.
    
    (c) Pool issue 1: As of December 31, 2008, 3 of the 38 pooled institutions have
    invoked their original contractual right to defer interest payments. The tranche
    held by Washington Trust continues to accrue and make payments as expected.
    
    (d) Pool issue 2: As of December 31, 2008, 5 of the 73 pooled institutions have
    invoked their original contractual right to defer interest payments. The tranche
    held by Washington Trust began deferring interest payments until future periods
    and based on the financial condition and operating outlook of the pooled
    institutions, was deemed to be other-than-temporarily impaired in the fourth
    quarter of 2008 resulting in the recognition of $1.859 million of impairment
    charges.
    
    
    
    
    
                                  At December 31, 2008
    
                                  Amortized  Unrealized        Fair
    
    (Dollars in thousands)        Cost*      Gains  Losses     Value
    
    Common and preferred stocks
    
    Common stock                  $942       $50    $ -        $992
    
    Perpetual preferred stocks:
    
    FNMA preferred stock          24         -      -          24
    
    FHLMC preferred stock         6          -      -          6
    
    Other preferred (financials)  4,064      -      (1,257  )  2,807
    
    Other preferred (utilities)   1,000      2      (130    )  872
    
    Total preferred               5,094      2      (1,387  )  3,709
    
    Total common and preferred    $6,036     $52    $(1,387 )  $4,701
    
    
    
    
    
    Losses on write-downs of investments to fair value were charged to earnings
    for securities deemed to be other-than-temporarily impaired in the amounts
    shown in the following table:
    
    (Dollars in thousands)
    
                                                        Three   Twelve
    
    Periods ended December 31, 2008                     Months  Months
    
    Trust preferred securities
    
    Collateralized debt obligations                     $1,859  $1,859
    
    Common and preferred stocks
    
    FNMA and FHLMC preferred stock                      $59     $1,470
    
    Other common (financials)                           435     435
    
    Other preferred (financials)                        -       1,578
    
    Losses on write-downs of investments to fair value  $2,353$5,342
    
    * Net of other-than-temporary impairment write-downs recognized in earnings.
    
    
    
    
    Washington Trust Bancorp, Inc. and Subsidiaries
    
    SELECTED FINANCIAL HIGHLIGHTS(unaudited)
    
                               At or for the Quarters Ended
    
                               Dec. 31,   Sept. 30,  June 30,   Mar. 31,   Dec. 31,
    
    (Dollars in thousands)     2008       2008       2008       2008       2007
    
    Asset Quality Data
    
    Allowance for Loan Losses
    
    Balance at beginning of    $22,631    $21,963    $20,724    $20,277    $19,472
    period
    
    Provision charged to       1,850      1,100      1,400      450        1,000
    earnings
    
    Charge-offs                (776    )  (492    )  (219    )  (106    )  (225    )
    
    Recoveries                 20         60         58         103        30
    
    Balance at end of period   $23,725    $22,631    $21,963    $20,724    $20,277
    
    Past Due Loans
    
    Loans 30-59 Days Past Due
    
    Commercial categories      $5,490     $3,560     $6,682     $2,240     $1,450
    
    Residential mortgages      3,113      1,619      1,624      475        1,620
    
    Consumer loans             76         77         476        43         73
    
    Loans 30-59 days past due  $8,679     $5,256     $8,782     $2,758     $3,143
    
    Loans 60-89 Days Past Due
    
    Commercial categories      $791       $257       $2,091     $3,715     $1,313
    
    Residential mortgages      1,452      296        1          344        39
    
    Consumer loans             401        -          87         22         38
    
    Loans 60-89 days past due  $2,644     $553       $2,179     $4,081     $1,390
    
    Loans 90 Days or more
    Past Due
    
    Commercial categories      $5,234     $5,134     $3,625     $3,088     $1,963
    
    Residential mortgages      973        188        408        441        441
    
    Consumer loans             77         48         -          36         86
    
    Loans 90 days or more      $6,284     $5,370     $4,033     $3,565     $2,490
    past due
    
    Total Past Due Loans
    
    Commercial categories      $11,515    $8,951     $12,398    $9,043     $4,726
    
    Residential mortgages      5,538      2,103      2,033      1,260      2,100
    
    Consumer loans             554        125        563        101        197
    
    Total past due loans       $17,607    $11,179    $14,994    $10,404    $7,023
    
    Nonperforming Assets
    
    Commercial mortgages       $1,942     $1,986     $1,991     $1,300     $1,094
    
    Commercial construction    -          -          -          -          -
    and development
    
    Other commercial           3,845      3,555      2,948      3,081      1,781
    
    Residential real estate    1,754      962        1,072      1,111      1,158
    mortgages
    
