plan”) for the benefit of certain eligible employees who were hired prior to October 1, 2007. Washington Trust also has non-qualified defined benefit retirement plans to provide supplemental retirement benefits to certain employees, as described in these plans. The defined benefit pension plans were previously amended to freeze benefit accruals after a

companies are permitted to company may engage directly or indirectly in, and acquire control of companies engaged in, activities that the Federal Reserve hadhas determined as of November 11, 1999 to be so closely related to banking as to be a proper incident thereto,or managing and controlling banks, subject to certain prior notification procedures and other requirements. In 2005, the Bancorp elected financial holding company status pursuant to the provisions of the Gramm-Leach-Bliley Act of 1999 (“GLBA”).  As a financial holding company, the Bancorp is authorized to engage in certain financial activities in which a bank holding company that has not elected to be a financial holding company may not engage.  “Financial activities” is broadly defined to include not only banking, insurance and

To satisfy these requirements, in 2016, the FDIC’s Board of Directors approved a final rule to increase the DIF’s reserve ratio to the statutorily required minimum ratio of 1.35% of estimated insured deposits. The final rule imposes on large banks a surcharge of 4.5 basis points of their assessment base, after making certain adjustments. LargeOn September 30, 2018, the DIF reserve ratio reached 1.36%. Small banks, which are generally banks with less than $10 billion or more in assets, will pay quarterly surcharges in addition to their regular risk-based assessments. Overall regular risk-basedwere awarded assessment rates decline once the reserve ratio reaches 1.15%. Small banks, such as the Bank, receive credits to offset the portion of their assessments that help to raise the reserve ratio from 1.15% to 1.35%. AfterIn 2019, the reserve ratio reaches 1.38%,Bank was awarded FDIC insurance assessment credits totaling approximately $1.1 million. The credits were fully utilized and recorded as a reduction to FDIC deposit insurance costs in the FDIC automatically applies a small bank’s credits to reduce its regular assessment up toConsolidated Statement of Income for the entire amount of the assessment for each period when the reserve ratio is at or above 1.38%.year ended December 31, 2019.

exempt a capped amount of reciprocal deposits from treatment as brokered deposits for certain insured depository institutions. Specifically, the Growth Act provides that reciprocal deposits received by an agent depository institution that places deposits (other than those obtained by or through a deposit broker) with a deposit placement network are not considered to be funds obtained by or through a deposit broker to the extent the total amount of such reciprocal deposits does not exceed the lesser of $5 billion or 20% of the depository institution’s total liabilities. However, a depository institution that is less than well capitalized may not accept or roll over such excluded reciprocal deposits at a rate of interest that is significantly higher than the prevailing rate in its market area or a national rate cap established by the FDIC. At December 31, 2018, the Bank had reciprocal deposits of less than $5 billion and less than 20% of the Bank’s total liabilities.

provisions of the Dodd-Frank Act, bank holding companies were permitted to include trust preferred securities and cumulative perpetual preferred stock in Tier 1 capital, subject to limitations.  However, the Federal Reserve’s capital rule applicable to bank holding companies permanently grandfathers non-qualifying capital instruments, including trust preferred securities, issued before May 19, 2010 by depository institution holding companies with less than $15 billion in total assets as of December 31, 2009, subject to a limit of 25% of Tier 1 capital.  The Bancorp’s currently outstanding trust preferred securities were grandfathered under this rule. In addition, under rules that became effective January 1, 2015, accumulated other comprehensive income (positive or negative) must be reflected in Tier 1 capital; however, the Bancorp wasand the Bank were permitted to make a one-time, permanent election to continue to exclude accumulated other comprehensive income from capital. The Bancorp and the Bank made this election.

