(Source: Business Wire)Washington Trust Bancorp, Inc. (NASDAQ Global Select; symbol: WASH), parent company of The Washington Trust Company, today announced third quarter 2009 net income of $4.9million, or 31cents per diluted share, compared to third quarter 2008 net income of $6.0million, or 44cents per diluted share. For the nine months ended September30, 2009, net income amounted to $11.3million, or 71cents per diluted share, compared to $18.0million, or $1.32per diluted share, for the same period in 2008.

Earnings in the third quarter of 2009 were influenced by the following:

Impairment losses of $467thousand were charged to earnings in the third quarter of 2009 for an investment security deemed to be other-than-temporarily impaired at September30, 2009. Impairment losses of $982thousand were recognized in the third quarter of 2008.

The loan loss provision charged to earnings amounted to $1.8million for the third quarter of 2009, compared to $1.1million for the third quarter of 2008. The provision was based on management's assessment of economic and credit conditions as well as growth in the loan portfolio.

No dividend was received from the Federal Home Loan Bank of Boston ("FHLBB") in the third quarter of 2009. Dividend income on Washington Trust's investment in FHLBB stock totaled $292thousand in the third quarter of 2008.

Federal Deposit Insurance Corp. ("FDIC") deposit insurance premiums for the third quarter of 2009 were up by $543thousand from the third quarter a year earlier, reflecting higher assessment rates.

Selected Third Quarter 2009 developments:

Wealth management revenues for the third quarter of 2009 increased $95thousand, or 2percent, from the second quarter of 2009. Included in second quarter amounts were seasonal tax preparation fee revenues of $339thousand. Assets under administration increased by $287million in the third quarter of 2009 and were less than 1percent below the balance at September30, 2008.

Net gains on loan sales and commissions on loans originated for others for the third quarter of 2009 were up by $352thousand from the same quarter a year ago, due to strong residential mortgage refinancing and sales activity.

Commercial loan growth continued at a good pace, amounting to $29million, or 3percent, in the third quarter of 2009. Commercial loans have increased $96million, or 11percent, from the balance at December31, 2008.

Reflecting continued weak economic conditions, nonperforming assets amounted to $27.9million, or 0.97% of total assets, at September30, 2009 up from $24.8million, or 0.85% of total assets, at June30, 2009. Nonperforming assets were $8.8million, or 0.30% of total assets, at December31, 2008.

John C. Warren, Washington Trust Bancorp, Inc.'s Chairman and Chief Executive Officer, stated "We are pleased with Washington Trust's third quarter performance in these challenging times. It is a testament to our sound business model and strong corporate brand that we were able to outperform market expectations during a period of continued economic uncertainty."

RESULTS OF OPERATIONS

Net interest income for the third quarter of 2009 increased $465thousand, or 3percent, from the second quarter of 2009 and remained essentially flat compared to the third quarter a year ago. On a year-to-date basis, net interest income increased $1.0million, or 2percent, from 2008. No dividend has been received from the FHLBB in 2009. Dividend income on Washington Trust's investment in FHLBB stock totaled $292thousand and $1.1million for the three and nine months ended September30, 2008, respectively.

The net interest margin (annualized tax-equivalent net interest income as a percentage of average earning assets) for the third quarter of 2009 was 2.51%, up 6basis points from the second quarter of 2009 primarily due to a 21basis point decline in the effective rate paid on interest-bearing deposits. The quarterly net interest margin was 11basis points lower than the third quarter a year ago. For the nine months ended September30, 2009, the net interest margin was 2.45%, down 19basis points from the same period a year earlier. The quarter and year-to-date decreases in net interest margin from 2008 reflect the elimination of FHLBB dividend income and margin compression, in general, on core deposit rates following the Federal Reserve's actions to reduce short-term interest rates in late 2008 and early 2009, as well as the impact of higher levels of nonaccrual loans in 2009 compared to 2008.

Total noninterest income for the third quarter of 2009 decreased $1.3million, or 10percent, from the second quarter of 2009 and increased $447thousand, or 4percent, from the third quarter of 2008. Included in noninterest income in the third quarter of 2009 were impairment losses of $467thousand for an investment security deemed to be other-than-temporarily impaired at September30, 2009. There were no impairment losses recognized in the second quarter of 2009 while impairment losses of $982thousand were recognized in earnings the third quarter of 2008. Excluding other-than-temporary impairment losses, noninterest income for the third quarter of 2009 declined by $799thousand, or 6percent, from the second quarter of 2009 and remained essentially flat compared to the third quarter of 2008. The linked-quarter decline in noninterest income, on this basis, was largely due to declines in net gains on loan sales and commissions on loans originated for others. On a year-to-date basis, total noninterest income decreased by $2.5million, or 8percent, from 2008. For the nine months ended September30, 2009 and 2008, impairment losses recognized in earnings totaled $2.5million and $3.0million, respectively. Excluding other-than-temporary net impairment losses, noninterest income, on a year-to-date basis, declined by $3.1million, or 8percent, from 2008 reflecting declines in wealth management revenues and lower net realized gains on securities, which were partially offset by higher net gains on loan sales and commissions on loans originated for others.