    Consumer                   236        208        170        208        271
    
    Total nonaccrual loans     $7,777     $6,711     $6,181     $5,700     $4,304
    
    Nonaccrual investment      633        -          -          -          -
    securities
    
    Other real estate owned,   392        113        -          -          -
    net
    
    Total nonperforming        $8,802     $6,824     $6,181     $5,700     $4,304
    assets
    
    Total past due loans to    0.96    %  0.63    %  0.88    %  0.65    %  0.45    %
    total loans
    
    Nonperforming assets to    0.30    %  0.25    %  0.23    %  0.22    %  0.17    %
    total assets
    
    Nonaccrual loans to total  0.42    %  0.38    %  0.36    %  0.36    %  0.27    %
    loans
    
    Accruing troubled debt     $870       $480       $1,947     $1,696     $1,717
    restructured loans
    
    Allowance for loan losses  305.07  %  337.22  %  355.33  %  363.58  %  471.12  %
    to nonaccrual loans
    
    Allowance for loan losses  1.29    %  1.28    %  1.29    %  1.30    %  1.29    %
    to total loans
    
    
    
    
    Washington Trust Bancorp, Inc. and Subsidiaries
    
    SELECTED FINANCIAL HIGHLIGHTS(unaudited)
    
                                                        Years Ended
    
                                                        December 31,  December 31,
    
    (Dollars and shares in thousands, except per share  2008          2007
    amounts)
    
    Operating Results
    
    Net interest income                                 $65,513       $59,944
    
    Provision for loan losses                           4,800         1,900
    
    Net gains on securities                             2,224         455
    
    Losses on write-downs of investments to fair value  (5,342     )  -
    
    Other noninterest income                            44,233        45,054
    
    Noninterest expenses                                71,742        68,906
    
    Income tax expense                                  7,527         10,847
    
    Net income                                          22,559        23,800
    
    Basic earnings per share                            $1.61         $1.78
    
    Diluted earnings per share                          $1.59         $1.75
    
    Dividends declared per share                        $0.83         $0.80
    
    Weighted average shares outstanding - basic         13,981.9      13,355.5
    
    Weighted average shares outstanding - diluted       14,146.3      13,604.1
    
    Shares outstanding at end of period                 15,934.7      13,354.5
    
    Key Ratios
    
    Return on average assets                            0.83       %  0.99       %
    
    Return on average tangible assets                   0.85       %  1.01       %
    
    Return on average equity                            11.31      %  13.48      %
    
    Return on average tangible equity                   16.50      %  20.10      %
    
    Interest rate spread (taxable equivalent basis)     2.33       %  2.39       %
    
    Net interest margin (taxable equivalent basis)      2.64       %  2.76       %
    
    Allowance for Loan Losses
    
    Balance at beginning of period                      $20,277       $18,894
    
    Provision charged to earnings                       4,800         1,900
    
    Charge-offs                                         (1,593     )  (778       )
    
    Recoveries                                          241           261
    
    Balance at end of period                            $23,725       $20,277
    
    Net charge-offs to average loans                    .08        %  .03        %
    
    Wealth Management Assets Under Administration
    
    Balance at beginning of period                      $4,014,352    $3,609,180
    
    Net investment (depreciation) appreciation and      (980,909   )  272,398
    income
    
    Net customer cash flows                             114,206       132,774
    
    Balance at end of period                            $3,147,649    $4,014,352
    
    
    
    
    
    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    2008                          2007
    December 31,
    
                          Average               Yield/  Average               Yield/
    
    (Dollars in           Balance     Interest  Rate    Balance     Interest  Rate
    thousands)
    
    Assets
    
    Residential real      $634,048    $8,771    5.50%   $592,025    $8,069    5.41%
    estate loans
    
    Commercial and other  860,827     13,399    6.19%   666,142     12,407    7.39%
    loans
    
    Consumer loans        312,127     3,922     5.00%   288,975     4,910     6.74%
    
    Total loans           1,807,002   26,092    5.74%   1,547,142   25,386    6.51%
    
    Short-term
    investments, federal  21,542      16        0.30%   15,147      181       4.72%
    funds sold and other
    
    Taxable debt          748,717     9,160     4.87%   608,827     7,967     5.19%
    securities
    
    Nontaxable debt       80,682      1,143     5.64%   80,637      1,137     5.59%
    securities
    
    Corporate stocks and  48,964      406       3.29%   41,791      735       7.00%
    FHLBB stock
    
    Total securities      899,905     10,725    4.74%   746,402     10,020    5.33%
    
    Total
    interest-earning      2,706,907   36,817    5.41%   2,293,544   35,406    6.12%
    assets
    
