Washington Trust Bancorp
Annual Report 2008

Plain-text annual report

2 0 0 8 A n n u a l R e p o r t W a s h i n g t o n T r u s t B a n c o r p , I n c . Strength. Focus. Direction. Steady Navigation in Turbulent Times For 208 years, people have looked to Washington Trust for guidance. Just as sailors in centuries past relied on a compass, astrolabe, and sextant for direction in unknown waters, customers in 2008 turned to Washington Trust to help them navigate turbulent financial markets and chart a course for financial security and peace of mind. 2 Letter to Shareholders ~ 4 Corporate Profile ~ 8 2008 Financial Highlights ~ 9 The Year In Review ~ 10 Consolidated Balance Sheets ~ 14 Consolidated Statements of Income ~ 15 Shareholder Information ~ 16 Corporate Directory ~ 17 Washington Trust Locations ~ 19 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. All statements, other than statements of historical facts, including statements regarding our strategy, effectiveness of investment programs, evaluations of future interest rate trends and liquidity, expectations as to growth in assets, deposits and results of operations, success of acquisitions, future operations, market position, financial position, and prospects, plans, goals and objectives of management are forward-looking statements. The actual results, performance or achievements of the Corporation could differ materially from those projected in the forward-looking statements as a result of, among other factors, changes in general national, regional or international economic conditions or conditions affecting the banking or financial services industries or financial capital markets, volatility and disruption in national and international financial markets, government intervention in the U.S. financial system, reductions in net interest income resulting from interest rate volatility as well as changes in the balance and mix of loans and deposits, reductions in the market value of wealth management assets under administration, changes in the value of securities and other assets, reductions in loan demand, changes in loan collectibility, default and charge-off rates, changes in the size and nature of the Corporation’s competition, changes in legislation or regulation and accounting principles, policies and guidelines, and changes in the assumptions used in making such forward-looking statements. In addition, the factors described under “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2008, as filed with the Securities and Exchange Commission, may result in these differences. You should carefully review all of these factors, and you should be aware that there may be other factors that could cause these differences. These forward-looking statements were based on information, plans and estimates at the date of this report, and the Corporation assumes no obligation to update forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes. t r o p e R l a u n n A 8 0 0 2 , . c n I , p r o c n a B t s u r T n o t g n i h s a W 3 John C. Warren, Chairman and CEO; John F. Treanor, President and COO 4 N o one could have predicted that 2008 would feature such a confluence of negative events, including a global recession, an international banking crisis, and a precipitous decline in the financial markets. As we look back at 2008, it is clear that for Washington Trust it was a year of “strength, focus and direction.” We knew the challenges, stuck to our principles, and remained focused on the core business that has driven our company for more than 208 years. For Washington Trust, 2008 was a solid year. Despite all of the turmoil, Washington Trust was successful – particularly in contrast to the widely-reported problems in the financial services industry. We generated $22.2 million in earnings in 2008, increased our dividend for the 16th consecutive year, and raised approximately $47 million in new capital with select institutional investors. Already well-capitalized by regulatory standards, this capital raise made our company even stronger and we therefore chose not to accept government funding under the Troubled Asset Relief Program (TARP). Washington Trust is the largest independent bank headquartered in Rhode Island. In 2008, our independence and local roots played pivotal roles in our