Good morning and welcome to the Washington Trust Bancorp, Inc.’s Conference Call. My name is Emily and I will be your operator today. [Operator Instructions] Today’s call is being recorded. Now I like to turn the call over to Elizabeth Eckel, Senior Vice President, Marketing and Investor Relations. Miss Eckel.

Thank you. Good morning, and welcome to the first quarter 2012 earnings conference call for Washington Trust Bancorp, Inc. NASDAQ Global Market, Select Symbol WASH. This morning’s conference call is being recorded webcast live and a webcast replay of today’s conference call will be available shortly after the conclusion of the call through the corporation’s website at www.washtrust.com in our Investor Relations section under the sub-head presentation. However, the information we provide during today’s call is accurate only as of this date and you should not rely on these statements after the conclusion of the call. Hosting this morning’s discussion is Joseph J. MarcAurele, Chairman, President, and Chief Executive Officer; and David V. Devault, Senior Executive Vice President, Secretary, and Chief Financial Officer. And now, I’m pleased to introduce Washington Trust’s Chairman, President and CEO, Joseph MarcAurele, Joe?

Good morning and thank you for joining us on today’s call. Earlier today, we released our first quarter 2012 earnings. I’ll make a few brief comments about the quarter and then David will provide a more detailed financial overview. We’ll then answer any questions you may have. As you may recall, Washington Trust announced record net income in the fourth quarter of 2011. I’m pleased to report that the momentum continued into 2012. And this was no easy task considering the difficult Rhode Island economy. We posted record earnings of $8.4 million or $0.51 per diluted share for the first quarter of 2012, up from $6.8 million or $0.42 per fully diluted share in the first quarter of 2011. Washington Trust has a solid foundation, which we built upon to improve our key performance measures during the quarter. As return on average equity was 11.85% and return on average assets was 1.11%. We continue to be well capitalized and our asset quality remains healthy. The key to our success has been our ability to strategically grow the corporation, while adhering to the core values upon which Washington Trust was founded 212 years ago. We’ve never forgotten that banking is about people, depositors, homeowners, businesses, and investors who depend on us to help them reach their goals. As we grow, we bring our brand of personal service, competitive products, and state of the art technology to new market areas reaching more and more people. Our mortgage expansion into Massachusetts and Connecticut is a great example of how we’ve been able to strategically grow a core business line and use our competitive advantage of service excellence. While some of the larger banks have been caught up in red tape, Washington Trust has been able to quickly and efficiently service homeowners. As a…

Thank you Joe, good morning everyone and thanks for joining us on our call today. I will review our first quarter 2012 operating results and financial position as described in our press release issued this morning. As Joe mentioned net income of $8.4 million and diluted earnings per share of $0.51 for the first quarter of this year were record levels for Washington Trust. These results compare to $0.47 per diluted share in the fourth quarter of last year and $0.42 per diluted share in the first quarter a year ago. These latest quarter results reflect some excellent revenue increases in a number of business lines, as well as continued improvement in asset quality. Key performance ratios for the latest quarter were very sound with a return on average equity of 11.85% and return on average assets of 1.11%. The return on average equity for the quarter is the highest level we have seen since the third quarter of 2008. And a return on average assets is the highest level in many years. Net interest income for the first quarter of this year was up 2% on a linked quarter basis, due to continued reduction in the cost of wholesale funding and time deposits. From the first quarter a year ago, net interest income is up by 10%, reflecting the benefit of lower funding costs, as well as 7% growth in average loan balances over that period of time. The net interest margin was 3.27% in the first quarter, up 5 basis points on a linked quarter basis and an 11 basis points higher than the first quarter a year ago. Looking at other non-interest revenue sources, mortgage banking revenues, which consist of net gains on loan sales and commissions received on loans originated for others reached an all-time high…

Thank you, David. We are obviously pleased with our first quarter performance. It’s a great way to start off the year. And while we are happy with the momentum we’ve generated in recent quarters, there is still much work to do. We are still facing some economic headwinds with both increased regulation and competition, as well as some continued weakness in the economy. We have had great success growing key business lines, particularly our mortgage banking operation and branch network, and we plan to continue to do that. We will however not grow just for growth sake, we will do it only if it is done strategically, so that we can build upon our already strong foundation and really do what we do best to provide a solid return for our shareholders. I really like to thank everyone for their time this morning. And now David and I would be happy to answer any of your questions. Thank you.

We will now begin the question and answer session. [Operator Instructions] And our first question will come from Damon DelMonte of KBW, please go ahead.

My first question has to do with the margin, obviously a nice quarter-over-quarter increase for you guys. David, maybe you could talk a little bit about your outlook for other ways to reduce the funding costs or maybe even on the asset side as to where you may be able to pick up a little bit yield to keep this level of the margin?

Well, there would continue to be some opportunity to continue to reduce wholesale funding costs and time deposit costs, I think it will be modest over time. The ability to generate new assets at yields that will support the margin is something we are going to try very hard to do. The longer the low interest rate environment continues the more stress there will be from that aspect of managing the margin. We would, I think look to see some stability in the margin over the next couple of quarters and we will take it from there.

Okay, that’s helpful. Could you talk a little bit about the loan pipeline, I know period end loans didn’t show much of an increase, but is the first quarter typically seasonally low for you and if so what would be your outlook for the second and third quarters coming up?

Well Damon this is Joe. My feeling is pretty basic here. We had a very, very strong fourth quarter in loan closings. To that extent we to a large degree blew out a fairly significant portion of the pipeline. We are rebuilding that now. The all in commercial pipeline right now stands at about $75 million. It has more typically been a bit higher than that. My sense is, is that we will continue to build that and hopefully we will show some level of growth in the second quarter that may be at least slightly better than we showed in first quarter.

Okay. And would you expect that pipeline to continue to build as you go further through the year?

That would be the goal.

Okay and then, just lastly David, with regards to expenses, is this quarters level, a good run rate going forward or are there additional expenses we should be considering?

This is a pretty good run rate Damon. You’re seeing, as I mentioned before the impact of mortgage origination commissions that are included in those expenses. Right now we anticipate certainly that the revenue side will continue to hold that up and we’ll see those kind of expenses, and we have a plan to open a branch later in the year, but that would be, I think pretty modest on the total expense base and largely staffed from the existing employee pool for the most part, maybe a few hundred thousand dollars on an annualized basis of additional costs from that new branch.

[Operator Instructions] And our next question comes from Frank Schiraldi of Sandler O'Neill. Please go ahead.

Just a few questions, wondered first, just a follow-up on the margin, Dave if you could talk a little bit about where CDs are being put on the books currently and give us a little color on, if possible on maturities going forward, timing?

The weighted average cost of CD originations has been hovering around the 30 to 40 basis point range on a monthly basis. That would include rollovers of existing CDs, as well as new CDs opened by customers. So that is going to continue to gradually reduce our funding cost there I think.

Okay is there any - in terms of maturities going forward, is there any bulkiness coming up or any programs coming up that would take down a large - larger than usual balance?

It’s pretty evenly spread out on a maturity basis.

Okay, and then on mortgage banking, given the 2 - given the office you opened in 4Q and the office in Rhode Island and in the first quarter, late in the first quarter as I recall, as those ramp up, should we expect even if industry originations fall, do you think we should expect to continue to see increased revenue going forward at least in 2Q versus 1Q?

Well, right now the pipeline for mortgage originations has been and continues to be fairly stable both the balance that we saw in the fourth quarter, at the end of the fourth quarter, pretty much throughout the first quarter. It's continuing at the range that it has been in, which is between $100 and $120 million for the most part of the residential pipeline. This is different than the commercial pipeline Joe was referring to earlier. So, I don't think we have seen the full impact yet of those new offices, we certainly haven't. I think we will see a gradual increase in originations from those new offices. And then you also have the impact of rates, right now and for the foreseeable future it looks like rates are going to continue to support the demand that we’ve been seeing.

Okay great. And then, I wonder Joe, maybe if you could just talk a little bit about, you know you talked a little bit about the marketplace, about the pipeline certainly, many banks that I’ve been talking to have really spoken about a ramp up in loan competition in their footprints, both on pricing and terms. And I’m just wondering if you would say the same is true of Rhode Island or if it’s maybe a bit different of a story considering the players and the share characteristics of the state.

Well, I really would say that the competition both on a rate and a structure standpoint has certainly heated up, and we do feel that. The advantage that I think we continue to feel is some opportunity, particularly against larger competitors to be a bit more agile. All that being said, I read the same thing that you read with other competitive banks and I would say that my comments would be consistent with that.

Okay, great and then just finally, you mentioned the difficult economy in Rhode Island, and I’m wondering are you seeing the hopeful signs here early in 2012, sort of lock step to the rest of what the country is seeing or is that a bit too optimistic?

I think lock step, but slower Frank, that would be my comment. Rhode Island, in my opinion, will come out of this later than other parts, certainly of New England and probably certain better parts of the country. And again our opportunity is that we have relatively modest market share and even though the economy is challenged, you know our opportunity is to continue to make market share gains.

[Operator Instruction] This concludes our question-and-answer session. I’d like to turn the conference back over to Joseph MarcAurele for any closing remarks.

Well, I just like to thank everyone again for your time and obviously we are pleased with what’s been a solid first quarter. We think that the trends and the opportunity for the company continue to be reasonable and our hope is that we can continue to perform on those.

The conference is now concluded. Thank you for attending today’s presentation, you may now disconnect.