Washington Trust Bancorp, Inc. reported third quarter 2026 net income of $19.4 million, a 21% increase from the preceding quarter. The Rhode Island-based bank also posted diluted earnings per share of $1.01, up $0.18 from the second quarter of 2026. Compared to the third quarter of 2025, net income rose by $8.5 million, or $0.45 per diluted share.
The improvement in profitability was driven by growth in net interest income and continued margin expansion. Net interest income for the quarter reached $44.7 million, up 7% from the prior quarter. This figure included $283,000 in previously unrecognized second-quarter interest income linked to the restructuring of a commercial real estate office loan that resumed accruing status in the third quarter. The net interest margin expanded to 2.84%, an increase of 11 basis points from the previous quarter.
Edward O. "Ned" Handy III, Chairman and Chief Executive Officer of Washington Trust, stated that the company delivered a strong quarter marked by earnings growth and improved operating efficiency. He noted that combining personalized service with regional bank capabilities allows the institution to provide a distinct level of service to customers.
Asset quality metrics improved significantly during the period, reflecting the resolution of a commercial real estate office loan that had been placed on nonaccrual status in the first quarter of 2026. That loan, valued at $22.3 million, was restructured and bifurcated in the third quarter. As a result, $18.5 million was returned to accruing status while $3.8 million was charged off. Consequently, nonaccrual loans decreased to $24.5 million, or 0.48% of total loans, down from $39.8 million, or 0.78%, in the prior quarter. Past due loans also declined to $27.9 million, or 0.54% of total loans.
On the balance sheet, total loans amounted to $5.2 billion at September 30, 2026, up $62 million from June 30, 2026. Commercial loans increased by $62 million, driven by growth in the commercial real estate portfolio, while residential real estate loans decreased by $12 million. Total deposits reached an all-time high of $5.4 billion, rising by $77 million from the prior quarter's end.
Capital ratios remained strong, with a common equity tier 1 ratio of 11.93% at September 30, 2026, compared to 11.89% in the prior quarter. Total shareholders' equity stood at $530.8 million, down 4% from June due to a decline in accumulated other comprehensive income and dividend declarations. The Board of Directors declared a quarterly dividend of 56 cents per share for the third quarter, which was paid on October 9, 2026.