What changed in this filing

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Item 1. Financial Statements

2024-05-07 compared with 2023-11-06 · 259 added, 448 removed, 991 unchanged (42% of the section changed)

4 unchanged sentences

(Dollars in thousands, except par value)

September 30,

2024 December 31,

2 unchanged sentences

Mortgage loans held for sale, at fair value 25,462 20,077

Available for sale debt securities, at fair value (amortized cost of $ 1,170,105 , net of allowance for credit losses on securities of $ 0 at September 30, 2023;

Available for sale debt securities, at fair value (amortized cost of $ 1,137,057 , net of allowance for credit losses on securities of $ 0 at March 31, 2024;

and amortized cost of $ 1,152,629 ;

24 unchanged sentences

authorized 60,000,000 shares;

17,363,457 shares issued and 17,019,239 shares outstanding at September 30, 2023 and 17,363,457 shares issued and 17,182,753 shares outstanding at December 31, 2022

17,363,457 shares issued and 17,033,174 shares outstanding at March 31, 2024 and 17,363,457 shares issued and 17,030,987 shares outstanding at December 31, 2023

Paid-in capital 126,785 126,150

2 unchanged sentences

Treasury stock, at cost;

344,218 shares at September 30, 2023 and 180,704 shares at December 31, 2022

330,283 shares at March 31, 2024 and 332,470 shares at December 31, 2023

( 15,212 ) ( 15,313 )

6 unchanged sentences

(Dollars and shares in thousands, except per share amounts)

Three Months Nine Months

Periods ended September 30, 2023 2022 2023 2022

Three months ended March 31, 2024 2023

Interest income:

45 unchanged sentences

and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss) (unaudited)

Consolidated Statements of Comprehensive Income (unaudited)

(Dollars in thousands)

Three Months Nine Months

Periods ended September 30, 2023 2022 2023 2022

Three months ended March 31, 2024 2023

Net income $ 10,936 $ 12,812

3 unchanged sentences

Net change in defined benefit plan obligations 23 45

Total other comprehensive loss, net of tax ( 29,907 ) ( 53,714 ) ( 20,934 ) ( 151,774 )

Total comprehensive (loss) income ($ 18,746 ) ($ 35,046 ) $ 14,295 ($ 96,666 )

Total other comprehensive (loss) income, net of tax ( 7,760 ) 16,040

Total comprehensive income $ 3,176 $ 28,852

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3 unchanged sentences

(Dollars and shares in thousands, except per share amounts)

For the three months ended September 30, 2023 Common

Shares Outstanding Common

Stock Paid-in

Capital Retained

Earnings Accumulated

Comprehensive

Loss Treasury Stock Total

Balance at June 30, 2023 17,019 $ 1,085 $ 125,685 $ 496,996 ($ 148,827 ) ($ 15,778 ) $ 459,161

— — — 11,161 — — 11,161

Total other comprehensive loss, net of tax — — — — ( 29,907 ) — ( 29,907 )

Cash dividends declared ($ 0.56 per share)

— — — ( 9,636 ) — — ( 9,636 )

Share-based compensation — — 624 — — — 624

Exercise of stock options, issuance of other compensation-related equity awards, net of awards surrendered

— — 1 — — — 1

Balance at September 30, 2023 17,019 $ 1,085 $ 126,310 $ 498,521 ($ 178,734 ) ($ 15,778 ) $ 431,404

For the nine months ended September 30, 2023 Common

For the three months ended March 31, 2024 Common

Shares Outstanding Common

12 unchanged sentences

2 — ( 118 ) — — 101 ( 17 )

Treasury stock purchased under 2023 Repurchase Program

( 200 ) — — — — ( 8,741 ) ( 8,741 )

Balance at September 30, 2023 17,019 $ 1,085 $ 126,310 $ 498,521 ($ 178,734 ) ($ 15,778 ) $ 431,404

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Washington Trust Bancorp, Inc.

and Subsidiaries

Consolidated Statements of Changes in Shareholders' Equity (unaudited)

(Dollars and shares in thousands, except per share amounts)

For the three months ended September 30, 2022 Common

Shares Outstanding Common

Stock Paid-in

Capital Retained

Earnings Accumulated

Comprehensive

Loss Treasury Stock Total

Balance at June 30, 2022 17,190 $ 1,085 $ 126,079 $ 475,889 ($ 118,041 ) ($ 8,378 ) $ 476,634

— — — 18,668 — — 18,668

Total other comprehensive loss, net of tax — — — — ( 53,714 ) — ( 53,714 )

Cash dividends declared ($ 0.54 per share)

— — — ( 9,394 ) — — ( 9,394 )

Share-based compensation — — 976 — — — 976

Treasury stock purchased under 2021 Repurchase Program

( 19 ) — — — — ( 896 ) ( 896 )

Balance at September 30, 2022 17,171 $ 1,085 $ 127,055 $ 485,163 ($ 171,755 ) ($ 9,274 ) $ 432,274

For the nine months ended September 30, 2022 Common

Balance at March 31, 2024 17,033 $ 1,085 $ 126,785 $ 503,175 ($ 148,913 ) ($ 15,212 ) $ 466,920

For the three months ended March 31, 2023 Common

Shares Outstanding Common

6 unchanged sentences

— — — 12,812 — — 12,812

Total other comprehensive loss, net of tax — — — — ( 151,774 ) — ( 151,774 )

Total other comprehensive income, net of tax — — — — 16,040 — 16,040

Cash dividends declared ($ 0.56 per share)

5 unchanged sentences

( 200 ) — — — — ( 8,741 ) ( 8,741 )

Balance at September 30, 2022 17,171 $ 1,085 $ 127,055 $ 485,163 ($ 171,755 ) ($ 9,274 ) $ 432,274

Balance at March 31, 2023 16,986 $ 1,085 $ 127,734 $ 495,231 ($ 141,760 ) ($ 17,307 ) $ 464,983

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3 unchanged sentences

(Dollars in thousands)

Nine months ended September 30, 2023 2022

Three months ended March 31, 2024 2023

Cash flows from operating activities:

2 unchanged sentences

Provision for credit losses

2,000 ( 2,100 )

Depreciation of premises and equipment

2 unchanged sentences

Share-based compensation

Tax benefit from stock option exercises and other equity awards — 71

Tax expense from stock option exercises and other equity awards ( 7 ) ( 1 )

Income from bank-owned life insurance

5 unchanged sentences

( 74,643 ) ( 23,394 )

Increase in operating lease right-of-use assets ( 726 ) ( 1,096 )

Increase in operating lease liabilities 996 1,179

Decrease in operating lease right-of-use assets 148 986

Decrease in operating lease liabilities ( 190 ) ( 936 )

Increase in other assets ( 5,806 ) ( 4,917 )

Increase in other liabilities 19,913 25,451

Increase (decrease) in other liabilities 752 ( 176 )

Net cash provided by operating activities 1,948 11,094

9 unchanged sentences

Available for sale debt securities:

Net purchases of Federal Home Loan Bank stock ( 9,205 ) ( 19,909 )

Purchases of other equity investments, net ( 375 ) ( 375 )

Net (purchases) redemptions of Federal Home Loan Bank stock ( 3,619 ) 962

Net increase in loans ( 36,251 ) ( 116,609 )

3 unchanged sentences

( 626 ) ( 1,144 )

Purchases of bank-owned life insurance

Proceeds from bank-owned life insurance — 1,566

Equity investments in real estate limited partnerships ( 758 ) ( 6,632 )

Purchases of other equity investments ( 125 ) —

Net cash used in investing activities

1 unchanged sentence

Cash flows from financing activities:

Net increase in deposits 396,601 89,806

Net (decrease) increase in deposits ( 267 ) 249,552

Proceeds from Federal Home Loan Bank advances

1 unchanged sentence

Repayments of Federal Home Loan Bank advances ( 810,000 ) ( 1,060,000 )

Purchases of treasury stock ( 8,741 ) ( 9,479 )

Treasury stock purchased — ( 8,741 )

Net proceeds from stock option exercises and issuance of other equity awards, net of awards surrendered

4 unchanged sentences

40,167 176,131

Net decrease in cash and cash equivalents ( 5,413 ) ( 45,654 )

Net increase in cash and cash equivalents 15,404 19,858

Cash and cash equivalents at beginning of period

19 unchanged sentences

The accounting and reporting policies of the Washington Trust conform to GAAP and to general practices of the banking industry.

The Unaudited Consolidated Financial Statements include the accounts of the Bancorp and its wholly-owned subsidiaries, except subsidiaries that are not deemed necessary to be consolidated.

Through consolidation, intercompany balances and transactions have been eliminated.

The Unaudited Consolidated Financial Statements of the Corporation presented herein have been prepared pursuant to the rules of the SEC for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by GAAP for complete financial statements.

2 unchanged sentences

The accompanying Unaudited Consolidated Financial Statements should be read in conjunction with the Audited Consolidated Financial Statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

The Unaudited Consolidated Financial Statements include the accounts of the Bancorp and its wholly-owned subsidiaries, except subsidiaries that are not deemed necessary to be consolidated.

Through consolidation, intercompany balances and transactions have been eliminated.

The Bancorp owns the common stock of two capital trusts, which have issued trust preferred securities.

These capital trusts are variable interest entities in which the Bancorp is not the primary beneficiary and, therefore, are not consolidated.

The capital trusts’ only assets are junior subordinated debentures issued by the Bancorp, which were acquired by the capital trusts using the proceeds from the issuance of the trust preferred securities and common stock.

The Bancorp’s equity interest in the capital trusts, which is classified in other assets, and the junior subordinated debentures are included in the Unaudited Consolidated Balance Sheets.

Interest expense on the junior subordinated debentures is included in the Unaudited Consolidated Statements of Income.

Use of Estimates

3 unchanged sentences

Note 2 - Recently Issued Accounting Pronouncements

Accounting Standards Adopted in 2023

Financial Instruments - Credit Losses - ASC 326

2022-02, “Troubled Debt Restructurings and Vintage Disclosures” (“ASU 2022-02”), was issued in March 2022 to provide updates on the accounting treatment for TDRs and related disclosures requirements, as well as modifying the disclosure requirement associated with the existing credit quality indicators “vintage” disclosure.

With respect to TDRs, ASU 2022-02 eliminates the recognition and measurement guidance for TDRs under current GAAP and instead requires that the Corporation evaluate whether the modification represents a new loan or a continuation of an existing loan, consistent with the current GAAP treatment for other loan modifications.

