Good morning and welcome to Washington Trust Bancorp Incorporated’s conference call. My name is Andrew and I will be your operator today. [Operator Instructions] Today’s call is being recorded. Now I will turn the call over to Elizabeth B. Eckel, Senior Vice President, Marketing and Investor Relations. Ms. Eckel?

Thank you, Andrew. Good morning. This is the fourth quarter and year-end 2012 earnings conference call for Washington Trust Bancorp Inc., NASDAQ global select market symbol WASH. Please note that this morning’s conference call is being recorded and webcast live. A webcast replay of today’s conference call will be made available shortly after the conclusion of the call through the corporation’s website, washtrust.com in our Investor Relations section under the subhead, Presentations. 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.

Good morning and thank you all for joining us on today’s call. Yesterday we released our fourth quarter and full-year 2012 results. This morning I’ll discuss our performance and then David will present a more detailed financial overview. At the conclusion of the call, we’ll answer questions and provide some thoughts on the year ahead. I’ll start by noting that Washington Trust had an outstanding fourth quarter, earning a record 9 million or $0.55 per diluted share. Full-year 2012 results reached an all-time high and totaled 35.1 million or $2.13 per diluted share. Our performance was marked really by good production and growth in our key areas. Our mortgage area had another standout performance in 2012 with mortgage origination production reaching a record 782 million for the year. Loan sale gains were a key component of total revenues and totaled 14.1 million in 2012. These results are directly attributable to our strategy to expand mortgage banking operations into nearby Massachusetts and Connecticut. In recent years, we hired talented mortgage professionals and opened offices in key markets. This strategy has paid off as we have had excellent production particularly in those areas. We’ve also benefited from continued low interest rates leading to continued refinancing, and it should be noted a slight uptick in purchase activity. Our commercial lending area posted double-digit growth in 2012, which we believe is quite an accomplishment in a slow growth market. As with our mortgage area, we’ve continued to hire commercial banking talent from larger institutions in recent years and months, and they have produced for us. In 2012, we booked a good mix of new CRE and C&I loans at the [indiscernible] competitors. We’ve built solid relationships with these clients by also providing cash management, deposit and merchant services. Total deposits reached record levels, totaling 2.3 billion at the end of 2012. We ranked first in market share for independent Rhode Island-based banks and stand third overall behind Citizens and Bank of America for Rhode Island market share. Our deposit growth has resulted from increased marketing, branch expansion in Rhode Island, and strong cash management efforts. It’s important to note that much of this growth is in low-cost retail commercial deposits. Our wealth management area continues to be a major source of non-interest income for the company with record revenues of nearly 30 billion in 2012. Our wealth management team works closely with other lines of business providing asset management, financial planning, trust and investment services to high net worth clients and non-profit organizations. I would now like to ask David Devault to provide more detail on our results. David?

Thank you, Joe. Good morning everyone and thanks for joining us on our call today. I’ll review our fourth quarter 2012 operating results and our financial position as described in our press release yesterday afternoon. Net income amounted to $9 million with diluted earnings per share of $0.55 in the fourth quarter of 2012. These were both record quarterly levels for Washington Trust. These results were up $0.01 per diluted share from the previous quarter and were $0.08 per diluted share higher than the fourth quarter of 2011. Key performance rations in the latest quarter continued to be very solid with a return on average equity of 12.01% and a return on average assets of 1.19%. These compare to the third quarter results of 12.02% for the return on equity and 1.17% for the return on assets. There were certain transactions in the quarter that require some additional explanation. Among these were some deleveraging transactions, including the sale of mortgage-backed securities with an amortized cost of $33.1 million resulting in net realized gains of $924,000. We also prepaid $38.8 million in federal home loan bank advances resulting in $1.8 million in debt prepayment penalty expense. There were also two revenue items that were higher than our normal run rate. Included in this were $462,000 of insurance commission fees received and reported in wealth management revenue, and a prepayment penalty in net interest income in the amount of $357,000 received from the pay down of a fixed rate commercial loan. Finally, we had a $400,000 cash contribution to our charitable foundation in the quarter. The combined impact of these transactions was a $0.02 reduction in diluted earnings per share on an after-tax basis. The net interest margin was 3.33% for the quarter, up 5 basis points on a linked quarter basis.…