may not lend money to, or engage in covered transactions with, its non-depository institution affiliates if the aggregate amount of “covered transactions” outstanding involving the bank, plus the proposed transaction exceeds the following limits: (i) in the case of any one such affiliate, the aggregate amount of “covered transactions” of the insured depository institution and its subsidiaries cannot exceed 10% of the capital stock and surplus of the insured depository institution; and (ii) in the case of all affiliates, the aggregate amount of covered transactions of the insured depository institution and its subsidiaries cannot exceed 20% of the capital stock and surplus of the insured depository institution. For this purpose, “covered transactions” are defined by statute to include a loan or extension of credit to an affiliate, a purchase of or investment in securities issued by an affiliate, a purchase of assets from an affiliate unless exempted by the Federal Reserve, the acceptance of securities issued by an affiliate as collateral for a loan or extension of credit to any person or company, the issuance of a guarantee, acceptance or letter of credit on behalf of an affiliate, securities borrowing or lending transactions with an affiliate that creates a credit exposure to such affiliate, or a derivatives transaction with an affiliate that creates a credit exposure to such affiliate.  “Covered transactions” are also subject to certain collateral security requirements. “Covered transactions” as well as other types of transactions between a bank and a bank holding company must be on marketconducted under terms and not otherwise undulyconditions, including credit standards, that are at least as favorable to the holding company or an affiliatebank as prevailing market terms. If a banking organization elects to use the community bank leverage ratio framework described in “Capital Adequacy and Safety and Soundness - Regulatory Capital Requirements” above, the banking organization would be required to measure the amount of the holding company.covered transactions as a percentage of Tier 1 capital, subject to certain adjustments. Moreover, Section 106 of the Bank Holding Company Act Amendments of 1970 provides that, to further competition, a bank holding company and its subsidiaries are prohibited from engaging in certain tying arrangements in connection with any extension of credit, lease or sale of property of any kind, or the furnishing of any service.

the Bank develop, implement and maintain a comprehensive written information security program designed to ensure the security and confidentiality of customer information (as defined under GLBA), to protect against anticipated threats or hazards to the security or integrity of such information; and to protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to any customer.  The Bank is also required to send a notice to customers whose sensitive information has been compromised if unauthorized use of the information is reasonably possible.  Most states, including the states where the Bank operates, have enacted legislation concerning breaches of data security and the duties of the Bank in response to a data breach.  Congress continues to consider federal legislation that would require consumer notice of data security breaches.  In addition, Massachusetts has promulgated data security regulations with respect to personal information of Massachusetts residents.  Pursuant to the FACT Act, the Bank had to develop and implement a written identity theft prevention program to detect, prevent, and mitigate identity theft in connection with the opening of certain accounts or certain existing accounts.  Additionally, the FACT Act amends the Fair Credit Reporting Act to generally prohibit a person from using information received from an affiliate to make a solicitation for marketing purposes to a consumer, unless the consumer is given notice and a reasonable opportunity and a reasonable and simple method to opt out of the making of such solicitations.

Commonwealth of Massachusetts,Act imposes numerous obligations on registered investment advisers, including those related to sales methods, trading practices, the use and safekeeping of customers’ funds and securities, capital structure, record keeping and the conduct of directors, officers and employees. Each of the mutual funds for which Weston Financial acted an investment adviser was registeredcompliance with the SEC under the Investment Company Act of 1940, as amended (the “Investment Company Act”), and was subject to requirements thereunder.  Shares of each mutual fund were registered with the SEC under the Securities Act of 1933, as amended, and were qualified for sale (or exempt from such qualification) under the laws of each state, the District of Columbia and the U.S. Virgin Islands to the extent such shares were sold in any of those jurisdictions. In the third quarter of 2017, the mutual funds were dissolved and liquidated pursuant to an Agreement and Plan of Dissolution and Liquidation approved by the shareholdersanti-fraud provisions of the mutual funds in August 2017.

Halsey is registered as an investment adviser with the SEC under the Investment Advisers Act and is subject to extensive regulation, supervision, and examination by the SEC and the Statefiduciary duties arising out of Connecticut, including those related to sales methods, trading practices, the use and safekeeping of customers’ funds and securities, capital structure, record keeping and the conduct of directors, officers and employees.

As investment advisers,provisions. Weston Financial and Halsey are subjectmust maintain a compliance program reasonably designed to prevent violations of the Investment Advisers Act and any regulations promulgated thereunder, including fiduciary,are also subject to recordkeeping, operational and disclosure obligations.  In addition, an adviser or subadvisor

reports as soon as reasonably practicable after it electronically files such material with, or furnishes it to, the SEC. Information on the Washington Trust website is not incorporated by reference into this Annual Report on Form 10‑K.

CertainHowever, certain assets and liabilities may react differently to changes in market interest rates. Further, interest rates on some types of assets and liabilities may fluctuate prior to changes in broader market interest rates, while rates on other types of assets and liabilities may lag behind. Additionally, some assets such as adjustable-rate mortgage loans have features, such as rate caps and floors, which restrict changes in applicable interest rates.