performance. As both the marketplace and larger financial institutions experienced major dis- ruptions, our position as “a pillar of strength for 208 years” resonated. Consumers, commercial customers, and investors sought strength and stability in the management of their financial affairs – and found it in Washington Trust. The values that we have held close for more than two centuries – trustworthiness, commitment to excellence, sound judgment, and a willingness to help – were never more important to our customers or more instrumental to our success. t r o p e R l a u n n A 8 0 0 2 , . c n I , p r o c n a B t s u r T n o t g n i h s a W s r e d l o h e r a h S o t r e t t e L 5 When the credit conduits on Wall Street dried up in 2008, capital conservation was the order of the day at many institutions, but not at Washington Trust. In fact, our commercial loan portfolio grew by a record 29% in 2008. We attracted new customers and provided financing for existing clients. Best of all, as we grew our portfolio, we continued to maintain good asset quality. As consumers turned from Wall Street to Main Street, our local presence combined with our reputation for providing exceptional service across all lines of business offered compelling reasons for people to choose us. What’s more, being a local bank with strong roots helped us stand out in a market dominated by three large institutions, all three of which are headquartered out of state. People wanted to do business with someone they knew, someone they could see or talk to at a moment’s notice. Many found that trusted advisor at Washington Trust. Service excellence sets us apart. It is a key part of our brand and helps us retain and grow profitable client relationships. Statistics and surveys indicate that we enjoy a high loyalty and satisfaction rate – once people become Washington Trust customers, they rarely leave. When customers are truly pleased with the service they receive, they not only become long-term customers; they also tell their friends and associates about us. This was especially valuable to us in 2008 when unprecedented dislocation in the marketplace had people looking for new banking relationships. There is no better catalyst for new business than the referral of a satisfied customer. At Washington Trust, people matter. Much of our success can be attributed to our focus on people – our employees, our customers, and our community. Washington Trust has a legacy of providing personalized service, trusted advice, and financial solutions. We have continued to recruit employees who embody that spirit, and invest in training programs and technology to ensure that our people possess the skills and talents that they need. Few prognosticators foresaw the events of 2008; fewer still would commit to predictions for 2009. Amid this uncertainty, we will remain focused on financial strength, sound lending practices, local decision-making, and a willingness to 6 work with people to help them achieve their goals. We are hopeful that President Obama’s stimulus package will generate the confidence needed to move the economy forward. We recently announced that Jack Treanor, President and Chief Operating Officer, has elected to retire in October 2009. Jack has been a key strategic leader and has contributed immensely to the success of this organization. He will continue to serve as a member of our board of directors and we look forward to his continued contributions and dedication to our organization. We are grateful for the outstanding efforts of our employees, the confidence of our customers, and the unwavering support of our shareholders. Ultimately, our strong performance in 2008 is a tribute to all of you. We are thankful to have the opportunity to lead your company and look forward to creating value for you over the long term. John C. Warren Chairman and Chief Executive Officer John F. Treanor President and Chief Operating Officer t r o p e R l a u n n A 8 0 0 2 , . c n I , p r o c n a B t s u r T n o t g n i h s a W s r e d l o h e r a h S o t r e t t e L 7 Corporate Profile Auditors: KPMG LLP, Providence, Rhode Island Counsel: Goodwin Procter LLP, Boston, Massachusetts Annual Meeting of Shareholders Tuesday, April 28, 2009, 11:00 a.m. The Granite Theatre 1 Granite Street, Westerly, Rhode Island 02891 Free shareholder parking is available at the Washington Trust parking garage at 23 Broad Street, Westerly, RI. The Granite Theatre is handicapped accessible. Shareholders may call 401-348-1566 with questions. Vote Your Proxy Online Or By Phone For your convenience, you can vote your shares online or by phone. Please have your proxy card available. INTERNET – Access www.voteproxy.com and follow the on-screen instructions. TELEPHONE – Call toll-free 800-PROXIES (800-776-9437) from any touch-tone telephone and follow the instructions. 