Thank you, David. Just by way of correction, wealth management revenues were a record $30 million last year, not $30 billion. That would be an aspirational goal, I think. Again, Washington Trust had an outstanding fourth quarter and year. Our success really can be contributed to the strategic initiatives we set forth several years ago. We successfully hired talent away from our larger competitors in key business lines. We expanded our branch and mortgage banking network. We capitalized on opportunities in the marketplace and we maintained a superior level of customer service that we believe continues to differentiate us. It’s a testament to our business model and our management team that we’re able to drive our company forward in what has proven to be a highly competitive and challenging economic environment. For 2012, we provided strong returns for our shareholders, increased our dividend twice along with a 10% increase in our share price. 2013 brings new challenges and we believe opportunities for Washington Trust as we face increased regulation, strong competition and continued economic uncertainties. We will continue to focus on using our core strengths that have guided our company for more than 212 years and manage our company for future growth. We thank you for your time this morning, and now David and I would be happy to answer any questions.

[Operator Instructions] The first question comes from Frank Schiraldi of Sandler O’Neill.

Just a couple of questions, really. I just wanted to ask first on mortgage banking revenues, if you could talk a little bit about the ramp up there. I’m assuming it has to do with ramping up to your capabilities on the production side, given some of the new offices you’ve opened; but just where that can ramp up to, I guess, in 2013.

Well Frank, I think that, we believe that we have at this point pretty much fully staffed the offices that we have. We may add some originators if we can successfully recruit them. While we don’t think that particularly our newer offices in Massachusetts and Connecticut are fully mature, we are of course mindful of the fact that low interest rates may not be totally sustainable through the year. At this point, our pipelines would indicate that although slightly down, they are only marginally down; and given that that’s the case, we feel good about where we are with the mortgage business. It is, though, not something that we feel is totally predictable at this point.

I think you had mentioned two offices. What were the two areas that might not be fully mature, and it sounded like you’ve got the bodies in place. Maybe it’s just them ramping up their production?

Right, that would be our Burlington, Massachusetts, office, which is in the greater Boston area, and our Glastonbury, Connecticut office, which obviously we have kind of stretched down into Fairfield County from an origination standpoint.

And if you could just give us a little color on what percentage those two offices currently provide in terms of that total revenue pie, or their total origination pie; and maybe just a bit of a sense on how immature they are or what they could get up to in production.

Well, Burlington is actually a very strong contributor to total origination, but we think that it has more potential because it’s such a strong market area for us and there’s a lot of business there. So it’s close to—it’s over 20% of total production on a contemporary basis. Glastonbury, which is a newer office, is a smaller portion of that and has more upside potential.

Okay, but that probably doesn’t have the upside potential of the Massachusetts office?

It may not. That remains to be seen.

Okay. And then just switching gears, I just wanted to ask on the margin. Looking at the margin in 2013, any color on expectations there given -- obviously inclusive of the restructuring you did in the fourth quarter, do you sort of believe you can hold that margin stable at these levels, or do you expect we may see some modest compression from here, excluding, obviously, the big prepayment income in the quarter too?

Right. On what we would, I think, both call a core basis, we would hope to keep the margin very close to the levels we reported on a core basis, anyways, in the fourth quarter. The restructurings and the de-leveragings will help to the extent that I had indicated earlier on the call, and at the same time we are certainly seeing new loans come on at lower rates than the traditional or the historical book of business because that’s the nature of the rate profile today. We will continue to be very disciplined in pricing deposits and there is a modest amount of room as things in the time deposit category will re-price downward in 2013. So taking all those things into consideration, it’s our goal to keep it as stable as we possibly can.

Okay, and then just finally, wanted to see if I could separate out some of the restructuring a bit. Just wondered if you had available the MBS that you sold in the quarter, the yield on that; and then the yield on the borrowings that were prepaid rather than the bunch that were extended.