The market values of most of our financial assetsThese rates are highly sensitive to fluctuations in market interest rates.  Fixed-rate investment securities, mortgage-backed securitiesmany factors beyond our control, including general economic conditions, both domestic and mortgage loans typically decline in value as interest rates rise.

Changes in market interest rates can also affect the extent to which our borrowers prepay loansforeign, and the ratemonetary and fiscal policies of prepayments on mortgage-backed securities. various governmental and regulatory authorities.

decrease, loan prepayments generally increase. Prepayments may adversely affect the value of such loans and investment securities and the income generated by them. Particularly in a decreasing interest rate environment, prepaymentsreceipt of payments on mortgage-backed securities generally increase, and may result in the proceeds having to be reinvested at a lower rate than the loan or mortgage-backed security being prepaid. Changes in interest rates can also affect the amount of loans that we originate, as well as the value of loans and our ability to realize gains on the sale of loans.

Increasesinvestment securities. Fixed-rate investment securities, mortgage-backed securities and mortgage loans typically decline in value as interest rates might cause depositors to shift funds from accounts that have a comparatively lower cost, such as regular savings accounts, to accounts with a higher cost, such as certificates of deposit. If the cost of interest-bearing deposits increases at a rate greater than the yields on interest-earning assets increase, our net interest income will be negatively affected.  Changes in the asset and liability mix may also affect our net interest income.rise.

We periodically make a determination ofmaintain an allowance for loan losses based on available information, including, but not limited to, the quality and collectability of the loan portfolio, the creditworthiness of borrowers, certain economic conditions, the value of the underlying collateral and the level of nonaccrual and criticized loans. We rely on our loan quality reviews, our experience and our evaluation of economic conditions, among other factors, in determining the amount of provision required for the allowance for loan losses. Provisions to this allowance result in an expense for the period. If, as a result of general economic conditions, changes to previous assumptions, or an increase in defaulted loans, we determine that additional increases in the allowance for loan losses are necessary, we will incur additional expense.

Determining A problem with one or more loans could require Washington Trust to significantly increase the level of its allowance for loan losses inherently involves a high degree of subjectivity and requires us to make various assumptions and judgments, all of which may undergo material changes. At any time, there are likely to be loans in our portfolio that will result in losses but that have not been identified as nonperforming or potential problem credits. We cannot be sure that we will be able to identify deteriorating credits before they become nonperforming assets or that we will be able to limit losses on those loans that are identified. We may be required to increase our allowance for loan losses for any of several reasons.losses. Federal and state regulators, in reviewing our loan portfolio as part of a regulatory examination, may request that we increase our allowance for loan losses. Changes in economic conditions affecting

borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require an increase in our allowance for loan losses. In addition, if losses and/or charge-offs in future periods exceed our allowance for loan losses, we will need additional increases in our allowance for loan losses. Any increases in our allowance for loan losses will result in a decrease in our net income and, possibly, our capital, and could have an adverse effect on our financial condition and results of operations.

We compete with larger bank and non-bank financial institutions for loans and deposits in the communities we serve, and we may face even greater competition in the future due to legislative, regulatory and technological changes and continued consolidation.  Many of our competitors have significantly greater resources and lending limits than we have.  Banks and other financial services firms can merge under the umbrella of a financial holding company, which can offer virtually any type of financial service.  In addition, technology has lowered barriers to entry and made it possible for non-banks to offer products and services traditionally provided by banks, such as automated transferto evolving industry standards and automaticconsumer preferences.

systems.  Many competitors have fewer regulatory constraints and may have lower cost structures than we do.  Additionally, due systems, could require substantial expenditures to their size, many competitors may be able to achieve economies of scale and, as a result, may offer a broader range ofmodify or adapt our existing products and services as well as better pricing for thosewe grow and develop our internet banking and mobile banking channel strategies in addition to remote connectivity solutions. We might not be successful in developing or introducing new products and services, than we can.  Our long-term success depends onintegrating new products or services into our abilityexisting offerings, responding or adapting to compete successfully with other financial institutionschanges in consumer behavior, preferences, spending, investing and/or saving habits, achieving market acceptance of our service areas.products and services, reducing costs in response to pressures to deliver products and services at lower prices or sufficiently developing and maintaining loyal customers.

