Q3 FY2026
Filed Oct 19, 2026Washington Trust Reports Third Quarter 2026 Results
Q3 net income rose 21.3% sequentially and 78.7% year over year, supported by 15.1% year-over-year growth in net interest income, a 44-basis-point expansion in net interest margin, and a 0.5% sequential increase in noninterest expense. Credit metrics improved materially following the resolution of a commercial real estate office loan, although the resolution included a $3.8 million charge-off.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 net interest incomeGAAP | $44.69M | 6.9 % | 15.1 % |
| Q3 2026 net interest marginother | 2.84 % | 11 bps | 44 bps |
| Q3 2026 provision for credit lossesGAAP | $1.8M | 12.5 % | (73.5 %) |
| Q3 2026 total noninterest incomeGAAP | $20.27M | 8.6 % | 14.9 % |
| Q3 2026 total noninterest expenseGAAP | $38.80M | 0.5 % | 8.6 % |
| Q3 2026 income before income taxesGAAP | $24.36M | 20.2 % | 74.7 % |
| Q3 2026 income tax expenseGAAP | $4.98M | 16.1 % | 60.8 % |
| Q3 2026 effective tax rateGAAP | 20.4% | – | – |
| Q3 2026 net incomeGAAP | $19.38M | 21.3 % | 78.7 % |
| Q3 2026 basic earnings per common shareGAAP | $1.02 | 21.4 % | 78.9 % |
| Q3 2026 diluted earnings per common shareGAAP | $1.01 | 21.7 % | 80.4 % |
| Q3 2026 return on average assetsGAAP | 1.17 % | 18 bps | 53 bps |
| Q3 2026 return on average equityGAAP | 13.89 % | 228 bps | 575 bps |
| Q3 2026 efficiency ratioGAAP | 59.7 % | (410) bps | (360) bps |
| Q3 2026 total loansGAAP | $5.16B | 1.2 % | 0.8 % |
| Sep 30, 2026 total depositsGAAP | $5.44B | 1.4 % | 4.1 % |
| Sep 30, 2026 Federal Home Loan Bank advancesGAAP | $376M | (17.5 %) | (52.5 %) |
| Sep 30, 2026 total shareholders' equityGAAP | $530.8M | (4.1 %) | (0.4 %) |
| Sep 30, 2026 book value per shareGAAP | $27.82 | (4.1 %) | (0.6 %) |
| Sep 30, 2026 common equity tier 1 ratioother | 11.93 % | 4 bps | 29 bps |
| Sep 30, 2026 nonaccrual loansGAAP | $24.54M | (38.4 %) | 75.1 % |
| Sep 30, 2026 nonaccrual loans to total loansother | 0.48 % | (30) bps | 21 bps |
| Sep 30, 2026 total past due loansGAAP | $27.88M | (32.7 %) | 243.7 % |
| Sep 30, 2026 allowance for credit losses on loansGAAP | $40.49M | (4.9 %) | 10.7 % |
| Sep 30, 2026 ACL on loans to total loansother | 0.78 % | (5) bps | 7 bps |
| Q3 2026 net loan charge-offsGAAP | $3.88M | 6,960.0 % | (66.0 %) |
| Nine months ended Sep 30, 2026 net interest incomeGAAP | $127.0M | – | 13.0 % |
| Nine months ended Sep 30, 2026 net incomeGAAP | $47.96M | – | 32.2 % |
| Nine months ended Sep 30, 2026 diluted earnings per common shareGAAP | $2.50 | – | 33.0 % |
| Nine months ended Sep 30, 2026 adjusted net incomenon-GAAP | $47.96M | – | 33.8 % |
| Nine months ended Sep 30, 2026 adjusted diluted earnings per common sharenon-GAAP | $2.50 | – | 35.1 % |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Wealth management revenuesIncreased asset-based revenues were offset by a seasonal decline in tax servicing fee income. | $11.09M | (1.0 %) | 6.9 % |
| Mortgage banking revenuesReflecting a decrease in the mortgage pipeline and rising market interest rates. | $3.15M | (9.2 %) | (9.9 %) |
| Loan related derivative incomeDriven by increased commercial borrower demand for interest rate swap transactions. | $1.51M | 158.5 % | 456.1 % |
| Income from bank-owned life insuranceDue to the recognition of a non-taxable gain of $954 thousand. | $1.86M | 106.1 % | 114.6 % |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
full-year 2026 outlook
- Tax rateapproximately 21.5%
Capital returns
- The Board of Directors declared a quarterly dividend of 56 cents per share for the third quarter.
- The dividend was paid on October 9, 2026 to shareholders of record on October 1, 2026.
- Q3 2026 cash dividends declared were $0.56, unchanged from Q2 2026 and Q3 2025.
What drove it
- Net interest income increased as average interest-earning assets increased by $104 million and yield increased by 7 basis points, while average interest-bearing liabilities increased by $52 million and rate declined by 3 basis points.
- Q3 net interest income included $283 thousand of previously unrecognized second quarter interest income from a commercial real estate office loan that returned to accruing status.
- Commercial loans increased by $61,948 sequentially, including a $66,186 increase in commercial real estate loans.
- Noninterest income benefited from a $924 thousand sequential increase in loan related derivative income and a $959 thousand sequential increase in income from bank-owned life insurance.
