2002 Annual Report Washington Trust Bancorp, Inc. and Subsidiary Consolidated statements of cash flows Years ended December 31, 2002 2001 2000 (Dollars in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $16,757 $13,108 $13,209 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 400 550 1,150 Depreciation of premises and equipment 2,988 3,036 3,323 Amortization of premium in excess of (less than) accretion of discount on debt securities 1,983 489 (149) Deferred income tax benefit (1,262) (644) (681) Increase in bank-owned life insurance cash surrender value (1,155) (1,134) (1,047) Depreciation (appreciation) of derivative instruments 384 (712) – Net amortization of intangibles 510 129 129 Net realized gains on securities (678) (348) (760) Net gains on loan sales (2,647) (1,686) (322) Proceeds from sales of loans 126,382 98,198 23,769 Loans originated for sale (120,587) (102,583) (23,437) (Increase) decrease in accrued interest receivable (175) 676 (1,790) (Increase) decrease in other assets (1,981) (930) 186 (Decrease) increase in accrued expenses and other liabilities (733) 807 2,857 Other, net 248 517 1,075 Net cash provided by operating activities 20,434 9,473 17,512 CASH FLOWS FROM INVESTING ACTIVITIES: Securities available for sale: Purchases (307,083) (160,774) (128,227) Proceeds from sales 29,964 238 40,288 Maturities and principal repayments 187,549 140,145 38,507 Securities held to maturity: Purchases (152,157) (131,570) (22,745) Maturities and principal repayments 84,447 37,841 14,235 Purchases of Federal Home Loan Bank stock – (3,933) (1,931) Principal collected on loans (under) over loan originations (12,507) 6,394 (48,756) Purchases of loans (62,433) (15,151) – Proceeds from sales of other real estate owned 61 151 95 Purchases of premises and equipment (3,400) (3,416) (1,813) Proceeds from sale of premises and equipment 638 – – Cash acquired, net of payment made for acquisition 34,506 – – Net cash used in investing activities (200,415) (130,075) (110,347) CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in deposits 156,420 81,192 74,931 Net increase (decrease) in other borrowings 4,242 (1,140) (982) Proceeds from Federal Home Loan Bank advances 717,200 1,217,000 404,500 Repayment of Federal Home Loan Bank advances (690,695) (1,162,872) (379,686) Purchase of treasury stock  (536) (670) – Net effect of common stock transactions 397 266 (201) Cash dividends paid (6,898) (6,135) (6,387) Net cash provided by financing activities 180,130 127,641 92,175 Net increase (decrease) in cash and cash equivalents 149 7,039 (660) Cash and cash equivalents at beginning of year 50,899 43,860 44,520 Cash and cash equivalents at end of year $51,048 $50,899 $43,860 (continued) fifteen