WASHINGTON TRUST BANCORP (WASH)·Q4 2025 Earnings Summary

Washington Trust Delivers Strong Q4 as Margins Expand and Credit Quality Improves

January 29, 2026 · by Fintool AI Agent

Washington Trust Bancorp (NASDAQ: WASH) reported fourth quarter 2025 net income of $16.0 million, or $0.83 per diluted share, representing a 48% increase from $0.56 in the prior quarter. The results cap a strong recovery year for the nation's oldest community bank, with full-year 2025 net income of $52.2 million compared to a net loss of $28.1 million in 2024 (which included significant balance sheet repositioning charges).

Did Washington Trust Beat Earnings?

Washington Trust delivered a strong quarter that exceeded recent run-rate performance:

The significant EPS improvement was driven by three factors: (1) net interest margin expansion of 16 basis points, (2) a normalized credit provision of just $600K versus $6.8M in Q3, and (3) continued growth in fee-based revenues.

For full-year 2025, adjusted net income totaled $51.8 million, or $2.69 per diluted share, compared to adjusted net income of $40.9 million, or $2.37 per diluted share, in 2024—representing 14% adjusted EPS growth.

What's Driving the Margin Expansion?

The net interest margin story is the headline for this quarter. At 2.56%, WASH's NIM is up 61 basis points year-over-year—a remarkable improvement for a regional bank in this rate environment.

Key NIM drivers:

• Funding costs declined 24 bps QoQ — Average rate on interest-bearing liabilities fell to 2.84% from 3.08%
• FHLB advances reduced significantly — Borrowings down $165M (21%) to $626M, with rate of 4.31%
• In-market deposit growth — Up 9% year-over-year, replacing higher-cost wholesale funding
• Zero wholesale brokered deposits — Completely eliminated this funding source
• Commercial loan prepayment income — $516K benefit (3 bps to NIM)

The full-year 2025 net interest margin was 2.40%, up 53 basis points from 1.87% in 2024.

How Did Wealth Management and Mortgage Banking Perform?

Fee income businesses showed solid momentum:

Wealth Management:

• Revenues of $10.9M, up 5% QoQ and 8% YoY
• Assets under administration reached $7.78B, up 10% YoY
• Includes $195M from Lighthouse Financial Management acquisition in July 2025
• 91% of AUA are managed assets (fee-generating)

Mortgage Banking:

• Revenues of $3.3M, up 14% YoY despite down 7% QoQ due to seasonal fair value adjustments
• Originations surged 21% QoQ and 62% YoY to $209M
• Loan sales up 25% QoQ to $158M

CEO Ned Handy highlighted growth investments: "The addition of resources in our commercial and wealth management business lines, including the recently announced dedicated institutional banking team, positions us well for sustainable growth."

What Changed From Last Quarter?

Several notable shifts from Q3 2025:

The Q3 2025 results were impacted by elevated credit provisions tied to commercial loan charge-offs, making the Q4 normalization particularly meaningful for earnings power assessment.

What Is the Credit Quality Outlook?

Credit metrics improved across the board:

Nonaccrual loans of $12.9M consisted entirely of residential and consumer loans—no commercial nonaccruals.

Commercial Real Estate Office Exposure:

• Total CRE office: $238M (11% of commercial loans)
• 66% secured by suburban properties
• 51% scheduled to mature before December 2027
• Weighted average LTV: 60%, debt service coverage: 1.27x

How Did the Stock React?

Washington Trust shares initially traded flat on the January 28 earnings release (8-K), closing at $30.19 (-0.26%). However, following the January 29 earnings call with specific NIM guidance, the stock rallied +3.9% to $31.37 intraday on elevated volume.

*Intraday price as of morning trading

Stock context:

• 52-week range: $24.95 - $34.13
• Current price: $31.37 (January 29, 2026)
• Market cap: ~$597M
• Dividend yield: ~7.1% ($2.24 annual)
• Book value per share: $28.56 (trading at 1.10x book)

The positive reaction to the earnings call suggests investors responded favorably to management's specific NIM guidance (2.78%-2.82% by Q4 2026) and confidence in the new C&I team's growth potential.