- Total noninterest expense rose $200 sequentially, as a $188 decline in salaries and employee benefits was offset by higher other noninterest expenses, including volume-related outsourced services expense.
- The commercial real estate office loan resolution returned $18.5 million to accruing status and resulted in $3.8 million being charged off.
Concerns
- Mortgage banking revenues were $3,155, down 9.2 % from Q2 2026 and 9.9 % from Q3 2025.
- Total noninterest expense was $38,797, up 8.6 % from Q3 2025, while salaries and employee benefits increased 10.8 %.
- Total shareholders' equity was $530,767, down 4.1 % from Jun 30, 2026, primarily because net income was offset by a decline in accumulated other comprehensive income and quarterly dividend declarations.
- Nonaccrual loans were $24,536, or 0.48 % of total loans, compared with $14,016, or 0.27 %, at Sep 30, 2025.
- Total past due loans were $27,884, up 243.7 % from $8,112 at Sep 30, 2025.
What to watch
- Sustainability of net interest margin after Q3 2026 benefited by 2 basis points from previously unrecognized interest income.
- Commercial real estate office credit performance following the loan resolution and $3,910 of Q3 loans charged off.
- Mortgage banking revenue and mortgage pipeline trends amid rising market interest rates.
- Deposit growth, funding mix, and the level of Federal Home Loan Bank advances.
- The full-year 2026 effective tax rate, which the Corporation expects to be approximately 21.5%.
Balance sheet and cash flow
- Total assets were $6,538,491 at Sep 30, 2026, compared to $6,547,904 at Jun 30, 2026 and $6,717,921 at Sep 30, 2025.
- Cash and due from banks were $21,675 at Sep 30, 2026.
- Interest-earning deposits with correspondent banks were $63,892 at Sep 30, 2026.
- Available for sale debt securities were $817,801 at Sep 30, 2026, compared to $885,321 at Jun 30, 2026.
- Contingent liquidity totaled $2,086,205 at Sep 30, 2026.
- No wholesale brokered deposits were outstanding at Sep 30, 2026, Jun 30, 2026, or Sep 30, 2025.
Analysis
Washington Trust reported a materially stronger third quarter. GAAP net income was $19,381, up $3,400 from Q2 2026 and $8,535 from Q3 2025, while diluted earnings per common share reached $1.01. The improvement was led by net interest income of $44,692, which increased 6.9 % sequentially and 15.1 % year over year. Net interest margin expanded to 2.84 %, from 2.73 % in Q2 2026 and 2.40 % in Q3 2025. The quarter included $283 thousand of previously unrecognized interest income associated with the resolution of a commercial real estate office loan, equivalent to a 2 basis points benefit to NIM.
Noninterest income grew to $20,265, up 8.6 % sequentially and 14.9 % year over year. Loan related derivative income increased to $1,507 as commercial borrowers showed greater demand for interest rate swap transactions, while income from bank-owned life insurance reached $1,863 following a non-taxable gain of $954 thousand. These gains more than offset weaker mortgage banking revenues of $3,155, which declined with the mortgage pipeline and rising market interest rates. Wealth management revenues were broadly stable sequentially at $11,089 and increased 6.9 % from the prior-year quarter.
Expense discipline improved operating efficiency. Total noninterest expense was $38,797, only 0.5 % above Q2 2026, despite a 8.6 % increase from Q3 2025. The efficiency ratio improved to 59.7 % from 63.8 % sequentially and 63.3 % a year earlier. Profitability ratios followed earnings higher, with return on average assets of 1.17 % and return on average equity of 13.89 %.
Balance-sheet activity showed loan and deposit growth alongside reduced wholesale funding. Total loans increased to $5,164,852, driven by commercial lending, and total deposits increased to $5,436,016. Federal Home Loan Bank advances declined to $376,000 from $456,000 at Jun 30, 2026. Total shareholders' equity declined to $530,767 as net income was offset by a decline in accumulated other comprehensive income and dividends, and book value per share fell to $27.82.
Credit metrics improved sharply from the preceding quarter due to the resolution of a $22.3 million commercial real estate office loan. The restructuring returned $18.5 million to accruing status and resulted in a $3.8 million charge-off. Consequently, nonaccrual loans fell to $24,536 from $39,816 and past due loans fell to $27,884 from $41,408. However, Q3 net loan charge-offs rose to $3,883 from $55, and nonaccrual and past due loans remained above their Sep 30, 2025 levels. Management expects a full-year 2026 effective tax rate of approximately 21.5%.
Management, verbatim
We delivered another strong quarter marked by growth in earnings and net interest income, continued margin expansion and improved operating efficiency.
Edward O. “Ned” Handy III, Chairman and Chief Executive Officer
By combining personalized service and trusted advice with the capabilities of a regional bank, we are able to provide customers with a level of service, expertise and convenience that stands apart from other community banks our size.
Edward O. “Ned” Handy III, Chairman and Chief Executive Officer
We continue to focus on leveraging these strengths to support prudent growth and deliver long-term value for our shareholders.
Edward O. “Ned” Handy III, Chairman and Chief Executive Officer
Not in the filing
stated, not guessed- Operating cash flow was not reported.
- Free cash flow was not reported.
- Share repurchases were not reported.
- Total revenue was not reported as a single line item.
- Gross margin was not reported.
- Forward revenue guidance was not reported.
- Forward expense guidance was not reported.
- Prior outlook was not provided, so no comparison with prior guidance is available.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.