23 Broad Street
Westerly, RI 02891
www.washtrust.com
A
Winning
Team
Washington
Trust
Bancorp,
Inc.
2003
Annual
Report
Corporate Profile
Washington Trust Bancorp, Inc. (Washington Trust or the Bancorp) is the
publicly-owned holding company of The Washington Trust Company (the
Bank), a Rhode Island-chartered bank founded in 1800. The Bank offers a
broad range of services, including trust and investment management,
through its branch offices in Rhode Island and southeastern Connecticut.
Unless the context otherwise requires, the word “Corporation” herein
refers to the Bancorp and the Bank.
At December 31, 2003, the Bank had 449 employees. The Bank has
adopted an Affirmative Action Plan and is an Equal Opportunity Employer.
The Bank is also a member of the FDIC and an Equal Housing Lender.
Stock Transfer and Dividend
Disbursing Agent
Mellon Investor Services (Mellon), our stock transfer and dividend
disbursing agent, is responsible for our shareholder records, issuance of
stock certificates, distribution of dividend checks, and IRS Form 1099.
Mellon is also responsible for the Corporation’s Dividend Reinvestment
(DRIP) and Stock Purchase Plan, which enables shareholders to reinvest
their quarterly dividends in Washington Trust shares. Plan members may
also make optional cash purchases of common stock up to $10,000 per
quarter.
For information, contact Mellon on the toll-free Shareholder Information
Line, (800) 852-0354, via the secure Mellon Investor Direct website,
https://vault.melloninvestor.com/isd, or by writing to: Mellon Investor
Direct Services Corporate Office, 85 Challenger Road, Ridgefield Park, NJ
07660.
Market and Dividend Information
Washington Trust’s common stock trades on the Nasdaq
National Market tier of the Nasdaq Stock Market® under the
symbol WASH. As of December 31, 2003, there were 2,212
shareholders of record.
2003 Quarters
Stock prices:
High
Low
Close
Dividend declared
2002 Quarters
Stock prices:
High
Low
Close
Dividend declared
1
2
3
4
$20.61
19.36
20.21
.15
$24.17
19.80
23.02
.15
$28.49
22.60
24.01
.16
$29.42
23.94
26.20
.16
1
2
3
4
$19.72
18.00
19.42
.14
$24.11
19.05
23.69
.14
$23.83
19.12
19.74
.14
$21.20
19.10
19.53
.14
This report contains certain statements that may be considered “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Corporation’s actual results, performance or
achievements could differ materially from those projected in the forward-looking statements as a
result, among other factors, of changes in general national or regional economic conditions, changes
in interest rates, reductions in the market value of trust and investment assets under management,
reductions in loan demand, reductions in deposit levels necessitating increased borrowing to fund
loans and investments, changes in loan default and charge-off rates, changes in the size and nature of
the Corporation’s competition, changes in legislation or regulation and accounting principles, policies
and guidelines and changes in the assumptions used in making such forward-looking statements.
Contents
2003 Financial Highlights................inside cover
Corporate Highlights.......................inside cover
Letter to Shareholders ......................................1
The Year In Highlights ......................................2
Consolidated Balance Sheets..........................16
Consolidated Statements of Income ..............17
Consolidated Statements of Changes
in Shareholders’ Equity ...................................18
Independent Auditors’ Report .......................19
Management’s Responsibility for
Financial Statements .......................................19
Corporate Directory ........................................20
Washington Trust
Locations .................................inside back cover
On the cover (L-R): Peter J. Miniati, Trust & Investment Services;
Cathleen A. Studley, Retail Banking; Gina R. Mead, Mortgage
Origination; Patricia M. Hartford, Business Services; Scott D. Lajoie,
Commercial Lending; and Holly M. Knott, Merchant Services, were
all recognized in 2003 as star performers in their respective areas.
Annual Meeting of Shareholders:
Tuesday, April 27, 2004, 11:00 a.m.,
Westerly Public Library, 44 Broad Street,
Westerly, Rhode Island 02891
Vote Your Proxy Online
For your convenience, you can vote your shares
online. Have your proxy card ready and go to
the website http://www.eproxy.com/wash. You
will be prompted to enter your control number
located on your card. Then, follow the instructions
to create and submit an electronic ballot.
Investor Information
Copies of our most recent annual and quarterly
reports and a copy of our 2003 Annual Report on
Form 10-K are available at no charge by contacting
Elizabeth B. Eckel, Senior Vice President, Marketing,
at 401-348-1309 or 1-800-475-2265. You may write to
Ms. Eckel at the Washington Trust Corporate Office,
23 Broad Street, Westerly, RI 02891. The annual
report is also available on our website,
www.washtrust.com.
Auditors: KPMG LLP, Providence, Rhode Island
Counsel: Goodwin Procter LLP, Boston, Massachusetts
Washington Trust Bancorp, Inc. 2003 Annual Report
23 Broad Street
Westerly, RI 02891
www.washtrust.com
A
Winning
Team
Washington
Trust
Bancorp,
Inc.
2003
Annual
Report
Corporate Profile
Washington Trust Bancorp, Inc. (Washington Trust or the Bancorp) is the
publicly-owned holding company of The Washington Trust Company (the
Bank), a Rhode Island-chartered bank founded in 1800. The Bank offers a
broad range of services, including trust and investment management,
through its branch offices in Rhode Island and southeastern Connecticut.
Unless the context otherwise requires, the word “Corporation” herein
refers to the Bancorp and the Bank.
At December 31, 2003, the Bank had 449 employees. The Bank has
adopted an Affirmative Action Plan and is an Equal Opportunity Employer.
The Bank is also a member of the FDIC and an Equal Housing Lender.
Stock Transfer and Dividend
Disbursing Agent
Mellon Investor Services (Mellon), our stock transfer and dividend
disbursing agent, is responsible for our shareholder records, issuance of
stock certificates, distribution of dividend checks, and IRS Form 1099.
Mellon is also responsible for the Corporation’s Dividend Reinvestment
(DRIP) and Stock Purchase Plan, which enables shareholders to reinvest
their quarterly dividends in Washington Trust shares. Plan members may
also make optional cash purchases of common stock up to $10,000 per
quarter.
For information, contact Mellon on the toll-free Shareholder Information
Line, (800) 852-0354, via the secure Mellon Investor Direct website,
https://vault.melloninvestor.com/isd, or by writing to: Mellon Investor
Direct Services Corporate Office, 85 Challenger Road, Ridgefield Park, NJ
07660.
Market and Dividend Information
Washington Trust’s common stock trades on the Nasdaq
National Market tier of the Nasdaq Stock Market® under the
symbol WASH. As of December 31, 2003, there were 2,212
shareholders of record.
2003 Quarters
Stock prices:
High
Low
Close
Dividend declared
2002 Quarters
Stock prices:
High
Low
Close
Dividend declared
1
2
3
4
$20.61
19.36
20.21
.15
$24.17
19.80
23.02
.15
$28.49
22.60
24.01
.16
$29.42
23.94
26.20
.16
1
2
3
4
$19.72
18.00
19.42
.14
$24.11
19.05
23.69
.14
$23.83
19.12
19.74
.14
$21.20
19.10
19.53
.14
This report contains certain statements that may be considered “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Corporation’s actual results, performance or
achievements could differ materially from those projected in the forward-looking statements as a
result, among other factors, of changes in general national or regional economic conditions, changes
in interest rates, reductions in the market value of trust and investment assets under management,
reductions in loan demand, reductions in deposit levels necessitating increased borrowing to fund
loans and investments, changes in loan default and charge-off rates, changes in the size and nature of
the Corporation’s competition, changes in legislation or regulation and accounting principles, policies
and guidelines and changes in the assumptions used in making such forward-looking statements.
Contents
2003 Financial Highlights................inside cover
Corporate Highlights.......................inside cover
Letter to Shareholders ......................................1
The Year In Highlights ......................................2
Consolidated Balance Sheets..........................16
Consolidated Statements of Income ..............17
Consolidated Statements of Changes
in Shareholders’ Equity ...................................18
Independent Auditors’ Report .......................19
Management’s Responsibility for
Financial Statements .......................................19
Corporate Directory ........................................20
Washington Trust
Locations .................................inside back cover
On the cover (L-R): Peter J. Miniati, Trust & Investment Services;
Cathleen A. Studley, Retail Banking; Gina R. Mead, Mortgage
Origination; Patricia M. Hartford, Business Services; Scott D. Lajoie,
Commercial Lending; and Holly M. Knott, Merchant Services, were
all recognized in 2003 as star performers in their respective areas.
Annual Meeting of Shareholders:
Tuesday, April 27, 2004, 11:00 a.m.,
Westerly Public Library, 44 Broad Street,
Westerly, Rhode Island 02891
Vote Your Proxy Online
For your convenience, you can vote your shares
online. Have your proxy card ready and go to
the website http://www.eproxy.com/wash. You
will be prompted to enter your control number
located on your card. Then, follow the instructions
to create and submit an electronic ballot.