In addition, ASU 2022-02 eliminates existing disclosure requirements on TDRs and replaces with enhanced disclosure requirements related to certain loan modifications made to borrowers experiencing financial difficulty.

ASU 2022-02 also provides an update to the existing credit quality indicators “vintage” tabular disclosure requiring current period gross write-offs to be disclosed by year of origination for each loan segment.

The Corporation adopted the provisions of ASU 2022-02 on January 1, 2023 on a prospective basis.

Historical disclosures on TDRs were removed from this report in accordance with the provisions of this ASU.

The adoption of this ASU did not have a material impact on the consolidated financial statements.

See Note 4 for additional information regarding modifications to borrowers experiencing financial difficulty.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Business Combinations - ASC 805

2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”), was issued in October 2021 to clarify the accounting for contract cost assets and contract liabilities acquired in a business combination.

Under current GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination at fair value on the acquisition date.

The provisions of ASU 2021-08 clarify that contract cost assets and contract liabilities acquired in a business combination should be accounted for in accordance with ASC 606, as if the acquirer had originated the contracts.

The Corporation adopted the provisions of ASU 2021-08 on January 1, 2023 on a prospective basis.

The adoption of ASU 2021-08 did not have a material impact on the Corporation’s consolidated financial statements.

Accounting Standards Pending Adoption

There were no new accounting standards issued in 2023 that are applicable to the Corporation and pending adoption.

Segment Reporting - Topic 280

Accounting Standards Update No.

2023-07, “Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), was issued in November 2023 to enhance and provide additional transparency on segment disclosures, including disclosure of significant segment expense provided to the chief operating decision maker (“CODM”), as well as disclosing the title and position of the CODM and how they use reported results in assessing segment performance and allocation of resources.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The provisions under ASU 2023-07 should be applied on a retrospective basis.

ASU 2023-07 is not expected to have a material impact on the Corporation’s financial statements.

Income Taxes - Topic 740

Accounting Standards Update No.

2023-09, “Income Taxes (Topic 740) - Improvements to Income Tax Disclosures” (“ASU 2023-09”), was issued in December 2023 to enhance and provide additional transparency on income tax disclosures.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The provisions under ASU 2023-09 should be applied on a prospective basis;

however, retrospective application is also permitted.

ASU 2023-09 is not expected to have a material impact on the Corporation’s financial statements.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Note 3 - Securities

2 unchanged sentences

(Dollars in thousands)

September 30, 2023 Amortized Cost Unrealized Gains Unrealized Losses ACL

March 31, 2024 Amortized Cost Unrealized Gains Unrealized Losses ACL

Available for Sale Debt Securities:

26 unchanged sentences

Total available for sale debt securities $ 1,152,629 $ 261 ($ 152,510 ) $ — $ 1,000,380

Accrued interest receivable on available for sale debt securities totaled $ 3.1 million as of both September 30, 2023 and December 31, 2022.

As of September 30, 2023 and December 31, 2022, securities with a fair value of $ 291.7 million and $ 294.8 million, respectively, were pledged as collateral for FHLB borrowings, potential borrowings with the FRBB, certain public deposits and for other purposes.

Available for sale debt securities balances exclude accrued interest receivable of $ 3.0 million and $ 3.7 million, respectively, as of March 31, 2024 and December 31, 2023.

At March 31, 2024 and December 31, 2023, securities with a fair value of $ 292.9 million and $ 311.9 million, respectively, were pledged as collateral for FHLB borrowings, potential borrowings with the FRBB, certain public deposits, and for other purposes.

See Note 9 for additional disclosure on FHLB borrowings.

3 unchanged sentences

Actual maturities may differ from amounts presented because certain issuers have the right to call or prepay obligations with or without call or prepayment penalties.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

(Dollars in thousands)

September 30, 2023 Amortized Cost Fair Value

March 31, 2024 Amortized Cost Fair Value

Due in one year or less $ 86,697 $ 72,753

7 unchanged sentences

$ 1,137,057 $ 970,060

Included in the above table are debt securities with an amortized cost balance of $ 253.0 million and a fair value of $ 217.2 million at September 30, 2023 that are callable at the discretion of the issuers.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Included in the above table are debt securities with an amortized cost balance of $ 253.0 million and a fair value of $ 225.5 million at March 31, 2024 that are callable at the discretion of the issuers.

Final maturities of the callable securities range from 3 months to 13 years, with call features ranging from 1 month to 4 months.

5 unchanged sentences

(Dollars in thousands) Less than 12 Months 12 Months or Longer Total

September 30, 2023 # Fair

March 31, 2024 # Fair

Value Unrealized

31 unchanged sentences

9 $ 63,711 ($ 438 ) 181 $ 914,700 ($ 152,072 ) 190 $ 978,411 ($ 152,510 )

There were no debt securities on nonaccrual status at September 30, 2023 and 2022 and, therefore there was no accrued interest related to debt securities reversed against interest income for the three and nine months ended September 30, 2023 and 2022.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

As of September 30, 2023, the Corporation does not intend to sell the debt securities in an unrealized loss position and has determined that it is more-likely-than-not that the Corporation would not be required to sell each security before the recovery of its amortized cost basis.

In addition, management does not believe that any of these debt securities are impaired due to reasons of credit quality.

There were no debt securities on nonaccrual status at March 31, 2024 and 2023 and, therefore there was no accrued interest related to debt securities reversed against interest income for the three months ended March 31, 2024 and 2023.

As of March 31, 2024, the Corporation does not intend to sell the debt securities in an unrealized loss position and has determined that it is more-likely-than-not that the Corporation will not be required to sell each security before the recovery of its amortized cost basis.

In addition, management does not believe that any of the securities are impaired due to reasons of credit quality.

As further described below, management believes the unrealized losses on these debt securities are primarily attributable to changes in the investment spreads and interest rates.

As a result, there was no ACL recorded at both September 30, 2023 and December 31, 2022.

Therefore, no ACL was recorded at both March 31, 2024 and December 31, 2023.

Obligations of U.S.

3 unchanged sentences

government, are highly rated by major credit rating agencies, and have a long history of no credit losses.

The issuers of these securities continue to make timely principal and interest payments and none of these securities were past due at September 30, 2023.

The issuers of these securities

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

continue to make timely principal and interest payments, and none of these securities were past due at March 31, 2024.

Additionally, the Corporation utilizes a zero credit loss estimate for these securities.

Individual Name Issuer Trust Preferred Debt Securities

These securities in an unrealized loss position at September 30, 2023 included three trust preferred securities issued by three individual companies in the banking sector.

These securities in an unrealized loss position at March 31, 2024 included three trust preferred securities issued by three individual companies in the banking sector.

Management reviewed the collectability of these securities taking into consideration such factors as the financial condition of the issuers, reported regulatory capital ratios of the issuers, credit ratings, including ratings in effect as of the reporting period date, as well as credit rating changes between the reporting period date and the filing date of this report, and other information.

As of September 30, 2023, there was one individual name issuer trust preferred debt security with an amortized cost of $ 2.0 million and unrealized losses of $ 216 thousand that was rated below investment grade by S&P.

We noted no downgrades to below investment grade between September 30, 2023 and the filing date of this report.

As of March 31, 2024, there was one individual name issuer trust preferred debt security with an amortized cost of $ 2.0 million and unrealized losses of $ 192 thousand that was rated below investment grade by S&P.

We noted no downgrades to below investment grade between March 31, 2024 and the filing date of this report.

Based on the information available through the filing date of this report, all individual name issuer trust preferred debt securities continue to accrue interest and make payments as expected with no payment deferrals or defaults on the part of the issuers.

Corporate Bonds

These securities in an unrealized loss position at September 30, 2023 included four corporate bond holdings issued by three individual companies in the financial services industry.

These securities in an unrealized loss position at March 31, 2024 included four corporate bond holdings issued by three individual companies in the financial services industry.

As of September 30, 2023, there was one corporate bond debt security with an amortized cost of $ 2.0 million and unrealized losses of $ 98 thousand that was rated below investment grade by S&P.

We noted no downgrades to below investment grade between September 30, 2023 and the filing date of this report.

As of March 31, 2024, there was one corporate bond debt security with an amortized cost of $ 2.0 million and unrealized losses of $ 46 thousand that was rated below investment grade by S&P.

We noted no downgrades to below investment grade between March 31, 2024 and the filing date of this report.

Based on the information available through the filing date of this report, all corporate bond debt securities continue to accrue interest and make payments as expected with no payment deferrals or defaults on the part of the issuers.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Note 4 - Loans

The following table presents a summary of loans:

(Dollars in thousands) September 30,

(Dollars in thousands) March 31,

2024 December 31, 2023

17 unchanged sentences

(4) Other consists of loans to individuals secured by general aviation aircraft and other personal installment loans.

(5) Includes net unamortized loan origination costs of $ 12.8 million and $ 11.6 million, respectively, at September 30, 2023 and December 31, 2022 and net unamortized premiums on loans purchased from and serviced by other financial institutions of $ 296 thousand and $ 318 thousand, respectively, at September 30, 2023 and December 31, 2022.

Loan balances exclude accrued interest receivable of $ 22.0 million and $ 17.6 million, respectively, as of September 30, 2023 and December 31, 2022.

As of September 30, 2023 and December 31, 2022, loans amounting to $ 3.0 billion and $ 2.4 billion, respectively, were pledged as collateral to the FHLB under a blanket pledge agreement and to the FRBB for the discount window.

(5) Includes net unamortized loan origination costs of $ 13.1 million and $ 13.0 million, respectively, at March 31, 2024 and December 31, 2023 and net unamortized premiums on loans purchased from and serviced by other financial institutions of $ 273 thousand and $ 286 thousand, respectively, at March 31, 2024 and December 31, 2023.

Loan balances exclude accrued interest receivable of $ 23.8 million and $ 22.9 million, respectively, as of March 31, 2024 and December 31, 2023.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

As of both March 31, 2024 and December 31, 2023, loans amounting to $ 3.4 billion, were pledged as collateral to the FHLB under a blanket pledge agreement and to the FRBB for the discount window.

See Note 9 for additional disclosure regarding borrowings.

