EX-99.HTM 2 exhibit99.htm EXHIBIT 99 TO FORM 8-K FOR QUARTER 4 2007 EARNINGS RELEASE exhibit99.htm Exhibit 99.1
 
[Graphic omitted]
NASDAQ: WASH
 
Contact:  Elizabeth B. Eckel
Senior Vice President, Marketing
Telephone:  (401) 348-1309
E-mail:  ebeckel@washtrust.com
Date:  January 22, 2008
FOR IMMEDIATE RELEASE

Washington Trust Announces Fourth Quarter 2007 Earnings


Westerly, Rhode Island…Washington Trust Bancorp, Inc. (NASDAQ Global Market; symbol: WASH), parent company of The Washington Trust Company, today announced fourth quarter 2007 net income of $5.8 million, or 43 cents per diluted share.  Net income for the fourth quarter of last year totaled $6.2 million, or 45 cents per diluted share.  The year-over-year decline in fourth quarter 2007 net income was primarily attributable to a higher provision for loan losses.  The increase in the provision is 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 economic conditions.  The returns on average equity and average assets for the fourth quarter of 2007 were 12.73% and 0.94%, respectively, compared to 14.06% and 1.04%, respectively, for the fourth quarter of 2006.

Fourth Quarter 2007 highlights include:
·  
Revenues from wealth management services were up 4 percent from third quarter 2007 and up 11 percent compared to the fourth quarter a year ago.
·  
Noninterest income (excluding securities gains) amounted to 43% of total revenues for the quarter.
·  
Commercial loan growth continued to be strong with an increase of $30.2 million in the quarter.  Commercial loans grew by 16 percent, or $92.9 million, for the full year 2007.
·  
Fourth quarter net interest margin declined 16 basis points from the third quarter of 2007.

John C. Warren, Washington Trust Chairman and CEO stated, "Despite unfavorable economic and market conditions, Washington Trust's fourth quarter and year-end 2007 earnings were strong, particularly in comparison with our peers in the region.  Our performance was driven by solid growth in both the wealth management and commercial lending areas."  Warren added, "We recognize that 2008 will once again be a challenging year, but we will continue to focus on the keys to our success: providing superior service, maintaining very good asset quality, generating diversified earnings, and investing in our future.  We believe that the increase in our loan loss provision is a prudent response to the conditions we

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Washington Trust
Page Two, January 22, 2008

are seeing.  We continue to be pleased with the strong growth in our commercial loan portfolio, but have general concerns with the overall economic environment.”

Net income for the year ended December 31, 2007 was $23.8 million, or $1.75 per diluted share, compared to $25.0 million, or $1.82 per diluted share, for 2006.  Results for the year 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 as well as a $700 thousand increase in the provision for loan losses.  There were no debt prepayment penalty charges in 2006.  The returns on average equity and average assets for the year ended December 31, 2007 were 13.48% and 0.99%, respectively, compared to 14.99% and 1.04%, respectively, for the prior year.

RESULTS OF OPERATIONS
Net interest income totaled $14.8 million for the fourth quarter of 2007, down $473 thousand, or 3 percent, compared to the third quarter of 2007 and down $139 thousand, or 1 percent, from the fourth quarter a year ago.  On a year to date basis, net interest income declined $1.5 million, or 2.5 percent, from 2006.  The decline in net interest income was due to the fact that rates paid on deposits and borrowings have risen faster than earning asset yields and a higher rate of growth was experienced in higher cost deposit categories.

The net interest margin (annualized tax-equivalent net interest income as a percentage of average earning assets) for the fourth quarter 2007 was 2.65%, down 16 basis points from the third quarter of 2007 and down 9 basis points from the fourth quarter of 2006.  The decline in net interest margin from the third quarter of 2007 was attributable to 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 little commensurate reduction in deposit rates paid during the same period.  The decline in net interest margin from the fourth quarter of 2006 is attributable to more rapid increases in rates paid on deposit and FHLB advances than asset yields, and to a change in funding mix resulting from declines in total average deposits and a resulting increase in higher cost FHLB advances.  For the year 2007 net interest margin was 2.76%, compared to 2.80% for 2006.

Total noninterest income amounted to $11.3 million and $45.5 million, respectively, for the quarter and year ended December 31, 2007 as compared to $10.4 million and $42.2 million for the same periods in 2006.  Net realized gains on sales of securities included in noninterest income amounted to $119 thousand and $455 thousand, respectively, for the quarter and year ended December 31, 2007 as compared to net realized losses of $16 thousand and net realized gains of $443 thousand, respectively, for the same periods in 2006.