Investor Information
Copies of our most recent annual and quarterly
reports and a copy of our 2003 Annual Report on
Form 10-K are available at no charge by contacting
Elizabeth B. Eckel, Senior Vice President, Marketing,
at 401-348-1309 or 1-800-475-2265. You may write to
Ms. Eckel at the Washington Trust Corporate Office,
23 Broad Street, Westerly, RI 02891. The annual
report is also available on our website,
www.washtrust.com.
Auditors: KPMG LLP, Providence, Rhode Island
Counsel: Goodwin Procter LLP, Boston, Massachusetts
Washington Trust Bancorp, Inc. 2003 Annual Report
Financial Highlights
(Dollars in millions, except per share amounts)
Results as of or for the years ended December 31,
Financial Results
Net interest income
Provision for loan losses
Net realized gains on securities
Noninterest income, excluding securities gains
Noninterest expense
Net income
Per Share Information
Diluted earnings per share
Cash dividends declared
Book value
Tangible book value
Closing stock price
Financial Condition
Securities
Loans:
Commercial
Residential real estate
Consumer
Total loans
Allowance for loan losses
Total assets
Deposits
Federal Home Loan Bank advances
Shareholders’ equity
Ratios (%)
Return on average assets
Return on average equity
Net interest margin (taxable equivalent basis)
Nonperforming assets to total assets
Nonaccrual loans to total loans
Allowance for loan losses to total loans
Earnings and Ratios Excluding Special Items
(Non-GAAP Financial Information)
Net income
Diluted earnings per share
Return on average assets (%)
Return on average equity (%)
2003
2002
2001
2000
1999
$
$
48.8
.5
.6
26.1
47.6
18.9
1.41
.62
10.46
8.60
26.20
$
$
44.3
.4
.7
22.6
43.0
16.8
1.30
.56
9.87
7.93
19.53
$
$
39.4
.6
.3
21.1
41.7
13.1
1.07
.52
8.15
8.10
19.00
$
$
37.9
1.2
.8
19.0
37.5
13.2
1.09
.48
7.43
7.36
14.00
$
$
35.6
1.8
.7
18.1
35.3
12.5
1.03
.44
6.55
6.48
17.75
$ 839.4
$ 795.8
$ 629.1
$ 511.5
$ 446.8
408.5
389.9
162.6
961.0
15.9
1,973.8
1,206.1
607.1
138.1
1.03
14.15
2.89
.14
.29
1.66
382.1
280.9
132.1
795.1
15.5
1,745.7
1,110.5
480.1
128.7
1.07
14.25
3.10
.24
.53
1.95
260.6
235.4
109.6
605.6
13.6
1,362.2
816.9
431.5
97.9
1.01
13.86
3.30
.28
.63
2.24
239.8
251.0
106.4
597.2
13.1
1,218.1
735.7
377.4
89.2
1.14
16.14
3.55
.28
.58
2.20
232.4
225.7
90.9
549.0
12.3
1,105.6
660.8
352.5
78.2
1.19
15.73
3.71
.35
.69
2.25
$
$
19.6
1.46
1.06
14.64
$
$
17.2
1.33
1.09
14.60
$
$
15.6
1.28
1.20
16.54
$
$
13.9
1.15
1.20
16.98
$
$
12.8
1.06
1.21
16.04
2003
2002
2001
2000
1999
Rhode Island Offices
$
18.9
$
16.8
$
13.1
$
13.2
$
12.5
Washington Trust Locations
(Dollars in millions, except per share amounts)
Results as of or for the years ended December 31,
Reconciliation Table –
Non-GAAP Financial Information
Net income, including special items
Add back (deduct) special items, net of tax:
Debt prepayment penalties
Acquisition related
Litigation settlement, net of insurance recovery
Net gain on sale of credit card portfolio
Net income, excluding special items
Diluted earnings per share
Effect of special items, net of tax
Diluted earnings per share, excluding special items
Ratios (%)
Return on average assets
Effect of special items, net of tax
Return on average assets, excluding special items
$
$
$
.7
–
–
–
19.6
1.41
.05
1.46
1.03
.03
1.06
$
$
$
–
.4
–
–
17.2
1.30
.03
1.33
1.07
.02
1.09
$
$
$
–
–
2.5
–
15.6
1.07
.21
1.28
1.01
.19
1.20
$
$
$
–
.7
–
–
13.9
1.09
.06
1.15
1.14
.06
1.20
$
$
$
–
.6
–
(.3)
12.8
1.03
.03
1.06
1.19
.02
1.21
15.73
.31
16.04
Return on average equity
Effect of special items, net of tax
Return on average equity, excluding special items
14.15
.49
14.64
14.25
.35
14.60
13.86
2.68
16.54
16.14
.84
16.98
Non-GAAP Financial Information Disclosure:
This annual report contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States
of America (“GAAP”). The Corporation’s management uses these non-GAAP measures in its analysis of the Corporation’s performance. These measures typically adjust
GAAP performance measures to exclude the effects of charges and expenses related to the consummation of acquisitions and costs related to the integration of merged
entities. These non-GAAP measures also may exclude other significant gains or losses that are unusual in nature. Because these items and their impact on the
Corporation’s performance are difficult to predict, management believes that presentations of financial measures excluding the impact of these items provide useful
supplemental information that is essential to a proper understanding of the operating results of the Corporation’s core businesses. These disclosures should not be
viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be
presented by other corporations. A quantitative reconciliation of the differences between the non-GAAP financial information discussed herein and the most directly
comparable financial information calculated and presented in accordance with GAAP is presented above.
Total Assets
Total Loans
Nonperforming Assets
to Total Assets
Diluted Earnings Per Share
Cash Dividends Declared
Washington Trust Bancorp, Inc. 2003 Annual Report
Account
Information Center
To speak with a customer service
representative, call 401-348-1200
or toll-free 1-800-475-2265.
In Connecticut, call 860-443-1508.
Online Banking
Bank and pay bills via the Internet
24 hours a day, 7 days a week at
www.washtrust.com.
XPress Banking
Automated banking by phone
24 hours a day, 7 days a week
at 401-348-1399 or toll-free
1-800-226-5877.
Website
Current company and shareholder
information available at
www.washtrust.com.
PROVIDENCE
Providence Office
180 Washington Street
Providence, RI 02903
401-421-3600
Providence Trust and
Investment Services Office
66 South Main Street
Providence, RI 02903
401-861-8440
Phoenix Investment
Management
68 South Main Street
Providence, RI 02903
401-331-6650
CRANSTON
Cranston Office
645 Reservoir Avenue
Cranston, RI 02910
401-946-1004
WARWICK
Warwick Office
236 Centerville Road
Warwick, RI 02886
401-739-2353
Connecticut Offices
MYSTIC
Mystic Office
Olde Mistick Village
Mystic, CT 06355
860-536-1200
A&P Super Foodmart
179 Stonington Road
Mystic, CT 06355
860-572-7100
McQuade’s Marketplace
14 Clara Drive
Mystic, CT 06355
860-572-2058
WESTERLY
Main Office
23 Broad Street
Westerly, RI 02891
401-348-1200
Franklin Street Office
126 Franklin Street
Westerly, RI 02891
401-348-1367
McQuade’s Marketplace
106 Main Street
Westerly, RI 02891
401-348-1201
RICHMOND
Richmond Office
1200 Main Street
Wyoming, RI 02898
401-539-2427
BLOCK ISLAND
Block Island Office
Ocean Avenue
Block Island, RI 02807
401-466-7710
CHARLESTOWN
Charlestown Office
4137 Old Post Road
Charlestown, RI 02813
401-364-4000
NARRAGANSETT
Sweet Meadows Office
20 Point Judith Road
Narragansett, RI 02882
401-782-1000
Bonnet Shores Office
885 Boston Neck Road
Narragansett, RI 02882
401-782-4800
SOUTH KINGSTOWN
Wakefield Office
730 Kingstown Road
Wakefield, RI 02879
401-782-4200
NORTH KINGSTOWN
North Kingstown Office
7625 Post Road
North Kingstown, RI 02852
401-295-4700
$0$200$400$600$800$1,000$549.0$597.2$961.0$795.11999 2000 2001 2002 2003In Millions$605.6$0$200$400$600$800$1,000$549.0$597.2$961.0$795.11999 2000 2001 2002 2003In Millions$605.6$0$200$400$600$800$1,000$549.0$597.2$961.0$795.11999 2000 2001 2002 2003In Millions$605.6$0$200$400$600$800$1,000$549.0$597.2$961.0$795.11999 2000 2001 2002 2003In Millions$605.6$0$200$400$600$800$1,000$549.0$597.2$961.0$795.11999 2000 2001 2002 2003In Millions$605.6 Financial Highlights
(Dollars in millions, except per share amounts)
Results as of or for the years ended December 31,
Financial Results
Net interest income
Provision for loan losses
Net realized gains on securities
Noninterest income, excluding securities gains
Noninterest expense
Net income
Per Share Information
Diluted earnings per share
Cash dividends declared
Book value
Tangible book value
Closing stock price
Financial Condition
Securities
Loans:
Commercial