Yes the yield on the securities was about 2%. The rate average cost on the prepaid advances was around 2.7%.

The next question comes from Damon DelMonte of KBW.

Just wondering were there any impacts to any of your borrowers with regards to Hurricane Sandy during the quarter?

At this point, Damon, we’ve done a very in-depth and thorough analysis of issues around Hurricane Sandy and did actually a loan-by-loan analysis of that. We are comfortable that there are insignificant loss issues associated with that for us.

Okay. Do you think that -— I know the coastline in Rhode Island, I believe, experienced some decent damage. Do you believe there is going to be some opportunities for you guys in the way of lending in the coming quarters as a result of the rebuilding?

We certainly are very involved in all of the community actions in that market, and we have had a couple of opportunities to help with the rebuilding. All that being said, my comments on commercial banking expansion going into this next year, we feel confident that we will be able to hit low single-digit -— I mean high single-digit, maybe low double-digit growth in commercial outstandings. That’s on a combined basis in the markets that we deal with.

Okay, all right. And then David, with respect to the provision, it seems like the last two quarters were flat here at $600,000. How should we think about that going forward in light of the anticipated loan growth you’re going to have in the portfolio?

At some point, and it may come in the near term quarters, growth would cause us probably to increase our provision. At this time, we’re not seeing asset quality trends that would cause that, but we may need to do that in response to growth.

Okay. And longer term, what would you target for a reserve level for the entire portfolio?

I can see it drifting down certainly below 1.3%, getting closer to 1.2%. That will take some time, obviously, as we work through real estate market limitations.

Okay. And then just lastly, do you know what the gain on sale of loans were for mortgages fourth quarter versus third quarter?

$4,476,000 in gains on loans in the fourth quarter; $3,504,000 in the third quarter.

Right, but what was that as a percentage of loans sold? So the gain on sale?

Oh, I see what you mean. I don’t know that I have that calculated right now. The gain yields have remained fairly constant.

[Operator Instructions] The next question comes from Matthew Kelley of Sterne Agee.

I was just wondering if you could comment on the commercial loan yields, real estate loan yields that you saw during the fourth quarter, how that’s compared to prior quarters and the trends there in pricing on the assets that you’re adding to the portfolio.

The pricing, it hasn’t changed much on a linked quarter basis. We continued to see good competitive or strong competitive pressure on good quality deals, so we are responding to the marketplace on that in terms of pricing but certainly not in credit terms.

Okay, got you. What was the average commercial real estate yield for fourth quarter originations?

I don’t have that with us this morning.

Okay, got it. And then just another question -- you have a pretty strong currency, trading nice multiple in tangible book and earnings. Maybe you can just update us on your appetite or interest in M&A throughout the New England landscape and how that might factor into your growth plans in the year ahead.

Well I think, Matthew -- this is Joe -- we are always interested in acquisition opportunities where we think there is strategic value. So from our perspective, I don’t think we would be inconsistent in saying what we have said before, that we would look for things to the extent they could be geographically somewhat close. Ideally, it would be things that we could put our brand on, but we recognize that may not be able to be the case; so there would have to be compelling reasons strategically and from an expense synergy perspective that would make it interesting for us. But we look at things all the time.

Okay, got you. And then just one other question on the mortgage banking platform -- how big is that platform right now in terms of originators and offices for you folks?

Well, we have the equivalent of five offices, two in Rhode Island, two in Massachusetts, one in Connecticut. There are approximately 50 originators.

Seeing that there are no further questions, this concludes our question and answer session. I would like to turn the conference back over to Joe MarcAurele for any closing remarks.

Well first of all, thank you everyone. We appreciate your joining us today. We continue to work hard to bring the company forward. We are pleased with 2012 from a financial performance perspective, but we are also keenly aware that we need to keep delivering into 2013. So again, thank you very much. We’re happy to have you with us today, and that’s the conclusion of my remarks.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect your line.