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Washington Trust
Page Three, January 22, 2008

Excluding net realized gains and losses on securities, noninterest income amounted to $11.2 million for the fourth quarter of 2007, up $720 thousand, or 7 percent, from the same quarter a year ago.  For the year 2007, noninterest income on this basis totaled $45.1 million and increased $3.3 million, or 8 percent, from the prior year.  The increase was largely attributable to higher revenues from wealth management services.  Wealth management revenues for the quarter and year ended December 31, 2007 were up $737 thousand (11 percent) and $2.6 million (10 percent), respectively.  Wealth management assets under administration totaled $4.014 billion at December 31, 2007, down slightly for the fourth quarter.  For the full year 2007, investment performance as well as successful business development efforts and customer cash flows contributed to an increase of $405 million, or 11 percent, from December 31, 2006.

Noninterest expenses amounted to $16.7 million for the fourth quarter of 2007, up $1.0 million, or 6 percent, from the same quarter a year earlier.  For the year 2007, noninterest expenses totaled $68.9 million, up $3.6 million, or 6 percent, from 2006.  Included in this increase was $1.1 million in debt prepayment penalties that were incurred in the first quarter of 2007 as a result of prepayments of higher cost FHLBB advances.  Excluding the debt prepayment penalty expense, noninterest expenses for 2007 increased $2.5 million, or 4 percent, over last year.
 
Income tax expense amounted to $2.6 million and $10.8 million, respectively, for the quarter and year ended December 31, 2007 as compared to $3.2 million and $12.1 million, respectively for the same periods in 2006.  The Corporation’s effective tax rate for the quarter and year ended December 31, 2007 was 31.1% and 31.3%, respectively, down from 33.8% and 32.6%, respectively, for the same periods in 2006, primarily due to higher average balances in nontaxable state and municipal debt obligations.

ASSET QUALITY
Nonperforming assets (nonaccrual loans and property acquired though foreclosure) amounted to $4.3 million, or 0.17% of total assets, at December 31, 2007, compared to $2.7 million, or 0.11% of total

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Washington Trust
Page Four, January 22, 2008

assets, at December 31, 2006.  There are no assets acquired through foreclosure on the balance sheet at December 31, 2007.  Nonaccrual loans as a percent of total loans stood at 0.27% at December 31, 2007 compared to 0.18% of total loans at September 30, 2007 and 0.19% of total loans at December 31, 2006.

Total 30 day+ delinquencies amounted to $7.0 million, or 0.45% of total loans, at December 31, 2007, up $1.2 million in the fourth quarter of 2007, but down $191 thousand from the balance at December 31, 2006.   The $1.2 million increase in total 30 day+ delinquencies in the fourth quarter of 2007 was primarily due to an increase in the commercial category that was offset in part by declines in residential and consumer loan delinquencies.

Total residential mortgage and consumer loan 30 day+ delinquencies declined in the fourth quarter to $2.3 million, or 0.26% of these loans, at December 31, 2007, compared to $3.6 million, or 0.42%, at September 30, 2007.  Total 90 day+ delinquencies in the residential mortgage and consumer loans portfolios amounted to $441 thousand (two loans) and $86 thousand (two loans), respectively, as of December 31, 2007.  Total nonaccrual loans, which include the 90 day+ delinquencies, amounted to $1.2 million and $271 thousand in the residential mortgage and consumer loan categories, respectively, at December 31, 2007.  The Corporation has never offered a sub-prime or Alt-A residential mortgage loan program.

The Corporation’s loan loss provision charged to earnings amounted to $1.0 million and $1.9 million for the quarter and year ended December 31, 2007, respectively, compared to $300 thousand and $1.2 million, respectively, for the same periods in 2006.  The increase in the fourth quarter 2007 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, with particular emphasis on the commercial portfolio, and general economic conditions.  Net charge-offs amounted to $517 thousand for 2007, including $195 thousand in the fourth quarter of 2007, compared to net charge-offs of $224 thousand for the year 2006.

The Corporation will continue to assess the adequacy of its allowance for loan losses in accordance with its established policies.  The provision for loan losses in 2008 is expected to increase somewhat above the 2007 level, subject to the achievement of anticipated portfolio growth and the future evaluation of economic conditions.


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Washington Trust
Page Five, January 22, 2008

The allowance for loan losses was $20.3 million, or 1.29% of total loans, at December 31, 2007, compared to $18.9 million, or 1.29% of total loans, at December 31, 2006, and $19.5 million, or 1.29% of total loans, at September 30, 2007.