Residential real estate
Consumer
Total loans
Allowance for loan losses
Total assets
Deposits
Federal Home Loan Bank advances
Shareholders’ equity
Ratios (%)
Return on average assets
Return on average equity
Net interest margin (taxable equivalent basis)
Nonperforming assets to total assets
Nonaccrual loans to total loans
Allowance for loan losses to total loans
Earnings and Ratios Excluding Special Items
(Non-GAAP Financial Information)
Net income
Diluted earnings per share
Return on average assets (%)
Return on average equity (%)
2003
2002
2001
2000
1999
$
$
48.8
.5
.6
26.1
47.6
18.9
1.41
.62
10.46
8.60
26.20
$
$
44.3
.4
.7
22.6
43.0
16.8
1.30
.56
9.87
7.93
19.53
$
$
39.4
.6
.3
21.1
41.7
13.1
1.07
.52
8.15
8.10
19.00
$
$
37.9
1.2
.8
19.0
37.5
13.2
1.09
.48
7.43
7.36
14.00
$
$
35.6
1.8
.7
18.1
35.3
12.5
1.03
.44
6.55
6.48
17.75
$ 839.4
$ 795.8
$ 629.1
$ 511.5
$ 446.8
408.5
389.9
162.6
961.0
15.9
1,973.8
1,206.1
607.1
138.1
1.03
14.15
2.89
.14
.29
1.66
382.1
280.9
132.1
795.1
15.5
1,745.7
1,110.5
480.1
128.7
1.07
14.25
3.10
.24
.53
1.95
260.6
235.4
109.6
605.6
13.6
1,362.2
816.9
431.5
97.9
1.01
13.86
3.30
.28
.63
2.24
239.8
251.0
106.4
597.2
13.1
1,218.1
735.7
377.4
89.2
1.14
16.14
3.55
.28
.58
2.20
232.4
225.7
90.9
549.0
12.3
1,105.6
660.8
352.5
78.2
1.19
15.73
3.71
.35
.69
2.25
$
$
19.6
1.46
1.06
14.64
$
$
17.2
1.33
1.09
14.60
$
$
15.6
1.28
1.20
16.54
$
$
13.9
1.15
1.20
16.98
$
$
12.8
1.06
1.21
16.04
2003
2002
2001
2000
1999
Rhode Island Offices
$
18.9
$
16.8
$
13.1
$
13.2
$
12.5
Washington Trust Locations
(Dollars in millions, except per share amounts)
Results as of or for the years ended December 31,
Reconciliation Table –
Non-GAAP Financial Information
Net income, including special items
Add back (deduct) special items, net of tax:
Debt prepayment penalties
Acquisition related
Litigation settlement, net of insurance recovery
Net gain on sale of credit card portfolio
Net income, excluding special items
Diluted earnings per share
Effect of special items, net of tax
Diluted earnings per share, excluding special items
Ratios (%)
Return on average assets
Effect of special items, net of tax
Return on average assets, excluding special items
$
$
$
.7
–
–
–
19.6
1.41
.05
1.46
1.03
.03
1.06
$
$
$
–
.4
–
–
17.2
1.30
.03
1.33
1.07
.02
1.09
$
$
$
–
–
2.5
–
15.6
1.07
.21
1.28
1.01
.19
1.20
$
$
$
–
.7
–
–
13.9
1.09
.06
1.15
1.14
.06
1.20
$
$
$
–
.6
–
(.3)
12.8
1.03
.03
1.06
1.19
.02
1.21
15.73
.31
16.04
Return on average equity
Effect of special items, net of tax
Return on average equity, excluding special items
14.15
.49
14.64
14.25
.35
14.60
13.86
2.68
16.54
16.14
.84
16.98
Non-GAAP Financial Information Disclosure:
This annual report contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States
of America (“GAAP”). The Corporation’s management uses these non-GAAP measures in its analysis of the Corporation’s performance. These measures typically adjust
GAAP performance measures to exclude the effects of charges and expenses related to the consummation of acquisitions and costs related to the integration of merged
entities. These non-GAAP measures also may exclude other significant gains or losses that are unusual in nature. Because these items and their impact on the
Corporation’s performance are difficult to predict, management believes that presentations of financial measures excluding the impact of these items provide useful
supplemental information that is essential to a proper understanding of the operating results of the Corporation’s core businesses. These disclosures should not be
viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be
presented by other corporations. A quantitative reconciliation of the differences between the non-GAAP financial information discussed herein and the most directly
comparable financial information calculated and presented in accordance with GAAP is presented above.
Total Assets
Total Loans
Nonperforming Assets
to Total Assets
Diluted Earnings Per Share
Cash Dividends Declared
Washington Trust Bancorp, Inc. 2003 Annual Report
Account
Information Center
To speak with a customer service
representative, call 401-348-1200
or toll-free 1-800-475-2265.
In Connecticut, call 860-443-1508.
Online Banking
Bank and pay bills via the Internet
24 hours a day, 7 days a week at
www.washtrust.com.
XPress Banking
Automated banking by phone
24 hours a day, 7 days a week
at 401-348-1399 or toll-free
1-800-226-5877.
Website
Current company and shareholder
information available at
www.washtrust.com.
PROVIDENCE
Providence Office
180 Washington Street
Providence, RI 02903
401-421-3600
Providence Trust and
Investment Services Office
66 South Main Street
Providence, RI 02903
401-861-8440
Phoenix Investment
Management
68 South Main Street
Providence, RI 02903
401-331-6650
CRANSTON
Cranston Office
645 Reservoir Avenue
Cranston, RI 02910
401-946-1004
WARWICK
Warwick Office
236 Centerville Road
Warwick, RI 02886
401-739-2353
Connecticut Offices
MYSTIC
Mystic Office
Olde Mistick Village
Mystic, CT 06355
860-536-1200
A&P Super Foodmart
179 Stonington Road
Mystic, CT 06355
860-572-7100
McQuade’s Marketplace
14 Clara Drive
Mystic, CT 06355
860-572-2058
WESTERLY
Main Office
23 Broad Street
Westerly, RI 02891
401-348-1200
Franklin Street Office
126 Franklin Street
Westerly, RI 02891
401-348-1367
McQuade’s Marketplace
106 Main Street
Westerly, RI 02891
401-348-1201
RICHMOND
Richmond Office
1200 Main Street
Wyoming, RI 02898
401-539-2427
BLOCK ISLAND
Block Island Office
Ocean Avenue
Block Island, RI 02807
401-466-7710
CHARLESTOWN
Charlestown Office
4137 Old Post Road
Charlestown, RI 02813
401-364-4000
NARRAGANSETT
Sweet Meadows Office
20 Point Judith Road
Narragansett, RI 02882
401-782-1000
Bonnet Shores Office
885 Boston Neck Road
Narragansett, RI 02882
401-782-4800
SOUTH KINGSTOWN
Wakefield Office
730 Kingstown Road
Wakefield, RI 02879
401-782-4200
NORTH KINGSTOWN
North Kingstown Office
7625 Post Road
North Kingstown, RI 02852
401-295-4700
$0$200$400$600$800$1,000$549.0$597.2$961.0$795.11999 2000 2001 2002 2003In Millions$605.6$0$200$400$600$800$1,000$549.0$597.2$961.0$795.11999 2000 2001 2002 2003In Millions$605.6$0$200$400$600$800$1,000$549.0$597.2$961.0$795.11999 2000 2001 2002 2003In Millions$605.6$0$200$400$600$800$1,000$549.0$597.2$961.0$795.11999 2000 2001 2002 2003In Millions$605.6$0$200$400$600$800$1,000$549.0$597.2$961.0$795.11999 2000 2001 2002 2003In Millions$605.6 Letter to Shareholders
Dear Shareholders,
The theme of this year’s Annual Report is teamwork and never
has this concept been more important than in 2003. Faced with
a volatile economy, record low interest rates, and aggressive
competition, your Corporation performed exceptionally well,
with net income of $18.9 million, up 13% for the year. We
posted solid returns for our shareholders and saw the market
value of our common stock increase 34% in 2003, closing at
$26.20 at December 31st. During the year we declared cash
dividends totaling 62 cents per share, including two separate
increases in the quarterly dividend rate. This marked our
eleventh consecutive year of dividend increases.
In early 2003, interest rates reached their lowest levels in some
45 years, fueling a refinancing boom your Corporation had not
seen in our 203-year history. Our entire mortgage team, from
the front lines to the back offices, worked tirelessly to process a
record number of applications and ensure fast closings for our
customers. The result was that mortgage activity reached an
all-time high with residential mortgage closings totaling a
record $308 million.
At the same time, total consumer loans were up 23% for the
year, led primarily by increases in home equity lines of credit.
Aggressive marketing, employee cross-selling and competitive
pricing have helped this portfolio grow significantly over the past
three to four years. We expect growth to remain strong in 2004.
Our commercial lending team made great progress in 2003.