    Non interest-earning  160,179                       170,781
    assets
    
    Total assets          $2,867,086                    $2,464,325
    
    Liabilities and
    Shareholders' Equity
    
    NOW accounts          $165,267    $70       0.17%   $161,722    $83       0.20%
    
    Money market          295,393     1,416     1.91%   324,685     3,217     3.93%
    accounts
    
    Savings accounts      172,098     206       0.48%   180,977     601       1.32%
    
    Time deposits         959,459     8,472     3.51%   801,107     9,189     4.55%
    
    FHLBB advances        764,367     7,790     4.05%   549,388     6,318     4.56%
    
    Junior subordinated   32,991      508       6.13%   22,681      338       5.91%
    debentures
    
    Other                 30,199      318       4.20%   31,319      345       4.36%
    
    Total
    interest-bearing      2,419,774   18,780    3.09%   2,071,879   20,091    3.85%
    liabilities
    
    Demand deposits       183,163                       176,242
    
    Other liabilities     33,048                        34,298
    
    Shareholders' equity  231,101                       181,906
    
    Total liabilities
    and shareholders'     $2,867,086                    $2,464,325
    equity
    
    Net interest income               $18,037                       $15,315
    (FTE)
    
    Interest rate spread                        2.32%                         2.27%
    
    Net interest margin                         2.65%                         2.65%
    
    
    
    
    
    Interest income amounts presented in the preceding table include the
    following adjustments for taxable equivalency:
    
    (Dollars in thousands)
    
    Three months ended December 31,  2008  2007
    
    Commercial and other loans       $49   $46
    
    Nontaxable debt securities       362   362
    
    Corporate stocks                 40    70
    
    Total                            $451  $478
    
    
    
    
    Washington Trust Bancorp, Inc. and Subsidiaries
    
    CONSOLIDATED AVERAGE BALANCE SHEETS(unaudited)
    
    Years ended December  2008                          2007
    31,
    
                          Average               Yield/  Average               Yield/
    
    (Dollars in           Balance     Interest  Rate    Balance     Interest  Rate
    thousands)
    
    Assets
    
    Residential real      $613,367    $33,954   5.54%   $589,619    $31,540   5.35%
    estate loans
    
    Commercial and other  782,825     50,589    6.46%   626,309     47,713    7.62%
    loans
    
    Consumer loans        301,653     16,584    5.50%   283,873     19,634    6.92%
    
    Total loans           1,697,845   101,127   5.96%   1,499,801   98,887    6.59%
    
    Short-term
    investments, federal  21,515      334       1.55%   16,759      831       4.96%
    funds sold and other
    
    Taxable debt          700,546     34,382    4.91%   605,443     31,163    5.15%
    securities
    
    Nontaxable debt       81,046      4,583     5.65%   77,601      4,368     5.63%
    securities
    
    Corporate stocks and  48,709      2,085     4.28%   42,544      3,047     7.16%
    FHLBB stock
    
    Total securities      851,816     41,384    4.86%   742,347     39,409    5.31%
    
    Total
    interest-earning      2,549,661   142,511   5.59%   2,242,148   138,296   6.17%
    assets
    
    Non interest-earning  163,729                       165,561
    assets
    
    Total assets          $2,713,390                    $2,407,709
    
    Liabilities and
    Shareholders' Equity
    
    NOW accounts          $165,479    $306      0.18%   $166,580    $285      0.17%
    
    Money market          310,445     6,730     2.17%   303,138     11,846    3.91%
    accounts
    
    Savings accounts      173,840     1,059     0.61%   194,342     2,619     1.35%
    
    Time deposits         861,814     33,100    3.84%   821,951     37,672    4.58%
    
    FHLBB advances        737,830     30,894    4.19%   489,229     21,641    4.42%
    
    Junior subordinated   30,259      1,879     6.21%   22,681      1,352     5.96%
    debentures
    
    Other                 26,678      1,181     4.43%   23,990      1,075     4.48%
    
    Total
    interest-bearing      2,306,345   75,149    3.26%   2,021,911   76,490    3.78%
    liabilities
    
    Demand deposits       177,032                       177,342
    
    Other liabilities     30,618                        31,886
    
    Shareholders' equity  199,395                       176,570
    
    Total liabilities
    and shareholders'     $2,713,390                    $2,407,709
    equity
    
    Net interest income               $67,362                       $61,806
    (FTE)
    
    Interest rate spread                        2.33%                         2.39%
    
    Net interest margin                         2.64%                         2.76%
    
    
    
    
    
    Interest income amounts presented in the preceding table include the
    following adjustments for taxable equivalency:
    
    (Dollars in thousands)
    
    Years ended December 31,    2008    2007
    
    Commercial and other loans  $188    $167
    
    Nontaxable debt securities  1,458   1,385
    
    Corporate stocks            203     310
    
    Total                       $1,849  $1,862
    
    
    
    

    
        Source: Washington Trust Bancorp, Inc.

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