2008 Quarters Stock prices: High Low Close Dividend declared 2007 Quarters Stock prices: High Low Close Dividend declared 1 2 3 4 $26.50 21.84 24.82 .20 $26.49 19.70 19.70 .21 $33.34 $27.30 16.33 19.75 .21 18.43 26.60 .21 1 2 3 4 $28.98 25.32 26.81 .20 $27.69 23.90 25.21 .20 $28.42 $28.65 23.49 25.23 .20 22.87 26.97 .20 Washington Trust Profile As of December 31, 2008 $3.0 billion in assets $315 million in market capitalization Washington Trust Bancorp, Inc. is the publicly-owned holding company of The Washington Trust Company (the Bank), a Rhode Island chartered commercial bank founded in 1800. Through the Bank and its other subsidiaries, Washington Trust offers a broad range of financial services, including wealth management, by way of its branch offices in Rhode Island, Massachusetts and southeastern Connecticut. At December 31, 2008, Washington Trust had 483 employees. The Corporation has an Affirmative Action Plan and is an Equal Opportunity Employer. Washington Trust is also a member of the FDIC and an Equal Housing Lender. Market and Dividend Information Washington Trust’s common stock trades on the NASDAQ Global Select® Market under the symbol WASH. As of December 31, 2008, there were 2,005 shareholders of record. Shareholder Return Performance Presentation At right is a line graph comparing the cumulative total shareholder return on the Corporation’s Common Stock against the cumulative total return of the NASDAQ Bank Stocks index and the NASDAQ Market (U.S.) for the five years ended December 31. The historical information below is not necessarily indicative of future performance. December 31, Washington Trust Bancorp, Inc. NASDAQ Bank Stocks NASDAQ Market (U.S.) 2003 $100.00 $100.00 $100.00 2004 $114.73 $110.99 $108.59 2005 $105.22 $106.18 $110.08 2006 $115.31 $117.87 $120.56 2007 $107.54 $91.85 $132.39 2008 $87.28 $69.88 $78.72 The results presented assume that the value of the Corporation’s Common Stock and each index was $100.00 on December 31, 2003. The total return assumes reinvestment of dividends. 8 Financial Highlights At or for the years ended December 31, (Dollars in thousands, except per share amounts) 2008 2007 2006 Financial Condition Total assets Total loans Allowance for loan losses Total securities Total deposits Total shareholders’ equity Financial Results Net interest income Provision for loan losses Net realized gains on securities (Losses) on write-downs of investments to fair value Other noninterest income Noninterest expense Net income Per Share Information Diluted earnings per share Cash dividends declared Book value per share Tangible book value per share Market value per share Selected Ratios Return on average assets Return on average equity Net interest margin (taxable equivalent basis) Total risk based capital Tangible equity to tangible assets Asset Quality Data Total past due loans to total loans Nonperforming assets to total assets Allowance for loan losses to total loans Net charge-offs to average loans $2,965,466 1,839,154 23,725 866,219 1,790,868 235,111 $2,539,940 1,573,652 20,277 751,778 1,646,205 186,513 $2,399,165 1,459,986 18,894 703,851 1,677,997 173,056 $65,513 4,800 2,224 (5,937) 44,233 71,742 22,172 $1.57 .83 14.75 10.47 19.75 $59,944 1,900 455 – 45,054 68,906 23,800 $1.75 .80 13.97 9.33 25.23 $61,474 1,200 443 – 41,740 65,335 25,031 $1.82 .76 12.89 8.61 27.89 0.82% 0.99% 1.04% 11.12 2.64 12.54 5.76 0.96% 0.30 1.29 0.08 13.48 2.76 10.39 5.03 0.45% 0.17 1.29 0.03 14.99 2.80 10.96 4.94 0.49% 0.11 1.29 0.02 Other Selected Data Wealth management assets under administration Number of ATMs $3,147,649 134 $4,014,352 141 $3,609,180 132 Total Loans Total Deposits Total Shareholders’ Equity t r o p e R l a u n n A 8 0 0 2 , . c n I , p r o c n a B t s u r T n o t g n i h