Washington Trust: 3 Key Takeaways for Long-Term Investors

On its third-quarter 2026 earnings call, held on Oct. 20, 2026, Washington Trust (NASDAQ:WASH) highlighted rising net interest income and expanding margins alongside improved credit quality. Expanding net interest margin (the difference between interest earned on assets and interest paid on deposits) and resolving troubled commercial loans set a clear foundation for earnings. Three things management said stand out.

1. Asset Sensitivity Keeps Net Interest Margin Expanding

Management raised fourth-quarter net interest margin guidance to a range of 2.85% to 2.90% after benefiting from higher market interest rates. Because the loan portfolio reprices faster than deposit costs, incremental rate hikes add directly to interest income.

I would say that we remain modestly asset sensitive, so that guidance includes just the September rate hike at this point. We think that each 25 basis point hike probably gives us 1-2 basis points on the run rate.
-- Ron Ohsberg, Senior Executive Vice President, Chief Financial Officer and Treasurer

2. Resolving Troubled Office Assets Clears Credit Quality Hurdles

Non-accrual loans (loans where the bank has stopped recognizing interest income because full collection is uncertain) dropped significantly during the quarter. Restructuring a single $22.3 million commercial real estate loan removed a major asset quality headwind.

The improvement was largely driven by the resolution of an office loan of $22.3 million that was placed on non-accrual in the first quarter. During the third quarter, this loan was restructured, resulting in $18.5 million being returned to accrual and $3.8 million being charged off.
-- Ron Ohsberg, Senior Executive Vice President, Chief Financial Officer and Treasurer

3. Capital Deployment Prioritizes Loan Expansion Over Stock Buybacks

Rather than repurchasing shares, management is holding capital to fund organic balance sheet growth. Retaining capital ensures the bank can fund credit demand without stretching regulatory capital buffers.

We don't have any plans to buy stock back at this point. The price is high. We've got the capital. We've got other things to invest in.
-- Ned Handy, Chairman and Chief Executive Officer

Looking Ahead

Commercial loan demand is accelerating, supported by a $230 million pipeline focused on C&I (commercial and industrial) accounts. Pricing discipline and selective branch expansion position the bank to gain regional market share.

The pipeline going forward, we've got about a $230 million pipeline as of 9/30, which is weighted toward C&I with about $40 million of that today in the institutional group.
-- Ned Handy, Chairman and Chief Executive Officer

Sustaining long-term balance sheet expansion depends on deploying regulatory capital efficiently into high-quality lending relationships. Management is directing capital directly into growing loan balances rather than returning it through share repurchases.

I think the prudent thing for us to do right now is to deploy that capital into the growth of the business.
-- Ron Ohsberg, Senior Executive Vice President, Chief Financial Officer and Treasurer

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