President George Washington’s February 22 birthday was declared a federal holiday in 1879. The Uniform Monday Holiday Act in 1968 both set the holiday for the third Monday in February and designated it as a day to honor all American presidents, especially Washington and Abraham Lincoln (born February 12). The Gale Student Resources in Context database has a great article on the history of Presidents Day. (Login with library card number and PIN may be required.)
Image from the February 22, 1909, Laramie Republican in Wyoming Newspapers.