Our success depends, in large part, oncontrol our ability to attractrisk exposure through a risk and retain key personnel.  Competition for qualified personnel incontrol framework encompassing a variety of separate but complementary financial, credit, operational, compliance, and legal reporting systems; internal controls; management review processes; and other mechanisms. While we employ a broad and diversified set of risk monitoring and risk mitigation techniques, those techniques and the financial services industry can be intense and wejudgments that accompany their application may not be able to hireeffective and may not anticipate every economic and financial outcome in all market environments or retain the key personnel that we depend upon for success. Certain key personnel that have regular direct contact with customersspecifics and clients often build strong relationships that are important to our business. The unexpected loss of services of one or more of our key personnel could have a material adverse impact on our business because of their skills, knowledge of the markets in which we operate, years of industry experience and the difficulty of promptly finding qualified replacement personnel. Also, the loss of key personnel could jeopardize our relationships with customers and clients and could lead to the loss of accounts. Lossestiming of such accounts could have a material adverse impact on our business.outcomes.

From timeexecute strategic plans and initiatives; to timedevelop competitive products and technologies; and to attract, retain and develop a highly skilled employee workforce. Our ability to successfully attract and retain wealth management clients is dependent upon our ability to compete with competitors’ investment products, level of investment performance, client services and marketing and distribution capabilities. If we are named as a defendant or are otherwise involved in various legal proceedings, including class actions and other litigation or disputes with third parties. There is no assurance that litigation with private parties will not increase in the future. Actions currently pending against us may result in judgments, settlements, fines, penalties or other results adverse to us, which could materially adversely affectsuccessful, our business, financial condition or results of operations or cause serious reputational harmand financial condition may be negatively impacted.

Our businesses and operationsdepend upon for success. Frequently, we compete in the market for talent with entities that are alsonot subject to increasing regulatory oversightcomprehensive regulation, including with respect to the structure of incentive compensation. The unexpected loss of services of one or more of our key personnel could have a material adverse impact on our business because of their skills, knowledge of the markets in which we operate, years of industry experience and scrutiny, which may lead to additional regulatory investigations or enforcement actions. Thesethe difficulty of promptly finding qualified replacement personnel. Also, the loss of key personnel could jeopardize our relationships with customers and other initiatives from federalclients and state officials may subject us to further judgments, settlements, fines or penalties, or cause us to be required to restructure our operations and activities, all of which could lead to reputational issues, or higher operational costs, thereby reducing our profitability.

The financial services industry is subject to intense scrutiny from bank supervisors in the examination process and aggressive enforcementloss of federal and state regulations, particularly with respect to mortgage-related practices and other consumer compliance matters, and compliance with anti-money laundering, Bank Secrecy Act and Officeaccounts. Losses of Foreign Assets Control regulations, and economic sanctions against certain foreign countries and nationals. Enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound practices. We maintain systems and procedures designed to ensure that we comply with applicable laws and regulations; however, some legal/regulatory frameworks provide for the imposition of fines or penalties for noncompliance even though the noncompliance was inadvertent or unintentional and even though there were systems and procedures designed to ensure compliance in place

In 2017, Congress enacted The Corporation assesses the Tax Cuts and Jobs Act (“Tax Act”), which has had both positive and negative effects on

our financial performance. The enactment of the Tax Act required a revaluation of our net deferred tax assets in lightperiodically to determine the likelihood of the new federal income tax rate This had an adverse impactCorporation’s ability to our financial performancerealize the benefits. Management judgment is required in 2017, as we recognized a write-downdetermining the appropriate recognition and valuation of $6.2 million in our net deferred tax assets withand liabilities, including projections of future taxable income, as well as the character of that income. A change in statutory tax rates may result in a correspondingdecrease or increase to incomethe Corporation’s deferred tax expense. Beginning in 2018, the Tax Act reduced the federal corporate tax rate from 35% to 21% and also enacted limitations on certain deductions, resulting in a netassets. A decrease in our effective incomethe Corporation’s deferred tax rate. Furthermore, changes in interpretations, guidance or regulations that may be promulgated, or actions that we may take as a result of the Tax Actassets could negatively impact our business. Similarly, our customers are likely to experience varying effects from both the individual and business tax provisions of the Tax Act and such effects, whether positive or negative, may have a corresponding impactmaterial adverse effect on ourthe Corporation’s results of operations or financial performance and the economy as a whole.condition.