FINANCIAL CONDITION
Total assets were $2.540 billion at December 31, 2007, up $140.5 million from December 31, 2006.  Total loans grew $113.7 million, or 8 percent, during 2007 and amounted to $1.6 billion.  Commercial loans increased $92.9 million (16 percent), residential loans increased by 11.0 million (2 percent), and consumer loans increased by $9.8 million (3 percent), during the year.  The investment securities portfolio totaled $751.8 million at December 31, 2007, up $48.0 million from December 31, 2006.  Included in the investment securities portfolio at December 31, 2007 were mortgage-backed securities with a fair value of $469.4 million.  All of the Corporation’s mortgage-backed securities are issued by U.S. Government sponsored agencies.  The Corporation reclassified its Held To Maturity portfolio to the Available For Sale category during the second quarter of 2007.

Total deposits decreased by $31.8 million from December 31, 2006.  Excluding brokered certificates of deposit, in-market deposits were up $14.0 million during 2007.  Declines in demand and savings deposits were offset by increases in money market accounts and in-market certificates of deposit.  FHLBB advances totaled $616.4 million at December 31, 2007, up $141.9 million from December 31, 2006.  Other borrowings increased $17.9 million in 2007, mainly due to an increase in securities sold under repurchase agreements.

Total shareholders’ equity amounted to $186.5 million at December 31, 2007, compared to $173.1 million at December 31, 2006.  Under the Corporation’s 2006 Stock Repurchase Plan, 185,400 shares were repurchased at a total cost of $4.8 million during the year ended December 31, 2007.  There were no shares repurchased in the fourth quarter.  Book value per share as of December 31, 2007 and December 31, 2006 amounted to $13.97 and $12.89, respectively.

DIVIDENDS DECLARED
The Board of Directors declared a quarterly dividend of 20 cents per share for the quarter ended December 31, 2007.  The dividend was paid on January 11, 2008 to shareholders of record on January 3, 2008.


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Washington Trust
Page Six, January 22, 2008

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 Wednesday, January 23, 2008 at 8:30 a.m. (Eastern Time) to discuss the Corporation’s fourth quarter and year end results.  This call is being webcast by TalkPoint 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 #: 414901.  The replay will be available until 11:59 p.m. on January 31, 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 MarketÒ 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, changes in interest rates, reductions in the market value of wealth management assets under administration, reductions in loan demand, reductions in deposit levels necessitating increased borrowing to fund loans and investments, 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.  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)
 
(Dollars in thousands)
 
December 31,
   
December 31,
 
   
2007
   
2006
 
Assets:
           
Cash and due from banks
  $
32,790
    $
54,337
 
Federal funds sold
   
7,600
     
16,425
 
Other short-term investments
   
722
     
1,147
 
Mortgage loans held for sale
   
1,981
     
2,148
 
Securities:
               
Available for sale, at fair value; amortized cost $750,583 in 2007 and $525,966 in 2006
   
751,778
     
526,396
 
Held to maturity, at cost; fair value $175,369 in 2006
   
     
177,455
 
Total securities
   
751,778
     
703,851
 
Federal Home Loan Bank stock, at cost
   
31,725
     
28,727
 
Loans:
               
Commercial and other
   
680,266
     
587,397
 
Residential real estate
   
599,671
     
588,671
 
Consumer
   
293,715
     
283,918
 
Total loans
   
1,573,652
     
1,459,986
 
Less allowance for loan losses
   
20,277
     
18,894
 
Net loans
   
1,553,375
     
1,441,092
 
Premises and equipment, net
   
25,420
     
24,307
 
Accrued interest receivable
   
11,427
     
11,268
 
Investment in bank-owned life insurance
   
41,363
     
39,770
 
Goodwill
   
50,479
     
44,558
 
Identifiable intangible assets, net
   
11,433
     
12,816
 
Other assets
   
19,847
     
18,719
 
Total assets
  $
2,539,940
    $
2,399,165
 
                 
Liabilities:
               
Deposits:
               
Demand deposits
  $
175,542
    $
186,533
 
NOW accounts
   
164,944
     
175,479
 
Money market accounts
   
321,600
     
286,998
 
Savings accounts
   
176,278
     
205,998
 
Time deposits
   
807,841
     
822,989
 
Total deposits
   
1,646,205
     
1,677,997
 
Dividends payable
   
2,677
     
2,556
 
Federal Home Loan Bank advances
   
616,417
     
474,561
 
Junior subordinated debentures
   
22,681
     
22,681
 
Other borrowings
   
32,560
     
14,684
 
Accrued expenses and other liabilities
   
32,887
     
33,630
 
Total liabilities
   
2,353,427
     
2,226,109
 
                 
Shareholders’ Equity:
               
