Washington Trust Expands Margin as C&I Lending Gains Momentum
Net interest margin rose 10 bps to 2.73% in the second quarter.
Washington Trust Bancorp (WASH), a regional banking provider, saw net interest income increase by $1.3 million, or 3%, from the first quarter. Net interest margin expanded 10 bps sequentially to 2.73%. This expansion included a 9 bps benefit resulting from the cessation of deferred loss amortization from a terminated cash flow hedge.
Asset yields rose 4 bps during the quarter while average interest-bearing liability rates decreased 5 bps. The bank grew total deposits 4% sequentially to $5.4 billion. Non-interest-bearing deposits grew 10% to $644.0 million, while interest-bearing deposits rose 3% to $4.71 billion.
Loan growth was led by the commercial segment. Total loan balances increased 2% sequentially to $5.1 billion, supported by a $63 million increase in commercial loans. Commercial and Industrial (C&I) loans grew 17.2% to $665.9 million, while Commercial Real Estate (CRE) loans decreased 1.7% to $2.05 billion.
Noninterest income rose 8% sequentially to $18.7 million. Mortgage banking revenues increased 14% and wealth management revenues grew 5%. Noninterest expense rose 2% to $38.6 million, as the company spent $972 thousand more on salaries and employee benefits to staff commercial and retail banking. The efficiency ratio improved 150 bps to 63.8%.
The provision for credit losses decreased to $1.6 million from $4.0 million in the first quarter. Net charge-offs rose to $55 thousand from $10 thousand in the preceding period. Past due loans increased to $41.4 million, or 0.81% of total loans, from $16.4 million. This rise was primarily due to a single CRE office loan already on nonaccrual.
The common equity tier 1 (CET1) ratio decreased 10 bps to 11.89% from 11.99% as of March 31, 2026.