3 unchanged sentences

The ability of commercial borrowers to honor their repayment commitments is dependent on the general economy, as well as the health of the real estate economic sector in the Corporation’s market area.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Past Due Loans

2 unchanged sentences

(Dollars in thousands) Days Past Due

September 30, 2023 30-59 60-89 Over 90 Total Past Due Current Total Loans

March 31, 2024 Current 30-59 60-89 90 or More Total Past Due Total Loans

Commercial real estate

11 unchanged sentences

(Dollars in thousands) Days Past Due

December 31, 2022 30-59 60-89 Over 90 Total Past Due Current Total Loans

December 31, 2023 Current 30-59 60-89 90 or More Total Past Due Total Loans

Commercial real estate

10 unchanged sentences

Total loans $ 5,636,361 $ 6,748 $ 1,853 $ 2,744 $ 11,345 $ 5,647,706

Included in past due loans as of September 30, 2023 and December 31, 2022, were nonaccrual loans of $ 5.7 million and $ 7.2 million, respectively.

In addition, all loans 90 days or more past due at September 30, 2023 and December 31, 2022 were classified as nonaccrual.

Included in past due loans as of March 31, 2024 and December 31, 2023, were nonaccrual loans of $ 5.1 million and $ 6.9 million, respectively.

In addition, all loans 90 days or more past due at March 31, 2024 and December 31, 2023 were classified as nonaccrual.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Nonaccrual Loans

4 unchanged sentences

Subsequent interest payments received on nonaccrual loans are applied to the outstanding principal balance of the loan or recognized as interest income depending on management’s assessment of the ultimate collectability of the loan.

Loans are removed from nonaccrual status when they have been current as to principal and interest for a period of time, the borrower has demonstrated an ability to comply with repayment terms, and when, in management’s opinion, the loans are considered to be fully collectible.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Loans are removed from nonaccrual status when they have been current as to principal and interest (generally for six months), the borrower has demonstrated an ability to comply with repayment terms, and when, in management’s opinion, the loans are considered to be fully collectible.

The following table is a summary of nonaccrual loans, segregated by class of loans:

(Dollars in thousands) September 30,

2023 December 31,

(Dollars in thousands) March 31, 2024 December 31, 2023

Nonaccrual Loans Nonaccrual Loans

Without an ACL

Total With an ACL

Without an ACL

Commercial real estate $ — $ 18,729 $ 18,729 $ 10,997 $ 21,830 $ 32,827

3 unchanged sentences

Residential real estate 8,590 1,132 9,722 8,495 1,131 9,626

Home equity 1,591 — 1,591 1,483 — 1,483

Other — — — — — —

Total consumer 1,591 — 1,591 1,483 — 1,483

1 unchanged sentence

Accruing loans 90 days or more past due $ — $ —

No ACL was deemed necessary on nonaccrual loans with carrying values of $ 15.8 million and $ 6.5 million, respectively, as of September 30, 2023 and December 31, 2022.

Nonaccrual loans of $ 27.9 million and $ 5.7 million, respectively, at September 30, 2023 and December 31, 2022 were current as to the payment of principal and interest.

As of September 30, 2023 and December 31, 2022, nonaccrual loans secured by one- to four-family residential property amounting to $ 803 thousand and $ 2.9 million, respectively, were in process of foreclosure.

There were no significant commitments to lend additional funds to borrowers whose loans were on nonaccrual status at September 30, 2023.

Nonaccrual loans of $ 25.6 million and $ 37.7 million, respectively, at March 31, 2024 and December 31, 2023 were current as to the payment of principal and interest.

As of March 31, 2024 and December 31, 2023, nonaccrual loans secured by one- to four-family residential property amounting to $ 3.2 million and $ 960 thousand, respectively, were in process of foreclosure.

There were no significant commitments to lend additional funds to borrowers whose loans were on nonaccrual status at March 31, 2024.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The following table presents interest income recognized on nonaccrual loans:

(Dollars in thousands) Three Months Nine Months

Periods ended September 30, 2023 2022 2023 2022

(Dollars in thousands)

Three months ended March 31, 2024 2023

Commercial real estate

$ 474 $ — $ 1,344 $ —

Commercial & industrial

2 unchanged sentences

Residential real estate

82 77 341 242

Total consumer 35 23

1 unchanged sentence

Troubled Loan Modifications

As disclosed in Note 2, the Corporation adopted ASU 2022-02, which eliminated the accounting guidance for TDRs and added enhanced disclosures with respect to certain modifications for borrowers experiencing financial difficulty.

Effective January 1, 2023, a loan that has been modified is considered a TLM when the modification is made to a borrower experiencing financial difficulty and the modification has a direct impact to the contractual cash flows.

If both of the

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

aforementioned criteria are met, then the modification is considered a TLM and subject to the enhanced disclosure requirements.

In the course of resolving problem loans, the Corporation may choose to modify the contractual terms of loans to borrowers who are experiencing financial difficulty.

Such modifications to borrowers experiencing financial difficulty may include modified contractual terms that have a direct impact to contractual cash flows, including principal forgiveness, interest rate reductions, maturity extensions, other-than-insignificant payment delays, or any combination thereof.

The following is a description of each of these types of modifications:

• Principal forgiveness results in the reduction in the outstanding principal balance of the loan and can result voluntarily through renegotiated contractual terms with the borrower or involuntarily through a bankruptcy proceeding.

• An interest rate reduction results in the contractual interest rate being reduced from the original agreement.

• A maturity extension represents an extension of the term of the loan beyond its original contractual maturity date.

• An other-than-insignificant payment delay is a deferral arrangement with the borrower, which allows them to delay a scheduled loan payment to a later date.

The Corporation considers that a three months or less payment delay generally would be considered insignificant.

• A combination includes loans that have undergone more than one of the above loan modification types.

The following tables present the carrying value at September 30, 2023, of TLMs made during the periods indicated, segregated by class of loans and type of concession granted:

(Dollars in thousands)

Three months ended September 30, 2023

Maturity Extension Total % (1)

Commercial real estate $ 13,963 $ 13,963 1 %

Commercial & industrial — — —

Total commercial 13,963 13,963 1

Total $ 13,963 $ 13,963 — %

(1) Represents the period end total carrying value of TLMs as a percentage of the period end total loan balance by class.

In the course of resolving problem loans, the Corporation may choose to modify the contractual terms of certain loans.

A loan that has been modified is considered a TLM when the modification is made to a borrower experiencing financial difficulty and the modification has a direct impact to the contractual cash flows.

The decision to modify a loan, versus aggressively enforcing the collection of the loan, may benefit the Corporation by increasing the ultimate probability of collection.

Modifications to borrowers experiencing financial difficulty may include modified contractual terms that have a direct impact to contractual cash flows, including principal forgiveness, interest rate reductions, maturity extensions, other-than-insignificant payment delays, or any combination thereof.

Nonaccrual loans that become TLMs generally remain on nonaccrual status for six months, subsequent to being modified, before management considers their return to accrual status.

If a TLM is on accrual status prior to being modified, it is reviewed to determine if the modified loan should remain on accrual status.

TLMs are reported as such for at least one year from the date of the modification.

If the TLM performs in accordance with the modified contractual terms for that period of time, it would be removed from this classification.

The following table presents the carrying value at March 31, 2024, of TLMs made during the period indicated, segregated by class of loans and type of concession granted:

(Dollars in thousands)

Nine months ended September 30, 2023

Maturity Extension Total % (1)

Three months ended March 31, 2024

Maturity Extension Total % of Loan Class (1)

Commercial real estate $ — $ — — %

2 unchanged sentences

Total $ 668 $ 668 — %

(1) Represents the period end total carrying value of TLMs as a percentage of the period end total loan balance by class.

(1) Percentage of TLMs to the total loans outstanding within the respective loan class.

During the three months ended March 31, 2023, there were no TLMs.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The following tables present the financial effect of TLMs made during the periods indicated, segregated by class of loans:

Three months ended September 30, 2023

The following table presents the financial effect of TLMs made during the period indicated, segregated by class of loans:

Three months ended March 31, 2024

Weighted Average Maturity Extension

2 unchanged sentences

Total commercial 120

Nine months ended September 30, 2023

Weighted Average Maturity Extension

Management closely monitors the performance of TLMs to understand the effectiveness of the modifications.

The following tables present an aging analysis, as of the date indicated, of TLMs that have been modified in the past 12 months:

(Dollars in thousands) Days Past Due

March 31, 2024 Current 30-59 60-89 90 or More Total Past Due Total Loans

Commercial real estate

$ 21,692 $ — $ — $ — $ — $ 21,692

Commercial & industrial

668 — — — — 668

Total commercial 22,360 — — — — 22,360

Management closely monitors the performance of TLMs to understand the effectiveness of the modifications.

The following table presents an aging analysis as of the date indicated, of TLMs that have been modified in the past nine months:

Total loans $ 22,360 $ — $ — $ — $ — $ 22,360

(Dollars in thousands) Days Past Due

September 30, 2023 30-59 60-89 Over 90 Total Past Due Current Total Loans

December 31, 2023 Current 30-59 60-89 90 or More Total Past Due Total Loans

Commercial real estate

3 unchanged sentences

Total loans $ 21,830 $ — $ — $ — $ — $ 21,830

There were no TLMs made in the previous nine months for which there was a subsequent payment default.

Nonaccrual loans that become TLMs generally remain on nonaccrual status for six months, subsequent to being modified, before management considers their return to accrual status.

If a TLM is on accrual status prior to being modified, it is reviewed to determine if the modified loan should remain on accrual status.

There were no significant commitments to lend additional funds to borrowers experiencing financial difficulty whose loans were TLMs at September 30, 2023.

There were no TLMs made in the previous 12 months for which there was a subsequent payment default.

There were no significant commitments to lend additional funds to borrowers experiencing financial difficulty whose loans were TLMs at March 31, 2024.

Individually Analyzed Loans

Individually analyzed loans include nonaccrual commercial loans, TLMs, as well as certain other loans based on the underlying risk characteristics and the discretion of management to individually analyze such loans.

Prior to January 1, 2023, individually analyzed loans also included TDRs.

As of September 30, 2023, individually analyzed loans amounted to $ 24.4 million, all of which were considered collateral dependent.

As of December 31, 2022, individually analyzed loans amounted to $ 10.0 million, of which $ 8.5 million were considered collateral dependent.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Individually analyzed loans are individually assessed for credit impairment and include nonaccrual commercial loans, TLMs, as well as certain other loans based on the underlying risk characteristics and the discretion of management to individually analyze such loans.