What Did Management Guide?

On the earnings call, CFO Ron Ohsberg provided unusually specific guidance on margin expansion:

Net Interest Margin Guidance:

This represents substantial margin expansion from the current 2.56% level, with 13 basis points of "locked in" benefit from the swap termination plus organic improvement.

Expense Guidance:

• Q1 2026: Salaries and benefits up ~6% (merit raises, FICA resets, new institutional team, medical insurance)
• Other expenses: ~5% YoY increase
• New Pawtucket branch: ~$600K total impact starting late summer/early fall

Loan Growth Guidance:

• CRE: 4-5% growth (standard pace)
• C&I: Expected to grow faster than CRE (new team ramping)
• Residential: Net runoff expected
• Total: Targeting "very solid 5% year-over-year" loan growth, an improvement over 2025

Other Guidance:

• Effective tax rate: ~22.0% for full-year 2026
• Charitable foundation contribution: $750K planned for year-end 2026
• Dividend: Maintained $0.56 quarterly

Capital ratios remain strong:

Q&A Highlights: What Analysts Asked

On the New C&I Team:

Analysts pressed for details on the institutional banking team hired from Brookline. CEO Ned Handy confirmed:

• 4 people on the team, with leader having 30+ years in the Northeast region
• Focus: education, healthcare, and nonprofit institutions throughout the Northeast
• "They've been with us for nine days... We have great expectations. They're a very seasoned team that's been in the market for a long time."
• Will add a treasury management specialist given the team's tendency to deliver deposits

On Reserve Levels:

Analyst Mark Fitzgibbon (Piper Sandler) noted the allowance looks light versus peers. Chief Risk Officer Bill Wray responded:

• Comfortable at mid-70s coverage based on CECL lifetime loss estimates
• Lower reserve partly due to relatively large residential portfolio (lower loss allocation than commercial)
• "We run the numbers, we look at our history, and we're very comfortable that it's adequate for our portfolio."

On the $6M Classified Office Loan:

When asked about the only classified office exposure:

• Matures in 2031 (plenty of runway)
• "Extremely strong, dedicated sponsors"
• Occupancy in mid-40% range but growing
• Completely current on payments
• "It's just gonna be a long, slow nursing process, but the sponsors are fully committed."

On Buybacks:

With CET1 at nearly 12%, analyst Laurie Hunziker (Seaport) asked about capital return. Handy said buybacks are "under consideration all the time" but declined to commit. Current authorization: 850K shares with 582K remaining.

On Wealth Management Fees:

Average fee on wealth AUA is approximately 60 basis points. The team added a financial planning specialist as a retention tool and to appeal to next-gen clients and full families.

Key Risks Flagged

Management's forward-looking statements highlighted several risk factors:

• Interest rate sensitivity — Changes in rates and balance sheet mix
• Economic conditions — Impact of tariffs, inflation, potential government shutdowns
• Deposit competition — Ongoing pressure on funding costs
• Commercial real estate — Office portfolio performance in changing work environment
• Wealth management outflows — Market volatility impact on AUA

The Bottom Line

Washington Trust delivered a strong finish to 2025, with Q4 EPS of $0.83 demonstrating the earnings power of the franchise when credit costs normalize. The 61 basis point year-over-year NIM expansion to 2.56% reflects disciplined liability management and successful elimination of higher-cost wholesale funding.

Key takeaways:

1. Margin expansion continues — Management guided to 2.78%-2.82% NIM by Q4 2026, with 13 bps "locked in" from swap termination
2. Growth investments ramping — New institutional C&I team (9 days in) and Pawtucket branch coming late summer
3. Credit normalized — Zero commercial nonaccruals, $6M classified office loan well-supported
4. Conservative capital deployment — Buybacks "under consideration" with 582K shares remaining on 850K authorization

The stock rose nearly 4% following the earnings call, suggesting investors appreciated the specific margin guidance and growth outlook.

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Data sources: Washington Trust Q4 2025 earnings call transcript (January 29, 2026), 8-K press release (January 28, 2026), S&P Global.