Washington Trust Bancorp is eager to dip its toe in the water when it comes to Fairfield County, Conn., but the company is reluctant to take a full plunge into that booming market.

The $3.4 billion company, based in Westerly, R.I., opened a mortgage lending office in Darien less than a month ago, prompting speculation that the move would pave the way for more branches or an acquisition.

Management certainly helped fuel such talk during a recent conference call to discuss quarterly results.

"We're excited about the additional growth opportunities we have in Fairfield County," Joseph MarcAurele, Washington Trust's chairman and chief executive, said during the Oct. 21 call, noting that the office's grand opening attracted more than 100 local lawyers, accountants and real estate agents. He said those visitors were "just as interested in our commercial lending and wealth management capabilities as they were in our mortgage lending."

It is understandable why investors might get carried away after hearing such commentary. Fairfield County is one of the nation's wealthiest markets, and Washington Trust is a well-regarded institution in New England. Expansion in that market would make a lot of sense, industry observers said.

Washington Trust is already doing "a fair amount of lending in Fairfield," Mark Fitzgibbon, research director at Sandler O'Neill said, adding that a retail expansion "seems logical."

In the same vein, John Carusone, president of the Bank Analysis Center in Hartford, Conn., said that a bigger push by Washington Trust into the county would create a "remarkably competitive super community entity in southern New England."

The logic isn't hard to follow.

Fairfield has a per capita income that exceeds $80,000, and it is growing even richer. Affluent young professionals are flocking to cities such as Norwalk, Bridgeport, Danbury and Stamford, said Christopher Bruhl, president and chief executive officer of the Business Council of Fairfield County. Even more attractive, perhaps, is the county's proximity to New York, Bruhl said.

Those fundamentals have made banks with large Fairfield operations prime targets for takeovers. Seven community banks based in the county have been acquired since 2000, according to the Federal Deposit Insurance Corp.

The three biggest banks based in Fairfield, in terms of deposit market share, are Fairfield County Bank in Ridgefield, Union Savings Bank in Danbury and First County Bank in Stamford.

It seems as though the only person who isn't talking up an acquisition is MarcAurele, who said that the very features that make Fairfield so attractive also make it an expensive market for newcomers. "I wouldn't put it totally out of the picture in the future, but right now we feel as though we can be very successful in expanding in Rhode Island where our brand is so strong," he said.

Washington Trust's earnings have risen steadily in recent years, so executives are wary of dramatic moves that could backfire and put a halt to the forward momentum. The company's third-quarter profit rose 6% from a year earlier, to $10.5 million, on higher fee income and a significant decrease in operating expenses.

Management's growth strategy is "very conservative," Fitzgibbon said, adding that it is hard to quibble with company's bottom-line results. "Their profit is so darn good," he said.

Washington Trust is "very interested" in buying a wealth management business. "We have looked at a lot of them in the last few years," MarcAurele said, adding that the limiting "factor has been our discipline around price and seller's expectation of what they were worth."

A whole-bank acquisition would be even more expensive. MarcAurele will not rule out the possibility of an acquisition in Fairfield or elsewhere in Connecticut, though he said Washington Trust is focusing more on filling out its franchise in Rhode Island.

"While we do not have any plans to open retail branches in Fairfield County or in Connecticut at this time, we are always open to merger-and-acquisition opportunities that could prove to be a good strategic fit for the company," MarcAurele said in a statement Friday

"We've had great success expanding our retail branch footprint in Rhode Island, and we believe we still have a lot of room for de novo branching in our home state," he added.

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