As of March 31, 2024 and December 31, 2023, individually analyzed loans amounted to $ 34.2 million and $ 34.6 million, respectively, all of which were considered collateral dependent.

For collateral dependent loans where management has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and repayment of the loan is to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date.

See Note 7 for additional disclosure regarding fair value of individually analyzed collateral dependent loans.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The following table presents the carrying value of collateral dependent individually analyzed loans:

(Dollars in thousands) September 30, 2023 December 31, 2022

(Dollars in thousands) March 31, 2024 December 31, 2023

Carrying Value Related Allowance Carrying Value Related Allowance

6 unchanged sentences

1,131 — 1,131 —

Home equity (3)

Total consumer — — 592 —

Total $ 34,245 $ — $ 34,640 $ 97

19 unchanged sentences

Classified - Loans identified as “substandard,” “doubtful” or “loss” based on criteria consistent with guidelines provided by banking regulators.

A “substandard” loan has defined weaknesses which make payment default or principal exposure likely,

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

but not yet certain.

A “substandard” loan has defined weaknesses which make payment default or principal exposure likely, but not yet certain.

Such loans are apt to be dependent upon collateral liquidation, a secondary source of repayment or an event outside of the normal course of business.

4 unchanged sentences

The Corporation’s procedures call for loan risk ratings and classifications to be revised whenever information becomes available that indicates a change is warranted.

On a quarterly basis, management reviews a watched asset list, which generally consists of commercial loans that are risk-rated 6 or worse, highly leveraged transaction loans, high-volatility commercial real estate and other selected loans.

On a quarterly basis, management reviews a watched asset list, which generally consists of commercial loans that are risk-rated 6 or worse, highly leveraged transaction loans, high-volatility

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

commercial real estate, and other selected loans.

Management’s review focuses on the current status of the loans, the appropriateness of risk ratings and strategies to improve the credit.

8 unchanged sentences

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The following table includes information on credit quality indicators and gross charge-offs for the Corporation’s loan portfolio, segregated by class of loans as of September 30, 2023:

The following table includes information on credit quality indicators and gross charge-offs for the Corporation’s loan portfolio, segregated by class of loans as of March 31, 2024:

(Dollars in thousands) Term Loans Amortized Cost by Origination Year

5 unchanged sentences

39,504 359,048 606,664 415,435 167,540 524,795 44,510 1,022 2,158,518

CRE gross charge-offs

— — — — — — — — —

Gross charge-offs — — — — — — — — —

41,752 53,657 125,752 50,132 49,053 184,526 96,460 556 601,888

3 unchanged sentences

41,752 53,657 130,711 51,624 49,053 189,563 96,460 556 613,376

C&I gross charge-offs (1)

25 — — — — — — — 25

Gross charge-offs 8 — — — — — — — 8

Residential Real Estate:

4 unchanged sentences

17,794 426,177 801,966 655,038 252,241 432,308 — — 2,585,524

Residential real estate gross charge-offs — — — — — — — — —

Gross charge-offs — — — — — — — — —

3,682 23,025 14,522 6,690 2,697 5,984 237,829 11,994 306,423

2 unchanged sentences

3,682 23,025 14,661 6,713 2,839 6,374 238,497 13,511 309,302

Home equity gross charge-offs — — — — — — — — —

6,197 3,674 3,758 1,045 143 4,307 241 — 19,365

Gross charge-offs — — — — — — — — —

1,020 6,457 3,422 2,585 945 3,814 237 — 18,480

22 — 7 — 3 — — — 32

Other gross charge-offs (1)

1,042 6,457 3,429 2,585 948 3,814 237 — 18,512

Gross charge-offs 58 — — — 2 2 — — 62

Total loans $ 103,774 $ 868,364 $ 1,557,431 $ 1,131,395 $ 472,621 $ 1,156,854 $ 379,704 $ 15,089 $ 5,685,232

Total gross charge-offs $ 66 $ — $ — $ — $ 2 $ 2 $ — $ — $ 70

(1) Gross charge-offs in 2023 represent charge-offs of business and consumer account overdraft balances.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The following table includes information on credit quality indicators for the Corporation’s loan portfolio, segregated by class of loans as of December 31, 2022:

The following table includes information on credit quality indicators and gross charge-offs for the Corporation’s loan portfolio, segregated by class of loans as of December 31, 2023:

(Dollars in thousands) Term Loans Amortized Cost by Origination Year

5 unchanged sentences

348,969 598,946 414,898 168,451 181,982 349,986 42,095 1,032 2,106,359

Gross charge-offs — — — — — 373 — — 373

55,607 124,894 52,282 49,812 72,876 145,361 90,664 587 592,083

3 unchanged sentences

66,726 125,712 52,471 49,812 73,739 145,361 90,664 587 605,072

Gross charge-offs 37 — — — — — — — 37

Residential Real Estate:

4 unchanged sentences

431,563 808,442 666,447 256,440 114,056 327,530 — — 2,604,478

Gross charge-offs — — — — — — — — —

24,925 14,997 6,829 2,919 1,982 3,696 241,459 12,591 309,398

2 unchanged sentences

24,925 14,997 6,829 2,919 2,112 4,525 242,760 13,527 312,594

Gross charge-offs — — — — — — — — —

6,777 3,530 3,685 1,001 120 3,824 243 — 19,180

1 unchanged sentence

6,798 3,530 3,685 1,001 120 3,824 245 — 19,203

Gross charge-offs 159 — 8 — — — — — 167

Total Loans $ 878,981 $ 1,551,627 $ 1,144,330 $ 478,623 $ 372,009 $ 831,226 $ 375,764 $ 15,146 $ 5,647,706

Consistent with industry practice, Washington Trust may renew commercial loans at or immediately prior to their maturity.

Total gross charge-offs $ 196 $ — $ 8 $ — $ — $ 373 $ — $ — $ 577

Washington Trust may renew commercial loans at or immediately prior to their maturity.

In the tables above, renewals subject to full credit evaluation before being granted are reported as originations in the period renewed.

In addition, loans with extensions of maturity dates of more than three months are reported as originations in the period extended.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

2 unchanged sentences

The level of the ACL on loans is based on management’s ongoing review of all relevant information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts.

The following table presents the activity in the ACL on loans for the three months ended September 30, 2023:

The following table presents the activity in the ACL on loans for the three months ended March 31, 2024:

(Dollars in thousands) Commercial Consumer

5 unchanged sentences

Ending Balance $ 24,856 $ 7,620 $ 32,476 $ 8,035 $ 1,057 $ 337 $ 1,394 $ 41,905

The following table presents the activity in the ACL on loans for the nine months ended September 30, 2023:

(Dollars in thousands) Commercial Consumer

CRE C&I Total Commercial Residential Real Estate Home Equity Other Total Consumer Total

Beginning Balance $ 18,435 $ 10,356 $ 28,791 $ 7,740 $ 1,115 $ 381 $ 1,496 $ 38,027

Charge-offs — ( 25 ) ( 25 ) — — ( 132 ) ( 132 ) ( 157 )

Recoveries — 10 10 — 10 23 33 43

Provision 5,250 ( 1,919 ) 3,331 ( 1,022 ) ( 133 ) 124 ( 9 ) 2,300

Ending Balance $ 23,685 $ 8,422 $ 32,107 $ 6,718 $ 992 $ 396 $ 1,388 $ 40,213

The following table presents the activity in the ACL on loans for the three months ended September 30, 2022:

The following table presents the activity in the ACL on loans for the three months ended March 31, 2023:

(Dollars in thousands) Commercial Consumer

5 unchanged sentences

Ending Balance $ 21,374 $ 9,833 $ 31,207 $ 6,239 $ 978 $ 356 $ 1,334 $ 38,780

The following table presents the activity in the ACL on loans for the nine months ended September 30, 2022:

(Dollars in thousands) Commercial Consumer

CRE C&I Total Commercial Residential Real Estate Home Equity Other Total Consumer Total

Beginning Balance $ 18,933 $ 10,832 $ 29,765 $ 7,860 $ 1,069 $ 394 $ 1,463 $ 39,088

Charge-offs — ( 19 ) ( 19 ) — — ( 103 ) ( 103 ) ( 122 )

Recoveries 145 22 167 21 4 34 38 226

Provision ( 1,467 ) ( 488 ) ( 1,955 ) ( 434 ) ( 2 ) 62 60 ( 2,329 )

Ending Balance $ 17,611 $ 10,347 $ 27,958 $ 7,447 $ 1,071 $ 387 $ 1,458 $ 36,863

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Note 6 - Derivative Financial Instruments

2 unchanged sentences

All derivatives are recognized as either assets or liabilities on the balance sheet and are measured at fair value.

Derivative assets are included in other assets and derivative liabilities are included in other liabilities in the Unaudited Consolidated Balance Sheets.

Derivative assets are included in other assets.

and derivative liabilities are included in other liabilities in the Unaudited Consolidated Balance Sheets.

The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and resulting designation.

7 unchanged sentences

Cash Flow Hedging Instruments

As of September 30, 2023 and December 31, 2022, the Corporation had interest rate swap contracts that were designated as cash flow hedges to hedge the interest rate risk associated with short-term borrowings.

As of March 31, 2024 and December 31, 2023, the Corporation had interest rate swap contracts that were designated as cash flow hedges to hedge the interest rate risk associated with short-term borrowings.

See Note 9 for additional disclosure on borrowings.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Additionally, the Corporation had an interest rate swap contract that was designated as a cash flow hedge to hedge the interest rate risk associated with a pool of variable rate commercial loans.

2 unchanged sentences

This loss is being amortized into earnings as a reduction of interest income on a straight-line basis over the remaining life of the original interest rate swap term, or through May 1, 2026.

At September 30, 2023, the remaining unamortized balance of the loss included in the AOCL component of shareholders’ equity was $ 22.2 million, or $ 16.9 million after tax.

At March 31, 2024, the remaining unamortized balance of the loss included in the AOCL component of shareholders’ equity was $ 17.9 million, or $ 13.3 million after tax.

The changes in fair value of derivatives designated as cash flow hedges are recorded in other comprehensive income (loss) and subsequently reclassified to earnings when gains or losses are realized.

5 unchanged sentences

For interest rate swaps, the third party exchanges the client’s fixed-rate loan payments for variable-rate loan payments.

The Corporation’s credit policies with respect to interest rate contracts with commercial borrowers are similar to those used for loans.

The Corporation retains the risk that is associated with the potential failure of counterparties and the risk inherent in originating loans.