Our marketing campaign encouraged businesses to “put us on
their list,” and many did just that, as we financed new SBA
loans, commercial real estate deals, and million dollar credits.
We remain committed to maintaining excellent asset quality
and were successful in doing so in a very challenging
economic environment.
Our trust and investment management area performed well
in 2003. This service continues to provide a key source of
noninterest income for the Corporation, with revenues totaling
$10.8 million for the year 2003. Our business development
team successfully attracted an excellent base of new clients.
Assets under management increased by 14% for the year, to
$1.74 billion. We are encouraged by signs of a strong stock
market and by the fact that clients are recognizing the quality
of our asset management expertise.
In 2003, Washington Trust was honored with several prestigious
awards, including the “Greatest Place to Work Award”, the
“Outstanding Philanthropic Corporation” Award, and the
Encore Award for Support of the Arts. These and many of the
other awards received this year are special to us and reflect
our success in being a good corporate citizen, employer and
neighbor.
Over the past year, there has been much media and regulatory
spotlight on corporate governance issues. You can be assured
that we take corporate governance seriously and that your
board and management operate under the highest possible
level of integrity.
In October, we welcomed two new directors, Barry G. Hittner,
Of Counsel with Cameron & Mittleman, LLP, and Kathleen
McKeough, Senior Vice President, Human Resources for GTECH
Holdings Corporation. Barry and Kathy bring a wealth of
talent and professional experience to our board and we are
pleased to have them on our team. They fill positions left by
the April 2003 retirements of Alcino G. Almeida and
Richard A. Grills. We are grateful for the contributions
Al and Richard made to our board and welcome them to
our Directors’ Advisory Council.
Looking forward in 2004, we are excited about the challenges
ahead for your Corporation. We are encouraged by signs
of improvement in the economy and recoveries in the stock
market. We are well positioned to take advantage of any
opportunities presented by the recently announced Fleet/Bank
of America merger and other recent industry consolidations in
our region. And, as always, we remain committed to our vision
to be “The Best Community Bank and Trust Company in New
England.”
Sincerely,
John C. Warren
Chairman and Chief Executive Officer
John F. Treanor
President and Chief Operating Officer
1
Longtime client Michael Integlia & Company came to W
to build The Gardens Office Park, a pair of state-of-the-art
“Wherever we are, we
want to be viewed as the best –
the best employees, the best
customer experience.”
– John C. Warren,
Chairman and CEO
Washington Trust 2003:
The Year in Highlights
By all marks, 2003 was a terrific year for
Washington Trust: outstanding earnings,
record mortgage production, and successful
business development growth were all critical
to its achievements. Yet, one of the key
factors in the Bank’s success is something that
cannot be measured and does not appear in
its financial statements: the Washington Trust
2
Washington Trust Bancorp, Inc. 2003 Annual Report
o Washington Trust in 2003 for $7 million in long-term financing
office buildings located in West Warwick, R.I.
Greater
Providence
Team
L-R: Joseph A. Carnevale, Commercial Lending; Geoffrey J. Wagner, Commercial Lending; James J. Vetelino, Merchant Services; Peter J.
Miniati, Trust & Investment Services; Russell W. Hahn, Commercial Lending; Frank B. Geary, Commercial Lending; Paula Fahlman, Business
Services; Scott D. Lajoie, Commercial Lending; Harvey C. Perry, II, Office for Non-Profit Resources; Robert D. McCormick, Commercial Lending.
spirit of teamwork. As John F. Treanor,
diligently to supply them with superior tools
President and Chief Operating Officer, says,
and resources so they could provide the very
“There’s a real ‘esprit de corps’ here – people
best customer experience.
working together.”
Perhaps more than anything else, it was a
bank-wide commitment to teamwork that
defined Washington Trust in 2003.
Throughout the year, front-line employees
and the sales staff focused on cross-training,
cross-selling, and providing excellent customer
service. Meanwhile, their colleagues behind
the scenes, from marketing to operations,
human resources to technology, worked
“The Power of Teamwork”
To help business development efforts, the
Bank developed cross-functional sales teams
to cover each of its market areas in Rhode
Island and southeastern Connecticut. These
teams, comprised of experienced professionals
from business banking, retail banking and
trust and investment services, called on
existing clients and prospects. As a result of
Peter Delis received
an SBA loan from
Washington Trust in
2003 to open his new
restaurant, Toti’s Pizza
Palace in Seekonk,
Mass., a busy suburb
of Providence, R.I.
3
Opened in May 2003, the Warwick branch is strategically
market. By year-end, the branch had surpassed projections for deposits, mor
“Washington Trust offers
a sincere approach
to service.”
– Daniel J. Dubeau,
Vice President and Market Manager
their efforts, new business was generated
and existing relationships were retained and
expanded. The team approach enabled
members to achieve, and in many cases
surpass, their sales goals, while providing
an even higher level of customer service
for the Bank’s clients.
“By formalizing the team selling concept,
we were able to give our customers and
prospects better access to all of Washington
Trust’s products and services,” says B. Michael
Rauh, Senior Vice President of Corporate
4
Washington Trust Bancorp, Inc. 2003 Annual Report
located between the greater Providence, R.I. market and the Bank’s traditional South County, R.I.
for deposits, mortgages and consumer loans.
L-R: Dickson G. Boenning, Trust & Investment Services; Cathleen A. Studley, Retail Banking; Stephen E. Russell, Commercial Lending;
Daniel J. Dubeau, Retail Banking; Gina R. Mead, Mortgage Origination; Patricia M. Hartford, Business Services; Norman D. Meyers,
Merchant Services; Vincent F. Moretti, Retail Banking.
Sales, Planning and Delivery. “Our teams were
a fifth retail banking officer was promoted
trained to recognize clients’ needs and to
to the position of Sales Manager. She is
bring in the right expert on the team to help.
responsible for coordinating the branch
Our customers really appreciate this approach.”
training, product knowledge, cross-sales and
referral programs, as well as overseeing the
To better support the focus on sales and
“mystery shopper” program that ensures
customer service, four key officers on the retail
that customers consistently receive the level
banking team were elevated to the positions
of superior customer service that is
of Market Area Manager, covering the Bank’s
Washington Trust’s hallmark.
geographic regions in Rhode Island and
southeastern Connecticut. These individuals
“Nailing Down the Best Rates”
are responsible for overseeing sales and
customer service for the branches located
in their respective regions. In addition,
Not since the Eisenhower Administration
had mortgage rates dipped as low as they
West Bay
Team
B&S Machine Services,
Inc., a supplier of
replacement parts
for metal cutting
machinery, received
an SBA loan from
Washington Trust
to help fund a
management buyout.
5
Cathy Buchanan and Jason Dittleman, owners of Crestar Mfg. The Frame Factory
have been Washington Trust business banking customers since star
“Each of our customers
knows that we have
a whole team of professionals
backing us up.”
– Cynthia Valenti Smith,
Vice President, Mortgage Origination
did in 2003. Thanks to these favorable
market conditions and a strong team of
lending professionals, Washington Trust more
than doubled its projected mortgage volume
for the year.
“The mortgage market, especially refinancing,
was ‘red hot’ in 2003,” says Stephen M.
Bessette, Senior Vice President, Retail Lending.
To ensure swift and accurate service, the
mortgage group relied on strong teamwork
within the department, plus some extra help
from other areas of the Bank. “To help us get
6
Washington Trust Bancorp, Inc. 2003 Annual Report
Mfg. The Frame Factory, winners of the Décor Top 100 Award for Retail Excellence,
since starting their business in 1998.
Narragansett
Bay Team
L-R: Charles P. Roberts, Trust & Investment Services; Catherine Fusco, Commercial Lending; Laureen E. Dufficy, Retail Banking;
Joseph E. LaPlume, Commercial Lending; John Mitchell, Jr., Mortgage Origination; Holly M. Knott, Merchant Services; Lori Fuka,
Trust & Investment Services; John W. Kennedy, Commercial Lending.
through the busiest parts of our season, some
“Put Us On The List”
of our part-timers volunteered to temporarily
switch to full-time schedules. And, we were
able to ‘borrow’ employees from some of the
other departments to help out,” Bessette
adds. “Everyone really pitched in to make
certain that we provided the best possible
customer experience.”
Consumer Lending also outpaced expectations
for the year, led by strong home equity financing.
Aggressive marketing and smart product
design helped generate a steady demand for
the products throughout the year.
In 2003, the Commercial Lending area
benefited from the support of a multi-media
marketing campaign entitled “For Business
Banking, Put Us On The List.” The campaign
highlighted the Bank’s key business products,
including multi-million dollar commercial loans
and commercial real estate loans, international
banking and cash management services.
"Washington Trust has always had an
outstanding reputation as a top commercial
lender," says Elizabeth B. Eckel, Senior Vice
President of Marketing. "This campaign
Ryan’s Market has
served the people of
Wickford, R.I. for
more than 120 years
and established a
relationship with
Washington Trust in
1997, using products
ranging from deposit
accounts to leasing.
