Washington Trust earnings rose in the third quarter of 2026, with net income reaching $19.4 million and diluted earnings per share of $1.01. The bank holding company released results on October 19, reporting stronger net interest income, higher deposits and improved operating efficiency compared with the preceding quarter.
Key Takeaways
- Net income increased 21% from the second quarter, while diluted EPS rose by $0.18.
- Net interest margin widened 11 basis points, with some benefit from recovered loan interest.
- An office-loan restructuring reduced nonaccrual balances but also generated a $3.8 million charge-off.
Table of Contents
- Washington Trust earnings benefit from a wider margin
- Fee income gains included a life-insurance benefit
- Deposits grew as office-loan resolution changed credit metrics
- Capital ratios held up despite lower shareholders’ equity
- Conclusion
Washington Trust earnings benefit from a wider margin
The company’s third-quarter 2026 results announcement showed net income increasing by $3.4 million from the preceding quarter and $8.5 million from a year earlier. Diluted earnings per share rose by $0.45 from the third quarter of 2025.
Net interest income reached $44.7 million, up 7% sequentially and 15% year over year. Net interest margin expanded to 2.84%, an increase of 11 basis points from the second quarter and 44 basis points from a year earlier.
The quarterly improvement reflected higher average interest-earning assets and asset yields, alongside a lower rate on interest-bearing liabilities. Results also included $283,000 of previously unrecognized second-quarter interest associated with an office loan returning to accruing status. That recovery contributed approximately $0.01 per diluted share and two basis points to the margin.
| Item | Details |
|---|---|
| Return on average equity | 13.89% in Q3 2026, compared with 11.61% in Q2. |
| Return on average assets | 1.17%, compared with 0.99% in the preceding quarter. |
| Provision for credit losses | $1.8 million, compared with $1.6 million in Q2. |
| Contingent liquidity | $2.1 billion at September 30, 2026. |
| Full-year tax guidance | Management expected an effective tax rate of approximately 21.5% for 2026. |
Fee income gains included a life-insurance benefit
Noninterest income increased 9% from the preceding quarter, while noninterest expenses rose 0.5%. Loan-related derivative income reached $1.5 million, up $924,000 as commercial borrowers increased demand for interest-rate swaps.
Income from bank-owned life insurance included a $954,000 non-taxable gain, equivalent to approximately $0.05 per diluted share. Along with the recovered loan interest, this means part of the quarterly earnings improvement came from identifiable items rather than broad growth across every business.
Wealth management revenue declined 1% sequentially as a seasonal drop in tax-servicing fees offset higher asset-based revenue. Mortgage banking revenue fell 9%, reflecting a smaller mortgage pipeline and rising market interest rates.
Deposits grew as office-loan resolution changed credit metrics
Deposits reached a record $5.4 billion, increasing $77.1 million from June 30, 2026. Loans grew $61.8 million, driven by commercial real estate lending, while Federal Home Loan Bank advances declined.
Nonaccrual loans fell to $24.5 million, or 0.48% of total loans, from $39.8 million, or 0.78%, at the end of June. The improvement largely reflected the resolution of a $22.3 million commercial real estate office loan.
That loan was restructured, with $18.5 million returned to accruing status and $3.8 million charged off. The lower nonaccrual balance therefore reflected both restored interest recognition and a recognized credit loss. Total quarterly net charge-offs reached $3.9 million, compared with $55,000 in the second quarter.
Capital ratios held up despite lower shareholders’ equity
Shareholders’ equity declined 4% to $530.8 million as a reduction in accumulated other comprehensive income and dividend declarations outweighed quarterly profit. The company attributed the comprehensive-income decline to lower fair values for available-for-sale debt securities as market interest rates changed.
The common equity tier 1 capital ratio edged up to 11.93% from 11.89%, and the company said capital remained above regulatory well-capitalized thresholds. Its declared third-quarter dividend of $0.56 per share was paid on October 9, 2026, to shareholders of record on October 1.
Conclusion
The quarter combined stronger interest income and deposit growth with specific earnings benefits and an office-loan charge-off. The October 19 release scheduled management’s discussion of the results and outlook for October 20, 2026, at 8:30 a.m. Eastern Time.
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