Wealth management revenues for the third quarter of 2009 increased $95thousand, or 2percent, from the second quarter of 2009 and decreased $1.1million, or 16percent, from the third quarter a year ago. Second quarter 2009 amounts included seasonal tax preparation fee revenues of $339thousand. For the nine months ended September30, 2009, wealth management revenues were down $4.7million, or 21percent, from the same period in 2008. Wealth management revenues are largely dependent on the value of assets under administration and are closely tied to the performance of the financial markets. Assets under administration totaled $3.603billion at September30, 2009, up $287million, or 9percent, from June30, 2009 and up $456million, or 14percent, from December31, 2008. Assets under administration were down $21million, or 1percent, from September30, 2008. The increase in assets under administration in 2009 was primarily due to higher valuations in the financial markets.

Net gains on loan sales and commissions on loans originated for others for the third quarter of 2009 were down by $961thousand from the second quarter of 2009 and up by $352thousand from the third quarter a year ago. On a year-to-date basis, net gains on loan sales and commissions on loans originated for others increased by $2.0million from the same period in 2008, reflecting strong residential mortgage refinancing and sales activity in 2009. Also included in noninterest income were net realized gains on securities of $314thousand and $1.9million for the nine months ended September30, 2009 and 2008, respectively.

Noninterest expenses for the third quarter of 2009 decreased by $1.1million, or 6percent, from the second quarter of 2009 and increased by $721thousand, or 4percent, from the third quarter of 2008. FDIC deposit insurance costs for the third quarter of 2009 decreased by $1.3million from the second quarter of 2009 and increased by $543thousand from the third quarter a year earlier. A special FDIC assessment of $1.35million was recorded in the second quarter of 2009. On a year-to-date basis, total noninterest expenses increased by $4.2million, or 8percent, from 2008, which included a $2.8million increase in FDIC deposit insurance costs. In addition to the special assessment, the year over year increase in FDIC deposit insurance costs also reflects higher assessment rates.

Income tax expense amounted to $1.9million and $4.4million for the three and nine months ended September30, 2009, respectively, as compared to $1.6million and $7.2million for the same periods in 2008. The effective tax rate for the third quarter and first nine months of 2009 was 27.4% and 28.1%, respectively, as compared to 21.2% and 28.5% for the same periods a year earlier.

ASSET QUALITY

Nonperforming assets (nonaccrual loans, nonaccrual investment securities and property acquired through foreclosure) amounted to $27.9million, or 0.97% of total assets, at September30, 2009, compared to $24.8million, or 0.85% of total assets, at June30, 2009. Nonperforming assets were $8.8million, or 0.30% of total assets, at December31, 2008. Nonaccrual loans totaled $25.2million at September30, 2009, up $2.5million in the third quarter of 2009. Included in this increase was one commercial real estate loan for $2.0million, which is secured by office buildings. Total nonaccrual loans were $7.8million at December31, 2008. Nonaccrual investment securities totaled $1.5million at September30, 2009, compared to $633thousand at December31, 2008. Property acquired through foreclosure or repossession amounted to $1.2million at September30, 2009, compared to $392thousand at December31, 2008. The balance at September30, 2009 consisted of one residential property.

At September30, 2009, total 30day+delinquencies amounted to $30.0million, or 1.57% of total loans, up $4.4million in the third quarter of 2009 and up $12.4million from the balance at December31, 2008, with the largest increase in the commercial loan category. Commercial loan delinquencies amounted to $22.2million, or 2.27% of total commercial loans, at September30, 2009, up $4.6million in the third quarter of 2009 and up $10.6million from the balance at December31, 2008.

Total residential mortgage and consumer loan 30 day+delinquencies amounted to $7.9million, or 0.84% of these loans, at September30, 2009, down $207thousand in the third quarter of 2009 and up $1.8million from the balance at December31, 2008. Total 90 day+delinquencies in the residential mortgage and consumer loan categories amounted to $4.2million (13 loans) and $300thousand (6 loans), respectively, at September30, 2009. Comparable amounts at June30, 2009 were $3.8million (10loans) and $2thousand (2loans), respectively. At December31, 2008, these amounts were $973thousand (5loans) and $77thousand (2loans), respectively. Washington Trust has never offered a subprime residential loan program.