7
The owners of The Chanler at Cliffwalk came to W
used to transform the historic mansion into an elegant
“Great service means
that the customer
leaves happier than they were
when they came in.”
– Mike Urgo,
Branch Manager, Westerly McQuade’s
communicated our capabilities to business
owners, as well as accountants, attorneys
and others who advise clients on business
banking matters."
The Commercial Lending area had a solid
year in 2003, originating a record number of
quality credits. “We really made our mark
as a statewide commercial lender,” says
James M. Vesey, Senior Vice President,
Commercial Lending. “The marketing campaign
generated awareness and energized our sales
teams. We received positive feedback from
8
Washington Trust Bancorp, Inc. 2003 Annual Report
Washington Trust in 2003 for a commercial real estate loan, which was
oceanfront hotel and restaurant.
Greater
Westerly
Team
L-R: Christopher J. Sheehan, Retail Banking; Rogean B. Makowski, Trust & Investment Services; David C. Kmetz, Commercial Lending;
Nina L. Luchka, Merchant Services; John J. Breen, Mortgage Origination; Sharon L. Snyder, Trust & Investment Services; Louis J. Luzzi,
Commercial Lending.
new and existing clients.” The Commercial
Working in tandem with their counterparts
Lending area also benefited from referrals
in Commercial Lending and branch
generated through the new cross-functional
management, Washington Trust’s Business
teams. Says Vesey, “I can’t say enough about
Services professionals helped to bring in new
the team sales calling approach – it was very
clients and service the cash management
positive for us.”
needs of existing ones. By meeting with
clients one-on-one at their place of business,
In 2003, the Bank formed a very successful
they were able to assess their needs and
Commercial Real Estate Group. This arm of
make recommendations that were best suited
the Commercial Lending area helps the Bank
to each. From business deposits and overnight
expand its reach by bringing multi-million-dollar
sweep investments to business online banking,
loan products to new clients located farther
they made sure that customers received the
into New England.
right products and services.
Since 1943 the
Gencarelli family,
owners of Westerly,
RI-based Ginger’s Oil,
has relied on
Washington Trust for
services such as
personal and business
deposits, trust planning
and business financing.
9
The Thanksgiving Day football game between Westerly High School and Stonington High School is the oldest high school football rivalr
the nation. Annually, Washington Trust presents a Team Leadership A
“We have a commitment
from the top down to do
whatever it takes to make sure
our products are superior to
anyone else’s.”
– David C. Kmetz,
Vice President, Commercial Lending
Also during the year, the Bank increased its
sales and service outreach to municipal and
state governments. To help grow this area,
the product line for municipal services was
enhanced and experienced sales staff was
added to the Washington Trust team.
“Running With the Bulls”
Trust and investment assets under administra-
tion grew to $1.7 billion in 2003, benefiting
from successful business development efforts
throughout the year, and improvements in the
equity markets late in the year. Clients seeking
10
Washington Trust Bancorp, Inc. 2003 Annual Report
High School and Stonington High School is the oldest high school football rivalry in
Leadership Award to one player on each team.
Easter n
Connecticut
and Block
Island
Team
Joe and Nancy Rustici,
owners of Elmridge
Golf Course in
Pawcatuck, Conn.,
came to Washington
Trust in 2003 to
refinance their
36-hole course.
L-R: Julia Anne M. Slom, Commercial Real Estate Group; Paul D. Nunes, Trust & Investment Services; Cynthia Valenti Smith, Mortgage
Origination; Joseph M. Confessore, Commercial Lending; Joseph J. Iacoi, Business Services; Amy U. Arruda, Retail Banking.
personal attention and disciplined management
associates to us, because they are confident
style turned to Washington Trust for consistent,
that we always put their needs first.”
reliable performance. In order to accommodate
for this growth, the Bank dedicated a variety
Phoenix Managing Director Marie J. Langlois
of new resources to the trust and asset
adds, “Our investment professionals have
management areas, including the addition
extensive experience in high net worth
of a number of skilled professionals.
portfolio management, investment research,
and investment policy and strategy formation.
Phoenix Investment Management added a
The team’s investment performance puts us in
substantial number of new clients in 2003.
the top quartile of money managers for the
Managing Director Gerald J. Fogarty says,
previous three-, five-, and ten-year periods.”
“Our customers were pleased with our ability
That level of expertise shows, as Phoenix
to preserve their wealth during the bear
ended the year with substantial growth in
market years and referred their friends and
assets under management.
11
Washington Trust Senior Vice President and Chief Investment Of
“Morning Business Report with Frank Coletta,” a popular business news segment on Pr
“Great service means
giving a little more
than the client expects.”
– Peter Miniati,
Vice President and Trust Officer
In 2003, the Trust and Investment Services area
developed a line of credit tied to investment
assets for high net worth clients, a market
that Washington Trust has identified as a key
growth area. To better serve this market, a
private banking service will be introduced
in 2004.
“Trust and Investment Services has been
providing our clients with highly personal
service for more than 100 years,” says
Rogean B. Makowski, Senior Vice President
and Trust Officer. “Our 2004 initiative will
create a more comprehensive private banking
12
Washington Trust Bancorp, Inc. 2003 Annual Report
Investment Officer Mary M. McGoldrick regularly presents her economic outlook on the
r business news segment on Providence TV station NBC 10 WJAR.
Phoenix
Investment
Management
Team
L-R: Carl Y. Chern, Deborah L. Picozzi, Joanne M. Mollica, Linda A. Kelly, Gerald J. Fogarty, Jr.,
Gary J. Friedmann, Marie J. Langlois, Barbara S. Williams.
service with dedicated bankers providing all
Adding a new dimension to the Bank’s
facets of their personal, business and trust
community service programming in 2003 was
service needs. This strategy will help us grow
the formation of the Office for Non-Profit
this important niche market.”
Resources, which provides non-profit organi-
zations with assistance in finding resources
“People Matter”
for professional services. “The health and
Washington Trust is committed to serving
people: customers, employees, shareholders,
and neighbors. This philosophy means
providing the best products and services to
customers and the highest value to
shareholders, while ensuring that the needs
of employees and the local communities
are being met as well.
well-being of our cities and towns rests, in
part, on the vitality of our local non-profit
organizations,” says Harvey C. Perry, II, Senior
Vice President and Director, Office for
Non-Profit Resources. “This new initiative
strengthens our long-standing reputation for
helping the non-profit community.”
Children's Friend and
Service of Rhode Island
serves the state's most
vulnerable children by
providing a variety of
services. They trust
their endowments to
the professionals of
Phoenix Investment
Management.
13
Dan Dubeau, Vice President and Branch Manager of the Bank’
helps fourth graders at Robertson Elementary in Warwick, R.I., lear
“The thing that makes
us different is the way we deliver
our products to the customer…
and that’s all about people.”
– John F. Treanor,
President and COO
Community volunteerism is a tradition at
Washington Trust, and in 2003, the teamwork
ethic that helped the Bank succeed in business
carried over into the community service realm
as well. Throughout the year, hundreds of
Washington Trust employees banded together
to raise tens of thousands of dollars for the
American Cancer Society and the American
Heart Association, to collect thousands of
dollars to benefit the victims and families of
the Station Fire Relief Fund, and to contribute
countless jars of peanut butter, Thanksgiving
14
Washington Trust Bancorp, Inc. 2003 Annual Report
of the Bank’s Warwick Office,
R.I., learn the importance of saving money.
Mortgage
Team
One of the many
awards won by the
Bank in 2003 was the
Greatest Place to Work
Award, presented by
the Providence Business
News. The judges cited
the Bank’s “high
morale, strong ethics,
and fun work
environment” as their
reasons for choosing
Washington Trust.
Employees in the Bank’s consumer credit, loan operations underwriting and secondary market departments
helped the mortgage department originate and close a record number of loans in 2003.
food items and toys to help local families
“At the very heart of Washington Trust’s
in need.
corporate philosophy is our strong belief that
people matter,” says John C. Warren, Chairman
Also during the year, teams of Washington
and CEO. “We are committed to this belief
Trust bankers went “back to school” to teach
because we know that when our employees
hundreds of elementary school children about
are happy, they make our customers and our
the importance of saving money, and show
neighbors in the community happy. When we
hundreds more high school students how to
take care of our employees, customers and
use credit wisely. These programs, developed
neighbors, Washington Trust succeeds. And when
by the American Banker’s Association, allowed
Washington Trust succeeds, our shareholders are
employees to use their knowledge to educate
the ultimate benefactors of our success.”
local children and helped the Bank fulfill its
pledge to actively participate in the “America’s
Promise” initiative.
15
Financial Statements
Washington Trust Bancorp, Inc. and Subsidiary
Consolidated Balance Sheets
December 31,
(Dollars in thousands)
Assets:
Cash and due from banks
Federal funds sold and other short-term investments
Mortgage loans held for sale
Securities:
Available for sale, at fair value; amortized cost $663,529 in 2003
and $539,109 in 2002
Held to maturity, at cost; fair value $169,401 in 2003 and $250,446 in 2002
Total securities
Federal Home Loan Bank stock, at cost
Loans
Less allowance for loan losses
Net loans
Premises and equipment, net
Accrued interest receivable
Goodwill
Identifiable intangible assets
Other assets
Total assets
Liabilities:
Deposits:
Demand
Savings
Time
Total deposits
Dividends payable
Federal Home Loan Bank advances
Other borrowings
Accrued expenses and other liabilities
Total liabilities
Commitments and contingencies
2003
2002
$ 40,710
20,400
2,486
$ 39,298
11,750
4,566
673,845
165,576
839,421
31,464
960,981
15,914
945,067
24,941
7,911
22,591
1,953
36,863
553,556
242,277
795,833
24,582
795,126
15,487
779,639
24,415
7,773
22,588
2,672
32,545
$1,973,807
$1,745,661
$194,144
493,878
518,119
1,206,141
2,113
607,104
2,311
18,083
$157,539
471,354
481,600
1,110,493
1,825
480,080
9,183
15,359
1,835,752
1,616,940
Shareholders’ Equity:
Common stock of $.0625 par value; authorized 30 million shares in 2003
and 2002; issued 13,204,024 shares in 2003 and 13,086,795 in 2002
Paid-in capital
Retained earnings
Unamortized employee restricted stock
Accumulated other comprehensive income
Treasury stock, at cost; 9,463 shares in 2003 and 44,361 shares in 2002
Total shareholders’ equity
Total liabilities and shareholders’ equity
825
29,868
101,492
(22)
6,101
(209)
138,055
$1,973,807
818
28,767
90,717
(24)
9,294
(851)
128,721
$1,745,661
Refer to Washington Trust Bancorp, Inc.’s 2003 Annual Report on Form 10-K for a complete set of consolidated financial statements.
16
Washington Trust Bancorp, Inc. 2003 Annual Report
Washington Trust Bancorp, Inc. and Subsidiary
Consolidated Statements of Income
Years ended December 31,
(Dollars in thousands, except per share amounts)
2003
2002
2001
Interest income:
Interest and fees on loans
Interest on securities
Dividends on corporate stock and Federal Home Loan Bank stock
Interest on federal funds sold and other short-term investments
Total interest income
Interest expense:
Savings deposits
Time deposits
Federal Home Loan Bank advances
Other
Total interest expense
Net interest income
Provision for loan losses
Net interest income after provision for loan losses
Noninterest income:
Trust and investment management fees
Service charges on deposit accounts
Net gains on loan sales
Merchant processing fees
Income from bank-owned life insurance
Net realized gains on securities
Other income
Total noninterest income
Noninterest expense:
Salaries and employee benefits
Net occupancy
Equipment
Merchant processing costs
Legal, audit and professional fees
Advertising and promotion
Outsourced services
Debt prepayment penalties
Amortization of intangibles
Acquisition related expenses
Litigation settlement cost, net of recovery
Other
Total noninterest expense
Income before income taxes
Income tax expense
Net income
Weighted average shares outstanding – basic
Weighted average shares outstanding – diluted
Per share information:
Basic earnings per share
Diluted earnings per share
Cash dividends declared per share
$51,603
32,430
2,081
131
86,245
$49,576
35,571
1,973
219
87,339
$50,618
33,988
2,327
594
87,527
3,221
15,333
18,819
73
37,446
48,799
460
48,339
10,769
4,920
4,690
3,410
1,161
630
1,155
26,735
26,945
2,979
3,380
2,716
1,242
1,440
1,333
941
719
–
–
5,937
47,632
27,442
8,519
5,598
16,776
20,596
87
43,057
44,282
400
43,882
10,171
3,787
2,884
3,002
1,155
678
1,581
23,258
23,793
2,694
3,333
2,391
1,893
1,180
1,077
–
651
605
–
5,373
42,990
24,150
7,393
5,127
18,866
24,068
99
48,160
39,367
550
38,817
10,408
3,514
2,058
2,642
1,134
348
1,381
21,485
20,845
2,632
3,375
2,124
1,336
1,237
975
–
129
–
3,625
5,375
41,653
18,649
5,541
$18,923
13,114.1
13,393.6
$1.44
$1.41
$.62
$16,757
12,737.3
12,932.4
$1.32
$1.30
$.56
$13,108
12,039.2
12,202.5
$1.09
$1.07
$.52
Refer to Washington Trust Bancorp, Inc.’s 2003 Annual Report on Form 10-K for a complete set of consolidated financial statements.
17
Financial Statements
Washington Trust Bancorp, Inc. and Subsidiary
Consolidated Statements of Changes in Shareholders’ Equity
(Dollars in thousands)
Common
Stock
Paid-in
Capital
Retained
Earnings
Unamortized
Employee
Restricted
Stock
Accumulated
Other
Comprehensive
Income
Treasury
Stock
Total
Balance at January 1, 2001
Net income
Cumulative effect of change in
accounting principle, net of tax
Unrealized gains on securities,
net of $1,499 income tax expense
Reclassification adjustments, net of tax
Comprehensive income
Cash dividends declared
Shares issued
Shares repurchased
Balance at December 31, 2001
$750
$10,144
$74,265
13,108
$ –
$4,027
$ –
(391)
3,000
(220)
4
552
(6,259)
$754
$10,696
$81,114
$ –
$6,416
17
(1,060)
$(1,043)
Net income
Unrealized gains on securities,
net of $1,629 income tax expense
Reclassification adjustments, net of tax
Comprehensive income
Cash dividends declared
Amortization of employee restricted stock,
16,757
(7,154)
3,310
(432)
net of shares issued
Shares issued
Shares issued for acquisition
Shares repurchased
Balance at December 31, 2002
1
(185)
18,255
64
(24)
$818
$28,767
$90,717
$(24)
$9,294
Net income
Unrealized losses on securities,
net of $1,002 income tax benefit
Reclassification adjustments, net of tax
Minimum pension liability adjustment,
net of $153 income tax benefit
Comprehensive income
Cash dividends declared
Amortization of employee restricted stock,
18,923
(8,148)
(2,499)
(410)
(284)
net of shares issued
Shares issued
Shares repurchased
Balance at December 31, 2003
29
1,072
7
2
$825 $29,868 $101,492
$(22)
$6,101
31
1,930
(209)
$(209) $138,055
851
(209)
Disclosure of Reclassification Amount:
Years ended December 31,
Reclassification adjustment for net gains included in net income
Income tax effect on net gains
Reclassification adjustment for amortization of unrealized loss
on interest rate floor contract included in net income
Income tax effect on interest rate floor contract amortization
Net reclassification adjustments
2003
2002
2001
$(630)
220
–
–
$(410)
$(678)
237
13
(4)
$(432)
$(348)
122
10
(4)
$(220)
Refer to Washington Trust Bancorp, Inc.’s 2003 Annual Report on Form 10-K for a complete set of consolidated financial statements.
18
Washington Trust Bancorp, Inc. 2003 Annual Report
$89,186
13,108
(391)
3,000
(220)
15,497
(6,259)
573
(1,060)
$97,937
16,757
3,310
(432)
19,635
(7,154)
24
704
(536)
$(851)
1
519
18,319
(536)
$128,721
18,923
(2,499)
(410)
(284)
15,730
(8,148)
Independent Auditors’ Report
We have audited, in accordance with auditing standards generally accepted in the United States of America, the
consolidated balance sheets of Washington Trust Bancorp, Inc. and subsidiary as of December 31, 2003 and 2002 and
the related consolidated statements of income, changes in shareholders’ equity and cash flows for each of the years in
the three-year period ended December 31, 2003 (not presented herein); and in our report dated February 27, 2004,
we expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying condensed consolidated financial statements is fairly
stated, in all material respects, in relation to the consolidated financial statements from which it has been derived.
Providence, Rhode Island
February 27, 2004
Management’s Responsibility for Financial Statements
Scope of Responsibility – Management prepares the accompanying consolidated financial statements and related
information and is responsible for their integrity and objectivity. The consolidated financial statements were prepared
in conformity with accounting principles generally accepted in the United States of America. These consolidated
financial statements include amounts that are based on management’s estimates and judgments. We believe that these
consolidated financial statements present fairly the Corporation’s financial position and results of operations and that
the other information contained in the annual report is consistent with the consolidated financial statements.
Internal Controls – We maintain and rely on systems of internal accounting controls designed to provide reasonable
assurance that assets are safeguarded and transactions are properly authorized and recorded. We continually monitor
these internal accounting controls, modifying and improving them as business conditions and operations change.
Our internal audit department also independently reviews and evaluates these controls. We recognize the inherent
limitations in all internal control systems and believe that our systems provide an appropriate balance between the
costs and benefits desired. We believe our systems of internal accounting controls provide reasonable assurance that
errors or irregularities that would be material to the consolidated financial statements are prevented or detected in the
normal course of business.
Independent Auditors – Our independent auditors, KPMG LLP, have audited the consolidated financial statements.
Their audit was conducted in accordance with auditing standards generally accepted in the United States of America,
which includes the consideration of our internal controls to the extent necessary to form an independent opinion on
the consolidated financial statements prepared by management.
Audit Committee – The audit committee of the board of directors, composed solely of independent outside directors,
assists the board of directors in overseeing management’s discharge of its financial reporting responsibilities. The
committee meets with management, our director of internal audit and representatives of KPMG LLP to discuss significant
changes to financial reporting principles and policies and internal controls and procedures proposed or contemplated by
management, our internal auditors or KPMG LLP. Additionally, the committee is responsible for the selection, evaluation
and, if applicable, replacement of our independent auditors; and the evaluation of the independence of the independent
auditors. Both internal audit and KPMG LLP have access to the audit committee without management’s presence.
Code of Ethics – We recognize our responsibility for maintaining a strong ethical climate. This responsibility is addressed
in the Corporation’s written code of ethics.
John C. Warren
Chairman and Chief Executive Officer
David V. Devault
Executive Vice President, Treasurer and Chief Financial Officer
19
Corporate Directory
Washington Trust Bancorp, Inc.
Board of Directors
The Washington Trust Company
Executive Officers
Gary P. Bennett, Retired Chairman and Chief Executive
Officer, Analysis and Technology, Inc.
Steven J. Crandall, Vice President, Ashaway Line &
Twine Mfg. Co.
John C. Warren, Chairman and Chief Executive Officer
John F. Treanor, President and Chief Operating Officer
David V. Devault, Executive Vice President, Secretary,
Treasurer and Chief Financial Officer
Larry J. Hirsch, Esq., Retired President, Westerly Jewelry Co.
Barry G. Hittner, Esq., Of Counsel Cameron & Mittleman, LLP
Senior Management
Katherine W. Hoxsie, Vice President,
Hoxsie Buick-Pontiac-GMC Truck, Inc.
Mary E. Kennard, Esq., Vice President and
University Counsel, The American University
Edward M. Mazze, Ph.D., Dean, College of
Dennis L. Algiere, Senior Vice President, Chief Compliance
Officer & Director of Community Affairs
Carl M. Amaral, Senior Vice President, Branch Sales and Service
Stephen M. Bessette, Senior Vice President, Retail Lending
Business Administration, University of Rhode Island
Vernon F. Bliven, Senior Vice President, Human Resources
Kathleen McKeough, Senior Vice President of Human
Elizabeth B. Eckel, Senior Vice President, Marketing
Resources, GTECH Holdings Corporation
Victor J. Orsinger, II, Esq., Partner, Orsinger and Nardone,
Attorneys at Law
H. Douglas Randall, III, President, H.D. Randall, Realtors
Joyce Olson Resnikoff, Chief Executive Officer,
Olde Mistick Village
Patrick J. Shanahan, Jr., Retired Chairman, President and
Chief Executive Officer, First Financial Corp.
James P. Sullivan, CPA, Retired Finance Officer,
Roman Catholic Diocese of Providence
Neil H. Thorp, President, Thorp & Trainer, Inc.
John F. Treanor, President and Chief Operating Officer,
Washington Trust Bancorp, Inc.
John C. Warren, Chairman and Chief Executive Officer,
Washington Trust Bancorp, Inc.
Officers of the Corporation
John C. Warren, Chairman and Chief Executive Officer
John. F. Treanor, President and Chief Operating Officer
David V. Devault, Executive Vice President, Treasurer and
Chief Financial Officer
Harvey C. Perry, II, Senior Vice President and Secretary
The Washington Trust Company Directors’
Advisory Council
Alcino G. Almeida, William Atherton, Charles M. Baker, Jr.,
Charles C. Buffum, David Curtis, Richard A. Grills,
Joseph J. Kirby, Jacques de Laporte, James W. McCormick, Jr.,
Thomas F. Moore, Brendan P. O’Donnell, Arthur Perry,
Joseph H. Potter, Joseph E. Pucci, Anthony J. Rose, Jr.,
James D. Thornton, William Blunt White
Gerald J. Fogarty, Jr., Managing Director,
Phoenix Investment Management
Philip L. Friend, Senior Vice President, Retail Lending
William D. Gibson, Senior Vice President, Credit Administration
Mark K.W. Gim, Senior Vice President, Financial Planning
and Asset Liability Management
Russell W. Hahn, Senior Vice President, Commercial Lending
Marie J. Langlois, Managing Director,
Phoenix Investment Management
Joseph E. LaPlume, Senior Vice President, Commercial Lending
Louis J. Luzzi, Senior Vice President, Commercial Lending
Rogean B. Makowski, Senior Vice President, Trust Officer
Mary M. McGoldrick, Senior Vice President and
Chief Investment Officer
Barbara J. Perino, CPA, Senior Vice President, Operations
and Technology
Harvey C. Perry, II, Senior Vice President, Director of Office for
Non-Profit Resources
B. Michael Rauh, Jr., Senior Vice President, Corporate Sales,
Planning and Delivery
Julia Anne M. Slom, Senior Vice President,
Commercial Real Estate Group
James M. Vesey, Senior Vice President and Chief Credit Officer
James J. Walther, Senior Vice President, Director of
Internal Audit
20
Washington Trust Bancorp, Inc. 2003 Annual Report
Financial Highlights
(Dollars in millions, except per share amounts)
Results as of or for the years ended December 31,
Financial Results
Net interest income
Provision for loan losses
Net realized gains on securities
Noninterest income, excluding securities gains
Noninterest expense
Net income
Per Share Information
Diluted earnings per share
Cash dividends declared
Book value
Tangible book value
Closing stock price
Financial Condition
Securities
Loans:
Commercial
Residential real estate
Consumer
Total loans
Allowance for loan losses
Total assets
Deposits
Federal Home Loan Bank advances
Shareholders’ equity
Ratios (%)
Return on average assets
Return on average equity
Net interest margin (taxable equivalent basis)
Nonperforming assets to total assets
Nonaccrual loans to total loans
Allowance for loan losses to total loans
Earnings and Ratios Excluding Special Items
(Non-GAAP Financial Information)
Net income
Diluted earnings per share
Return on average assets (%)
Return on average equity (%)
2003
2002
2001
2000
1999
$
$
48.8
.5
.6
26.1
47.6
18.9
1.41
.62
10.46
8.60
26.20
$
$
44.3
.4
.7
22.6
43.0
16.8
1.30
.56
9.87
7.93
19.53
$
$
39.4
.6
.3
21.1
41.7
13.1
1.07
.52
8.15
8.10
19.00
$
$
37.9
1.2
.8
19.0
37.5
13.2
1.09
.48
7.43
7.36
14.00
$
$
35.6
1.8
.7
18.1
35.3
12.5
1.03
.44
6.55
6.48
17.75
$ 839.4
$ 795.8
$ 629.1
$ 511.5
$ 446.8
408.5
389.9
162.6
961.0
15.9
1,973.8
1,206.1
607.1
138.1
1.03
14.15
2.89
.14
.29
1.66
382.1
280.9
132.1
795.1
15.5
1,745.7
1,110.5
480.1
128.7
1.07
14.25
3.10
.24
.53
1.95
260.6
235.4
109.6
605.6
13.6
1,362.2
816.9
431.5
97.9
1.01
13.86
3.30
.28
.63
2.24
239.8
251.0
106.4
597.2
13.1
1,218.1
735.7
377.4
89.2
1.14
16.14
3.55
.28
.58
2.20
232.4
225.7
90.9
549.0
12.3
1,105.6
660.8
352.5
78.2
1.19
15.73
3.71
.35
.69
2.25
$
$
19.6
1.46
1.06
14.64
$
$
17.2
1.33
1.09
14.60
$
$
15.6
1.28
1.20
16.54
$
$
13.9
1.15
1.20
16.98
$
$
12.8
1.06
1.21
16.04
2003
2002
2001
2000
1999
Rhode Island Offices
$
18.9
$
16.8
$
13.1
$
13.2
$
12.5
Washington Trust Locations
(Dollars in millions, except per share amounts)
Results as of or for the years ended December 31,
Reconciliation Table –
Non-GAAP Financial Information
Net income, including special items
Add back (deduct) special items, net of tax:
Debt prepayment penalties
Acquisition related
Litigation settlement, net of insurance recovery
Net gain on sale of credit card portfolio
Net income, excluding special items
Diluted earnings per share
Effect of special items, net of tax
Diluted earnings per share, excluding special items
Ratios (%)
Return on average assets
Effect of special items, net of tax
Return on average assets, excluding special items
$
$
$
.7
–
–
–
19.6
1.41
.05
1.46
1.03
.03
1.06
$
$
$
–
.4
–
–
17.2
1.30
.03
1.33
1.07
.02
1.09
$
$
$
–
–
2.5
–
15.6
1.07
.21
1.28
1.01
.19
1.20
$
$
$
–
.7
–
–
13.9
1.09
.06
1.15
1.14
.06
1.20
$
$
$
–
.6
–
(.3)
12.8
1.03
.03
1.06
1.19
.02
1.21
15.73
.31
16.04
Return on average equity
Effect of special items, net of tax
Return on average equity, excluding special items
14.15
.49
14.64
14.25
.35
14.60
13.86
2.68
16.54
16.14
.84
16.98
Non-GAAP Financial Information Disclosure:
This annual report contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States
of America (“GAAP”). The Corporation’s management uses these non-GAAP measures in its analysis of the Corporation’s performance. These measures typically adjust
GAAP performance measures to exclude the effects of charges and expenses related to the consummation of acquisitions and costs related to the integration of merged
entities. These non-GAAP measures also may exclude other significant gains or losses that are unusual in nature. Because these items and their impact on the
Corporation’s performance are difficult to predict, management believes that presentations of financial measures excluding the impact of these items provide useful
supplemental information that is essential to a proper understanding of the operating results of the Corporation’s core businesses. These disclosures should not be
viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be
presented by other corporations. A quantitative reconciliation of the differences between the non-GAAP financial information discussed herein and the most directly
comparable financial information calculated and presented in accordance with GAAP is presented above.
Total Assets
Total Loans
Nonperforming Assets
to Total Assets
Diluted Earnings Per Share
Cash Dividends Declared
Washington Trust Bancorp, Inc. 2003 Annual Report
Account
Information Center
To speak with a customer service
representative, call 401-348-1200
or toll-free 1-800-475-2265.
In Connecticut, call 860-443-1508.
Online Banking
Bank and pay bills via the Internet
24 hours a day, 7 days a week at
www.washtrust.com.
XPress Banking
Automated banking by phone
24 hours a day, 7 days a week
at 401-348-1399 or toll-free
1-800-226-5877.
Website
Current company and shareholder
information available at
www.washtrust.com.
PROVIDENCE
Providence Office
180 Washington Street
Providence, RI 02903
401-421-3600
Providence Trust and
Investment Services Office
66 South Main Street
Providence, RI 02903
401-861-8440
Phoenix Investment
Management
68 South Main Street
Providence, RI 02903
401-331-6650
CRANSTON
Cranston Office
645 Reservoir Avenue
Cranston, RI 02910
401-946-1004
WARWICK
Warwick Office
236 Centerville Road
Warwick, RI 02886
401-739-2353
Connecticut Offices
MYSTIC
Mystic Office
Olde Mistick Village
Mystic, CT 06355
860-536-1200
A&P Super Foodmart
179 Stonington Road
Mystic, CT 06355
860-572-7100
McQuade’s Marketplace
14 Clara Drive
Mystic, CT 06355
860-572-2058
WESTERLY
Main Office
23 Broad Street
Westerly, RI 02891
401-348-1200
Franklin Street Office
126 Franklin Street
Westerly, RI 02891
401-348-1367
McQuade’s Marketplace
106 Main Street
Westerly, RI 02891
401-348-1201
RICHMOND
Richmond Office
1200 Main Street
Wyoming, RI 02898
401-539-2427
BLOCK ISLAND
Block Island Office
Ocean Avenue
Block Island, RI 02807
401-466-7710
CHARLESTOWN
Charlestown Office
4137 Old Post Road
Charlestown, RI 02813
401-364-4000
NARRAGANSETT
Sweet Meadows Office
20 Point Judith Road
Narragansett, RI 02882
401-782-1000
Bonnet Shores Office
885 Boston Neck Road
Narragansett, RI 02882
401-782-4800
SOUTH KINGSTOWN
Wakefield Office
730 Kingstown Road
Wakefield, RI 02879
401-782-4200
NORTH KINGSTOWN
North Kingstown Office
7625 Post Road
North Kingstown, RI 02852
401-295-4700
$0$200$400$600$800$1,000$549.0$597.2$961.0$795.11999 2000 2001 2002 2003In Millions$605.6$0$200$400$600$800$1,000$549.0$597.2$961.0$795.11999 2000 2001 2002 2003In Millions$605.6$0$200$400$600$800$1,000$549.0$597.2$961.0$795.11999 2000 2001 2002 2003In Millions$605.6$0$200$400$600$800$1,000$549.0$597.2$961.0$795.11999 2000 2001 2002 2003In Millions$605.6$0$200$400$600$800$1,000$549.0$597.2$961.0$795.11999 2000 2001 2002 2003In Millions$605.6 23 Broad Street
Westerly, RI 02891
www.washtrust.com
A
Winning
Team
Washington
Trust
Bancorp,
Inc.
2003
Annual
Report
Corporate Profile
Washington Trust Bancorp, Inc. (Washington Trust or the Bancorp) is the
publicly-owned holding company of The Washington Trust Company (the
Bank), a Rhode Island-chartered bank founded in 1800. The Bank offers a
broad range of services, including trust and investment management,
through its branch offices in Rhode Island and southeastern Connecticut.
Unless the context otherwise requires, the word “Corporation” herein
refers to the Bancorp and the Bank.
At December 31, 2003, the Bank had 449 employees. The Bank has
adopted an Affirmative Action Plan and is an Equal Opportunity Employer.
The Bank is also a member of the FDIC and an Equal Housing Lender.
Stock Transfer and Dividend
Disbursing Agent
Mellon Investor Services (Mellon), our stock transfer and dividend
disbursing agent, is responsible for our shareholder records, issuance of
stock certificates, distribution of dividend checks, and IRS Form 1099.
Mellon is also responsible for the Corporation’s Dividend Reinvestment
(DRIP) and Stock Purchase Plan, which enables shareholders to reinvest
their quarterly dividends in Washington Trust shares. Plan members may
also make optional cash purchases of common stock up to $10,000 per
quarter.
For information, contact Mellon on the toll-free Shareholder Information
Line, (800) 852-0354, via the secure Mellon Investor Direct website,
https://vault.melloninvestor.com/isd, or by writing to: Mellon Investor
Direct Services Corporate Office, 85 Challenger Road, Ridgefield Park, NJ
07660.
Market and Dividend Information
Washington Trust’s common stock trades on the Nasdaq
National Market tier of the Nasdaq Stock Market® under the
symbol WASH. As of December 31, 2003, there were 2,212
shareholders of record.
2003 Quarters
Stock prices:
High
Low
Close
Dividend declared
2002 Quarters
Stock prices:
High
Low
Close
Dividend declared
1
2
3
4
$20.61
19.36
20.21
.15
$24.17
19.80
23.02
.15
$28.49
22.60
24.01
.16
$29.42
23.94
26.20
.16
1
2
3
4
$19.72
18.00
19.42
.14
$24.11
19.05
23.69
.14
$23.83
19.12
19.74
.14
$21.20
19.10
19.53
.14
This report contains certain statements that may be considered “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Corporation’s actual results, performance or
achievements could differ materially from those projected in the forward-looking statements as a
result, among other factors, of changes in general national or regional economic conditions, changes
in interest rates, reductions in the market value of trust and investment assets under management,
reductions in loan demand, reductions in deposit levels necessitating increased borrowing to fund
loans and investments, changes in loan default and charge-off rates, changes in the size and nature of
the Corporation’s competition, changes in legislation or regulation and accounting principles, policies
and guidelines and changes in the assumptions used in making such forward-looking statements.
Contents
2003 Financial Highlights................inside cover
Corporate Highlights.......................inside cover
Letter to Shareholders ......................................1
The Year In Highlights ......................................2
Consolidated Balance Sheets..........................16
Consolidated Statements of Income ..............17
Consolidated Statements of Changes
in Shareholders’ Equity ...................................18
Independent Auditors’ Report .......................19
Management’s Responsibility for
Financial Statements .......................................19
Corporate Directory ........................................20
Washington Trust
Locations .................................inside back cover
On the cover (L-R): Peter J. Miniati, Trust & Investment Services;
Cathleen A. Studley, Retail Banking; Gina R. Mead, Mortgage
Origination; Patricia M. Hartford, Business Services; Scott D. Lajoie,
Commercial Lending; and Holly M. Knott, Merchant Services, were
all recognized in 2003 as star performers in their respective areas.
Annual Meeting of Shareholders:
Tuesday, April 27, 2004, 11:00 a.m.,
Westerly Public Library, 44 Broad Street,
Westerly, Rhode Island 02891
Vote Your Proxy Online
For your convenience, you can vote your shares
online. Have your proxy card ready and go to
the website http://www.eproxy.com/wash. You
will be prompted to enter your control number
located on your card. Then, follow the instructions
to create and submit an electronic ballot.
Investor Information
Copies of our most recent annual and quarterly
reports and a copy of our 2003 Annual Report on
Form 10-K are available at no charge by contacting
Elizabeth B. Eckel, Senior Vice President, Marketing,
at 401-348-1309 or 1-800-475-2265. You may write to
Ms. Eckel at the Washington Trust Corporate Office,
23 Broad Street, Westerly, RI 02891. The annual
report is also available on our website,
www.washtrust.com.
Auditors: KPMG LLP, Providence, Rhode Island
Counsel: Goodwin Procter LLP, Boston, Massachusetts
Washington Trust Bancorp, Inc. 2003 Annual Report