Common stock of $.0625 par value; authorized 30,000,000 shares;
               
issued 13,492,110 shares in 2007 and 2006
   
843
     
843
 
Paid-in capital
   
34,874
     
35,893
 
Retained earnings
   
154,647
     
141,548
 
Accumulated other comprehensive loss
    (239 )     (3,515 )
Treasury stock, at cost; 137,652 shares in 2007 and 62,432 in 2006
    (3,612 )     (1,713 )
Total shareholders’ equity
   
186,513
     
173,056
 
Total liabilities and shareholders’ equity
  $
2,539,940
    $
2,399,165
 

Washington Trust Bancorp, Inc. and Subsidiaries
 
CONSOLIDATED STATEMENTS OF INCOME
 
   
(Dollars and shares in thousands, except per share amounts)
 
(unaudited)
 
   
Three Months
   
Twelve Months
 
Periods ended December 31,
 
2007
   
2006
   
2007
   
2006
 
Interest income:
                       
Interest and fees on loans
  $
25,340
    $
23,733
    $
98,720
    $
92,190
 
Interest on securities:
                               
Taxable
   
7,967
     
8,210
     
31,163
     
33,763
 
Nontaxable
   
775
     
514
     
2,983
     
1,618
 
Dividends on corporate stock and Federal Home Loan Bank stock
   
665
     
718
     
2,737
     
2,842
 
Interest on federal funds sold and other short-term investments
   
181
     
204
     
831
     
721
 
Total interest income
   
34,928
     
33,379
     
136,434
     
131,134
 
Interest expense:
                               
Deposits
   
13,090
     
13,110
     
52,422
     
46,982
 
Federal Home Loan Bank advances
   
6,318
     
4,801
     
21,641
     
20,916
 
Junior subordinated debentures
   
338
     
338
     
1,352
     
1,352
 
Other
   
345
     
154
     
1,075
     
410
 
Total interest expense
   
20,091
     
18,403
     
76,490
     
69,660
 
Net interest income
   
14,837
     
14,976
     
59,944
     
61,474
 
Provision for loan losses
   
1,000
     
300
     
1,900
     
1,200
 
Net interest income after provision for loan losses
   
13,837
     
14,676
     
58,044
     
60,274
 
Noninterest income:
                               
Wealth management services:
                               
Trust and investment advisory fees
   
5,498
     
5,063
     
21,124
     
19,099
 
Mutual fund fees
   
1,430
     
1,092
     
5,430
     
4,665
 
Financial planning, commissions and other service fees
   
547
     
583
     
2,462
     
2,616
 
Wealth management services
   
7,475
     
6,738
     
29,016
     
26,380
 
Service charges on deposit accounts
   
1,154
     
1,248
     
4,713
     
4,915
 
Merchant processing fees
   
1,425
     
1,380
     
6,710
     
6,208
 
Income from bank-owned life insurance
   
427
     
396
     
1,593
     
1,410
 
Net gains on loan sales and commissions on loans originated for others
   
288
     
394
     
1,493
     
1,423
 
Net realized gains (losses) on securities
   
119
      (16 )    
455
     
443
 
Other income
   
400
     
293
     
1,529
     
1,404
 
Total noninterest income
   
11,288
     
10,433
     
45,509
     
42,183
 
Noninterest expense:
                               
Salaries and employee benefits
   
9,791
     
9,598
     
39,986
     
38,698
 
Net occupancy
   
1,074
     
982
     
4,150
     
3,888
 
Equipment
   
909
     
818
     
3,473
     
3,370
 
Merchant processing costs
   
1,193
     
1,167
     
5,686
     
5,257
 
Outsourced services
   
570
     
505
     
2,180
     
2,009
 
Advertising and promotion
   
557
     
405
     
2,024
     
1,894
 
Legal, audit and professional fees
   
463
     
295
     
1,761
     
1,637
 
Amortization of intangibles
   
326
     
384
     
1,383
     
1,593
 
Debt prepayment penalties
   
-
     
-
     
1,067
     
-
 
Other
   
1,842
     
1,586
     
7,196
     
6,989
 
Total noninterest expense
   
16,725
     
15,740
     
68,906
     
65,335
 
Income before income taxes
   
8,400
     
9,369
     
34,647
     
37,122
 
Income tax expense
   
2,613
     
3,166
     
10,847
     
12,091
 
Net income
  $
5,787
    $
6,203
     
23,800
    $
25,031
 
                                 
Weighted average shares outstanding - basic
   
13,347.5
     
13,452.5
     
13,355.5
     
13,424.1
 
Weighted average shares outstanding - diluted
   
13,580.7
     
13,769.3
     
13,604.1
     
13,723.2
 
Per share information:
                               
Basic earnings per share
  $
0.43
    $
0.46
    $
1.78
    $
1.86
 
Diluted earnings per share
  $
0.43
    $
0.45
    $
1.75
    $
1.82
 
Cash dividends declared per share
  $
0.20
    $
0.19
    $
0.80
    $
0.76
 

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 per share amounts)
 
2007
   
2007
   
2007
   
2007
   
2006
 
Financial Data
                             
Total assets
  $
2,539,940
    $
2,431,762
    $
2,393,882
    $
2,399,962
    $
2,399,165
 
Total loans
   
1,573,652
     
1,514,493
     
1,489,174
     
1,470,200
     
1,459,986
 
Total securities
   
751,778
     
688,709
     
676,204
     
706,406
     
703,851
 
Total deposits
   
1,646,205
     
1,655,887
     
1,669,089
     
1,683,592
     
1,677,997
 
Total shareholders equity
   
186,513
     
177,897
     
171,188
     
175,527
     
173,056
 
Net income
   
5,787
     
6,556
     
5,482
     
5,975
     
6,203
 
                                         
Per Share Data
                                       
Basic earnings per share
  $
0.43
    $
0.49
    $
0.41
    $
0.45
    $
0.46
 
Diluted earnings per share
  $
0.43
    $
0.48
    $
0.40
    $
0.44
    $
0.45
 
Dividends declared per share
  $
0.20
    $
0.20
    $
0.20
    $
0.20
    $
0.19
 
Book value per share
  $
13.97
    $
13.33
    $
12.87
    $
13.12
    $
12.89
 
Tangible book value per share
  $
9.33
    $
8.66
    $
8.61
    $
8.86
    $
8.61
 
Market value per share
  $
25.23
    $
26.97
    $
25.21
    $
26.81
    $
27.89
 
                                         
Key Ratios
                                       
Return on average assets
    0.94 %     1.10 %     0.92 %     1.00 %     1.04 %
Return on average equity
    12.73 %     14.99 %     12.57 %     13.66 %     14.06 %
                                         
Capital Ratios
                                       
Tier 1 risk-based capital
    9.10 %     9.11 %     9.40 %     9.47 %     9.57 %
Total risk-based capital
    10.39 %     10.43 %     10.73 %     10.84 %     10.96 %
Tier 1 leverage ratio
    6.09 %     6.11 %     6.16 %     6.14 %     6.01 %
                                         
Average Yields (taxable equivalent basis)
                                       
Assets
                                       
Residential real estate loans
    5.41 %     5.35 %     5.31 %     5.32 %     5.18 %
Commercial and other loans
    7.39 %     7.62 %     7.64 %     7.86 %     7.77 %
Consumer loans
    6.74 %     7.01 %     6.98 %     6.95 %     6.98 %
Total loans
    6.51 %     6.62 %     6.59 %     6.66 %     6.55 %
Federal funds sold and
                                       
other short-term investments
    4.72 %     5.10 %     4.36 %     5.75 %     5.43 %
Taxable debt securities
    5.19 %     5.16 %     5.17 %     5.07 %     4.86 %
Nontaxable debt securities
    5.59 %     5.61 %     5.65 %     5.69 %     5.80 %
Corporate stocks and FHLBB stock
    7.00 %     7.03 %     7.15 %     7.46 %     7.11 %
Total securities
    5.33 %     5.31 %     5.32 %     5.28 %     5.06 %
Total interest-earning assets
    6.12 %     6.20 %     6.16 %     6.19 %     6.03 %
Liabilities
                                       
NOW accounts
    0.20 %     0.17 %     0.15 %     0.16 %     0.18 %
Money market accounts
    3.93 %     3.90 %     3.92 %     3.88 %     3.94 %
Savings accounts
    1.32 %     1.32 %     1.35 %     1.40 %     1.14 %
Time deposits
    4.55 %     4.60 %     4.61 %     4.57 %     4.47 %
FHLBB advances
    4.56 %     4.44 %     4.35 %     4.31 %     4.16 %
Junior subordinated debentures
    5.91 %     5.91 %     5.98 %     6.04 %     5.91 %
Other
    4.36 %     4.47 %     4.51 %     4.73 %     4.91 %
Total interest-bearing liabilities
    3.85 %     3.78 %     3.77 %     3.73 %     3.64 %
                                         
Interest rate spread (taxable equivalent basis)
    2.27 %     2.42 %     2.39 %     2.46 %     2.39 %
Net interest margin (taxable equivalent basis)
    2.65 %     2.81 %     2.76 %     2.81 %     2.74 %
                                         
Wealth Management Assets (1)
                                       
Market value of assets under administration
  $
4,014,352
    $
4,025,877
    $
3,867,674
    $
3,715,987
    $
3,609,180
 
                                         
(1) Certain prior period amounts have been adjusted to conform to the current year presentation.

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)
 
2007
   
2007
   
2007
   
2007
   
2006
Period End Balances
                           
Loans
                           
Commercial:
                           
Mortgages
  $
278,821
    $
276,995
    $
265,560
    $
271,817
    $
282,019
 
Construction and development
   
60,361
     
48,899
     
43,755
     
33,092
     
32,233
 
Other
   
341,084
     
324,129
     
313,673
     
294,261
     
273,145
 
Total commercial
   
680,266
     
650,023
     
622,988
     
599,170
     
587,397
 
Residential real estate:
                                   
Mortgages
   
588,628
     
566,776
     
572,321
     
577,823
     
577,522
 
Homeowner construction
   
11,043
     
12,040
     
11,071
     
11,742
     
11,149
 
Total residential real estate
   
599,671
     
578,816
     
583,392
     
589,565
     
588,671
 
Consumer:
                                   
Home equity lines
   
144,429
     
139,732
     
139,256
     
142,548
     
145,676
 
Home equity loans
   
99,827
     
99,798
     
97,253
     
94,521
     
93,947
 
Other
   
49,459
     
46,124
     
46,285
     
44,396
     
44,295
 
Total consumer
   
293,715
     
285,654
     
282,794
     
281,465
     
283,918
 
Total loans
  $
1,573,652
    $
1,514,493
    $
1,489,174
    $
1,470,200
    $
1,459,986
 
Deposits
                                   
Demand deposits
  $
175,542
    $
182,830
    $
177,210
    $
175,010
    $
186,533
 
NOW accounts
   
164,944
     
172,378
     
174,715
     
176,006
     
175,479
 
Money market accounts
   
321,600
     
312,257
     
290,046
     
290,273
     
286,998
 
Savings accounts
   
176,278
     
189,157
     
196,105
     
204,465
     
205,998
 
Time deposits
   
807,841
     
799,265
     
831,013
     
837,838
     
822,989
 
Total deposits
  $
1,646,205
    $
1,655,887
    $
1,669,089
    $
1,683,592
    $
1,677,997
 
                                     
Brokered deposits included in time deposits
   
129,798
     
130,017
     
159,297
     
163,089
     
175,618
 
                                     
Asset Quality Data
                                   
Allowance for Loan Losses
                                       
Balance at beginning of period
  $
19,472
    $
19,327
    $
19,360
    $
18,894
    $
18,645
 
Provision charged to earnings
   
1,000
     
300
     
300
     
300
     
300
 
Net charge-offs
    (195 )     (155 )     (333 )    
166
      (51 )
Balance at end of period
  $
20,277
    $
19,472
    $
19,327
    $
19,360
    $
18,894
 
                                         
Loans 30 days or More Past Due
                                       
Commercial categories
  $
4,726
    $
2,239
    $
7,224
    $
6,935
    $
5,807
 
Residential mortgages
   
2,100
     
3,266
     
1,697
     
914
    $
1,299
 
Consumer loans
   
197
     
358
     
145
     
169
     
108
 
Total
  $
7,023
    $
5,863
    $
9,066
    $
8,018
    $
7,214
 
                                         
Nonperforming Assets
                                       
Commercial mortgages
  $
1,094
    $
1,099
    $
1,385
    $
1,157
    $
981
 
Commercial construction and development
   
     
     
     
     
 
Other commercial
   
1,781
     
581
     
645
     
1,021
     
831
 
Residential real estate
   
1,158
     
731
     
698
     
709
     
721
 
Consumer
   
271
     
262
     
241
     
216
     
190
 
Total nonaccrual loans
  $
4,304
    $
2,673
    $
2,969
    $
3,103
    $
2,723
 
Other real estate owned, net
   
-
     
-
     
-
     
-
     
-
 
Total nonperforming assets
  $
4,304
    $
2,673
    $
2,969
    $
3,103
    $
2,723
 
                                         
Loans 30 days or more past due to total loans
    0.45 %     0.39 %     0.61 %     0.55 %     0.49 %
Nonperforming assets to total assets
    0.17 %     0.11 %     0.12 %     0.13 %     0.11 %
Nonaccrual loans to total loans
    0.27 %     0.18 %     0.20 %     0.21 %     0.19 %
Allowance for loan losses to nonaccrual loans
    471.12 %     728.47 %     650.96 %     623.91 %     693.87 %
Allowance for loan losses to total loans
    1.29 %     1.29 %     1.30 %     1.32 %     1.29 %

Washington Trust Bancorp, Inc. and Subsidiaries
 
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
 
   
   
Years Ended
 
   
December 31,
   
December 31,
 
(Dollars and shares in thousands, except per share amounts)
 
2007
   
2006
 
             
Operating Results
           
Net interest income
  $
59,944
    $
61,474
 
Provision for loan losses
   
1,900
     
1,200
 
Net realized gains on securities
   
455
     
443
 
Other noninterest income
   
45,054
     
41,740
 
Noninterest expenses
   
68,906
     
65,335
 
Income tax expense
   
10,847
     
12,091
 
Net income
   
23,800
     
25,031
 
                 
Basic earnings per share
  $
1.78
    $
1.86
 
Diluted earnings per share
  $
1.75
    $
1.82
 
Dividends declared per share
  $
0.80
    $
0.76
 
                 
Weighted average shares outstanding - basic
   
13,355.5
     
13,424.1
 
Weighted average shares outstanding - diluted
   
13,604.1
     
13,723.2
 
Shares outstanding at end of period
   
13,354.5
     
13,429.7
 
                 
Key Ratios
               
Return on average assets
    0.99 %     1.04 %
Return on average equity
    13.48 %     14.99 %
Interest rate spread (taxable equivalent basis)
    2.39 %     2.47 %
Net interest margin (taxable equivalent basis)
    2.76 %     2.80 %
                 
Allowance for Loan Losses
               
Balance at beginning of period
  $
18,894
    $
17,918
 
Provision charged to earnings
   
1,900
     
1,200
 
Net charge-offs
    (517 )     (224 )
Balance at end of period
  $
20,277
    $
18,894
 
                 
Net charge-offs (recoveries) to average loans
    .03 %     .02 %
                 
                 
   
Three Months
   
Year
 
   
Ended
   
Ended
 
(Dollars in thousands)
 
Dec. 31, 2007
   
Dec. 31, 2007
 
                 
Wealth Management Assets Under Administration (1)
               
Balance at beginning of period
  $
4,025,877
    $
3,609,180
 
Net investment appreciation (depreciation) and income
    (11,751 )    
272,398
 
Net customer cash flows
   
226
     
132,774
 
Balance at end of period
  $
4,014,352
    $
4,014,352
 
                 
(1) Certain prior period amounts have been adjusted to conform to the current year presentation.

Washington Trust Bancorp, Inc. and Subsidiaries
 
CONSOLIDATED AVERAGE BALANCE SHEETS (unaudited)
 
   
       
Three months ended December 31,
 
2007
   
2006
 
   
Average
         
Yield/
   
Average
         
Yield/
 
(Dollars in thousands)
 
Balance
   
Interest
   
Rate
   
Balance
   
Interest
   
Rate
 
Assets
                                   
Residential real estate loans
  $
592,025
    $
8,069
      5.41 %   $
592,055
    $
7,732
      5.18 %
Commercial and other loans
   
666,142
     
12,407
      7.39 %    
567,356
     
11,115
      7.77 %
Consumer loans
   
288,975
     
4,910
      6.74 %    
280,118
     
4,929
      6.98 %
Total loans
   
1,547,142
     
25,386
      6.51 %    
1,439,529
     
23,776
      6.55 %
Federal funds sold and
                                               
other short-term investments
   
15,147
     
181
      4.72 %    
14,940
     
204
      5.43 %
Taxable debt securities
   
608,827
     
7,967
      5.19 %    
670,523
     
8,210
      4.86 %
Nontaxable debt securities
   
80,637
     
1,137
      5.59 %    
54,024
     
789
      5.80 %
Corporate stocks and FHLBB stock
   
41,791
     
735
      7.00 %    
45,233
     
811
      7.11 %
Total securities
   
746,402
     
10,020
      5.33 %    
784,720
     
10,014
      5.06 %
Total interest-earning assets
   
2,293,544
     
35,406
      6.12 %    
2,224,249
     
33,790
      6.03 %
Non interest-earning assets
   
170,781
                     
171,361
                 
Total assets
  $
2,464,325
                    $
2,395,610
                 
Liabilities and Shareholders’ Equity
                                               
NOW accounts
  $
161,722
    $
83
      0.20 %   $
170,111
    $
76
      0.18 %
Money market accounts
   
324,685
     
3,217
      3.93 %    
306,036
     
3,037
      3.94 %
Savings accounts
   
180,977
     
601
      1.32 %    
201,031
     
577
      1.14 %
Time deposits
   
801,107
     
9,189
      4.55 %    
836,645
     
9,420
      4.47 %
FHLBB advances
   
549,388
     
6,318
      4.56 %    
457,690
     
4,801
      4.16 %
Junior subordinated debentures
   
22,681
     
338
      5.91 %    
22,681
     
338
      5.91 %
Other
   
31,319
     
345
      4.36 %    
12,472
     
154
      4.91 %
Total interest-bearing liabilities
   
2,071,879
     
20,091
      3.85 %    
2,006,666
     
18,403
      3.64 %
Demand deposits
   
176,242
                     
186,017
                 
Other liabilities
   
34,298
                     
26,482
                 
Shareholders’ equity
   
181,906
                     
176,445
                 
Total liabilities and shareholders’ equity
  $
2,464,325
                    $
2,395,610
                 
Net interest income (FTE)
          $
15,315
                    $
15,387
         
Interest rate spread
                    2.27 %                     2.39 %
Net interest margin
                    2.65 %                     2.74 %
 
Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:
 
(Dollars in thousands)
           
             
Three months ended December 31,
 
2007
   
2006
 
Commercial and other loans
  $
46
    $
43
 
Nontaxable debt securities
   
362
     
275
 
Corporate stocks
   
70
     
93
 
Total
  $
478
    $
411
 

Washington Trust Bancorp, Inc. and Subsidiaries
 
CONSOLIDATED AVERAGE BALANCE SHEETS (unaudited)
 
   
       
Years ended December 31,
 
2007
   
2006
 
   
Average
         
Yield/
   
Average
         
Yield/
 
(Dollars in thousands)
 
Balance
   
Interest
   
Rate
   
Balance
   
Interest
   
Rate
 
Assets
                                   
Residential real estate loans
  $
589,619
    $
31,540
      5.35 %   $
590,245
    $
30,237
      5.12 %
Commercial and other loans
   
626,309
     
47,713
      7.62 %    
564,310
     
43,409
      7.69 %
Consumer loans
   
283,873
     
19,634
      6.92 %    
274,764
     
18,748
      6.82 %
Total loans
   
1,499,801
     
98,887
      6.59 %    
1,429,319
     
92,394
      6.46 %
Federal funds sold and
                                               
other short-term investments
   
16,759
     
831
      4.96 %    
14,548
     
721
      4.96 %
Taxable debt securities
   
605,443
     
31,163
      5.15 %    
712,870
     
33,763
      4.74 %
Nontaxable debt securities
   
77,601
     
4,368
      5.63 %    
42,977
     
2,486
      5.79 %
Corporate stocks and FHLBB stock
   
42,544
     
3,047
      7.16 %    
48,643
     
3,205
      6.59 %
Total securities
   
742,347
     
39,409
      5.31 %    
819,038
     
40,175
      4.91 %
Total interest-earning assets
   
2,242,148
     
138,296
      6.17 %    
2,248,357
     
132,569
      5.90 %
Non interest-earning assets
   
165,561
                     
159,115
                 
Total assets
  $
2,407,709
                    $
2,407,472
                 
Liabilities and Shareholders’ Equity
                                               
NOW accounts
  $
166,580
    $
285
      0.17 %   $
173,137
    $
302
      0.17 %
Money market accounts
   
303,138
     
11,846
      3.91 %    
262,613
     
9,063
      3.45 %
Savings accounts
   
194,342
     
2,619
      1.35 %    
198,040
     
1,464
      0.74 %
Time deposits
   
821,951
     
37,672
      4.58 %    
856,979
     
36,153
      4.22 %
FHLBB advances
   
489,229
     
21,641
      4.42 %    
509,611
     
20,916
      4.10 %
Junior subordinated debentures
   
22,681
     
1,352
      5.96 %    
22,681
     
1,352
      5.96 %
Other
   
23,990
     
1,075
      4.48 %    
8,627
     
410
      4.76 %
Total interest-bearing liabilities
   
2,021,911
     
76,490
      3.78 %    
2,031,688
     
69,660
      3.43 %
Demand deposits
   
177,342
                     
185,322
                 
Other liabilities
   
31,886
                     
23,517
                 
Shareholders’ equity
   
176,570
                     
166,945
                 
Total liabilities and shareholders’ equity
  $
2,407,709
                    $
2,407,472
                 
Net interest income (FTE)
          $
61,806
                    $
62,909
         
Interest rate spread
                    2.39 %                     2.47 %
Net interest margin
                    2.76 %                     2.80 %
 
Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:
 
(Dollars in thousands)
           
             
Years ended December 31,
 
2007
   
2006
 
Commercial and other loans
  $
167
    $
204
 
Nontaxable debt securities
   
1,385
     
868
 
Corporate stocks
   
310
     
363
 
Total
  $
1,862
    $
1,435