The interest rate contracts with counterparties are generally subject to bilateral collateralization terms.

These derivatives are not designated as hedges and therefore, changes in fair value are recognized in earnings.

5 unchanged sentences

Under a risk participation-in agreement, a derivative liability, the Corporation assumes, or participates in, a portion of the credit risk associated with the interest rate swap position with the commercial borrower for a fee received from the other bank.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Mortgage Loan Commitments

3 unchanged sentences

Both interest rate lock commitments and forward sale commitments are derivative financial instruments, but do not meet criteria for hedge accounting and therefore, the changes in fair value of these commitments are recognized in earnings.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The following table presents the notional amounts and fair values of derivative instruments in the Unaudited Consolidated Balance Sheets:

(Dollars in thousands) September 30, 2023 December 31, 2022

(Dollars in thousands) March 31, 2024 December 31, 2023

Fair Value Fair Value

22 unchanged sentences

Net amounts $ 64,168 $ 62,415 $ 51,966 $ 52,814

(1) The fair value of derivative assets includes accrued interest receivable of $ 262 thousand and $ 24 thousand, respectively, at September 30, 2023 and December 31, 2022.

The fair value of derivative liabilities includes accrued interest payable of $ 856 thousand at December 31, 2022.

(1) The fair value of derivative assets includes accrued interest receivable of $ 233 thousand and $ 239 thousand, respectively, at March 31, 2024 and December 31, 2023.

There was no accrued interest payable included in the fair value of derivative liabilities at March 31, 2024 or at December 31, 2023.

(2) Interest rate risk management contracts and loan related derivative contracts with counterparties are subject to master netting arrangements.

(3) Collateral pledged to derivative counterparties is in the form of cash.

(3) Collateral contractually required to be pledged to derivative counterparties is in the form of cash.

Washington Trust may need to post additional collateral in the future in proportion to potential increases in unrealized loss positions.

The following table presents the effect of derivative instruments in the Unaudited Consolidated Statements of Changes in Shareholders’ Equity:

(Dollars in thousands) Gain (Loss) Recognized in

(Dollars in thousands) Gain Recognized in

Other Comprehensive Income (Loss), Net of Tax

Three Months Nine Months

Periods ended September 30, 2023 2022 2023 2022

Three months ended March 31, 2024 2023

Derivatives Designated as Cash Flow Hedging Instruments:

8 unchanged sentences

Recognized in Noninterest Income

Three Months Nine Months

Periods ended September 30, Statement of Income Location 2023 2022 2023 2022

Three months ended March 31, Statement of Income Location 2024 2023

Derivatives not Designated as Hedging Instruments:

28 unchanged sentences

The following table presents a summary of mortgage loans held for sale accounted for under the fair value option:

(Dollars in thousands) September 30,

(Dollars in thousands) March 31,

2024 December 31,

1 unchanged sentence

Aggregate principal balance

24,934 19,480

Difference between fair value and principal balance $ 528 $ 597

Changes in fair value of mortgage loans held for sale accounted for under the fair value option election are included in mortgage banking revenues in the Unaudited Consolidated Statements of Income.

Changes in fair value amounted to decreases to mortgage banking revenues of $ 39 thousand for the three months ended September 30, 2023 and $ 21 thousand for the nine months ended September 30, 2023.

This compared to decreases to mortgage banking revenues of $ 521 thousand

Changes in fair value amounted to a decrease in mortgage banking revenues of $ 69 thousand for the three months ended March 31, 2024, compared to an increase in mortgage banking revenues of $ 24 thousand for the same period in 2023.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

for the three months ended September 30, 2022 and $ 1.3 million for the nine months ended September 30, 2022.

There were no mortgage loans held for sale 90 days or more past due as of September 30, 2023 and December 31, 2022.

There were no mortgage loans held for sale 90 days or more past due as of March 31, 2024 and December 31, 2023.

Valuation Techniques

3 unchanged sentences

such items are classified as Level 1.

There were no Level 1 debt securities held at September 30, 2023 and December 31, 2022.

There were no Level 1 debt securities held at March 31, 2024 and December 31, 2023.

Level 2 debt securities are traded less frequently than exchange-traded instruments.

3 unchanged sentences

Debt securities not actively traded whose fair value is determined through the use of cash flows utilizing inputs that are unobservable are classified as Level 3.

There were no Level 3 debt securities held at September 30, 2023 and December 31, 2022.

There were no Level 3 debt securities held at March 31, 2024 and December 31, 2023.

Mortgage Loans Held for Sale

16 unchanged sentences

However, the credit valuation adjustments utilize Level 3 inputs.

As of September 30, 2023 and December 31, 2022, the Corporation has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation.

As of March 31, 2024 and December 31, 2023, the Corporation has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation.

As a result, the Corporation has classified its derivative valuations in their entirety as Level 2.

10 unchanged sentences

(Level 2) Significant Unobservable Inputs

September 30, 2023

March 31, 2024

Available for sale debt securities:

37 unchanged sentences

Items Recorded at Fair Value on a Nonrecurring Basis

The following table presents the carrying value of assets held at September 30, 2023, which were written down to fair value during the nine months ended September 30, 2023.

There were no assets written down to fair value during the three months ended March 31, 2024.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The following table presents the carrying value of assets held at December 31, 2023, which were written down to fair value during the year ended December 31, 2023.

(Dollars in thousands) Total Quoted Prices in Active Markets for Identical Assets

1 unchanged sentence

(Level 2) Significant Unobservable Inputs

Collateral dependent individually analyzed loan $ 8,050 $ — $ — $ 8,050

Collateral dependent individually analyzed loans $ 8,050 $ — $ — $ 8,050

Loan servicing rights 8,512 — — 8,512

Total assets at fair value on a nonrecurring basis $ 16,562 $ — $ — $ 16,562

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

There were no assets written down to fair value during the twelve months ended December 31, 2022.

The following table presents valuation techniques and unobservable inputs for assets measured at fair value on a nonrecurring basis.

(Dollars in thousands) Fair Value Valuation Technique Unobservable Input Range of Inputs Utilized

The following table presents valuation techniques and unobservable inputs for assets measured at fair value on a nonrecurring

basis for which the Corporation has utilized Level 3 inputs to determine fair value:

(Dollars in thousands) Fair Value Valuation Technique Unobservable Input Inputs Utilized

(Weighted Average)

September 30, 2023

Collateral dependent individually analyzed loan $ 8,050 Appraisals of collateral Discount for costs to sell 0 %

December 31, 2023

Collateral dependent individually analyzed loans $ 8,050 Appraisals of collateral Discount for costs to sell 0 %

Appraisal adjustments 0 %

Loan servicing rights 8,512 Discounted cash flow Discount rates 10 % - 14 % ( 10 %)

Prepayment rates 6 % - 53 % ( 9 %)

Items for which Fair Value is Only Disclosed

The estimated fair values and related carrying amounts for financial instruments for which fair value is only disclosed are presented below as of the periods indicated.

The tables exclude financial instruments for which the carrying value approximates fair value such as cash and cash equivalents, FHLB stock, accrued interest receivable, BOLI, non-maturity deposits and accrued interest payable.

The Corporation considers cash and cash equivalents, accrued interest receivable and accrued interest payable as Level 1 measurements within the fair value hierarchy.

The Corporation considers FHLB stock, BOLI and non-maturity deposits as Level 2 measurements.

The estimated fair values and related carrying amounts for financial instruments for which fair value is only disclosed are presented in the tables below:

(Dollars in thousands)

September 30, 2023 Carrying Amount Total

March 31, 2024 Carrying Amount Total

Fair Value Quoted Prices in Active Markets for Identical Assets

2 unchanged sentences

Financial Assets:

Cash and cash equivalents $ 105,588 $ 105,588 $ 105,588 $ — $ —

Loans, net of allowance for credit losses on loans 5,643,327 5,391,991 — — 5,391,991

55,512 55,512 — 55,512 —

Investment in BOLI

104,475 104,475 — 104,475 —

Financial Liabilities:

Non-maturity deposits $ 3,517,657 $ 3,517,657 $ — $ 3,517,657 $ —

Time deposits 1,830,236 1,813,910 — 1,813,910 —

FHLB advances

1,240,000 1,237,195 — 1,237,195 —

Junior subordinated debentures 22,681 19,247 — 19,247 —

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

(Dollars in thousands)

4 unchanged sentences

Financial Assets:

Cash and cash equivalents $ 90,184 $ 90,184 $ 90,184 $ — $ —

Loans, net of allowance for credit losses on loans 5,606,649 5,365,396 — — 5,365,396

51,893 51,893 — 51,893 —

Investment in BOLI

103,736 103,736 — 103,736 —

Financial Liabilities:

Non-maturity deposits $ 3,559,923 $ 3,559,923 $ — $ 3,559,923 $ —

Time deposits 1,788,237 1,773,643 — 1,773,643 —

FHLB advances

1,190,000 1,192,262 — 1,192,262 —

Junior subordinated debentures 22,681 19,228 — 19,228 —

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Note 8 - Deposits

The following table presents a summary of deposits:

(Dollars in thousands) September 30,

(Dollars in thousands) March 31,

2024 December 31,

Noninterest-bearing:

Demand deposits $ 773,261 $ 858,953

Noninterest-bearing demand deposits $ 648,929 $ 693,746

Interest-bearing:

Interest-bearing demand deposits 536,923 504,959

490,217 333,197

NOW accounts 735,617 767,036

5 unchanged sentences

Total deposits $ 5,347,893 $ 5,348,160

(1) Includes wholesale brokered demand deposit balances of $ 0 and $ 31,153 , respectively, as of September 30, 2023 and December 31, 2022.

(2) Includes wholesale brokered time deposit balances of $ 668,042 and $ 327,044 , respectively, as of September 30, 2023 and December 31, 2022.

(1) Includes wholesale brokered time deposit balances of $ 673.7 million and $ 654.1 million, respectively, as of March 31, 2024 and December 31, 2023.

The following table presents scheduled maturities of time certificates of deposit:

(Dollars in thousands) Scheduled Maturity Weighted Average Rate

October 1, 2023 to December 31, 2023 $ 1,198,713 4.51 %

April 1, 2024 to December 31, 2024 $ 1,518,477 4.74 %

2025 219,665 3.39

3 unchanged sentences

2029 and thereafter 1,675 2.70

Balance at September 30, 2023 $ 1,779,984 4.27 %

Time certificates of deposit in denominations of $250 thousand or more totaled $ 292.1 million and $ 200.9 million, respectively, at September 30, 2023 and December 31, 2022.

