Washington Trust Q2 2026: CRE Office Stress Drives Nonaccrual Spike; NIM Gains Ground
WASH sits 56% above its 52-week low of $25.23.
Summary
Washington Trust's Q2 2026 10-Q shows a sharp rise in nonaccrual loans to $39.8M, driven by two CRE office loans, and a higher provision for credit losses. NIM improved, but credit quality deterioration is the dominant story.
Key Events · Earnings and Guidance · WASH
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Nonaccrual Loans Surge
Nonaccrual loans climbed to $39.8 million at June 30, 2026, from $12.9 million at December 31, 2025, primarily because two CRE office segment loans totaling $28.9 million were placed on nonaccrual in Q1 2026.
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Provision for Credit Losses Rises
The provision for credit losses reached $5.6 million for the first six months of 2026, up from $1.8 million in the same period of 2025, largely reflecting specific reserves on the two nonaccrual CRE office loans.
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Allowance for Credit Losses Builds
At June 30, 2026, the allowance for credit losses on loans increased to $42.6 million, or 0.83% of total loans, compared to $37.2 million, or 0.73%, at year-end 2025.
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Net Interest Margin Improves
Net interest margin (FTE) improved to 2.68% for the first half of 2026 from 2.32% a year earlier, driven by lower funding costs and the cessation of amortization of a deferred loss on a terminated cash flow hedge.
Analysis · WASH · Finance
A sharp deterioration in commercial real estate credit quality dominates Washington Trust's Q2 2026 10-Q. Nonaccrual loans jumped to $39.8 million from $12.9 million at year-end, fueled by two CRE office loans totaling $28.9 million that were placed on nonaccrual in Q1. Reflecting this stress, the provision for credit losses surged to $5.6 million for the first half of 2026, up from $1.8 million a year ago, and the allowance for credit losses now stands at 0.83% of total loans. While net interest margin improved to 2.68% from 2.32% a year earlier, the credit stress in the office portfolio is a significant negative development that could pressure future earnings. The company also adopted a new 850,000-share repurchase program, but no shares have been bought back yet.
At the time of this filing, WASH was trading at $39.27 on NASDAQ in the Finance sector, with a market capitalization of approximately $748.6M. The 52-week trading range was $25.23 to $40.25. This filing was assessed with negative market sentiment and an importance score of 8 out of 10.