The loan loss provision charged to earnings amounted to $1.8million for the third quarter of 2009, compared to $3.0million for the second quarter of 2009 and $1.1million for the third quarter of 2008. For the nine months ended September30, 2009 and 2008, the loan loss provision totaled $6.5million and $3.0million, respectively. The provision for loan losses was based on management's assessment of economic and credit conditions, with particular emphasis on commercial and commercial real estate categories, as well as growth in the loan portfolio. Net charge-offs amounted to $1.4million in the third quarter of 2009, approximately equal to the second quarter of 2009. Net charge-offs were $432thousand in the third quarter of 2008. For the nine months ended September30, 2009 and 2008, net charge-offs totaled $3.8million and $596thousand, respectively.

We believe that the declining credit quality trend experienced in 2009 is primarily related to weakened national and regional economic conditions. These conditions, including high unemployment levels, may continue for the next few quarters. Management will continue to assess the adequacy of the allowance for loan losses in accordance with its established policies. The allowance for loan losses was $26.4million, or 1.39% of total loans, at September30, 2009, compared to $23.7million, or 1.29% of total loans, at December31, 2008 and $22.6million, or 1.28% of total loans, at September30, 2008.

FINANCIAL CONDITION

Total loans grew by $15million in the third quarter of 2009, with growth of $49million in the commercial real estate portfolio, offset in part by a $20million decline in other commercial loans and a $14million decrease in the residential loan portfolio. During the first nine months of 2009, total loans grew by $67million, or 4percent, with commercial real estate loan growth of $95million, or 21percent.

The investment securities portfolio amounted to $732.6million at September30, 2009, down by $44million in the third quarter of 2009 and down by $134million from the balance at December31, 2008. The largest component of the investment securities portfolio is mortgage-backed securities, all of which are issued by U.S. Government agencies or U.S. Government-sponsored enterprises. At September30, 2009, the net unrealized gain position on the investment securities portfolio was $16.2million, including gross unrealized losses of $17.0million. Approximately 92% of the gross unrealized losses on the investment securities portfolio were concentrated in variable rate trust preferred securities issued by financial services companies. During the third quarter of 2009, net impairment losses of $467thousand were charged to earnings on a pooled trust preferred debt security deemed to be other-than-temporarily impaired at September30, 2009.

Total deposits amounted to $1.894billion at September30, 2009, up by $10million from June30, 2009 and by $103million, or 6percent, from December31, 2008. Excluding out-of-market brokered certificates of deposit, in-market deposits grew by $59million, or 3percent, during the third quarter of 2009. During the first nine months of 2009, in-market deposits increased by $189million, or 12percent, which included $40million in wealth management client money market deposits previously held in outside money market funds.

FHLBB advances totaled $637million at September30, 2009, down by $52million from June30, 2009 and down by $193million from December31, 2008.

DIVIDENDS DECLARED

The Board of Directors declared a quarterly dividend of 21cents per share for the quarter ended September30, 2009. The dividend was paid on October13, 2009 to shareholders of record on September30, 2009.

CONFERENCE CALL

Washington Trust Chairman and Chief Executive Officer John C. Warren, and David V. Devault, Executive Vice President, Chief Financial Officer and Secretary, will host a conference call on Wednesday, October21, 2009 at 8:30a.m. (Eastern Time) to discuss Washington Trust's third quarter results. This call is being webcast by SNL IR Solutions and can be accessed through the Investor Relations section of the Washington Trust website, www.washtrust.com, or may be accessed by calling (800)860-2442, or (412)858-4600 for international callers. A replay of the call will be posted in this same location on the website shortly after the conclusion of the call. To listen to a replay of the conference call, dial (877)344-7529 and enter Conference ID #: 434184. The replay will be available until 9:00a.m. on October30, 2009.

BACKGROUND

Washington Trust Bancorp, Inc. is the parent of The Washington Trust Company, a Rhode Island state-chartered bank founded in 1800. Washington Trust offers personal banking, business banking and wealth management services through its offices in Rhode Island, Massachusetts and southeastern Connecticut. Washington Trust Bancorp, Inc.'s common stock trades on the NASDAQ Global Select® Market under the symbol "WASH." Investor information is available on the Washington Trust's web site: www.washtrust.com.

FORWARD-LOOKING STATEMENTS

This press release contains certain statements that may be considered "forward-looking statements" within the meaning of Section27A 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 Washington Trust 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 Washington Trust'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 December31, 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 press release, and Washington Trust assumes no obligation to update forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

SUPPLEMENTAL INFORMATION -- EXPLANATION OF NON-GAAP FINANCIAL MEASURES

Reported amounts are presented in accordance with U.S. generally accepted accounting principles ("GAAP"). Washington Trust's management believes that the supplemental non-GAAP information, which consists of measurements and ratios based on tangible equity and tangible assets, is utilized by regulators and market analysts to evaluate a company's financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies.

                                                                                                                                                                 
                                                                                                                                                                 
 Washington Trust Bancorp, Inc.