Balance at March 31, 2024 $ 1,830,236 4.49 %

Time certificates of deposit in denominations of $250 thousand or more totaled $ 297.5 million and $ 271.2 million, respectively, at March 31, 2024 and December 31, 2023.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Note 9 - Borrowings

Advances payable to the FHLB amounted to $ 1.1 billion and $ 980.0 million, respectively, at September 30, 2023 and December 31, 2022.

As of September 30, 2023 and December 31, 2022, the Bank had access to a $ 40.0 million unused line of credit with the FHLB.

Additionally, the Bank had a standby letter of credit with the FHLB of $ 115.0 million and $ 215.0 million, respectively, at September 30, 2023 and December 31, 2022.

This standby letter of credit was executed in 2022 to collateralize an institutional deposit.

The Bank had remaining available borrowing capacity of $ 1.0 billion and $ 668.3 million, respectively, with the FHLB at September 30, 2023 and December 31, 2022.

Advances payable to the FHLB amounted to $ 1.2 billion at both March 31, 2024 and December 31, 2023.

At March 31, 2024, the Corporation has interest rate swaps with a notional amount of $ 120.0 million that were designated as cash flow hedges to hedge the interest rate risk associated with short-term FHLB advances.

See Note 6 for additional disclosure on derivatives.

As of March 31, 2024 and December 31, 2023, the Bank had access to a $ 40.0 million unused line of credit with the FHLB.

Additionally, the Bank had standby letters of credit with the FHLB of $ 66.0 million and $ 65.0 million, respectively, at March 31, 2024 and December 31, 2023.

The standby letters of credit collateralize institutional deposits.

The Bank had remaining available borrowing capacity of $ 999.4 million and $ 1.1 billion, respectively, with the FHLB at March 31, 2024 and December 31, 2023.

The Bank pledges certain qualified investment securities and loans as collateral to the FHLB.

The following table presents maturities and weighted average interest rates on FHLB advances outstanding as of September 30, 2023:

The following table presents maturities and weighted average interest rates on FHLB advances outstanding as of March 31, 2024:

(Dollars in thousands) Scheduled

Maturity Weighted

October 1, 2023 to December 31, 2023 $ 215,000 5.53 %

April 1, 2024 to December 31, 2024 $ 600,000 5.37 %

2025 305,000 4.94

3 unchanged sentences

2029 and thereafter — —

Balance at September 30, 2023 $ 1,120,000 4.90 %

Balance at March 31, 2024 $ 1,240,000 4.99 %

Note 10 - Shareholders' Equity

4 unchanged sentences

The 2024 Repurchase Program commenced on January 1, 2024 and expires on December 31, 2024, and may be modified, suspended, or discontinued at any time.

During the nine months ended September 30, 2023, the Corporation repurchased 200,000 shares, at an average price of $ 43.70 and a total cost of $ 8.7 million, all of which was repurchased in January and February.

As of March 31, 2024, no shares have been repurchased under the 2024 Repurchase Program.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Regulatory Capital Requirements

Capital levels at September 30, 2023 exceeded the regulatory minimum levels to be considered “well capitalized.”

Capital levels at March 31, 2024 exceeded the regulatory minimum levels to be considered “well capitalized.”

The following table presents the Corporation’s and the Bank’s actual capital amounts and ratios, as well as the corresponding minimum and well capitalized regulatory amounts and ratios that were in effect during the respective periods:

1 unchanged sentence

Amount Ratio Amount Ratio Amount Ratio

September 30, 2023

March 31, 2024

Total Capital (to Risk-Weighted Assets):

24 unchanged sentences

(1) Leverage ratio.

In addition to the minimum regulatory capital required for capital adequacy purposes outlined in the table above, the Corporation is required to maintain a minimum capital conservation buffer, in the form of common equity, of 2.50% in order to avoid restrictions on capital distributions and discretionary bonuses.

The Corporation’s capital levels exceeded the minimum regulatory capital requirements plus the capital conservation buffer at September 30, 2023 and December 31, 2022.

In addition to the minimum regulatory capital required for capital adequacy outlined in the table above, the Corporation and the Bank are required to maintain a minimum capital conservation buffer, in the form of common equity, of 2.50%, resulting in a requirement for the Corporation and the Bank to effectively maintain total capital, Tier 1 capital, and common equity Tier 1 capital ratios of 10.50%, 8.50%, and 7.00%, respectively.

The Corporation and the Bank must maintain the capital conservation buffer to avoid restrictions on the ability to pay dividends and discretionary bonuses.

The Corporation’s and the Bank’s capital levels exceeded the minimum regulatory capital requirements plus the capital conservation buffer at March 31, 2024 and December 31, 2023.

The Bancorp owns the common stock of two capital trusts, which have issued trust preferred securities.

In accordance with GAAP, the capital trusts are treated as unconsolidated subsidiaries.

At both September 30, 2023 and December 31, 2022, $ 22.0 million in trust preferred securities were included in the Tier 1 capital of the Corporation for regulatory capital reporting purposes pursuant to the capital adequacy guidelines of the Federal Reserve.

At both March 31, 2024 and December 31, 2023, $ 22.0 million in trust preferred securities were included in the Tier 1 capital of the Corporation for regulatory capital reporting purposes pursuant to the capital adequacy guidelines of the Federal Reserve.

In accordance with regulatory capital rules, the Corporation elected the option to delay the estimated impact of ASC 326 on its regulatory capital over a two-year deferral and subsequent three-year transition period ending December 31, 2024.

As a result, capital ratios exclude the full impact of the increased ACL on loans and unfunded loan commitments attributed to the adoption of ASC 326, adjusted for an approximation of the after-tax provision for credit losses attributable to ASC 326

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

relative to the incurred loss methodology during the two-year deferral period.

result, capital ratios exclude the full impact of the increased ACL on loans and unfunded loan commitments attributed to the adoption of ASC 326, adjusted for an approximation of the after-tax provision for credit losses attributable to ASC 326 relative to the incurred loss methodology during the two-year deferral period.

The cumulative difference at the end of the deferral period is being phased-in to regulatory capital over the three-year transition period, which began January 1, 2022.

Note 11 - Revenue from Contracts with Customers

The following tables summarize total revenues as presented in the Unaudited Consolidated Statements of Income and the related amounts that are from contracts with customers within the scope of ASC 606.

The following table summarizes total revenues as presented in the Unaudited Consolidated Statements of Income and the related amounts that are from contracts with customers within the scope of ASC 606.

As shown below, a substantial portion of our revenues are specifically excluded from the scope of ASC 606.

For the three months ended September 30, 2023 2022

For the three months ended March 31, 2024 2023

(Dollars in thousands) Revenue (1)

14 unchanged sentences

739 — 1,165 —

Total noninterest income 15,226 11,218 15,803 11,947

Total revenues $ 48,977 $ 11,218 $ 57,845 $ 11,947

(1) As reported in the Unaudited Consolidated Statements of Income.

(2) Revenue from contracts with customers in scope of ASC 606.

For the nine months ended September 30, 2023 2022

(Dollars in thousands) Revenue (1) ASC 606 Revenue (2)

Revenue (1) ASC 606 Revenue (2)

Net interest income $ 104,444 $ — $ 114,648 $ —

Noninterest income:

Wealth management revenues 26,659 26,659 30,122 30,122

Mortgage banking revenues

2,466 2,370 352 276

Card interchange fees

3,667 3,667 3,754 3,754

Service charges on deposit accounts

2,118 2,118 2,250 2,250

Loan related derivative income

1,278 — 2,011 —

Income from bank-owned life insurance

2,754 — 1,900 —

1,252 949 1,147 880

Total noninterest income 17,163 13,538 13,283 10,848

2 unchanged sentences

(2) Revenue from contracts with customers in scope of ASC 606.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The following table presents revenue from contracts with customers based on the timing of revenue recognition:

(Dollars in thousands) Three Months Nine Months

Periods ended September 30, 2023 2022 2023 2022

(Dollars in thousands)

Three months ended March 31, 2024 2023

Revenue recognized at a point in time:

4 unchanged sentences

Wealth management revenues

8,948 9,525 26,659 30,122

Service charges on deposit accounts

251 191 712 468

Total revenues from contracts with customers in scope of ASC 606

$ 13,538 $ 10,848

Total revenues from contracts in scope of Topic 606 $ 11,218 $ 11,947 $ 33,393 $ 37,006

Receivables for revenue from contracts with customers primarily consist of amounts due for wealth management services performed for which the Corporation’s performance obligations have been fully satisfied.

Receivables amounted to $ 6.4 million and $ 5.1 million, respectively, at September 30, 2023 and December 31, 2022 and were included in other assets in the Unaudited Consolidated Balance Sheets.

Receivables amounted to $ 5.7 million and $ 5.5 million, respectively, at March 31, 2024 and December 31, 2023 and were included in other assets in the Unaudited Consolidated Balance Sheets.

Deferred revenues, which are considered contract liabilities under ASC 606, represent advance consideration received from customers for which the Corporation has a remaining performance obligation to fulfill.

Contract liabilities are recognized as revenue over the life of the contract as the performance obligations are satisfied.

The balances of contract liabilities were insignificant at both September 30, 2023 and December 31, 2022 and were included in other liabilities in the Unaudited Consolidated Balance Sheets.

The balances of contract liabilities were insignificant at both March 31, 2024 and December 31, 2023 and were included in other liabilities in the Unaudited Consolidated Balance Sheets.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

For commissions and incentives that are in scope of ASC 606, such as those paid to employees in our wealth management services and commercial banking segments in order to obtain customer contracts, contract cost assets are established.

The contract cost assets are capitalized and amortized over the estimated useful life that the asset is expected to generate benefits.

The carrying value of contract cost assets amounted to $ 1.9 million and $ 2.1 million, respectively, at September 30, 2023 and December 31, 2022 and were included in other assets in the Unaudited Consolidated Balance Sheets.

The carrying value of contract cost assets amounted to $ 2.0 million at both March 31, 2024 and December 31, 2023 and were included in other assets in the Unaudited Consolidated Balance Sheets.

The amortization of contract cost assets is recorded within salaries and employee benefits expense in the Unaudited Consolidated Statements of Income.