s a W s t h g i l h g i H l a i c n a n i F e l i f o r P e t a r o p r o C 9 ~ Flight to Quality At the core of our story for 2008 is the “flight to quality” that occurred in the marketplace as customers across all lines of business sought strength and stability in the management of their financial affairs. Many turned to Washington Trust – and for good reason. We are strong, well capitalized, and willing to do business. The principles that have guided our company for more than two centuries prevailed once again. The fact is, it was business as usual at Washington Trust in 2008. What changed were the market conditions outside our doors, which prompted people to turn to us. Record Commercial Growth Our commercial lending group achieved record growth in 2008, with balanced increases in both commercial and industrial lending and commercial real estate. This was the cumulative result of efforts made over the last ten years as we established our name in influential business circles, built a reputation for significant lending capacity and excellent service, and recruited top-notch talent. We put ourselves in position to take advantage of opportunities when they presented themselves – and they did throughout 2008. As the credit and financial markets started to crumble and it became evident that some of the larger banks were tightening up on credit, or not lending at all, borrowers turned to Washington Trust. The message was loud and clear: Washington Trust was lending to businesses throughout New England. As a result, our commercial portfolio grew substantially and we attracted quality credits of all types and sizes throughout our market area. We worked with existing clients, brought in multi-million-dollar deals from new clients, and financed loans for local small businesses. And once again we were one of the top SBA lenders in Rhode Island. Ultimately, commercial lending and commercial real estate lending is a relationship business and Washington Trust professionals continued to work closely with attorneys, accountants, developers, and borrowers to nurture those relationships. We have a strong network of professionals committed to working with us in the best interests of the business community. Attracting New Investors It was a difficult year for investors, regardless of asset class. Still, our wealth management team outperformed the equity market indices in a year where stocks 10 finished below levels of ten years ago. While it may be the proverbial “moral victory,” the fact is, Washington Trust wealth management clients fared better than most in 2008. Over the long term, they continue to outperform the benchmarks. Difficult market conditions drove business to our wealth management group. As investors lost confidence in Wall Street, they looked for local, proven providers that they knew they could trust. Many clients who were investing with other firms in addition to Washington Trust consolidated their savings and investments with us, especially as the larger, out-of-state firms experienced difficulties. Despite market challenges, we enjoyed one of our best years ever for garnering new business and assets. Much of the new business was from existing clients and professional advisors who showed confidence in our proven abilities by referring friends, family, and clients to us. In 2008, our wealth management group implemented technology solutions to enhance relationships with clients and strengthen our competitive advantage. A new open-architecture overlay gives our advisors the ability to employ any of our proprietary investment capabilities as well as third-party managers, mutual funds, and exchange-traded funds. What’s more, the technology analyzes client portfolios to ensure adherence to their goals and objectives, and to maximize tax efficiency. As a result, portfolio managers are able to act more quickly and knowledgeably on our clients’ behalf. Trusted Lender Despite tightening credit markets, declining home values, and lower overall home sales, Washington Trust had solid mortgage lending activity in 2008. When the real estate market contracted and many lenders were saddled with bad debt, we had money to lend to creditworthy borrowers, and in 2008 they sought us out. Throughout our history, we have always embraced traditional, thorough under- writing practices. Such an approach was not “in vogue” in recent years when loosened lending practices were prevalent. Another factor in our loan growth was the changing landscape of the mortgage origination business. As recently as 2007, up to 75% of all mortgages in Rhode Island were written by mortgage companies. Amid the arrival of the sub-prime loan crisis, many of these mortgage companies shut their doors. The industry returned to more traditional loan products and a more rigorous lending approach. Borrowers sought out banks in general and Washington Trust in particular as a trusted resource for financing. t r o p e R l a u n n A 8 0 0 2 , . c n I , p r o c n a B t s u r T n o t g n i h s a W w e i v e R n i r a e Y e h T 11 While industry numbers for reverse mortgages were down due to declining home equity and reduced borrowing activity, our book of business remained consistent with 2007. We have established ourselves as experts on reverse mortgages and continue to educate key influencers – accountants, financial planners, attorneys, healthcare professionals, and realtors – on how reverse mortgages can benefit their clients. We are ahead of the pack in this category and see promising growth opportunities in the future. Security and Peace of Mind Just a short time ago, the thought of stuffing your money in the mattress was ridiculous. However, the financial events in 2008 left everyone shaken and led many to question the safest place for their money. And, even while the FDIC increased insurance coverage to $250,000 per depositor, per institution, through December 2009, some depositors sought a safe haven for their money. Many customers turned to Washington Trust in 2008 for the security of their deposits and peace of mind. In August, we introduced a solution for high balance depositors, a new product called the Certificate of Deposit Account Registry Service (CDARS). As part of the CDARS network, Washington Trust now provides depositors with access of up to $50 million in FDIC insurance on their certificates of deposit. This product was tremendously successful in generating new deposits and new relationships. New Downtown Location, Same Uptown Service In December, we relocated our Providence branch to the heart of the capital city’s financial district. Featuring a contemporary design and catering to busy professionals, the new branch gave us a high-visibility presence among the city’s movers and shakers – attorneys, accountants, and other key centers of influence. It also provided a natural complement to our commercial lending office, which is right around the corner, and our wealth management location across the river. Now clients at these offices have convenient access to Washington Trust banking services whenever they need them. One of our key strategic goals is to unveil a new branch every two years. We took a step to fulfilling that goal in 2008 with the purchase of a prime high-traffic parcel in the Governor Francis section of Warwick. Slated to open in 2009, subject to state and federal regulatory approvals, the new Governor Francis branch will give us a second location in Warwick and expand our footprint and presence in the West Bay. 12 Brand Strength The Washington Trust brand is one of our most valuable assets. We have invested consistently to ensure our name is synonymous with outstanding service, significant capacity, steady management, and more than two centuries of experience. Our tag line, “Trusted Advisors Since 1800,” emphasizes our service orientation and heritage. Those four words could not have been more relevant to the marketplace than they were in 2008 as dislocated consumers looked to Washington Trust as a financial institution they could rely on. Nowhere is the Washington Trust service ethic more evident than on the front line. It’s not just that our branch personnel embrace the Washington Trust core value of providing outstanding service to every customer. Many of them are long-term employees who are very familiar with their customers’ financial situation and needs. Washington Trust is also well known for our community outreach and involvement. We not only respond to the critical needs around us through volunteerism, board leadership, and financial contributions; our people are an integral part of the communities where they live and work, as well. You see them at food drives, walk-a-thons, beach cleanups, and other community fundraisers. As an organization and as individuals, we are civically engaged and making a difference in the community each day. Looking Forward Washington Trust is well served by the banking fundamentals that have held us in good stead for 208 years. In 2009, we will continue to honor these principles, while keeping our focus on our customers. We will look for opportunities that can augment our client base, talent pool, revenue, profitability, and capabilities at a price that makes sense to our shareholders. And always, we will remain true to our role as trusted advisor to our clients and customers, which is the cornerstone of our success. t r o p e R l a u n n A 8 0 0 2 , . c n I , p r o c n a B t s u r T n o t g n i h s a W w e i v e R n i r a e Y e h T 13 Washington Trust Bancorp, Inc. and Subsidiaries Consolidated Balance Sheets December 31, (Dollars in thousands) Assets: Cash and noninterest-bearing balances due from banks Interest-bearing balances due from banks Federal funds sold and securities purchased under resale agreements Other short-term investments Mortgage loans held for sale Securities available for sale, at fair value; amortized cost $869,433 in 2008 and $750,583 in 2007 Federal Home Loan Bank stock, at cost Loans: Commercial and other Residential real estate Consumer Total loans Less allowance for loan losses Net loans Premises and equipment, net Accrued interest receivable Investment in bank-owned life insurance Goodwill Identifiable intangible assets, net Other assets Total assets Liabilities: Deposits: Demand deposits NOW accounts Money market accounts Savings accounts Time deposits Total deposits Dividends payable Federal Home Loan Bank advances Junior subordinated debentures Other borrowings Accrued expenses and other liabilities Total liabilities 2008 2007 $ 11,644 41,780 2,942 1,824 2,543 866,219 42,008 880,313 642,052 316,789 1,839,154 23,725 1,815,429 25,102 11,036 43,163 58,114 10,152 33,510 $2,965,466 $172,771 171,306 305,879 173,485 967,427 1,790,868 3,351 829,626 32,991 26,743 46,776 2,730,355 $ 30,817 1,973 7,600 722 1,981 751,778 31,725 680,266 599,671 293,715 1,573,652 20,277 1,553,375 25,420 11,427 41,363 50,479 11,433 19,847 $2,539,940 $175,542 164,944 321,600 176,278 807,841 1,646,205 2,677 616,417 22,681 32,560 32,887 2,353,427 Shareholders’ Equity: Common stock of $.0625 par value; authorized 30,000,000 shares; issued 16,018,868 shares in 2008 and 13,492,110 shares in 2007 Paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock, at cost; 84,191 shares in 2008 and 137,652 shares in 2007 Total shareholders’ equity Total liabilities and shareholders’ equity 1,001 82,095 164,679 (10,458) (2,206) 235,111 $2,965,466 843 34,874 154,647 ( 239) (3,612) 186,513 $2,539,940 Refer to Washington Trust Bancorp, Inc.’s 2008 Annual Report on Form 10-K for a complete set of consolidated financial statements. 14 Washington Trust Bancorp, Inc. and Subsidiaries Consolidated Statements of Income Years ended December 31, (Dollars and shares in thousands, except per share amounts) 2008 2007 2006 Interest income: Interest and fees on loans Interest on securities: Taxable Nontaxable Dividends on corporate stock and Federal Home Loan Bank stock Other interest income Total interest income Interest expense: Deposits Federal Home Loan Bank advances Junior subordinated debentures Other interest expense Total interest expense Net interest income Provision for loan losses Net interest income after provision for loan losses Noninterest income: Wealth management services: Trust and investment advisory fees Mutual fund fees Financial planning, commissions and other service fees Wealth management services Service charges on deposit accounts Merchant processing fees Income from bank-owned life insurance Net gains on loan sales and commissions on loans originated for others Net realized gains on securities Losses on write-downs of investments to fair value Net unrealized gains (losses) on interest rate swap contracts Other income Total noninterest income Noninterest expense: Salaries and employee benefits Net occupancy Equipment Merchant processing costs Outsourced services Advertising and promotion Legal, audit and professional fees Amortization of intangibles Debt prepayment penalties Other expenses 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 $ 100,939 $ 98,720 $ 92,190 34,382 3,125 1,882 334 140,662 41,195 30,894 1,879 1,181 75,149 65,513 4,800 60,713 20,316 5,205 2,752 28,273 4,781 6,900 1,800 1,396 2,224 (5,937) (542) 1,625 40,520 31,163 2,983 2,737 831 136,434 33,763 1,618 2,842 721 131,134 52,422 21,641 1,352 1,075 76,490 59,944 1,900 58,044 21,124 5,430 2,462 29,016 4,713 6,710 1,593 1,493 455 – 27 1,502 45,509 46,982 20,916 1,352 410 69,660 61,474 1,200 60,274 19,099 4,665 2,616 26,380 4,915 6,208 1,410 1,423 443 – – 1,404 42,183 41,037 4,536 3,838 5,769 2,859 1,729 2,325 1,281 – 8,368 71,742 29,491 7,319 $ 22,172 39,986 4,150 3,473 5,686 2,180 2,024 1,761 1,383 1,067 7,196 68,906 34,647 10,847 $ 23,800 38,698 3,888 3,370 5,257 2,009 1,894 1,637 1,593 – 6,989 65,335 37,122 12,091 $ 25,031 13,981.9 14,146.3 13,355.5 13,604.1 13,424.1 13,723.2 $1.59 $1.57 $0.83 $1.78 $1.75 $0.80 $1.86 $1.82 $0.76 Refer to Washington Trust Bancorp, Inc.’s 2008 Annual Report on Form 10-K for a complete set of consolidated financial statements. t r o p e R l a u n n A 8 0 0 2 , . c n I , p r o c n a B t s u r T n o t g n i h s a W s t n e m e t a t S l a i c n a n i F 15 Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders Washington Trust Bancorp, Inc.: We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Washington Trust Bancorp, Inc. and Subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of income, changes in shareholders’ equity (not present herein) and cash flows (not presented herein) for each of the years in the three-year period ended December 31, 2008; and in our report dated February 27, 2009, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying 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, 2009 Stock Transfer and Dividend Disbursing Agent American Stock Transfer & Trust Company LLC (AST), 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. AST 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. For information, contact AST on the toll-free Shareholder Information Line, 800-852-0354, via the secure AST Shareholder Services website, www.amstock.com, or by writing to: American Stock Transfer LLC, 6201 15th Avenue, Brooklyn, New York, NY 11219. For transaction processing, contact AST in writing to Plan Administration Department, P.O. Box 922, Wall Street Station, New York, NY 10269-0560. To receive a duplicate copy of your 2008 IRS Form 1099, please visit www.amstock.com or call 800-852-0354. Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be held April 28, 2009: The Corporation’s 2009 Proxy Statement, Form 10-K and Annual Report for 2008 are available online by visiting: www.washtrust.com/proxy or by visiting the Corporation’s website, www.washtrust.com under Investor Relations – SEC Filings. These documents are also available by calling the Corporation’s toll-free number, 800- 475-2265 extension 1566, or by contacting Elizabeth B. Eckel, Senior Vice President, by email at investor.relations@washtrust.com. 16 Corporate Directory, Washington Trust Bancorp, Inc. Board of Directors Gary P. Bennett, Retired Chairman and Chief Executive Officer, Analysis and Technology, Inc. Steven J. Crandall, Vice President, Ashaway Line & Twine Mfg. Co. Larry J. Hirsch, Esq., Retired President, Westerly Jewelry Co. Barry G. Hittner, Esq., Of Counsel, Cameron & Mittleman, LLP Katherine W. Hoxsie, CPA, Retired 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., Distinguished University Professor of Business Administration, University of Rhode Island Kathleen McKeough, Retired Senior Vice President of Human 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 Patrick J. Shanahan, Jr., Former Chairman, President and Chief Executive Officer, First Financial Corp. 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 Galan G. Daukas, Executive Vice President, Wealth Management David V. Devault, Executive Vice President, Chief Financial Officer and Secretary Mark K. W. Gim, Executive Vice President and Treasurer The Washington Trust Company Directors’ Advisory Council Alcino G. Almeida, Charles M. Baker, Jr., Charles C. Buffum, Richard A. Grills, Joseph J. Kirby, Jacques de Laporte, James W. McCormick, Jr., Thomas F. Moore, Brendan P. O’Donnell, Joseph H. Potter, Joseph E. Pucci, Joyce Olson Resnikoff, Anthony J. Rose, Jr., James P. Sullivan, William Blunt White t r o p e R l a u n n A 8 0 0 2 , . c n I , p r o c n a B t s u r T n o t g n i h s a W y r o t c e r i D e t a r o p r o C n o i t a m r o f n I r e d l o h e r a h S 17 ~ Corporate Directory, The Washington Trust Company Senior Management John C. Warren, Chairman and Chief Executive Officer John F. Treanor, President and Chief Operating Officer Dennis L. Algiere, Senior Vice President, Chief Compliance Officer and Director of Community Affairs Carl M. Amaral, Senior Vice President, Branch Sales and Service Stephen M. Bessette, Executive Vice President, Retail Lending Vernon F. Bliven, Senior Vice President, Human Resources Galan G. Daukas, Executive Vice President, Wealth Management David V. Devault, Executive Vice President, Chief Financial Officer and Secretary Elizabeth B. Eckel, Senior Vice President, Marketing Gerald J. Fogarty, Jr., Managing Director, Washington Trust Investors Philip L. Friend, Senior Vice President, Retail Lending William D. Gibson, Senior Vice President, Risk Management Mark K. W. Gim, Executive Vice President and Treasurer Russell W. Hahn, Senior Vice President, Commercial Lending Marie J. Langlois, Managing Director, Washington Trust Investors Rogean B. Makowski, Senior Vice President, Wealth Management Client Services 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., Executive Vice President, Sales, Service and Delivery Brenda H. Senak, Senior Vice President, Risk Management Julia Anne M. Slom, Senior Vice President, Commercial Real Estate Group James M. Vesey, Executive Vice President and Chief Credit Officer James J. Walther, Senior Vice President, Director of Internal Audit Weston Financial Group, Inc. Galan G. Daukas, Executive Managing Director Douglas A. Biggar, Managing Director Wayne M. Grzecki, Managing Director Joseph Robbat, Jr., Managing Director Ronald A. Sugameli, Managing Director 18 Washington Trust Locations Rhode Island Offices CORPORATE OFFICE 23 Broad Street Westerly, RI 02891 401-348-1200 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 CRANSTON Oaklawn Avenue Office 1203 Oaklawn Avenue Cranston, RI 02920 401-732-0049 Reservoir Avenue Office 645 Reservoir Avenue Cranston, RI 02910 401-946-1004 NARRAGANSETT Bonnet Shores Office 885 Boston Neck Road Narragansett, RI 02882 401-782-4800 Sweet Meadows Office 20 Point Judith Road Narragansett, RI 02882 401-782-1000 NORTH KINGSTOWN North Kingstown Office 7625 Post Road North Kingstown, RI 02852 401-295-4700 PROVIDENCE Providence Office 156 Westminster Street Providence, RI 02903 401-421-3600 Providence Commercial Lending Office 10 Weybosset Street Suite 100 Providence, RI 02903 401-331-5090 Providence Wealth Management Offices 66-70 South Main Street Providence, RI 02903 401-861-8440 401-331-6650 RICHMOND Richmond Office 1200 Main Street Wyoming, RI 02898 401-539-2427 SOUTH KINGSTOWN Wakefield Office 730 Kingstown Road Wakefield, RI 02879 401-782-4200 WARWICK Centerville Road Office 236 Centerville Road Warwick, RI 02886 401-739-2353 OPENING 2009 Warwick Avenue Office 1473 Warwick Avenue Warwick, RI 02888 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 Connecticut Offices MYSTIC 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 Mystic Office Olde Mistick Village Mystic, CT 06355 860-536-1200 Massachusetts Office WELLESLEY Weston Financial Group Wellesley Office Park 40 William Street Wellesley, MA 02481 781-235-7055 Account Information Center To speak with a customer service representative, call 401-348-1200 or toll-free 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 800-226-5877. Website Current company and share- holder information available at www.washtrust.com. t r o p e R l a u n n A 8 0 0 2 , . c n I , p r o c n a B t s u r T n o t g n i h s a W s n o i t a c o L y r o t c e r i D e t a r o p r o C 19 ~ m o c . t s u r t h s a w . w w w 1 9 8 2 0 d n a l s I e d o h R , y l r e t s e W , t e e r t S d a o r B 3 2 W a s h i n g t o n T r u s t B a n c o r p , W a s h i n g t o n T r u s t B a n c o r p , I n c . I n c . Printed with vegetable-based inks. A portion of the energy used in printing was supplied by wind-generated electricity. 

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