Washington Trust Announces Record Net Income for Fourth Quarter and Full Year 2011

WESTERLY, R.I.--(BUSINESS WIRE)-- Washington Trust Bancorp, Inc. (NASDAQ Global Select; symbol: WASH), parent company of The Washington Trust Company, today announced fourth quarter 2011 net income of $7.8 million compared to third quarter 2011 net income of $7.6 million and fourth quarter 2010 net income of $7.2 million. On a diluted earnings per share basis, Washington Trust reported earnings of 47 cents for the fourth quarter of 2011, compared to 46 cents for the previous quarter and up by 7% from the 44 cents reported for the fourth quarter of 2010. Fourth quarter 2011 earnings includes a reduction of 3 cents per diluted share related to certain transactions described below.

For the year ended December 31, 2011, net income totaled $29.7 million, or $1.82 per diluted share, compared to $24.1 million, or $1.49 per diluted share, for 2010. On a diluted earnings per share basis, 2011 earnings were up by 22% over 2010. The returns on average equity and average assets for 2011 were 10.61% and 1.02%, respectively, compared to 9.09% and 0.82%, respectively, for 2010.

"Washington Trust had a strong fourth quarter performance, contributing to record net income for the fourth quarter and for the year 2011," stated Joseph J. MarcAurele, Washington Trust Chairman, President and CEO. "We surpassed $3 billion in assets for the first time in the Corporation's 211-year history, and saw growth along all business lines. Washington Trust's continued profitability in these challenging times is a testament to our Corporation's solid foundation and reputation."

Selected financial highlights for the fourth quarter included:

• Total loans increased by $59 million, or 3%, during the fourth quarter of 2011, led by growth in the commercial loan portfolio.
• Total deposits increased by $40 million, or 2%, from the end of the third quarter, reflecting growth in lower cost deposits.
• Net interest income for the fourth quarter of 2011 was up by 2% from the previous quarter end and by 9% from the fourth quarter of 2010.
• Due to continued strong mortgage refinancing and sales activity, mortgage banking revenues totaled $2.9 million for the fourth quarter, up from $1.1 million for the third quarter of 2011 and $2.2 million from the fourth quarter of 2010.
• The provision for loan losses was $1.0 million in the fourth quarter of 2011, unchanged from the previous quarter and down by $500 thousand from the fourth quarter of 2010.
• In December 2011, Washington Trust made a contribution of appreciated equity securities to its charitable foundation. The cost of this contribution was $990 thousand and was included in noninterest expenses. This contribution also resulted in a realized gain of $331 thousand on the disposition of the equity security. The combined effect of this transaction was a net after-tax charge to earnings of $305 thousand, or 2 cents per diluted share.
• A modest balance sheet management transaction was conducted in December 2011 that included the sale of $4.0 million in mortgage-backed securities and prepayment of $4.0 million Federal Home Loan Bank of Boston ("FHLBB") advances. The transaction resulted in net realized gains on securities of $142 thousand and $473 thousand of debt prepayment penalty expense. The combined effect of this transaction was a net after-tax charge to earnings of $213 thousand, or 1 cent per diluted share.
• Nonperforming assets amounted to $24.8 million, or 0.81% of total assets, at December 31, 2011, compared to $24.6 million, or 0.83% of total assets, at September 30, 2011.

Net Interest Income

Net interest income of $22.0 million for the fourth quarter of 2011 increased by 2% on a linked quarter basis and by 9% from the fourth quarter a year ago due to the continued reduction in cost of funds, primarily FHLBB advances and time deposits. Net interest margin for the fourth quarter of 2011 was 3.22%, level with the third quarter of 2011 and up from 3.05% for the fourth quarter of 2010.

Noninterest Income

Noninterest income totaled $14.8 million for the fourth quarter of 2011, up by $1.9 million on a linked quarter basis and by $1.4 million from the fourth quarter of 2010, largely due to growth in mortgage banking revenues.

Net gains on loan sales and commissions on loans originated for others increased by $1.9 million and $772 thousand, respectively, compared to the third quarter of 2011 and fourth quarter of 2010. This reflected the high volume of residential mortgage loan refinancing and sales activity during the quarter.

Revenue from wealth management services, our largest source of noninterest income, is largely dependent on the value of wealth management assets under administration and is closely tied to the performance of the financial markets. Wealth management revenues for the fourth quarter of 2011 totaled $6.9 million, up by $134 thousand, or 2%, on a linked quarter basis and by $87 thousand, or 1%, over the fourth quarter of 2010. Wealth management assets under administration totaled $3.9 billion at December 31, 2011, up by $171 million, or 5%, from September 30, 2011.

Noninterest Expenses

Noninterest expenses totaled $24.8 million for the fourth quarter of 2011, up by $2.2 million and $3.0 million, respectively, from the third quarter of 2011 and fourth quarter of 2010. As described previously, during the fourth quarter of 2011, the Corporation made a $990 thousand contribution to its charitable foundation and also incurred a $473 thousand debt prepayment penalty. Fourth quarter 2010 noninterest expense also included a charitable foundation contribution of $350 thousand.

Excluding the impact of the charitable contributions and debt prepayment penalty, the linked quarter and year over year quarter increase in noninterest expenses was primarily due to an increase in salaries and employee benefits,which were up by $1.0 million, or 8%, on a linked quarter basis and $1.8 million, or 15%, compared to the fourth quarter of 2010. This increase reflected higher staffing levels in mortgage banking, other selected staffing additions and higher amounts of commissions paid to mortgage originators.

Income tax expense amounted to $3.3 million for the fourth quarter of 2011, essentially unchanged from the third quarter of 2011 and up from $3.2 million for the fourth quarter in 2010. The effective tax rate was 29.7% for the fourth quarter, compared to 30.5% for the previous quarter and 30.4% for the fourth quarter of 2010. Based on the current status of federal and applicable state income tax statutes, the Corporation currently expects the 2012 effective tax rate to be approximately 31.1%.

Asset Quality

Nonperforming assets (nonaccrual loans, nonaccrual investment securities and property acquired through foreclosure or repossession) remain at a level which we believe to be manageable, amounting to $24.8 million, or 0.81% of total assets, at December 31, 2011, compared to $24.6 million, or 0.83% of total assets, at September 30, 2011 and $23.0 million, or 0.79% of total assets, at December 31, 2010.

At December 31, 2011, total past due loans amounted to $26.3 million, or 1.22% of total loans, up by $4.3 million from the third quarter of 2011, reflecting net increases of $2.7 million in past due commercial loans and $1.6 million in past due residential real estate loans. Included in the change in commercial loans was one loan totaling $1.7 million.

At December 31, 2011, loans classified as troubled debt restructurings totaled $19.6 million, up by $4.1 million from the balance at September 30, 2011, primarily reflecting the restructuring and pay down of an accruing commercial loan relationship from $9.7 million to $4.7 million, secured by real estate and marketable securities.

The loan loss provision charged to earnings amounted to $1.0 million for the fourth quarter of 2011, level with the third quarter of 2011 and down by $500 thousand from the fourth quarter of 2010. Net charge-offs amounted to $839 thousand in the fourth quarter of 2011, compared to net charge-offs of $712 thousand in the third quarter of 2011 and $1.1 million in the fourth quarter of 2010.

Loans

Total loans increased by $59 million, or 3%, in the fourth quarter of 2011 due to strong growth in the commercial portfolio, which increased by $54 million. For the year, total loans were up by $152 million, or 8%, with an increase of $98 million in the commercial loan portfolio and $55 million in the residential real estate portfolio.

Investment Securities

The investment securities portfolio amounted to $593 million at December 31, 2011, up by $12 million from the balance at September 30, 2011 and essentially unchanged from the balance at December 31, 2010.

Deposits and Borrowings

Deposits totaled $2.1 billion at December 31, 2011, up by $40 million, or 2%, from the balance at September 30, 2011. This primarily reflects increases in money market, demand and NOW accounts, offset, in part, by declines in time deposits. Total deposits have increased by $90 million, or 4%, from the balance at December 31, 2010, including a $111 million, or 49%, increase in demand deposits.

FHLBB advances totaled $540 million at December 31, 2011, up by $46 million from September 30, 2011 and $42 million from December 31, 2010.

Capital Management

Capital levels remain above the regulatory minimums to be considered well capitalized, with total risk-based capital ratio of 12.86% at December 31, 2011, compared to 12.79% at December 31, 2010.

Total shareholder's equity amounted to $281 million at December 31, 2011, down by $4 million from September 30, 2011 and up by $12 million from the balance at December 31, 2010. A charge of $7.0 million to the accumulated other comprehensive income component of shareholders' equity was recorded at December 31, 2011, associated with the periodic remeasurement of the value of defined benefit pension liabilities. This charge was largely due to a decline in the discount rates used to measure the present value of pension liabilities as a result of a reduction in market rates of interest.

Expansion Plans

Washington Trust plans to open a new mortgage production office in Warwick, Rhode Island in the first quarter of 2012.

Dividends Declared

The Board of Directors declared a quarterly dividend of 22 cents per share for the quarter ended December 31, 2011. The dividend was paid on January 13, 2012 to shareholders of record on January 3, 2012.

Conference Call

Washington Trust will host a conference call on Thursday, January 26, 2012 at 8:30 a.m. Eastern Time to discuss fourth quarter results. This call is being webcast and can be accessed through the Investor Relations section of the Washington Trust web site, . Individuals may dial in to the call at 1-877-317-6789. The international dial-in number is 1-412-317-6789. A replay of the call will be posted in this same location on the web site shortly after the conclusion of the call. To listen to a replay of the conference call, dial 1-877-344-7529. For international access, dial 1-412-317-0088. The Conference Number for replay is 10008545. The replay will be available until 9:00 a.m. on February 8, 2012.

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 Connecticut. Washington Trust Bancorp, Inc.'s common stock trades on the NASDAQ Global Select Market under the symbol "WASH." Investor information is available on the Corporation's web site: .

Forward-Looking Statements

This press release contains certain statements that are "forward-looking statements". We may also make written or oral forward-looking statements in other documents we file with the SEC, in our annual reports to shareholders, in press releases and other written materials, and in oral statements made by our officers, directors or employees. You can identify forward-looking statements by the use of the words "believe", "expect", "anticipate", "intend", "estimate", "assume", "outlook", "will", "should", and other expressions that predict or indicate future events and trends and which do not relate to historical matters. You should not rely on forward-looking statements, because they involve known and unknown risks, uncertainties and other factors, some of which are beyond the control of Washington Trust. These risks, uncertainties and other factors may cause the actual results, performance or achievements of Washington Trust to be materially different from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements.

Some of the factors that might cause these differences include the following, 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 Washington Trust's competition, changes in legislation or regulation and accounting principles, policies and guidelines such as the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, 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, 2010, as filed with the Securities and Exchange Commission and as updated by our Quarterly Reports on Form 10-Q, 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 Washington Trust assumes no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

Supplemental Information - Explanation of Non-GAAP Financial Measures

In addition to results presented in accordance with generally accepted accounting principles ("GAAP"), this press release contains certain non-GAAP financial measures. Washington Trust's management believes that the supplemental non-GAAP information, which consists of measurements and ratios based on tangible equity and tangible assets, is utilized by regulators and market analysts to evaluate a company's financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.

Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS (unaudited)
(Dollars in thousands, except par value)		Dec 31, 2011				Dec 31, 2010
Assets:
Cash and due from banks		$	82,238			$	85,971
Other short-term investments		4,782				6,765
Mortgage loans held for sale; amortized cost $19,624 in 2011		20,340				13,894
Securities:
Available for sale, at fair value; amortized cost $524,036 in 2011 and $578,897 in 2010		541,253				594,100
Held to maturity, at cost; fair value $52,499 in 2011		52,139				-
Total Securities		593,392				594,100
Federal Home Loan Bank stock, at cost		42,008				42,008
Loans:
Commercial and other		1,124,628				1,027,065
Residential real estate		700,414				645,020
Consumer		322,117				323,553
Total loans		2,147,159				1,995,638
Less allowance for loan losses		29,802				28,583
Net loans		2,117,357				1,967,055
Premises and equipment, net		26,028				26,069
Investment in bank-owned life insurance		53,783				51,844
Goodwill		58,114				58,114
Identifiable intangible assets, net		6,901				7,852
Other assets		59,155				55,853
Total assets		$	3,064,098			$	2,909,525
Liabilities:
Deposits:
Demand deposits		$	339,809			$	228,437
NOW accounts		257,031				241,974
Money market accounts		406,777				396,455
Savings accounts		243,904				220,888
Time deposits		878,794				948,576
Total deposits		2,126,315				2,036,330
Federal Home Loan Bank advances		540,450				498,722
Junior subordinated debentures		32,991				32,991
Other borrowings		19,758				23,359
Other liabilities		63,233				49,259
Total liabilities		2,782,747				2,640,661
Shareholders' Equity:
Common stock of $.0625 par value; authorized 30,000,000 shares; issue 16,292,471 shares in 2011 and 16,171,618 shares in 2010		1,018				1,011
Paid-in capital		88,030				84,889
Retained earnings		194,198				178,939
Accumulated other comprehensive (loss) income		(1,895		)		4,025
Total shareholders' equity		281,351				268,864
Total liabilities and shareholders' equity		$	3,064,098			$	2,909,525

Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars and shares in thousands, except per share amounts)			Three Months								Twelve Months
Periods ended December 31,			2011				2010				2011				2010
Interest income:
Interest and fees on loans			$	25,284			$	24,846			$	99,319			$	98,070
Interest on securities:
Taxable			4,422				4,709				18,704				21,824
Nontaxable			729				769				3,002				3,077
Dividends on corporate stock and Federal Home Loan Bank stock			55				34				252				198
Other interest income			17				26				69				85
Total interest income			30,507				30,384				121,346				123,254
Interest expense:
Deposits			3,652				4,465				15,692				20,312
Federal Home Loan Bank advances			4,202				4,993				18,158				22,786
Junior subordinated debentures			393				428				1,568				1,989
Other interest expense			245				245				973				976
Total interest expense			8,492				10,131				36,391				46,063
Net interest income			22,015				20,253				84,955				77,191
Provision for loan losses			1,000				1,500				4,700				6,000
Net interest income after provision for loan losses			21,015				18,753				80,255				71,191
Noninterest income:
Wealth management services:
Trust and investment advisory fees			5,487				5,448				22,532				20,670
Mutual fund fees			994				1,124				4,287				4,423
Financial planning, commissions and other service fees			444				266				1,487				1,299
Wealth management services			6,925				6,838				28,306				26,392
Service charges on deposit accounts			793				921				3,455				3,587
Merchant processing fees			2,056				2,094				9,905				9,156
Card interchange fees			584				592				2,249				1,975
Income from bank-owned life insurance			493				488				1,939				1,887
Net gains on loan sales and commissions on loans originated for others			2,935				2,163				5,074				4,052
Net realized gains (losses) on securities			501				(8		)		698				729
Net gains (losses) on interest rate swap contracts			12				77				6				(36		)
Equity in gains (losses) of unconsolidated subsidiaries			220				(140		)		(213		)		(337		)
Other income			307				383				1,536				1,485
Noninterest income, excluding other-than-temporary impairment losses			14,826				13,408				52,955				48,890
Total other-than-temporary impairment losses on securities			-				-				(54		)		(245		)
Portion of loss recognized in other comprehensive income (before taxes)			-				-				(137		)		(172		)
Net impairment losses recognized in earnings			-				-				(191		)		(417		)
Total noninterest income			14,826				13,408				52,764				48,473
Noninterest expense:
Salaries and employee benefits			13,957				12,135				51,095				47,429
Net occupancy			1,376				1,188				5,295				4,851
Equipment			1,133				1,051				4,344				4,099
Merchant processing costs			1,765				1,802				8,560				7,822
Outsourced services			920				840				3,530				3,304
FDIC deposit insurance costs			429				724				2,043				3,163
Legal, audit and professional fees			538				449				1,927				1,813
Advertising and promotion			478				383				1,819				1,633
Amortization of intangibles			246				237				951				1,091
Foreclosed property costs			329				515				878				841
Debt prepayment penalties			473				-				694				752
Other expenses			3,130				2,472				9,237				8,513
Total noninterest expense			24,774				21,796				90,373				85,311
Income before income taxes			11,067				10,365				42,646				34,353
Income tax expense			3,290				3,154				12,922				10,302
Net income			$	7,777			$	7,211			$	29,724			$	24,051
Weighted average common shares outstanding - basic			16,288.1				16,160.6				16,254.0				16,113.9
Weighted average common shares outstanding - diluted			16,326.5				16,182.7				16,283.9				16,122.5
Per share information:	Basic earnings per common share		$	0.48			$	0.44			$	1.82			$	1.49
	Diluted earnings per common share		$	0.47			$	0.44			$	1.82			$	1.49
	Cash dividends declared per share		$	0.22			$	0.21			$	0.88			$	0.84

Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
		At or for the Quarters Ended
(Dollars and shares in thousands, except per share amounts)		Dec 31, 2011				Sep 30, 2011				Jun 30, 2011				Mar 31, 2011				Dec 31, 2010
Financial Data:
Total assets		$	3,064,098			$	2,969,613			$	2,936,306			$	2,892,272			$	2,909,525
Total loans		2,147,159				2,087,759				2,057,152				2,029,637				1,995,638
Total securities		593,392				581,543				591,580				576,158				594,100
Total deposits		2,126,315				2,086,150				1,996,043				2,048,846				2,036,330
Total shareholders' equity		281,351				285,494				281,425				273,885				268,864
Net interest income		22,015				21,549				21,064				20,327				20,253
Provision for loan losses		1,000				1,000				1,200				1,500				1,500
Noninterest income, excluding OTTI losses		14,826				13,114				13,285				11,730				13,408
Net OTTI losses recognized in earnings		-				(158		)		-				(33		)		-
Noninterest expenses		24,774				22,595				22,264				20,740				21,796
Income tax expense		3,290				3,328				3,320				2,984				3,154
Net income		7,777				7,582				7,565				6,800				7,211
Share Data:
Basic earnings per common share		$	0.48			$	0.46			$	0.46			$	0.42			$	0.44
Diluted earnings per common share		$	0.47			$	0.46			$	0.46			$	0.42			$	0.44
Dividends declared per share		$	0.22			$	0.22			$	0.22			$	0.22			$	0.21
Book value per share		$	17.27			$	17.54			$	17.30			$	16.87			$	16.63
Tangible book value per share - Non-GAAP (1)		$	13.28			$	13.53			$	13.27			$	12.82			$	12.55
Market value per share		$	23.86			$	19.78			$	22.97			$	23.74			$	21.88
Shares outstanding at end of period		16,292.5				16,279.5				16,266.5				16,233.6				16,171.6
Weighted average common shares outstanding-basic		16,288.1				16,277.8				16,251.6				16,197.2				16,160.6
Weighted average common shares outstanding-diluted		16,326.5				16,293.7				16,284.3				16,229.8				16,182.7
Key Ratios:
Return on average assets		1.04		%		1.03		%		1.04		%		0.94		%		0.99		%
Return on average tangible assets - Non-GAAP (1)		1.07		%		1.06		%		1.07		%		0.96		%		1.01		%
Return on average equity		10.89		%		10.67		%		10.83		%		10.04		%		10.70		%
Return on average tangible equity - Non-GAAP (1)		14.10		%		13.86		%		14.16		%		13.26		%		14.17		%
Capital Ratios:
Tier 1 risk-based capital		11.61% (i)				11.73		%		11.72		%		11.65		%		11.53		%
Total risk-based capital		12.86% (i)				12.99		%		12.98		%		12.92		%		12.79		%
Tier 1 leverage ratio		8.70% (i)				8.69		%		8.61		%		8.49		%		8.25		%
Equity to assets		9.18		%		9.61		%		9.58		%		9.47		%		9.24		%
Tangible equity to tangible assets - Non-GAAP (1)		7.21		%		7.58		%		7.52		%		7.36		%		7.14		%
(i) - estimated
Wealth Management Assets under
Administration:
Balance at beginning of period		$	3,728,837			$	4,148,433			$	4,119,207			$	3,967,207			$	3,744,632
Net investment appreciation (depreciation) & income		215,449				(374,961		)		1,625				145,563				227,168
Net client cash flows		(36,815		)		(44,635		)		27,601				6,437				(4,593		)
Other (2)		(7,410		)		-				-				-				-
Balance at end of period		$	3,900,061			$	3,728,837			$	4,148,433			$	4,119,207			$	3,967,207

(1) See the section labeled "Supplemental Information - Non-GAAP Financial Measures" at the end of this document.
(2) Represents declassifications of largely low-fee paying assets from assets under administration due to a change in the nature of client relationships, regarding the scope and/or frequency of services provided by Washington Trust. The impact of this change on wealth management revenues was minimal.

Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
			Twelve Months Ended
(Dollars and shares in thousands, except per share amounts)			Dec 31, 2011				Dec 31, 2010
Financial Data:
Net interest income			$	84,955			$	77,191
Provision for loan losses			4,700				6,000
Noninterest income, excluding OTTI losses			52,955				48,890
Net OTTI losses recognized in earnings			(191		)		(417		)
Noninterest expenses			90,373				85,311
Income tax expense			12,922				10,302
Net income			29,724				24,051
Share Data:
Basic earnings per common share			$	1.82			$	1.49
Diluted earnings per common share			$	1.82			$	1.49
Dividends declared per share			$	0.88			$	0.84
Weighted average common shares outstanding - basic			16,254.0				16,113.9
Weighted average common shares outstanding - diluted			16,283.9				16,122.5
Key Ratios:
Return on average assets			1.02		%		0.82		%
Return on average tangible assets - Non-GAAP (1)			1.04		%		0.84		%
Return on average equity			10.61		%		9.09		%
Return on average tangible equity - Non-GAAP (1)			13.85		%		12.13		%
Asset Quality Data:
Allowance for Loan Losses:
Balance at beginning of period			$	28,583			$	27,400
Provision charged to earnings			4,700				6,000
Charge-offs			(3,834		)		(5,402		)
Recoveries			353				585
Balance at end of period			$	29,802			$	28,583
Net Loan Charge-Offs:
Commercial:	Mortgages		$	953			$	1,152
	Construction and development		-				-
	Other		1,374				2,787
Residential:	Mortgages		637				413
	Homeowner construction		-				-
Consumer			517				465
Total			$	3,481			$	4,817
Net charge-offs to average loans (annualized)			0.17		%		0.24		%
Wealth Management Assets Under Administration:
Balance at beginning of period			$	3,967,207			$	3,735,646
Net investment (depreciation) appreciation & income			(12,324		)		318,985
Net client cash flows			(47,412		)		18,345
Other (2)			(7,410		)		(105,769		)
Balance at end of period			$	3,900,061			$	3,967,207

(1) See the section labeled "Supplemental Information - Non-GAAP Financial Measures" at the end of this document.
(2) Represents declassifications of largely low-fee paying assets from assets under administration due to a change in the nature of client relationships, regarding the scope and/or frequency of services provided by Washington Trust. The impact of this change on wealth management revenues was minimal.

Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
		For the Quarters Ended
		Dec 31, 2011			Sep 30, 2011			Jun 30, 2011			Mar 31, 2011			Dec 31, 2010
Average Yield / Rate (taxable equivalent basis):
Assets:
Commercial and other loans		5.19	%		5.22	%		5.23	%		5.28	%		5.22	%
Residential real estate loans, including mortgage loans held for sale		4.46	%		4.58	%		4.72	%		4.79	%		4.76	%
Consumer loans		3.87	%		3.90	%		3.91	%		3.93	%		3.96	%
Total loans		4.74	%		4.80	%		4.86	%		4.91	%		4.87	%
Cash, federal funds sold and other short-term investments		0.19	%		0.20	%		0.15	%		0.22	%		0.21	%
FHLBB stock		0.30	%		0.26	%		0.31	%		0.31	%		-	%
Taxable debt securities		3.58	%		3.78	%		4.01	%		3.93	%		3.79	%
Nontaxable debt securities		5.82	%		5.82	%		5.88	%		5.95	%		5.76	%
Corporate stocks		5.89	%		7.58	%		7.50	%		8.07	%		7.42	%
Total securities		3.88	%		4.07	%		4.28	%		4.23	%		4.08	%
Total interest-earning assets		4.44	%		4.53	%		4.61	%		4.61	%		4.54	%
Liabilities:
NOW accounts		0.10	%		0.10	%		0.10	%		0.10	%		0.12	%
Money market accounts		0.24	%		0.25	%		0.25	%		0.33	%		0.34	%
Savings accounts		0.12	%		0.12	%		0.12	%		0.14	%		0.14	%
Time deposits		1.45	%		1.48	%		1.57	%		1.61	%		1.65	%
FHLBB advances		3.44	%		3.49	%		3.80	%		4.04	%		4.13	%
Junior subordinated debentures		4.73	%		4.73	%		4.77	%		4.79	%		5.15	%
Other		4.59	%		4.50	%		4.48	%		4.23	%		4.43	%
Total interest-bearing liabilities		1.45	%		1.53	%		1.61	%		1.67	%		1.70	%
Interest rate spread (taxable equivalent basis)		2.99	%		3.00	%		3.00	%		2.94	%		2.84	%
Net interest margin (taxable equivalent basis)		3.22	%		3.22	%		3.21	%		3.16	%		3.05	%

		At December 31, 2011
		Amortized			Unrealized			Unrealized				Fair
(Dollars in thousands)		Cost (1)			Gains			Losses				Value
Securities Available for Sale:
Obligations of U.S. government-sponsored enterprises		$	29,429		$	3,404		$	-			$	32,833
Mortgage-backed securities issued by U.S. government agencies and U.S. government sponsored enterprises		369,946			19,712			-				389,658
States and political subdivisions		74,040			5,453			-				79,493
Trust preferred securities:
Individual name issuers		30,639			-			(8,243		)		22,396
Collateralized debt obligations		4,256			-			(3,369		)		887
Corporate bonds		13,872			813			(403		)		14,282
Common stocks		-			-			-				-
Perpetual preferred stocks		1,854			-			(150		)		1,704
Total securities available for sale		524,036			29,382			(12,165		)		541,253
Held to Maturity:
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises		52,139			360			-				52,499
Total securities held to maturity		52,139			360			-				52,499
Total securities		$	576,175		$	29,742			($12,165	)		$	593,752

(1) Net of other-than-temporary impairment losses recognized in earnings.

Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
			Period End Balances At
(Dollars in thousands)			Dec 31, 2011				Sep 30, 2011				Jun 30, 2011				Mar 31, 2011				Dec 31, 2010
Loans:
Commercial:	Mortgages		$	624,813			$	573,355			$	562,976			$	551,069			$	518,623
	Construction & development		10,955				18,518				19,448				34,615				47,335
	Other		488,860				478,652				491,071				470,704				461,107
	Total commercial		1,124,628				1,070,525				1,073,495				1,056,388				1,027,065
Residential real estate:	Mortgages		678,582				674,242				644,210				636,916				634,739
	Homeowner construction		21,832				17,226				14,137				12,241				10,281
	Total residential real estate		700,414				691,468				658,347				649,157				645,020
Consumer:	Home equity lines		223,430				222,886				223,284				221,003				218,288
	Home equity loans		43,121				45,354				46,797				48,337				50,624
	Other		55,566				57,526				55,229				54,752				54,641
	Total consumer		322,117				325,766				325,310				324,092				323,553
	Total loans		$	2,147,159			$	2,087,759			$	2,057,152			$	2,029,637			$	1,995,638

		At December 31, 2011
(Dollars in thousands)		Balance				% of Total
Commercial Real Estate Loans by Property Location:
Rhode Island, Connecticut, Massachusetts		$	589,083			92.7	%
New York, New Jersey, Pennsylvania		33,317				5.2	%
New Hampshire		11,668				1.8	%
Other		1,700				0.3	%
Total commercial real estate loans (1)		$	635,768			100.0	%

(1) Commercial real estate loans consist of commercial mortgages and construction and development loans. Commercial mortgages are loans secured by income producing property.

		At December 31, 2011
(Dollars in thousands)		Balance				% of Total
Residential Mortgages by Property Location:
Rhode Island, Connecticut, Massachusetts		$	675,935			96.5	%
New York, Virginia, New Jersey, Maryland, Pennsylvania, District of Columbia		11,499				1.6	%
Ohio		5,665				0.8	%
California, Washington, Oregon		1,881				0.3	%
Colorado, New Mexico		1,079				0.2	%
Georgia		1,118				0.2	%
New Hampshire		2,767				0.4	%
Wyoming		470				-	%
Total residential mortgages		$	700,414			100.0	%

		Period End Balances At
(Dollars in thousands)		Dec 31, 2011				Sep 30, 2011				Jun 30, 2011				Mar 31, 2011				Dec 31, 2010
Deposits:
Demand deposits		$	339,809			$	319,203			$	261,016			$	274,798			$	228,437
NOW accounts		257,031				242,372				236,162				228,502				241,974
Money market accounts		406,777				374,324				355,096				387,923				396,455
Savings accounts		243,904				239,356				227,014				223,599				220,888
Time deposits		878,794				910,895				916,755				934,024				948,576
Total deposits		$	2,126,315			$	2,086,150			$	1,996,043			$	2,048,846			$	2,036,330
Out-of-market brokered certificates of deposits included in time deposits		$	90,073			$	85,250			$	85,659			$	51,778			$	52,347
In-market deposits, excluding out of market brokered certificates of deposit		$	2,036,242			$	2,000,900			$	1,910,384			$	1,997,068			$	1,983,983

Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
		Period End Balances At
(Dollars in thousands)		Dec 31, 2011				Sep 30, 2011				Jun 30, 2011				Mar 31, 2011				Dec 31, 2010
Asset Quality Data:
Nonperforming Assets:
Commercial mortgages		$	5,709			$	6,367			$	7,476			$	6,068			$	6,624
Commercial construction and development		-				-				-				-				-
Other commercial		3,708				2,745				3,152				4,445				5,259
Residential real estate mortgages		10,614				11,352				9,570				8,265				6,414
Consumer		1,206				1,126				780				601				213
Total nonaccrual loans		$	21,237			$	21,590			$	20,978			$	19,379			$	18,510
Nonaccrual investment securities		887				796				934				752				806
Property acquired through foreclosure or repossession		2,647				2,201				2,189				2,163				3,644
Total nonperforming assets		$	24,771			$	24,587			$	24,101			$	22,294			$	22,960
Total past due loans to total loans		1.22		%		1.05		%		1.19		%		1.34		%		1.27		%
Nonperforming assets to total assets		0.81		%		0.83		%		0.82		%		0.77		%		0.79		%
Nonaccrual loans to total loans		0.99		%		1.03		%		1.02		%		0.95		%		0.93		%
Allowance for loan losses to nonaccrual loans		140.33		%		137.29		%		139.92		%		150.21		%		154.42		%
Allowance for loan losses to total loans		1.39		%		1.42		%		1.43		%		1.43		%		1.43		%
Troubled Debt Restructured Loans:
Accruing troubled debt restructured loans
Commercial mortgages		$	6,389			$	5,861			$	6,552			$	10,071			$	11,736
Other commercial		6,625				4,059				4,026				4,554				4,594
Residential real estate mortgages		1,481				1,158				2,279				2,724				2,863
Consumer		171				174				317				417				509
Accruing troubled debt restructured loans		14,666				11,252				13,174				17,766				19,702
Nonaccrual troubled debt restructured loans
Commercial mortgages		91				1,209				2,555				826				1,302
Other commercial		2,154				292				455				526				431
Residential real estate mortgages		2,615				2,686				2,303				1,785				948
Consumer		106				129				131				199				41
Nonaccrual troubled debt restructured loans		4,966				4,316				5,444				3,336				2,722
Total troubled debt restructured loans		$	19,632			$	15,568			$	18,618			$	21,102			$	22,424

Washington Trust Bancorp, Inc. and Subsidiaries
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
		Period End Balances At
(Dollars in thousands)		Dec 31, 2011				Sep 30, 2011				Jun 30, 2011				Mar 31, 2011				Dec 31, 2010
Past Due Loans:
Loans 30-59 Days Past Due
Commercial mortgages		$	1,621			$	874			$	1,507			$	3,223			$	2,185
Other commercial loans		3,760				1,629				1,783				2,474				1,862
Residential real estate mortgages		3,969				2,145				3,355				2,986				3,073
Consumer loans		1,073				1,100				1,979				1,735				2,005
Loans 30-59 days past due		$	10,423			$	5,748			$	8,624			$	10,418			$	9,125
Loans 60-89 Days Past Due
Commercial mortgages		$	315			$	328			$	1,013			$	1,626			$	514
Other commercial loans		982				103				80				315				953
Residential real estate mortgages		1,505				206				992				1,345				1,477
Consumer loans		263				420				120				335				448
Loans 60-89 days past due		$	3,065			$	1,057			$	2,205			$	3,621			$	3,392
Loans 90 Days or more Past Due
Commercial mortgages		$	4,995			$	5,510			$	5,553			$	5,242			$	5,322
Other commercial loans		633				1,209				1,378				2,524				3,376
Residential real estate mortgages		6,283				7,826				6,549				5,165				4,041
Consumer loans		874				649				245				317				11
Loans 90 days or more past due		$	12,785			$	15,194			$	13,725			$	13,248			$	12,750
Total Past Due Loans
Commercial mortgages		$	6,931			$	6,712			$	8,073			$	10,091			$	8,021
Other commercial loans		5,375				2,941				3,241				5,313				6,191
Residential real estate mortgages		11,757				10,177				10,896				9,496				8,591
Consumer loans		2,210				2,169				2,344				2,387				2,464
Total past due loans		$	26,273			$	21,999			$	24,554			$	27,287			$	25,267
Nonaccrual loans included in past due loans		$	17,588			$	16,585			$	16,705			$	16,456			$	14,894

		For the Quarters Ended
(Dollars in thousands)		Dec 31, 2011				Sep 30, 2011				Jun 30, 2011				Mar 31, 2011				Dec 31, 2010
Allowance for Loan Losses:
Balance at beginning of period		$	29,641			$	29,353			$	29,109			$	28,583			$	28,165
Provision charged to earnings		1,000				1,000				1,200				1,500				1,500
Charge-offs		(920		)		(818		)		(1,044		)		(1,052		)		(1,396		)
Recoveries		81				106				88				78				314
Balance at end of period		$	29,802			$	29,641			$	29,353			$	29,109			$	28,583
Net Loan Charge-Offs (Recoveries):
Commercial mortgages		$	249			$	249			$	122			$	333			$	226
Other commercial		39				286				541				508				695
Residential real estate mortgages		273				100				146				118				(99		)
Consumer		278				77				147				15				260
Total		$	839			$	712			$	956			$	974			$	1,082

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 adjusted for applicable state income taxes, net of the related federal tax benefit. 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 December 31,		2011											2010
		Average								Yield/			Average								Yield/
(Dollars in thousands)		Balance				Interest				Rate			Balance				Interest				Rate
Assets:
Commercial and other loans		$	1,082,834			$	14,159			5.19	%		$	1,044,263			$	13,741			5.22	%
Residential real estate loans, including mortgage loans held for sale		717,250				8,065				4.46	%		661,108				7,936				4.76	%
Consumer loans		323,339				3,155				3.87	%		324,703				3,239				3.96	%
Total loans		2,123,423				25,379				4.74	%		2,030,074				24,916				4.87	%
Cash, federal funds sold and other short-term investments		35,429				17				0.19	%		49,381				26				0.21	%
FHLBB stock		42,008				32				0.30	%		42,008				-				-	%
Taxable debt securities		490,589				4,422				3.58	%		492,684				4,709				3.79	%
Nontaxable debt securities		75,352				1,105				5.82	%		79,457				1,154				5.76	%
Corporate stocks		2,291				34				5.89	%		2,512				47				7.42	%
Total securities		568,232				5,561				3.88	%		574,653				5,910				4.08	%
Total interest-earning assets		2,769,092				30,989				4.44	%		2,696,116				30,852				4.54	%
Non interest-earning assets		214,556											216,654
Total assets		$	2,983,648										$	2,912,770
Liabilities and Shareholders' Equity:
NOW accounts		$	243,241			$	63			0.10	%		$	245,857			$	74			0.12	%
Money market accounts		402,652				245				0.24	%		414,425				357				0.34	%
Savings accounts		239,110				70				0.12	%		211,513				72				0.14	%
Time deposits		897,535				3,274				1.45	%		951,545				3,962				1.65	%
FHLBB advances		484,537				4,202				3.44	%		479,703				4,993				4.13	%
Junior subordinated debentures		32,991				393				4.73	%		32,991				428				5.15	%
Other		21,194				245				4.59	%		21,965				245				4.43	%
Total interest-bearing liabilities		2,321,260				8,492				1.45	%		2,357,999				10,131				1.70	%
Demand deposits		330,027											239,100
Other liabilities		46,654											46,101
Shareholders' equity		285,707											269,570
Total liabilities and shareholders' equity		$	2,983,648										$	2,912,770
Net interest income (FTE)						$	22,497										$	20,721
Interest rate spread										2.99	%										2.84	%
Net interest margin										3.22	%										3.05	%

Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:
(Dollars in thousands)
Three months ended December 31,		2011				2010
Commercial and other loans		$	95			$	70
Nontaxable debt securities		376				385
Corporate stocks		11				13
Total		$	482			$	468

Washington Trust Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCE SHEETS (unaudited)
Years ended December 31,		2011											2010
		Average								Yield/			Average								Yield/
(Dollars in thousands)		Balance				Interest				Rate			Balance				Interest				Rate
Assets:
Commercial and other loans		$	1,063,322			$	55,592			5.23	%		$	1,019,304			$	53,628			5.26	%
Residential real estate loans, including mortgage loans held for sale		678,697				31,447				4.63	%		634,735				31,609				4.98	%
Consumer loans		324,002				12,649				3.90	%		327,770				13,062				3.99	%
Total loans		2,066,021				99,688				4.83	%		1,981,809				98,299				4.96	%
Cash, federal funds sold and other short-term investments		35,625				69				0.19	%		41,407				85				0.21	%
FHLBB stock		42,008				124				0.30	%		42,008				-				-	%
Taxable debt securities		489,210				18,704				3.82	%		553,531				21,824				3.94	%
Nontaxable debt securities		77,634				4,555				5.87	%		79,491				4,618				5.81	%
Corporate stocks		2,456				177				7.21	%		3,595				274				7.62	%
Total securities		569,300				23,436				4.12	%		636,617				26,716				4.20	%
Total interest-earning assets		2,712,954				123,317				4.55	%		2,701,841				125,100				4.63	%
Non interest-earning assets		214,214											213,644
Total assets		$	2,927,168										$	2,915,485
Liabilities and Shareholders' Equity:
NOW accounts		$	232,545			$	242			0.10	%		$	220,875			$	268			0.12	%
Money market accounts		392,002				1,051				0.27	%		403,489				1,918				0.48	%
Savings accounts		229,180				286				0.12	%		205,767				318				0.15	%
Time deposits		925,064				14,113				1.53	%		955,222				17,808				1.86	%
FHLBB advances		492,714				18,158				3.69	%		547,974				22,786				4.16	%
Junior subordinated debentures		32,991				1,568				4.75	%		32,991				1,989				6.03	%
Other		21,891				973				4.44	%		21,321				976				4.58	%
Total interest-bearing liabilities		2,326,387				36,391				1.56	%		2,387,639				46,063				1.93	%
Demand deposits		278,120											221,350
Other liabilities		42,554											41,804
Shareholders' equity		280,107											264,692
Total liabilities and shareholders' equity		$	2,927,168										$	2,915,485
Net interest income (FTE)						$	86,926										$	79,037
Interest rate spread										2.99	%										2.70	%
Net interest margin										3.20	%										2.93	%

Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:
(Dollars in thousands)
Years ended December 31,		2011				2010
Commercial and other loans		$	369			$	229
Nontaxable debt securities		1,553				1,541
Corporate stocks		49				76
Total		$	1,971			$	1,846

Washington Trust Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION - Non-GAAP Financial Measures (unaudited)
		At or for the Quarters Ended
(Dollars in thousands, except per share amounts)		Dec 31, 2011				Sep 30, 2011				Jun 30, 2011				Mar 31, 2011				Dec 31, 2010
Calculation of Tangible Book Value per Share:
Total shareholders' equity at end of period		$	281,351			$	285,494			$	281,425			$	273,885			$	268,864
Less:
Goodwill		58,114				58,114				58,114				58,114				58,114
Identifiable intangible assets, net		6,901				7,147				7,377				7,614				7,852
Total tangible shareholders' equity at end of period		$	216,336			$	220,233			$	215,934			$	208,157			$	202,898
Shares outstanding at end of period		16,292.5				16,279.5				16,266.5				16,233.6				16,171.6
Book value per share - GAAP		$	17.27			$	17.54			$	17.30			$	16.87			$	16.63
Tangible book value per share - Non-GAAP		$	13.28			$	13.53			$	13.27			$	12.82			$	12.55
Calculation of Tangible Equity to Tangible Assets:
Total tangible shareholders' equity at end of period		$	216,336			$	220,233			$	215,934			$	208,157			$	202,898
Total assets at end of period		$	3,064,098			$	2,969,613			$	2,936,306			$	2,892,272			$	2,909,525
Less:
Goodwill		58,114				58,114				58,114				58,114				58,114
Identifiable intangible assets, net		6,901				7,147				7,377				7,614				7,852
Total tangible assets at end of period		$	2,999,083			$	2,904,352			$	2,870,815			$	2,826,544			$	2,843,559
Equity to assets - GAAP		9.18		%		9.61		%		9.58		%		9.47		%		9.24		%
Tangible equity to tangible assets - Non-GAAP		7.21		%		7.58		%		7.52		%		7.36		%		7.14		%
Calculation of Return on Average Tangible Assets:
Net income		$	7,777			$	7,582			$	7,564			$	6,800			$	7,211
Total average assets		$	2,983,648			$	2,935,146			$	2,904,086			$	2,884,618			$	2,912,770
Less:
Average goodwill		58,114				58,114				58,114				58,114				58,114
Average identifiable intangible assets, net		7,025				7,257				7,493				7,730				7,967
Total average tangible assets		$	2,918,509			$	2,869,775			$	2,838,479			$	2,818,774			$	2,846,689
Return on average assets - GAAP		1.04		%		1.03		%		1.04		%		0.94		%		0.99		%
Return on average tangible assets - Non-GAAP		1.07		%		1.06		%		1.07		%		0.96		%		1.01		%
Calculation of Return on Average Tangible Equity:
Net income		$	7,777			$	7,582			$	7,564			$	6,800			$	7,211
Total average shareholders' equity		$	285,707			$	284,244			$	279,281			$	270,991			$	269,570
Less:
Average goodwill		58,114				58,114				58,114				58,114				58,114
Average identifiable intangible assets, net		7,025				7,257				7,493				7,730				7,967
Total average tangible shareholders' equity		$	220,568			$	218,873			$	213,674			$	205,147			$	203,489
Return on average shareholders' equity - GAAP		10.89		%		10.67		%		10.83		%		10.04		%		10.70		%
Return on average tangible shareholders' equity - Non-GAAP		14.10		%		13.86		%		14.16		%		13.26		%		14.17		%

Washington Trust Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION - Non-GAAP Financial Measures (unaudited)
		Years Ended
(Dollars in thousands)		Dec 31, 2011				Dec 31, 2010
Calculation of return on average tangible assets:
Net income		$	29,724			$	24,051
Total average assets		$	2,927,168			$	2,915,485
Less:
Average goodwill		58,114				58,114
Average identifiable intangible assets, net		7,374				8,368
Total average tangible assets		$	2,861,680			$	2,849,003
Return on average assets - GAAP		1.02		%		0.82		%
Return on average tangible assets - Non-GAAP		1.04		%		0.84		%
Calculation of return on average tangible equity:
Net income		$	29,724			$	24,051
Total average shareholders' equity		$	280,107			$	264,692
Less:
Average goodwill		58,114				58,114
Average identifiable intangible assets, net		7,374				8,368
Total average tangible shareholders' equity		$	214,619			$	198,210
Return on average shareholders' equity - GAAP		10.61		%		9.09		%
Return on average tangible shareholders' equity - Non-GAAP		13.85		%		12.13		%

Washington Trust Bancorp, Inc.
Elizabeth B. Eckel, 401-348-1309
Senior Vice President, Marketing
[e-mail]

Source: Washington Trust Bancorp, Inc.