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Washington Trust also has non-qualified retirement plans to provide supplemental retirement benefits to certain employees, as defined in the plans.

These defined benefit pension plans were previously amended to freeze benefit accruals after a 10-year transition period.

This transition period will end in December 2023.

In the fourth quarter of 2023, the Corporation’s Board of Directors approved a resolution to terminate the qualified pension plan.

Work on the qualified pension plan termination process has commenced and the qualified pension plan’s assets are expected to be distributed in fiscal year 2025, pending completion of applicable regulatory approvals, including receipt of a determination letter from the Internal Revenue Service.

The qualified pension plan liability is expected to be settled through a combination of lump sum payments to participants and purchase of a group annuity contract from a highly-rated insurance company.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

These defined benefit pension plans were previously amended to freeze benefit accruals after a 10-year transition period, which ended in December 2023.

In the fourth quarter of 2023, the Corporation’s Board of Directors approved a resolution to terminate the qualified pension plan, and participants were notified of the termination.

Work on the qualified pension plan termination process has commenced and the qualified pension plan’s assets are expected to be distributed in 2025, pending completion of applicable regulatory approvals, including receipt of a determination letter from the Internal Revenue Service.

The qualified pension plan liability is expected to be settled in 2025 through a combination of lump sum payments to participants and purchase of a group annuity contract from a highly-rated insurance company.

Upon settlement in 2025, the Corporation expects to recognize a pre-tax pension settlement charge that will include a non-cash charge for the recognition of all pre-tax actuarial losses accumulated in AOCL at that time.

The actual amount of the settlement charge will depend on various factors, including interest rates, plan asset returns, the lump sum election rate and annuity pricing.

The following table presents components of net periodic benefit cost and other amounts recognized in other comprehensive income (loss), on a pre-tax basis:

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Pension Plan Non-Qualified Retirement Plans

Three Months Nine Months Three Months Nine Months

Periods ended September 30, 2023 2022 2023 2022 2023 2022 2023 2022

Three months ended March 31, 2024 2023 2024 2023

Net Periodic Benefit Cost:

6 unchanged sentences

Recognized net actuarial loss (2)

— 255 — 765 59 173 178 519

Net periodic benefit cost ($ 70 ) $ 88 $ 193 $ 274

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Qualified Pension Plan Non-Qualified Retirement Plans

For the nine months ended September 30, 2023 2022 2023 2022

For the three months ended March 31, 2024 2023 2024 2023

Measurement date Dec 31, 2023 Dec 31, 2022 Dec 31, 2023 Dec 31, 2022

Equivalent single discount rate for benefit obligations 4.51 % 5.54 % 5.15 % 5.50 %

Equivalent single discount rate for service cost 5.60 3.11 5.61 3.16

Equivalent single discount rate for service cost N/A 5.60 N/A 5.61

Equivalent single discount rate for interest cost 4.51 5.43 5.11 5.40

Expected long-term return on plan assets 4.75 5.25 N/A N/A

Rate of compensation increase 5.00 3.75 5.00 3.75

Rate of compensation increase 0.50 5.00 N/A 5.00

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

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and institutional trust services, including custody and fiduciary services.

The following tables present the statement of operations and total assets for Washington Trust’s reportable segments:

The following table presents the statement of operations and total assets for Washington Trust’s reportable segments:

(Dollars in thousands) Commercial Banking Wealth Management Services Consolidated Total

Three months ended September 30, 2023 2022 2023 2022 2023 2022

Three months ended March 31, 2024 2023 2024 2023 2024 2023

Net interest income $ 31,665 $ 37,180 $ — $ 13 $ 31,665 $ 37,193

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Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

(Dollars in thousands) Commercial Banking Wealth Management Services Consolidated Total

Nine months ended September 30, 2023 2022 2023 2022 2023 2022

Net interest income (expense) $ 104,407 $ 114,709 $ 37 ($ 61 ) $ 104,444 $ 114,648

Provision for credit losses 2,000 ( 2,100 ) — — 2,000 ( 2,100 )

Net interest income (expense) after provision for credit losses 102,407 116,809 37 ( 61 ) 102,444 116,748

Noninterest income 15,679 18,174 27,155 30,640 42,834 48,814

Noninterest expenses:

Depreciation and amortization expense 2,582 2,168 1,059 1,034 3,641 3,202

Other noninterest expenses 74,801 69,110 22,528 23,051 97,329 92,161

Total noninterest expenses 77,383 71,278 23,587 24,085 100,970 95,363

Income before income taxes 40,703 63,705 3,605 6,494 44,308 70,199

Income tax expense 8,226 13,423 853 1,668 9,079 15,091

Net income $ 32,477 $ 50,282 $ 2,752 $ 4,826 $ 35,229 $ 55,108

Total assets at period end $ 7,127,117 $ 6,332,986 $ 56,358 $ 75,065 $ 7,183,475 $ 6,408,051

Expenditures for long-lived assets 3,493 3,494 31 330 3,524 3,824

Note 14 - Other Comprehensive Income (Loss)

The following tables presents the activity in other comprehensive income (loss):

Three months ended September 30, 2023 2022

(Dollars in thousands) Pre-tax Amounts Income Tax Benefit (Expense) Net of Tax Pre-tax Amounts Income Tax Benefit (Expense) Net of Tax

The following table presents the activity in other comprehensive income (loss):

Three months ended March 31, 2024 2023

(Dollars in thousands) Pre-tax Amounts Income Tax Benefit (Expense) Net of Tax Pre-tax Amounts Income Tax Expense Net of Tax

Available for Sale Debt Securities:

8 unchanged sentences

31 ( 8 ) 23 59 ( 14 ) 45

Total other comprehensive loss ($ 39,351 ) $ 9,444 ($ 29,907 ) ($ 70,678 ) $ 16,964 ($ 53,714 )

(1) For the three months ended September 30, 2023 and 2022, the pre-tax amounts reclassified into earnings in the Unaudited Consolidated Statements of Income include reductions of $ 2.2 million and $ 1.1 million, respectively, in interest and fees on loans, as well as reductions of $ 631 thousand and $ 3 thousand, respectively, in FHLB interest expense.

(2) The pre-tax amounts are included in other expenses in the Unaudited Consolidated Statements of Income.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Nine months ended September 30, 2023 2022

(Dollars in thousands) Pre-tax Amounts Income Tax Benefit (Expense) Net of Tax Pre-tax Amounts Income Tax Benefit (Expense) Net of Tax

Securities available for sale:

Change in fair value of available for sale debt securities ($ 38,703 ) $ 9,289 ($ 29,414 ) ($ 174,302 ) $ 41,833 ($ 132,469 )

Cash flow hedges:

Change in fair value of cash flow hedges

4,938 ( 1,185 ) 3,753 ( 27,394 ) 6,574 ( 20,820 )

Net cash flow hedge losses (gains) reclassified into earnings (1)

6,043 ( 1,451 ) 4,592 709 ( 170 ) 539

Net change in fair value of cash flow hedges 10,981 ( 2,636 ) 8,345 ( 26,685 ) 6,404 ( 20,281 )

Defined benefit plan obligations:

Amortization of net actuarial losses (2)

178 ( 43 ) 135 1,284 ( 308 ) 976

Total other comprehensive loss ($ 27,544 ) $ 6,610 ($ 20,934 ) ($ 199,703 ) $ 47,929 ($ 151,774 )

(1) For the nine months ended September 30, 2023 and 2022, the pre-tax amounts reclassified into earnings in the Unaudited Consolidated Statements of Income include reductions of $ 7.1 million and $ 561 thousand, respectively, in interest and fees on loans, as well as a reduction of $ 1.0 million and an increase of $ 148 thousand, respectively, in FHLB interest expense.

Total other comprehensive (loss) income ($ 10,416 ) $ 2,656 ($ 7,760 ) $ 21,106 ($ 5,066 ) $ 16,040

(1) For the three months ended March 31, 2024 and 2023, the pre-tax amounts reclassified into earnings in the Unaudited Consolidated Statements of Income included reductions of $ 2.1 million and $ 2.8 million, respectively, in interest and fees on loans, as well as reductions of $ 493 thousand and $ 127 thousand, respectively, in FHLB interest expense.

(2) The pre-tax amounts are included in other expenses in the Unaudited Consolidated Statements of Income.

1 unchanged sentence

(Dollars in thousands) Net Unrealized Losses on Available For Sale Debt Securities Net Unrealized Losses on Cash Flow Hedges Net Unrealized Losses on Defined Benefit Plan Obligations Total

For the three months ended September 30, 2023

Balance at June 30, 2023 ($ 127,662 ) ($ 17,133 ) ($ 4,032 ) ($ 148,827 )

Other comprehensive (loss) income before reclassifications ( 32,785 ) 1,669 — ( 31,116 )

Amounts reclassified from accumulated other comprehensive (loss) income — 1,164 45 1,209

Net other comprehensive (loss) income ( 32,785 ) 2,833 45 ( 29,907 )

Balance at September 30, 2023 ($ 160,447 ) ($ 14,300 ) ($ 3,987 ) ($ 178,734 )

(Dollars in thousands) Net Unrealized Losses on Available For Sale Debt Securities Net Unrealized Losses on Cash Flow Hedges Net Unrealized Losses on Defined Benefit Plan Obligations Total

For the nine months ended September 30, 2023

For the three months ended March 31, 2024

Balance at December 31, 2023 ($ 116,591 ) ($ 15,619 ) ($ 8,943 ) ($ 141,153 )

Other comprehensive (loss) income before reclassifications ( 10,988 ) 1,979 — ( 9,009 )

Amounts reclassified from accumulated other comprehensive (loss) income — 4,592 135 4,727

Net other comprehensive (loss) income ( 29,414 ) 8,345 135 ( 20,934 )

Balance at September 30, 2023 ($ 160,447 ) ($ 14,300 ) ($ 3,987 ) ($ 178,734 )

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

(Dollars in thousands) Net Unrealized Losses on Available For Sale Debt Securities Net Unrealized Losses on Cash Flow Hedges Net Unrealized Losses on Defined Benefit Plan Obligations Total

For the three months ended September 30, 2022

Balance at June 30, 2022 ($ 92,197 ) ($ 17,321 ) ($ 8,523 ) ($ 118,041 )

Other comprehensive loss before reclassifications ( 47,067 ) ( 7,790 ) — ( 54,857 )

Amounts reclassified from accumulated other comprehensive loss — 817 326 1,143

Amounts reclassified from AOCL

— 1,226 23 1,249

Net other comprehensive (loss) income ( 10,988 ) 3,205 23 ( 7,760 )

Balance at September 30, 2022 ($ 139,264 ) ($ 24,294 ) ($ 8,197 ) ($ 171,755 )

Balance at March 31, 2024 ($ 127,579 ) ($ 12,414 ) ($ 8,920 ) ($ 148,913 )

(Dollars in thousands) Net Unrealized Losses on Available For Sale Debt Securities Net Unrealized Losses on Cash Flow Hedges Net Unrealized Losses on Defined Benefit Plan Obligations Total

For the nine months ended September 30, 2022

For the three months ended March 31, 2023

Balance at December 31, 2022 ($ 131,033 ) ($ 22,645 ) ($ 4,122 ) ($ 157,800 )

Other comprehensive loss before reclassifications ( 132,469 ) ( 20,820 ) — ( 153,289 )

Amounts reclassified from accumulated other comprehensive loss — 539 976 1,515

Net other comprehensive (loss) income ( 132,469 ) ( 20,281 ) 976 ( 151,774 )

Balance at September 30, 2022 ($ 139,264 ) ($ 24,294 ) ($ 8,197 ) ($ 171,755 )

Other comprehensive income before reclassifications 13,198 795 — 13,993

Amounts reclassified from AOCL

— 2,002 45 2,047

Net other comprehensive income 13,198 2,797 45 16,040

Balance at March 31, 2023 ($ 117,835 ) ($ 19,848 ) ($ 4,077 ) ($ 141,760 )

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

Note 15 - Earnings per Common Share

1 unchanged sentence

(Dollars and shares in thousands, except per share amounts)

Three Months Nine Months

Periods ended September 30, 2023 2022 2023 2022

Three months ended March 31, 2024 2023

Earnings for basic and diluted earnings per common share:

2 unchanged sentences

Net income available to common shareholders $ 10,924 $ 12,783

Weighted average common shares outstanding 17,019 17,174 17,034 17,269

Weighted average common shares outstanding for basic EPS

17,033 17,074

Dilutive effect of common stock equivalents

Weighted average common shares outstanding for diluted EPS

17,074 17,170

Weighted average diluted common shares outstanding 17,041 17,298 17,063 17,389

Earnings per common share:

Basic earnings per common share $ 0.65 $ 1.08 $ 2.06 $ 3.18

Diluted earnings per common share $ 0.65 $ 1.08 $ 2.06 $ 3.16

Weighted average common stock equivalents, not included in common stock equivalents above because they were anti-dilutive, totaled 468,524 and 452,472 , respectively, for the three and nine months ended September 30, 2023, compared to 137,886 and 140,777 , respectively, for the same periods in 2022.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

$ 0.64 $ 0.75

$ 0.64 $ 0.74

Weighted average common stock equivalents, not included in common stock equivalents above because they were anti-dilutive, totaled 464,011 for the three months ended March 31, 2024, compared to 303,982 for the same period in 2023.

Note 16 - Commitments and Contingencies

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The Corporation is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers and to manage the Corporation’s exposure to fluctuations in interest rates.

These financial instruments include commitments to extend credit, standby letters of credit, forward loan commitments, loan related derivative contracts and interest rate risk management contracts.

These financial instruments include commitments to extend credit and standby letters of credit, as well as derivative financial instruments, such as mortgage loan commitments, loan related derivative contracts and interest rate risk management contracts.

These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the Unaudited Consolidated Balance Sheets.

The contract or notional amounts of these instruments reflect the extent of involvement the Corporation has in particular classes of financial instruments.

See Note 6 for additional disclosure pertaining to derivative financial instruments.

Financial Instruments Whose Contract Amounts Represent Credit Risk (Unfunded Commitments)

11 unchanged sentences

Most standby letters of credit extend for one year.

At September 30, 2023 and December 31, 2022, there were no liabilities to beneficiaries resulting from standby letters of credit.

At March 31, 2024 and December 31, 2023, there were no liabilities to beneficiaries resulting from standby letters of credit.

Should the Corporation be required to make payments to the beneficiary, repayment from the customer to the Corporation is required.

Financial Instruments Whose Notional Amounts Exceed the Amount of Credit Risk

Mortgage Loan Commitments

Interest rate lock commitments are extended to borrowers and relate to the origination of mortgage loans held for sale.

To mitigate the interest rate risk and pricing risk associated with these rate locks and mortgage loans held for sale, the Corporation enters into forward sale commitments.

Both interest rate lock commitments and forward sale commitments are derivative financial instruments.

Loan Related Derivative Contracts

The Corporation’s credit policies with respect to interest rate contracts with commercial borrowers are similar to those used for loans.

The interest rate contracts with other counterparties are generally subject to bilateral collateralization terms.

Interest Rate Risk Management Contracts

The Corporation’s interest rate risk management contracts consist of interest rate swap agreements in which the Corporation and another party agree to exchange interest payments (e.g., fixed-rate for variable-rate payments) computed on a notional principal amount.

The credit risk associated with these transactions is the risk of default by the counterparty.

To minimize this risk, the Corporation enters into interest rate agreements only with highly rated counterparties that management believes to be creditworthy.

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The following table presents the contractual and notional amounts of financial instruments with off-balance sheet risk:

(Dollars in thousands) September 30,

(Dollars in thousands) March 31,

2024 December 31,

Financial instruments whose contract amounts represent credit risk (unfunded commitments):

Financial instruments whose contract amounts represent credit risk:

Commitments to extend credit $ 1,130,340 $ 1,185,196

Standby letters of credit 9,815 9,323

Financial instruments whose notional amounts exceed the amounts of credit risk:

Mortgage loan commitments:

Interest rate lock commitments

30,722 12,201

Forward sale commitments

45,433 23,150

Loan related derivative contracts:

Interest rate contracts with customers 962,174 935,099

Mirror interest rate contracts with counterparties 962,174 935,099

Risk participation-in agreements

224,374 221,247

Interest rate risk management contracts:

Interest rate swaps

140,000 320,000

See Note 6 for additional disclosure pertaining to derivative financial instruments.

ACL on Unfunded Commitments

The ACL on unfunded commitments is management’s estimate of expected lifetime credit losses over the expected contractual term in which the Corporation is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Corporation.

Unfunded commitments for home equity lines of credit and commercial demand loans are considered unconditionally cancellable for regulatory capital purposes and, therefore, are excluded from the calculation to estimate the ACL on unfunded commitments.

For each portfolio, estimated loss rates and funding factors are applied to the corresponding balance of unfunded commitments.

The estimated loss rates applied to unfunded commitments are the same quantitative and qualitative loss rates applied to the corresponding on-balance sheet amounts in determining the ACL on loans.

The estimated funding factor applied to unfunded commitments represents the likelihood that the funding will occur and is based upon the Corporation’s average historical utilization rate for each portfolio.

The activity in the ACL on unfunded commitments for the three months ended September 30, 2023 is presented below:

The activity in the ACL on unfunded commitments for the three months ended March 31, 2024 is presented below:

(Dollars in thousands) Commercial Consumer

3 unchanged sentences

Ending Balance $ 943 $ 771 $ 1,714 $ 15 $ — $ 11 $ 11 $ 1,740

The activity in the ACL on unfunded commitments for the nine months ended September 30, 2023 is presented below:

(Dollars in thousands) Commercial Consumer

CRE C&I Total Commercial Residential Real Estate Home Equity Other Total Consumer Total

Beginning Balance $ 1,236 $ 988 $ 2,224 $ 50 $ — $ 16 $ 16 $ 2,290

Provision ( 140 ) ( 120 ) ( 260 ) ( 36 ) — ( 4 ) ( 4 ) ( 300 )

Ending Balance $ 1,096 $ 868 $ 1,964 $ 14 $ — $ 12 $ 12 $ 1,990

Condensed Notes to Unaudited Consolidated Financial Statements – (continued)

The activity in the ACL on unfunded commitments for the three months ended September 30, 2022 is presented below:

The activity in the ACL on unfunded commitments for the three months ended March 31, 2023 is presented below:

(Dollars in thousands) Commercial Consumer

3 unchanged sentences

Ending Balance $ 1,368 $ 883 $ 2,251 $ 25 $ — $ 14 $ 14 $ 2,290

The activity in the ACL on unfunded commitments for the nine months ended September 30, 2022 is presented below:

(Dollars in thousands) Commercial Consumer

CRE C&I Total Commercial Residential Real Estate Home Equity Other Total Consumer Total

Beginning Balance $ 1,267 $ 816 $ 2,083 $ 62 $ — $ 16 $ 16 $ 2,161

Provision 197 43 240 ( 12 ) — 1 1 229

Ending Balance $ 1,464 $ 859 $ 2,323 $ 50 $ — $ 17 $ 17 $ 2,390

Other Contingencies

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Management is of the opinion, based on its review with counsel of the development of such matters to date, that the ultimate disposition of such matters will not materially affect the consolidated balance sheets or statements of income of the Corporation.

Other Matters

On September 27, 2023, the Bank entered into a settlement with the DOJ through an agreement to resolve allegations that it violated fair lending laws in the state of Rhode Island from 2016 to 2021.

Under the settlement, the Bank will provide $ 7.0 million in loan subsidies over a five-year period with the goal of increasing home mortgage loans, home improvement loans, and home refinance loans in specific census tracts in Rhode Island.

Loan subsidies may include originating a loan for a home purchase, refinancing or home improvement at an interest rate below the otherwise prevailing market interest rate offered by Washington Trust and payment of the initial mortgage insurance premium on loans subject to such mortgage insurance.

The cost of such subsidies will generally be recognized over the life of the respective loans.

Loan subsidies may also include down payment assistance and closing cost assistance.

The Bank also will commit $ 2.0 million for focused community outreach and marketing efforts over a five-year period.

The expenses associated with community outreach and marketing efforts will be recorded in the period in which the activities occur and are consistent with historical spending levels.

In addition, the Bank will commit to opening two full-service branches in specific census tracts in Rhode Island, including the previously announced new branch in Olneyville, Rhode Island.

The settlement included no civil penalties levied against the Bank.

The United States District Court for the District of Rhode Island approved the settlement on October 31, 2023.

The settlement resolves all claims made by the DOJ against the Bank related to its lending practices in the state of Rhode Island from 2016 to 2021 .

Management's Discussion and Analysis

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements