What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-08-06 · 256 added, 248 removed, 931 unchanged (35% of the section changed)

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The following discussion should be read in conjunction with the Corporation’s Audited Consolidated Financial Statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2024, and in conjunction with the condensed Unaudited Consolidated Financial Statements and notes thereto included in Item 1 of this report.

Operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results for the full-year ended December 31, 2025 or any future period.

Operating results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results for the full-year ended December 31, 2025 or any future period.

Forward-Looking Statements

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Some of the factors that might cause these differences include the following:

• changes in general business and economic conditions (including the impact of actual or threatened tariffs imposed by the U.S.

and foreign governments, inflation and concerns about liquidity) on a national basis and in the local markets in which we operate;

• changes in general business and economic conditions (including the impact of tariffs, inflation and concerns about liquidity) on a national basis and in the local markets in which we operate;

• interest rate changes or volatility, as well as changes in the balance and mix of loans and deposits;

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(Dollars in thousands, except per share amounts)

Three Months Six Months

Periods ended June 30, 2025 2024 2025 2024

Three Months Nine Months

Periods ended September 30, 2025 2024 2025 2024

Adjusted Noninterest Income:

44 unchanged sentences

(Dollars in thousands, except per share amounts)

Three Months Six Months

Periods ended June 30, 2025 2024 2025 2024

Three Months Nine Months

Periods ended September 30, 2025 2024 2025 2024

Adjusted Diluted Earnings per Common Share:

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(Dollars in thousands)

Three Months Six Months

Periods ended June 30, 2025 2024 2025 2024

Three Months Nine Months

Periods ended September 30, 2025 2024 2025 2024

Adjusted Return on Average Assets (1) :

76 unchanged sentences

The following table presents a summarized consolidated statement of operations:

(Dollars in thousands) Three Months Six Months

(Dollars in thousands) Three Months Nine Months

Change Change

Periods ended June 30, 2025 2024 $ % 2025 2024 $ %

Periods ended September 30, 2025 2024 $ % 2025 2024 $ %

Net interest income $38,833 $32,262 $6,571 20 % $112,440 $95,512 $16,928 18 %

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$10,846 $10,981 ($135) (1 %) $35,853 $30,424 $5,429 18 %

Net income totaled $13.2 million and $25.4 million, respectively, for the three and six months ended June 30, 2025, compared to $10.8 million and $21.8 million, respectively, reported for the same periods in 2024.

Net income totaled $10.8 million and $36.3 million, respectively, for the three and nine months ended September 30, 2025, compared to $11.0 million and $32.7 million, respectively, reported for the same periods in 2024.

These results included the following infrequent transactions:

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• In the first quarter of 2024, noninterest income included income of $2.1 million associated with a litigation settlement.

Excluding these items, adjusted net income (non-GAAP) for the three and six months ended June 30, 2025 was $13.2 million and $25.0 million, respectively, compared to $10.1 million and $19.4 million, respectively, for the same periods in 2024.

These increases were largely driven by increases in net interest income.

Excluding these items, adjusted net income (non-GAAP) for the three and nine months ended September 30, 2025 was $10.8 million and $35.9 million, respectively, compared to $11.0 million and $30.4 million, respectively, for the same periods in 2024.

These results largely reflected increases in net interest income, but were also negatively impacted by an elevated provision for credit losses in the third quarter of 2025.

The following table presents a summary of performance metrics and ratios:

Three Months Six Months

Periods ended June 30, 2025 2024 2025 2024

Three Months Nine Months

Periods ended September 30, 2025 2024 2025 2024

Diluted earnings per common share $0.56 $0.64 $1.88 $1.91

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Nonaccrual loans, as well as interest recognized on these loans, are included in amounts presented for loans.

Three months ended June 30, 2025 2024 Change

Three months ended September 30, 2025 2024 Change

(Dollars in thousands) Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate

46 unchanged sentences

(Dollars in thousands)

Three months ended June 30, 2025 2024 Change

Three months ended September 30, 2025 2024 Change

Commercial loans $218 $234 ($16)

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Total $219 $234 ($15)

Six months ended June 30, 2025 2024 Change

Nine months ended September 30, 2025 2024 Change

(Dollars in thousands) Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate

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(Dollars in thousands)

Six months ended June 30, 2025 2024 Change

Nine months ended September 30, 2025 2024 Change

Commercial loans $644 $683 ($39)

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Net Interest Income

Net interest income, the primary source of our operating income, totaled $37.2 million and $73.6 million, respectively, for the three and six months ended June 30, 2025, compared to $31.6 million and $63.3 million, respectively, for the same periods in 2024.

Net interest income, the primary source of our operating income, totaled $38.8 million and $112.4 million, respectively, for the three and nine months ended September 30, 2025, compared to $32.3 million and $95.5 million, respectively, for the same periods in 2024.

Net interest income is affected by the level of and changes in interest rates, and changes in the amount and composition of interest-earning assets and interest-bearing liabilities.

Net interest income also includes the periodic recognition of prepayment penalty fee income associated with commercial loan payoffs.

Prepayment penalty fee income amounted to $52 thousand and $60 thousand, respectively, for the three and six months ended June 30, 2025, compared to $46 thousand and $66 thousand, respectively, for the three and six months ended June 30, 2024, and had essentially no benefit to NIM in any of the respective periods.

Net interest income may also include the periodic recognition of prepayment penalty fee income associated with commercial loan payoffs.

Prepayment penalty fee income and its impact on NIM was insignificant for all periods presented.

The analysis of net interest income, NIM, and the yield on loans is also impacted by changes in the level of net amortization of premiums and discounts on securities and loans, which is included in interest income.

Changes in market interest rates affect the level of loan prepayments and the receipt of payments on mortgage-backed securities.

Prepayment speeds generally increase as longer-term market interest rates decline and decrease as longer-term market interest rates rise.

Changes in prepayment speeds could increase or decrease the level of net amortization of premiums and discounts, thereby affecting interest income.

As noted in the Unaudited Consolidated Statements of Cash Flows, net amortization of premiums and discounts on securities and loans (a net reduction to net interest income) amounted to $364 thousand for the six months ended June 30, 2025, compared to $573 thousand for the same period in 2024.

As noted in the Unaudited Consolidated Statements of Cash Flows, net amortization of premiums and discounts on securities and loans (a net reduction to net interest income) amounted to $783 thousand for the nine months ended September 30, 2025, compared to $878 thousand for the same period in 2024.

The improvement in net interest income, FTE net interest income and NIM discussed below largely reflected benefits from the balance sheet repositioning transactions previously announced in December 2024, which included the sale of lower-yielding debt securities and residential real estate loans, reinvestment into higher-yielding debt securities, and pay-down of higher-cost FHLB advances and wholesale brokered time deposits.

The following discussion presents net interest income on an FTE basis by adjusting income and yields on tax-exempt loans to be comparable to taxable loans.

FTE net interest income for the three and six months ended June 30, 2025 amounted to $37.4 million and $74.0 million, respectively, up by $5.6 million and $10.3 million, respectively, from the same periods in 2024.

For the three and six months ended June 30, 2025, decreases in average interest-bearing liability balances, net of decreases in average interest-earning assets, increased net income by $1.9 million and $3.6 million, respectively.

Decreases in funding costs outpaced decreases in asset yields, increasing net interest income by $3.7 million and $6.8 million, respectively, for the three and six months ended June 30, 2025.

NIM was 2.36% and 2.32%, respectively, for the three and six months ended June 30, 2025, compared to 1.83% and 1.84%, respectively, for the same periods in 2024.

Total average securities for the three and six months ended June 30, 2025 decreased by $61.5 million and $82.3 million, respectively, from the average balances for the same periods a year earlier primarily due to routine pay-downs.

The FTE rate of return on the securities portfolio for the three and six months ended June 30, 2025 was 3.47% and 3.45%, respectively, compared to 2.47% and 2.48%, respectively, for the same periods in 2024.

Total average loan balances for the three and six months ended June 30, 2025 decreased by $540.9 million and $551.8 million, respectively, from the average loan balances for the comparable 2024 periods, largely reflecting a decrease in average balances of residential real estate loans.

The yield on total loans for the three and six months ended June 30, 2025 was 5.29% and 5.30%, respectively, compared to 5.43% and 5.40%, respectively, in the corresponding periods in 2024.

FTE net interest income for the three and nine months ended September 30, 2025 amounted to $39.1 million and $113.1 million, respectively, up by $6.6 million and $16.9 million, respectively, from the same periods in 2024.

For the three and nine months ended September 30, 2025, decreases in average interest-bearing liability balances net of decreases in average interest-earning assets increased net income by $2.3 million and $6.5 million, respectively.

Decreases in funding costs outpaced decreases in asset yields, increasing net interest income by $4.3 million and $10.3 million, respectively, for the three and nine months ended September 30, 2025.

NIM was 2.40% and 2.35%, respectively, for the three and nine months ended September 30, 2025, up from 1.85% and 1.84%, respectively, for the same periods in 2024.

Total average securities for the three and nine months ended September 30, 2025 decreased by $34.0 million and $66.0 million, respectively, from the average balances for the same periods a year earlier primarily due to routine pay-downs.

The FTE rate of return on the securities portfolio for the three and nine months ended September 30, 2025 was 3.46% and 3.45%, respectively, up from 2.44% and 2.47%, respectively, for the same periods in 2024.

Total average loan balances for the three and nine months ended September 30, 2025 decreased by $414.2 million and $505.6 million, respectively, from the average loan balances for the comparable 2024 periods, largely reflecting a decrease in average balances of residential real estate loans.

The yield on total loans for both the three and nine months ended September 30, 2025 was 5.30%, compared to 5.44% and 5.41%, respectively, for the corresponding periods in 2024.

FHLB advances and brokered time deposits are utilized as wholesale funding sources.

The average balance of FHLB advances for the three and six months ended June 30, 2025 decreased by $463.1 million and $371.6 million, respectively,

Management's Discussion and Analysis

compared to the average balances for the same periods in 2024.

The average rate paid on such advances for the three and six months ended June 30, 2025 was 4.49% and 4.56%, respectively, down from 4.98% and 4.95%, respectively, for the same periods in 2024, reflecting lower short-term market interest rates.

Included in total average interest-bearing deposits were wholesale brokered deposits, which decreased by $508.9 million and $510.6 million, respectively, from the same periods in 2024.

The average rate paid on wholesale brokered deposits for the three and six months ended June 30, 2025 was 4.96% and 5.05%, respectively, down from 5.23% and 5.22%, respectively, for the same periods in 2024.

Average in-market interest-bearing deposits, which excludes wholesale brokered deposits, for the three and six months ended June 30, 2025 increased by $386.6 million and $360.5 million, respectively, from the average balances for the same periods in 2024, reflecting increases in average balances across most deposit categories.

The average rate paid on in-market interest-bearing deposits for the three and six months ended June 30, 2025 was 2.81% and 2.79%, respectively, down from 3.01% and 2.97%, respectively, for the same periods in 2024.

The average balance of noninterest-bearing demand deposits for the three and six months ended June 30, 2025 decreased by $36.3 million and $40.1 million, respectively, from the average balances for the same periods in 2024.

Wholesale funding balances decreased in 2025, largely reflecting benefits from the balance sheet repositioning transactions mentioned above, as well as in-market deposit growth.

Rates paid on wholesale funding have declined from the prior year reflecting lower market interest rates.

The average balance of FHLB advances for the three and nine months ended September 30, 2025 decreased by $481.1 million and $408.4 million, respectively, compared to the average balances for the same periods in 2024.

The average rate paid on such advances for the three and nine months ended September 30, 2025 was 4.44% and 4.52%, respectively, down from 4.95% for both of the same periods in 2024.

Included in total average interest-bearing deposits were wholesale

Management's Discussion and Analysis

brokered deposits, which decreased by $457.6 million and $492.9 million, respectively, from the same periods in 2024.

The average rate paid on wholesale brokered deposits for the three and nine months ended September 30, 2025 was 4.42% and 5.04%, respectively, down from 5.27% and 5.24%, respectively, for the same periods in 2024.

Average in-market interest-bearing deposits, which excludes wholesale brokered deposits, for the three and nine months ended September 30, 2025 increased by $412.6 million and $378.1 million, respectively, from the average balances for the same periods in 2024, reflecting increases in average balances across most deposit categories.

The average rate paid on in-market interest-bearing deposits for both the three and nine months ended September 30, 2025 was 2.78%, down from 3.06% and 3.00%, respectively, for the same periods in 2024, largely reflecting lower market interest rates.

The average balance of noninterest-bearing demand deposits for the three and nine months ended September 30, 2025 decreased by $24.8 million and $34.9 million, respectively, from the average balances for the same periods in 2024.

Volume / Rate Analysis - Interest Income and Expense (FTE Basis)

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The net change attributable to both volume and rate has been allocated proportionately.

(Dollars in thousands) Three Months Ended June 30, 2025 vs.

2024 Six Months Ended June 30, 2025 vs.

(Dollars in thousands) Three Months Ended September 30, 2025 vs.

2024 Nine Months Ended September 30, 2025 vs.

Change Due to Change Due to

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$2,284 $4,272 $6,556 $6,547 $10,340 $16,887

Management's Discussion and Analysis

Provision for Credit Losses

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Estimating an appropriate level of ACL necessarily involves a high degree of judgment.

Management's Discussion and Analysis

The following table presents the provision for credit losses:

(Dollars in thousands) Three Months Six Months

(Dollars in thousands) Three Months Nine Months

Change Change

Periods ended June 30, 2025 2024 $ % 2025 2024 $ %

Periods ended September 30, 2025 2024 $ % 2025 2024 $ %

Provision for credit losses on loans $6,950 $300 $6,650 2,217 % $9,000 $1,700 $7,300 429 %

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Provision for credit losses $6,800 $200 $6,600 3300 % $8,600 $1,400 $7,200 514 %

The provision for credit losses for the three and six months ended June 30, 2025 included the impact of losses and specific reserve allocations on individually analyzed nonaccrual commercial loans and reflected our estimate of forecasted economic conditions.

The provision for credit losses recognized for the three and six months ended June 30, 2024 reflected continued, yet subsiding, slowdown of loan prepayment speeds and modest commercial loan growth, and was partially offset by improvements in our estimate of forecasted economic conditions.

Net charge-offs totaled $647 thousand for the three months ended June 30, 2025, compared to net charge-offs of $27 thousand for the same period in 2024.

For the six months ended June 30, 2025, net charge-offs totaled $3.0 million, compared to net charge-offs of $79 thousand for the same period in 2024.

The year-to-date increase in net charge-offs reflected partial charge-offs on two CRE office portfolio segment loans.

See additional discussion under the caption “Asset Quality” below.

The ACL on loans was $41.1 million, or 0.80% of total loans, at June 30, 2025, compared to $42.0 million, or 0.82% of total loans, at December 31, 2024.

The increase in the provision for credit losses for the three and nine months ended September 30, 2025, as compared to the same periods in 2024, was primarily due to charge-offs of $11.3 million on two commercial loan relationships in the third quarter of 2025.

Net charge-offs totaled $11.4 million and $14.4 million, respectively, for the three and nine months ended September 30, 2025.

This compared to $48 thousand and $127 thousand, respectively, for the same periods in 2024.

See additional discussion regarding these two commercial loan relationships and other credit quality details under the caption “Asset Quality” below.

Noninterest Income

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The principal categories of noninterest income are shown in the following table:

(Dollars in thousands) Three Months Six Months

(Dollars in thousands) Three Months Nine Months

Change Change

Periods ended June 30, 2025 2024 $ % 2025 2024 $ %

Periods ended September 30, 2025 2024 $ % 2025 2024 $ %

Noninterest income:

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Noninterest Income Analysis

Noninterest income amounted to $17.1 million and $39.7 million, respectively, for the three and six months ended June 30, 2025, compared $16.7 million and $33.8 million, respectively, for the same periods in 2024.

Noninterest income was impacted by infrequent transactions, as described under the caption “Summary” above.

Excluding the impact of these transactions, adjusted noninterest income (non-GAAP) was $17.1 million and $32.7 million, respectively, for the three and six months ended June 30, 2025, up by $1.4 million and $2.0 million, respectively, from the same periods in 2024.

Total noninterest income amounted to $17.6 million and $57.4 million, respectively, for the three and nine months ended September 30, 2025, compared $16.3 million and $50.1 million, respectively, for the same periods in 2024.

Total noninterest income was impacted by infrequent transactions, as described under the caption “Summary” above.

Excluding the impact of these transactions, adjusted noninterest income (non-GAAP) was $17.6 million and $50.4 million, respectively, for the three and nine months ended September 30, 2025, up by $1.4 million and $3.4 million, respectively, from the same periods in 2024.

Management's Discussion and Analysis

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The categories of wealth management revenues are shown in the following table:

(Dollars in thousands) Three Months Six Months

(Dollars in thousands) Three Months Nine Months

Change Change

Periods ended June 30, 2025 2024 $ % 2025 2024 $ %

Periods ended September 30, 2025 2024 $ % 2025 2024 $ %

Wealth management revenues:

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Total wealth management revenues $10,373 $9,989 $384 4 % $30,384 $29,005 $1,379 5 %

Wealth management revenues for the three and six months ended June 30, 2025 increased by $442 thousand and $995 thousand, respectively, from the same periods in 2024, reflecting an increase in asset-based revenues.

The change in asset-based revenues correlated with the change in average AUA balances.

The average balance of AUA for the three and six months ended June 30, 2025 increased by 3% and 4%, respectively, from the average balance for the same periods in 2024.

The end of period AUA balance amounted to $7.2 billion at June 30, 2025, up by $103.9 million, or 1%, from December 31, 2024, reflecting net investment appreciation that was partially offset by net client asset outflows.

The following table presents the changes in wealth management AUA balances:

(Dollars in thousands)

Three Months Six Months

Periods ended June 30, 2025 2024 2025 2024

Wealth management assets under administration:

Balance at the beginning of period $6,818,390 $6,858,322 $7,077,802 $6,588,406

Net investment appreciation & income 466,541 108,529 317,793 472,773

Net client asset outflows (103,216) (163,360) (213,880) (257,688)

Balance at the end of period $7,181,715 $6,803,491 $7,181,715 $6,803,491

The following table presents wealth management AUA balances:

(Dollars in thousands) Change

September 30,

2025 December 31,

Assets under administration at the end of period $7,682,440 $7,077,802 $604,638 9 %

In the third quarter of 2025, the Bank's registered investment adviser subsidiary purchased client advisory contracts from Lighthouse in an asset acquisition.

The transaction closed on July 31, 2025, resulting in the acquisition of AUA totaling $195 million.

See Note 7 to the Unaudited Consolidated Financial Statements for additional disclosure.

Wealth management revenues for the three and nine months ended September 30, 2025 increased by $384 thousand and $1.4 million, respectively, from the same periods in 2024, largely reflecting an increase in asset-based revenues.

The increase in asset-based revenues primarily reflected net investment appreciation of AUA.

Mortgage banking revenues are dependent on mortgage origination volume and are sensitive to interest rates and the condition of housing markets.

The composition of mortgage banking revenues and the volume of loans sold to the secondary market are shown in the following table:

(Dollars in thousands) Three Months Six Months

(Dollars in thousands) Three Months Nine Months

Change Change

Periods ended June 30, 2025 2024 $ % 2025 2024 $ %

Periods ended September 30, 2025 2024 $ % 2025 2024 $ %

Mortgage banking revenues:

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(4) Includes brokered loans (loans originated for others).

For the three and nine months ended September 30, 2025, mortgage banking revenues were up by $635 thousand and $706 thousand, respectively, compared to the same periods in 2024.

Mortgage banking revenues are impacted by changes in

Management's Discussion and Analysis

For the three and six months ended June 30, 2025, mortgage banking revenues were up by $273 thousand and $71 thousand, respectively, compared to the same periods in 2024, reflecting an increase in the volume of loans sold and the sales yield.

Mortgage banking revenues are also impacted by changes in the fair value on mortgage loans held for sale and forward loan commitments.

Card interchange fee income or the three and six months ended June 30, 2025 was down modestly by $28 thousand and up by $336 thousand, respectively, from the same periods in 2024.

The year-to-date increase included the receipt of a third-party contract incentive, as well as revenue generated from debit card transaction volume.

Loan related derivative income from interest rate swap transactions with commercial borrowers for the three and six months ended June 30, 2025, increased by $627 thousand and $444 thousand, respectively, from the same periods in 2024.

the fair value on mortgage loans held for sale and forward loan commitments, which are primarily based on current market prices in the secondary market and correlate to changes in the size of the mortgage pipeline.

Loan related derivative income from interest rate swap transactions with commercial borrowers for the three and nine months ended September 30, 2025, increased by $145 thousand and $589 thousand, respectively, from the same periods in 2024.

Noninterest Expense

The following table presents noninterest expense comparisons:

(Dollars in thousands) Three Months Six Months

(Dollars in thousands) Three Months Nine Months

Change Change

Periods ended June 30, 2025 2024 $ % 2025 2024 $ %

Periods ended September 30, 2025 2024 $ % 2025 2024 $ %

Noninterest expense:

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Noninterest Expense Analysis

Noninterest expense amounted to $36.5 million and $78.7 million, respectively, for the three and six months ended June 30, 2025, compared to $33.9 million and $68.3 million, respectively, for the same periods in 2024.

Noninterest expense was impacted by the termination of the Corporation’s qualified pension plan, as described under the caption “Summary” above.

Excluding the impact of this infrequent transaction, adjusted noninterest expense (non-GAAP) was $36.5 million and $72.3 million, respectively, for the three and six months ended June 30, 2025, up by $2.6 million and $4.0 million, respectively, from the same periods in 2024.

Salaries and employee benefits expense, the largest component of noninterest expense, for the three and six months ended June 30, 2025 increased by $1.8 million and $2.4 million, respectively, compared to the same periods in 2024.

These increases reflected lower levels of performance-based compensation recognized in 2024, as well as lower staffing levels in 2025.

Outsourced services expense for the three and six months ended June 30, 2025 increased by $308 thousand and $874 thousand, respectively, compared to the same periods in the prior year.

The increases reflected expansion of and volume-related changes to services (including software-as-a-service) that are provided by third-party vendors.

Net occupancy expense for the three and six months ended June 30, 2025 increased by $265 thousand and $445 thousand, respectively, compared to the same periods in 2024, largely reflecting additional lease expense associated with the sales-leaseback transactions that were completed in the first quarter of 2025.

Total noninterest expense amounted to $35.7 million and $114.5 million, respectively, for the three and nine months ended September 30, 2025, compared to $34.5 million and $102.8 million, respectively, for the same periods in 2024.

Total noninterest expense was impacted by the termination of the Corporation’s qualified pension plan, as described under the caption “Summary” above.

Excluding the impact of this infrequent transaction, adjusted noninterest expense (non-GAAP) was $35.7 million and $108.0 million, respectively, for the three and nine months ended September 30, 2025, up by $1.2 million and $5.2 million, respectively, from the same periods in 2024.

Salaries and employee benefits expense, the largest component of total noninterest expense, for the three and nine months ended September 30, 2025 increased by $1.3 million and $3.7 million, respectively, compared to the same periods in 2024.

These increases largely reflected lower levels of performance-based compensation recognized in 2024.

Outsourced services expense for the three and nine months ended September 30, 2025 was down modestly by $65 thousand and up by $809 thousand, respectively, compared to the same periods in the prior year, reflecting changes in third-party provided software costs, including volume-related changes.

Net occupancy expense for the three and nine months ended September 30, 2025 increased by $292 thousand and $737 thousand, respectively, compared to the same periods in 2024, largely reflecting additional lease expense associated with the sales-leaseback transactions that were completed in the first quarter of 2025.

FDIC insurance costs for the three and nine months ended September 30, 2025 decreased by $347 thousand and $695 thousand, respectively, compared to the same periods in 2024, reflecting the impact of decreases in average assets from a year ago and a lower FDIC deposit assessment rate.

Other noninterest expense for three and nine months ended September 30, 2025 increased by $242 thousand and $1.1 million, respectively, compared to the same periods in the prior year.

The year-to-date increase included system conversion costs associated with changes in technology, as well as increases across a variety of noninterest expense categories.

Management's Discussion and Analysis

Other noninterest expense for three and six months ended June 30, 2025 increased by $443 thousand and $853 thousand, respectively, compared to the same periods in the prior year.

The increases included system conversion costs associated with recent investments in technology, as well as increases across a variety of noninterest expense categories.

The following table presents the Corporation’s income tax provision and applicable tax rates for the periods indicated:

(Dollars in thousands)

Three Months Six Months

Periods ended June 30, 2025 2024 2025 2024

Three Months Nine Months

Periods ended September 30, 2025 2024 2025 2024

Income tax expense $3,097 $2,849 $10,475 $8,698

7 unchanged sentences

The blended statutory rates include the federal income tax rate of 21% and a blended state income tax rate net of a federal tax benefit.

The increase in the effective income tax rate on both a GAAP and non-GAAP basis largely reflected an increase in state tax expense and a higher proportion of taxable income to pre-tax book income.

The Corporation’s net deferred tax assets are reported in other assets and amounted to $40.5 million at June 30, 2025, down from $63.0 million at December 31, 2024.

This decrease included the realization of a deferred tax asset associated with the loans that were reclassified to held for sale and written down to fair value in December 2024 and then sold in January 2025.

The increase in the effective income tax rate on both a GAAP and non-GAAP basis largely reflected an increase in state tax expense.

The Corporation’s net deferred tax assets are reported in other assets and amounted to $36.9 million at September 30, 2025, down from $63.0 million at December 31, 2024.

This decrease included the realization of a deferred tax asset associated with loans that were reclassified to held for sale and written down to fair value in December 2024 and then sold in January 2025.

Management believes deferred tax assets, net of the valuation allowance, are more-likely-than-not to be realized.

Segment Reporting

The Corporation manages its operations through two reportable business segments, consisting of Commercial Banking and Wealth Management Services.

The Corporation manages its operations through two reportable business segments, consisting of Banking and Wealth Management Services.

See Note 15 to the Unaudited Consolidated Financial Statements for additional disclosure related to business segments.

Commercial Banking

The following table presents a summarized statement of operations for the Commercial Banking business segment:

(Dollars in thousands) Three Months Six Months

The following table presents a summarized statement of operations for the Banking business segment:

(Dollars in thousands) Three Months Nine Months

Change Change

Periods ended June 30, 2025 2024 $ % 2025 2024 $ %

Periods ended September 30, 2025 2024 $ % 2025 2024 $ %

Net interest income $38,833 $32,262 $6,571 20 % $112,440 $95,512 $16,928 18 %

7 unchanged sentences

Net income $8,210 $8,645 ($435) (5 %) $31,684 $24,718 $6,966 28 %

Net interest income for the Commercial Banking segment for the three and six months ended June 30, 2025 increased by $5.6 million and $10.4 million, respectively, from the same periods in 2024.

This improvement reflected benefits from the

Management's Discussion and Analysis

balance sheet repositioning transactions previously announced in December 2024.

Net interest income for the Banking segment for the three and nine months ended September 30, 2025 increased by $6.6 million and $16.9 million, respectively, from the same periods in 2024.

This improvement reflected benefits from the balance sheet repositioning transactions previously announced in December 2024.

See additional discussion under the caption “Net Interest Income” above.

The provision for credit losses for the three and six months ended June 30, 2025 increased by $100 thousand and $600 thousand, respectively, from the same periods in 2024.

Management's Discussion and Analysis

The provision for credit losses for the three and nine months ended September 30, 2025 increased by $6.6 million and $7.2 million, respectively, from the same periods in 2024.

See additional discussion under the caption “Provision for Credit Losses” above.

Noninterest income derived from the Commercial Banking segment for the three and six months ended June 30, 2025 was up by $69 thousand and $7.1 million, respectively, from the comparable periods in 2024.

Year-over-year comparisons were impacted by the first quarter 2025 net gain recognized on sales-leaseback transactions and the second quarter 2024 net gain on sale of a bank-owned operations facility.

Noninterest income derived from the Banking segment for the three and nine months ended September 30, 2025 was up by $938 thousand and $8.1 million, respectively, from the comparable periods in 2024.

Year-to-date comparisons were impacted by the first quarter 2025 net gain recognized on sales-leaseback transactions and the second quarter 2024 net gain on sale of a bank-owned operations facility.

Excluding these items, Banking noninterest income for the three and nine months ended September 30, 2025 increased by $938 thousand and $2.1 million, respectively, largely reflecting increases in mortgage banking revenues and loan related derivative income.

See additional disclosure under the caption “Noninterest Income” above.

Commercial Banking noninterest expenses for the three and six months ended June 30, 2025 totaled $28.5 million and $61.1 million, respectively.

Included in the six months ended June 30, 2025 was $4.9 million of the total pension plan settlement charge that was recognized and allocated to the Commercial Banking segment in the first quarter.

Excluding this item, noninterest expenses for the Commercial Banking segment for the three and six months ended June 30, 2025 increased by $1.6 million and $2.2 million, respectively, from the same periods in 2024, reflecting increases in salaries and employee benefits expense, net occupancy, outsourced services, and system conversion costs.

Banking noninterest expenses for the three and nine months ended September 30, 2025 totaled $28.7 million and $89.7 million, respectively.

Included in the nine months ended September 30, 2025 was $4.9 million of the total pension plan settlement charge that was recognized and allocated to the Banking segment in the first quarter.

Excluding this item, noninterest expenses for the Banking segment for the three and nine months ended September 30, 2025 increased by $1.3 million and $3.5 million, respectively, from the same periods in 2024, reflecting increases in salaries and employee benefits expense, net occupancy, outsourced services, and system conversion costs, partially offset by a decrease in FDIC insurance costs.

See additional discussion under the caption “Noninterest Expense” above.

1 unchanged sentence

The following table presents a summarized statement of operations for the Wealth Management Services business segment:

(Dollars in thousands)

(Dollars in thousands) Three Months Nine Months

Change Change

Periods ended June 30, 2025 2024 $ % 2025 2024 $ %

Periods ended September 30, 2025 2024 $ % 2025 2024 $ %

Net interest income $— $— $— — % $— $— $— — %

4 unchanged sentences

Net income $2,636 $2,336 $300 13 % $4,586 $8,014 ($3,428) (43 %)

For the three and six months ended June 30, 2025, noninterest income derived from the Wealth Management Services segment increased by $349 thousand and decreased by $1.2 million, respectively, from the same periods in 2024.

The year-over-year comparison was impacted by the first quarter 2024 litigation settlement.

Excluding this item, Wealth Management noninterest income for the three and six months ended June 30, 2025 increased by $349 thousand and $866 thousand, respectively, from the same periods in 2024, largely reflecting an increase in asset-based revenues.

For the three and nine months ended September 30, 2025, noninterest income derived from the Wealth Management Services segment increased by $426 thousand and decreased by $808 thousand, respectively, from the same periods in 2024.

The year-to-date comparison was impacted by the first quarter 2024 litigation settlement.

Excluding this item, Wealth Management noninterest income for the three and nine months ended September 30, 2025 increased by $426 thousand and $1.3 million, respectively, from the same periods in 2024, largely reflecting an increase in asset-based revenues.

See further discussion under the caption “Noninterest Income” above.

Wealth Management Services segment noninterest expenses for the three and six months ended June 30, 2025 totaled $8.0 million and $17.7 million, respectively.

Included in the six months ended June 30, 2025 was $1.5 million of the total pension plan settlement charge, which was recognized and allocated to the Wealth Management Services segment in the first quarter.

Excluding this item, noninterest expenses for the Wealth Management Services segment for the three and six months ended June 30, 2025 increased by $1.0 million and $1.8 million, respectively, from the same periods in 2024, reflecting increases in salaries and employee benefits expense and system conversion costs.

Wealth Management Services segment noninterest expenses for the three and nine months ended September 30, 2025 totaled $7.0 million and $24.7 million, respectively.

Included in the nine months ended September 30, 2025 was $1.5 million of the total pension plan settlement charge, which was recognized and allocated to the Wealth Management Services segment in the first quarter.

Excluding this item, noninterest expenses for the Wealth Management Services segment for the three and nine months ended September 30, 2025 decreased modestly by $61 thousand and increased by $1.8 million, respectively, from the same periods in 2024.

The year-to-date change largely reflected increases in salaries and employee benefits expense.

See additional discussion under the caption “Noninterest Expense” above.

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(Dollars in thousands) Change

September 30,

2025 December 31,

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In addition, management periodically performs independent price tests of securities to ensure proper valuation and to verify our understanding of how securities are priced.

As of June 30, 2025 and December 31, 2024, management did not make any adjustments to the prices provided by the pricing service.

As of September 30, 2025 and December 31, 2024, management did not make any adjustments to the prices provided by the pricing service.

Our fair value measurements generally utilize Level 2 inputs, representing quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, and model-derived valuations in which all significant input assumptions are observable in active markets.

3 unchanged sentences

The carrying amounts of securities held are as follows:

(Dollars in thousands) June 30, 2025 December 31, 2024

(Dollars in thousands) September 30, 2025 December 31, 2024

Amount % of Total Amount % of Total

10 unchanged sentences

Total available for sale debt securities $962,466 100 % $916,305 100 %

The securities portfolio represented 14% of total assets at June 30, 2025, compared to 13% of total assets at December 31, 2024.

The securities portfolio represented 14% of total assets at September 30, 2025, compared to 13% of total assets at December 31, 2024.

The largest component of the securities portfolio is mortgage-backed securities, all of which are issued by U.S.

5 unchanged sentences

These increases were partially offset by $61.3 million of routine pay-downs on mortgage-backed securities and calls of trust preferred debt securities.

As of June 30, 2025, the carrying amount of available for sale debt securities included net unrealized losses of $113.5 million, compared to net unrealized losses of $133.3 million as of December 31, 2024.

The carrying amounts of available for sale debt securities as of September 30, 2025 and December 31, 2024 included net unrealized losses of $100.7 million and $133.3 million, respectively.

The net unrealized losses were primarily concentrated in obligations of U.S.

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We primarily serve individuals and businesses located in southern New England, and a substantial portion of our loans are secured by properties in southern New England.

Total loans amounted to $5.1 billion at June 30, 2025, up by $2.4 million, or 0.05%, from the end of 2024.

Total loans amounted to $5.1 billion at September 30, 2025, down by $15.3 million, or 0.3%, from the end of 2024.

Management's Discussion and Analysis

The following table sets forth the composition of the Corporation’s loan portfolio:

(Dollars in thousands) June 30, 2025 December 31, 2024

(Dollars in thousands) September 30, 2025 December 31, 2024

Amount % of Total Amount % of Total

9 unchanged sentences

Total loans $5,122,582 100 % $5,137,838 100 %

(1) Includes negative basis adjustments associated with fair value hedges of $179 thousand and $1.5 million, respectively, at June 30, 2025 and December 31, 2024.

(1) Includes negative basis adjustments associated with fair value hedges of $255 thousand and $1.5 million, respectively, at September 30, 2025 and December 31, 2024.

See Note 8 to the Unaudited Consolidated Financial Statements for additional disclosure.

Commercial Loans

The commercial loan portfolio represented 53% of total loans at June 30, 2025, compared to 52% at December 31, 2024.

The commercial loan portfolio represented 53% of total loans at September 30, 2025, compared to 52% at December 31, 2024.

In making commercial loans, we may occasionally solicit the participation of other banks.

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In such cases, these loans are individually underwritten by us using standards similar to those employed for our self-originated loans.

Our participation in commercial loans originated by other banks amounted to $680.6 million and $685.7 million, respectively, at June 30, 2025 and December 31, 2024.

Our participation in commercial loans originated by other banks amounted to $659.4 million and $685.7 million, respectively, at September 30, 2025 and December 31, 2024.

Our participation in commercial loans originated by other banks also includes shared national credits.

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Commercial Real Estate Loans

CRE loans totaled $2.2 billion at June 30, 2025, up by $24.4 million, or 1%, from the balance at December 31, 2024.

In the first six months of 2025, CRE advances and originations amounted to $133.0 million and were partially offset by payments.

The outstanding balance of construction and development loans included in the CRE loan portfolio amounted to $116.8 million and $102.2 million, respectively, as of June 30, 2025 and December 31, 2024.

Shared national credit balances outstanding included in the CRE loan portfolio at June 30, 2025 and December 31, 2024, totaled $86.6 million and $84.7 million, respectively.

At June 30, 2025 and December 31, 2024, balances of $63.8 million

CRE loans totaled $2.2 billion at September 30, 2025, up by $2.2 million, or 0.1%, from the balance at December 31, 2024.

In the first nine months of 2025, CRE advances and originations amounted to $235.7 million and were largely offset by payments.

The outstanding balance of construction and development loans included in the CRE loan portfolio amounted to $92.8 million and $102.2 million, respectively, as of September 30, 2025 and December 31, 2024.

Shared national credit balances outstanding included in the CRE loan portfolio at September 30, 2025 totaled $89.5 million, of which $63.7 million was included in the pass-rated category of commercial loan credit quality and $25.8 million was

Management's Discussion and Analysis

and $63.7 million, respectively, were included in the pass-rated category of commercial loan credit quality and balances of $22.8 million and $21.0 million, respectively, were included in the classified category.

All of these loans were current with respect to contractual payment terms at June 30, 2025.

included in the classified category.

At December 31, 2024, shared national credit balances outstanding included in the CRE loan portfolio totaled $84.7 million, of which $63.7 million was included in the pass-rated category of commercial loan credit quality and $21.0 million was included in the classified category.

All of these loans were current with respect to contractual payment terms at both dates.

The following table presents a geographic summary of CRE loans by property location:

(Dollars in thousands) June 30, 2025 December 31, 2024

(Dollars in thousands) September 30, 2025 December 31, 2024

Outstanding Balance % of Total Outstanding Balance % of Total

8 unchanged sentences

The following table presents a summary of CRE loans by property type segmentation:

(Dollars in thousands) June 30, 2025 December 31, 2024

(Dollars in thousands) September 30, 2025 December 31, 2024

Outstanding Balance (1)

17 unchanged sentences

$65,503 $65,482

(1) Does not include unfunded commitments of $118.7 million and $168.3 million, respectively, as of June 30, 2025 and December 31, 2024.

(1) Does not include unfunded commitments of $97.8 million and $168.3 million, respectively, as of September 30, 2025 and December 31, 2024.

(2) Total commitment (outstanding loan balance plus unfunded commitments) divided by number of loans.

Multi-family, our largest single CRE segment, totaled $629.2 million as of June 30, 2025, representing 12% of total loans and 29% of the total CRE portfolio.

Multi-family, our largest single CRE segment, totaled $635.8 million as of September 30, 2025, representing 12% of total loans and 29% of the total CRE portfolio.

This segment includes non-owner occupied residential properties consisting of four or more units that are rented to tenants.

At June 30, 2025, the credit quality of the multi-family segment was 100% pass-rated.

Also, there were no nonaccrual loans and all loans were current with respect to payment terms at June 30, 2025 in this segment.

At September 30, 2025, the credit quality of the multi-family segment was 100% pass-rated.

Also, there were no nonaccrual loans and all loans were current with respect to payment terms at September 30, 2025 in this segment.

There continues to be heightened focus in the banking industry on the CRE office sector, given the continuation of remote work and elevated vacancies across the office market.

As of June 30, 2025, Washington Trust’s CRE office loan segment totaled $274.7 million, or 5% of total loans and 13% of the total CRE loans.

The loans are secured by non-owner occupied office properties, including medical office and lab space, located in our primary lending market area of southern New England - Connecticut, Massachusetts, and Rhode Island.

As of September 30, 2025, Washington Trust’s CRE office loan segment totaled $242.2 million, or 5% of total loans and 11% of the total CRE loans.

The loans are secured by non-owner occupied office properties, including medical office and lab space, located in our primary lending market area of southern New England - Massachusetts, Connecticut, and Rhode Island.

Furthermore, approximately 66% of the CRE office segment balance of $242.2 million is secured by properties located in suburban areas.

As of June 30, 2025, 100% of the CRE office segment was current with respect to payment terms, and 98% of the CRE office segment was on accruing status.

Additionally, the credit quality of the CRE office loan segment was 85% pass-rated, 3% special mention-rated, and 12%

As of September 30, 2025, 100% of the CRE

Management's Discussion and Analysis

classified as of June 30, 2025.

office segment was current with respect to payment terms, and 100% of the CRE office segment was on accruing status.

Additionally, the credit quality of the CRE office loan segment was 74% pass-rated, 13% special mention-rated, and 13% classified as of September 30, 2025.

Commercial and Industrial Loans

C&I loans amounted to $547.3 million at June 30, 2025, up by $4.8 million, or 1%, from the balance at December 31, 2024.

In the first six months of 2025, C&I originations and advances amounted to $35.6 million and were partially offset by payments.

Shared national credit balances outstanding included in the C&I loan portfolio totaled $89.7 million and $71.0 million, respectively, at June 30, 2025 and December 31, 2024.

At June 30, 2025, balances of $80.8 million were pass-rated and balances of $8.9 million were in the classified category.

Additionally, the classified balances at June 30, 2025 were on nonaccrual status and $1.4 million was past due.

C&I loans amounted to $568.3 million at September 30, 2025, up by $25.8 million, or 5%, from the balance at December 31, 2024.

In the first nine months of 2025, C&I originations and advances amounted to $48.1 million and were partially offset by payments.

Shared national credit balances outstanding included in the C&I loan portfolio at September 30, 2025 totaled $83.7 million, of which $83.2 million was included in the pass-rated category of commercial loan credit quality and $507 thousand was included in the classified category.

The classified balance at September 30, 2025 was on nonaccrual status and was current with respect to payment terms.

At December 31, 2024, shared national credit balances outstanding included in the C&I loan portfolio totaled $71.0 million, all of which were in the pass-rated category and current with respect to payment terms.

Management considers the C&I portfolio to be well-diversified with loans across several industries.

The following table presents a summary of C&I loan by industry segmentation:

(Dollars in thousands) June 30, 2025 December 31, 2024

(Dollars in thousands) September 30, 2025 December 31, 2024

Outstanding Balance (1)

9 unchanged sentences

Retail trade 49,234 9 41,132 8

Accommodation and food services 26,161 5 12,368 2

Finance and insurance

25,561 4 26,557 5

Accommodation and food services 24,752 5 12,368 2

21,626 4 22,265 4

12 unchanged sentences

$32,560 $25,333

(1) Does not include unfunded commitments of $286.0 million and $307.9 million, respectively, as of June 30, 2025 and December 31, 2024.

(1) Does not include unfunded commitments of $283.8 million and $307.9 million, respectively, as of September 30, 2025 and December 31, 2024.

(2) Total commitment (outstanding loan balance plus unfunded commitments) divided by number of loans.

Healthcare and social assistance, our largest single C&I segment, totaled $118.7 million as of June 30, 2025, representing 2% of total loans and 22% of the total C&I portfolio.

Healthcare and social assistance, our largest single C&I segment, totaled $148.8 million as of September 30, 2025, representing 3% of total loans and 26% of the total C&I portfolio.

This segment includes specialty medical practices, elder services, and community and mental health centers.

At June 30, 2025, the credit quality of the healthcare and social assistance segment was 86% pass-rated and 14% was special mention.

Also, there were no nonaccrual loans and all loans were current with respect to payment terms at June 30, 2025 in this segment.

At September 30, 2025, the credit quality of the healthcare and social assistance segment was 89% pass-rated and 11% was special mention.

Also, there were no nonaccrual loans and all loans were current with respect to payment terms at September 30, 2025 in this segment.

Residential Real Estate Loans

The residential real estate loan portfolio represented 41% of total loans at both June 30, 2025 and December 31, 2024.

Residential real estate loans amounted to $2.1 billion at June 30, 2025, down by $29.9 million, or 1%, from the balance at December 31, 2024.

The residential real estate loan portfolio represented 40% of total loans at September 30, 2025, compared to 41% at December 31, 2024.

Management's Discussion and Analysis

Residential real estate loans amounted to $2.1 billion at September 30, 2025, down by $52.4 million, or 2%, from the balance at December 31, 2024.

The following is a geographic summary of residential real estate loans by property location:

(Dollars in thousands) June 30, 2025 December 31, 2024

(Dollars in thousands) September 30, 2025 December 31, 2024

Amount % of Total Amount % of Total

6 unchanged sentences

$2,073,740 100 % $2,126,171 100 %

(1) Includes residential mortgage loans purchased from and serviced by other financial institutions totaling $42.1 million and $46.8 million, respectively, as of June 30, 2025 and December 31, 2024.

(1) Includes residential mortgage loans purchased from and serviced by other financial institutions totaling $41.0 million and $46.8 million, respectively, as of September 30, 2025 and December 31, 2024.

Residential real estate loans are originated both for sale to the secondary market as well as for retention in the Bank’s loan portfolio.

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The table below presents residential real estate loan origination activity:

(Dollars in thousands) Three Months Six Months

Periods ended June 30, 2025 2024 2025 2024

(Dollars in thousands) Three Months Nine Months

Periods ended September 30, 2025 2024 2025 2024

Amount % of Total Amount % of Total Amount % of Total Amount % of Total

8 unchanged sentences

(Dollars in thousands)

Three Months Six Months

Periods ended June 30, 2025 2024 2025 2024

Three Months Nine Months

Periods ended September 30, 2025 2024 2025 2024

Amount % of Total Amount % of Total Amount % of Total Amount % of Total

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Loan servicing rights are included in other assets and are subsequently amortized as an offset to mortgage banking revenues over the estimated period of servicing.

The net balance of capitalized servicing rights amounted to $7.2 million and $7.7 million, respectively, as of June 30, 2025 and December 31, 2024.

The balance of residential mortgage loans serviced for others, which are not included in the Unaudited Consolidated Balance Sheets, amounted to $1.4 billion at both June 30, 2025 and December 31, 2024.

The net balance of capitalized servicing rights amounted to

Management's Discussion and Analysis

$6.9 million and $7.7 million, respectively, as of September 30, 2025 and December 31, 2024.

The balance of residential mortgage loans serviced for others, which are not included in the Unaudited Consolidated Balance Sheets, amounted to $1.4 billion at both September 30, 2025 and December 31, 2024.

Consumer Loans

The consumer loan portfolio represented 6% of total loans at June 30, 2025, compared to 7% at December 31, 2024.

The consumer loan portfolio represented 7% of total loans at both September 30, 2025 and December 31, 2024.

Consumer loans include home equity loans and lines of credit and personal installment loans.

Home equity lines of credit and home equity loans represented 95% of the total consumer portfolio at June 30, 2025.

Home equity lines of credit and home equity loans represented 95% of the total consumer portfolio at September 30, 2025.

Our home equity line and home equity loan origination activities are conducted primarily in southern New England.

The Bank estimates that approximately 45% of the combined home equity lines of credit and home equity loan balances are first lien positions or subordinate to other Washington Trust mortgages.

The consumer loan portfolio totaled $317.8 million at June 30, 2025, up by $3.1 million, or 1.0%, from December 31, 2024, largely reflecting an increase in home equity loans.

The consumer loan portfolio totaled $323.8 million at September 30, 2025, up by $9.1 million, or 3%, from December 31, 2024, largely reflecting an increase in home equity loans.

Asset Quality

7 unchanged sentences

The following table presents nonperforming assets and additional asset quality data:

(Dollars in thousands) June 30,

(Dollars in thousands) September 30,

2025 December 31,

2 unchanged sentences

Total commercial

13,987 10,568

Residential Real Estate:

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

Nonaccrual Loans

During the six months ended June 30, 2025, the Corporation made no changes in its practices or policies concerning the placement of loans into nonaccrual status.

Management's Discussion and Analysis

Nonaccrual Loans

During the nine months ended September 30, 2025, the Corporation made no changes in its practices or policies concerning the placement of loans into nonaccrual status.

The following table presents the activity in nonaccrual loans:

(Dollars in thousands) Three Months Six Months

For the periods ended June 30, 2025 2024 2025 2024

(Dollars in thousands) Three Months Nine Months

For the periods ended September 30, 2025 2024 2025 2024

Balance at beginning of period $26,108 $30,479 $23,307 $44,618

5 unchanged sentences

Balance at end of period $14,016 $31,142 $14,016 $31,142

As previously disclosed on a Form 8-K filed on October 8, 2025, the Corporation’s third quarter 2025 results were adversely impacted by $11.3 million of charge-offs on two nonaccrual commercial loan relationships.

The first loan relationship was a C&I participation in a shared national credit to a telecom infrastructure construction contractor.

The contractor filed for Chapter 11 bankruptcy in the second quarter of 2025 due to cash flow problems, and at that time, the Corporation placed the loan relationship on nonaccrual status.

As of June 30, 2025, this individually analyzed collateral dependent relationship had a carrying value of $9.3 million, of which $1.4 million was past due.

Utilizing the information available at that time, which included collateral valuations (estimated bids from the sale of the company and estimated recovery of receivables), management established a specific reserve of $2.3 million at June 30, 2025, which covered approximately 25% of the carrying value.

Based on ensuing developments in the bankruptcy proceedings during the third quarter, which included bidders dropping out of the sale process, the company sold via auction on August 28, 2025 significantly below expectations.

Additionally, the bank group, which included the Bank, approved the sale of the receivables on September 15, 2025.

As a result of these updated recovery estimates, the Corporation revised its estimate of expected credit losses on this relationship and recognized a charge-off of $8.3 million in the third quarter.

The remaining carrying value of $1.0 million as of September 30, 2025 was collected in October 2025.

The second loan was a CRE loan secured by an office property in our primary lending area of southern New England.

This loan was previously placed on nonaccrual status in 2023 and was also modified and reported as a TLM.

As of June 30, 2025, this individually analyzed collateral dependent loan had a carrying value of $4.3 million, net of previous charge-offs taken.

Based on an appraisal received in the first quarter of 2025, management concluded that no additional specific reserve was warranted for this loan at June 30, 2025.

In September 2025, the Corporation changed its exit strategy and decided to sell this loan.

Late in September, the sale closed, proceeds of $1.2 million were received, and a charge-off of $3.0 million was recognized.

Management's Discussion and Analysis

The following table presents additional detail on nonaccrual loans:

(Dollars in thousands) June 30, 2025 December 31, 2024

(Dollars in thousands) September 30, 2025 December 31, 2024

Days Past Due Days Past Due

13 unchanged sentences

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

As of June 30, 2025, the composition of nonaccrual loans was 54% commercial and 46% residential and consumer.

As of September 30, 2025, the composition of nonaccrual loans was 7% commercial and 93% residential and consumer.

This compared to 45% commercial and 55% residential and consumer as of December 31, 2024.

Nonaccrual loans at June 30, 2025 totaled $26.1 million, up by $2.8 million from the end of 2024.

This reflected an increase in nonaccrual C&I loans of $9.2 million, primarily attributable to one relationship that was placed on nonaccrual status, as discussed further below.

This increase was partially offset by a decline in nonaccrual CRE loans of $5.8 million that reflected year-to-date partial charge-offs of $2.7 million on two office segment loans and the resolution of one of these loans that paid off in the second quarter of 2025.

Both of these office segment loans were previously modified as TLMs.

As of June 30, 2025, the balance of nonaccrual C&I loans primarily consisted of one individually analyzed collateral dependent relationship with a carrying value of $9.3 million, of which $1.4 million was past due.

This C&I borrower is a broadband infrastructure contractor who recently filed Chapter 11 bankruptcy due to cash flow problems.

Washington Trust is a 5% participant in a multi-bank deal and has a total exposure of approximately $11 million.

As of June 30, 2025, the balance of nonaccrual commercial real estate loans consisted of one individually analyzed collateral dependent loan secured by an office property in our primary lending area of southern New England.

Based on recent collateral and other valuations of sources of repayment, management believes it has established appropriate specific reserves to cover the estimated potential loss exposure associated with these nonaccrual commercial loans at June 30, 2025.

Management's Discussion and Analysis

As of June 30, 2025, the balance of nonaccrual residential mortgage loans was predominately secured by properties in Massachusetts, Connecticut, and Rhode Island.

Included in total nonaccrual residential real estate loans at June 30, 2025 were two loans purchased for portfolio and serviced by others amounting to $517 thousand.

Nonaccrual loans at September 30, 2025 totaled $14.0 million, down by $9.3 million from the end of 2024, largely reflecting a decline in nonaccrual CRE loans of $10.1 million.

The decline in nonaccrual CRE loans was concentrated in CRE office segment and reflected year-to-date charge-offs, a loan payoff received in the second quarter of 2025 and loan sale proceeds received in the third quarter of 2025.

Additionally, see discussion above regarding the collection of the $1.0 million nonaccrual C&I balance in October of 2025.

As of September 30, 2025, the balance of nonaccrual residential mortgage loans was predominately secured by properties in Massachusetts, Connecticut, and Rhode Island.

Included in total nonaccrual residential real estate loans at September 30, 2025 were two loans purchased for portfolio and serviced by others amounting to $507 thousand.

Management monitors the collection efforts of its third-party servicers as part of its assessment of the collectability of nonperforming loans.

1 unchanged sentence

The following table presents past due loans by class:

(Dollars in thousands) June 30, 2025 December 31, 2024

(Dollars in thousands) September 30, 2025 December 31, 2024

Commercial real estate $— — % $— — %

8 unchanged sentences

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

The composition of past due loans (loans past due 30 days or more) was 87% residential and consumer and 13% commercial as of June 30, 2025, compared to 92% residential and consumer and 8% commercial as of December 31, 2024.

Total past due loans increased by $2.1 million from the end of 2024, largely reflecting an increase in past due residential mortgage loans.

Total past due loans included $8.2 million of nonaccrual loans as of June 30, 2025, compared to $6.4 million as of December 31, 2024.

All loans 90 days or more past due at June 30, 2025 and December 31, 2024 were classified as nonaccrual.

Management's Discussion and Analysis

The composition of past due loans (loans past due 30 days or more) was essentially all residential and consumer as of September 30, 2025, compared to 92% residential and consumer and 8% commercial as of December 31, 2024.

Total past due loans decreased by $3.9 million from the end of 2024, largely reflecting decreases in past due consumer and residential mortgage loans.

Total past due loans included $5.9 million of nonaccrual loans as of September 30, 2025, compared to $6.4 million as of December 31, 2024.

All loans 90 days or more past due at September 30, 2025 and December 31, 2024 were classified as nonaccrual.

Potential Problem Loans

The Corporation classifies certain loans as “substandard,” “doubtful,” or “loss” based on criteria consistent with guidelines provided by banking regulators.

Potential problem loans include classified accruing commercial loans that were less than 90 days past due at June 30, 2025 and other loans for which known information about possible credit problems of the related borrowers causes management to have doubts as to the ability of such borrowers to comply with the present loan repayment terms and which may result in disclosure of such loans as nonperforming at some time in the future.

Potential problem loans include classified accruing commercial loans that were less than 90 days past due at September 30, 2025 and other loans for which known information about possible credit problems of the related borrowers causes management to have doubts as to the ability of such borrowers to comply with the present loan repayment terms and which may result in disclosure of such loans as nonperforming at some time in the future.

Potential problem loans are not included in the amounts of nonaccrual loans presented above.

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Accordingly, there can be no assurance that other loans will not become 90 days or more past due, be placed on nonaccrual, become modified, or require an increased allowance coverage and provision for credit losses on loans.

Management has identified $29.2 million in potential problem loans at June 30, 2025, compared to $28.2 million at December 31, 2024.

As of June 30, 2025, the balance of potential problem loans largely consisted of two CRE loans secured by office properties in Massachusetts.

At June 30, 2025, these loans were current with respect to payment terms.

Management's Discussion and Analysis

Management has identified $32.1 million in potential problem loans at September 30, 2025, compared to $28.2 million at December 31, 2024.

As of September 30, 2025, the balance of potential problem loans largely consisted of two CRE loans secured by office properties in Massachusetts.

At September 30, 2025, these loans were current with respect to payment terms.

Allowance for Credit Losses on Loans

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The ACL on loans is reduced by charge-offs on loans and is increased by recoveries of amounts previously charged off.

There were no significant changes in our modeling methodology to determine the ACL on loans during the three and six months ended June 30, 2025.

There were no significant changes in our modeling methodology to determine the ACL on loans during the three and nine months ended September 30, 2025.

The Corporation’s general practice is to identify problem credits early.

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The following table presents additional detail on the Corporation’s loan portfolio and associated allowance:

(Dollars in thousands) June 30, 2025 December 31, 2024

Management's Discussion and Analysis

(Dollars in thousands) September 30, 2025 December 31, 2024

Loans Related Allowance Allowance / Loans Loans Related Allowance Allowance / Loans

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Total $5,122,837 $36,576 0.71 % $5,139,319 $41,960 0.82 %

(1) The amount reported for pooled loans excludes negative basis adjustments associated with fair value hedges of $179 thousand and $1.5 million, respectively, at June 30, 2025 and December 31, 2024.

(1) The amount reported for pooled loans excludes negative basis adjustments associated with fair value hedges of $255 thousand and $1.5 million, respectively, at September 30, 2025 and December 31, 2024.

See Note 8 to the Unaudited Consolidated Financial Statements for additional disclosure.

The ACL on loans amounted to $36.6 million at September 30, 2025, down by $5.4 million, or 13%, from the balance at December 31, 2024.

The ACL on loans as a percentage of total loans, also known as the reserve coverage ratio, was 0.71% at September 30, 2025, compared to 0.82% at December 31, 2024.

ACL on loans as percentage of nonaccrual loans was 260.96% at September 30, 2025, compared to 180.03% at December 31, 2024.

Net charge-offs totaled $11.4 million and $14.4 million, respectively, for the three and nine months ended September 30, 2025.

See additional discussion regarding third quarter charge-offs of $11.3 million on two nonaccrual commercial loan relationships above under the caption “Nonaccrual Loans.” Net charge-offs were $48 thousand and $127 thousand, respectively, for the three and nine months ended September 30, 2024.

Various loan loss allowance coverage ratios are affected by the timing and extent of charge-offs, particularly with respect to individually analyzed collateral dependent loans.

The ACL on loans amounted to $41.1 million at June 30, 2025, down by $901 thousand, or 2%, from the balance at December 31, 2024.

The ACL on loans as a percentage of total loans, also known as the reserve coverage ratio, was 0.80% at June 30, 2025, compared to 0.82% at December 31, 2024.

The Corporation recorded a provision for credit losses on loans of $650 thousand and $2.1 million, respectively, for the three and six months ended June 30, 2025.

The provision included the impact of losses and specific reserve allocations on individually analyzed nonaccrual commercial loans and reflected our estimate of forecasted economic conditions.

Net charge-offs totaled $647 thousand for the three months ended June 30, 2025, compared to $27 thousand for the same period in 2024.

For the six months ended June 30, 2025, net charge-offs totaled $3.0 million, compared to $79 thousand for the same period in 2024.

The year-to-date increase in net charge-offs reflected partial charge-offs on two CRE office portfolio segment loans.

The decrease in the ACL on loans from December 31, 2024 reflects the resolution of the two commercial loan relationships discussed above, as well as net improvements in loss given default estimates and regression analysis results, which were reflective of the performance of the overall loan portfolio and changes in econometric forecasts.

As further disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, for pooled loans the Corporation utilizes a discounted cash flow methodology to estimate credit losses over the expected life of the loan.

The methodology incorporates a probability of default and loss given default framework.

Loss given default is estimated based on historical credit loss experience.

Probability of default is estimated utilizing a regression model that incorporates econometric factors.

See additional disclosure regarding our ACL methodology in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

The ACL on loans is an estimate and ultimate losses may vary from management’s estimate.

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conversely, improving conditions or assumptions could lead to further reductions in the ACL on loans.

Management's Discussion and Analysis

The following table presents the allocation of the ACL on loans by portfolio segment.

The total ACL on loans is available to absorb losses from any segment of the loan portfolio.

(Dollars in thousands) June 30, 2025 December 31, 2024

(Dollars in thousands) September 30, 2025 December 31, 2024

Allocated ACL

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(1) Percentage of loans outstanding in respective class to total loans outstanding.

Management's Discussion and Analysis

Sources of Funds

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The following table presents a summary of deposits:

(Dollars in thousands) June 30, 2025 December 31, 2024 Change in Balance

(Dollars in thousands) September 30, 2025 December 31, 2024 Change in Balance

Amount % of Total Amount % of Total $ %

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Total deposits $5,222,836 100 % $5,115,800 100 % $107,036 2 %

(1) As of June 30, 2025, in-market deposits were approximately 60% retail and 40% commercial and the average size was approximately $37 thousand.

Management's Discussion and Analysis

Total deposits amounted to $5.0 billion at June 30, 2025, down by $70.6 million, or 1%, from December 31, 2024, due to a decline in wholesale brokered time deposits of $295.7 million, or 99%, that was partially offset by an increase in in-market deposits.

(1) As of September 30, 2025, in-market deposits were approximately 59% retail and 41% commercial and the average size was approximately $39 thousand.

Total deposits amounted to $5.2 billion at September 30, 2025, up by $107.0 million, or 2%, from December 31, 2024, due to an increase in in-market deposits that was partially offset by a decline in wholesale brokered time deposits of $297.5 million.

See disclosure regarding wholesale funding under the caption “Borrowings” below.

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Growing deposits continues to be highly competitive in our market area and demand for higher-cost deposit products is intense.

Washington Trust has made recent investments in technology to enhance our customers’ experience and we remain focused on maintaining and growing depositor relationships.

Washington Trust remains focused on maintaining and growing depositor relationships.

Management's Discussion and Analysis

The following table presents a summary of the Bank’s uninsured deposits:

(Dollars in thousands) June 30, 2025 December 31, 2024

(Dollars in thousands) September 30, 2025 December 31, 2024

Balance % of Total Deposits Balance % of Total Deposits

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Borrowings primarily consist of FHLB advances, which are used as a source of funding for liquidity and interest rate risk management purposes.

FHLB advances totaled $1.0 billion at June 30, 2025, down by $124.0 million, or 11%, from the balance at the end of 2024.

FHLB advances totaled $791.0 million at September 30, 2025, down by $334.0 million, or 30%, from the balance at the end of 2024.

For additional information regarding FHLB advances see Note 11 to the Unaudited Consolidated Financial Statements.

Both FHLB advances and wholesale brokered time deposits decreased in the six months ended June 30, 2025, reflecting increases in in-market deposits, the redeployment of cash resulting from the previously disclosed balance sheet repositioning transactions, and timing of liquidity management activities.

Both FHLB advances and wholesale brokered time deposits decreased in the nine months ended September 30, 2025, reflecting increases in in-market deposits, the redeployment of cash resulting from the previously disclosed balance sheet repositioning transactions, and timing of liquidity management activities.

Liquidity and Capital Resources

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Liquidity is the ability of a financial institution to meet maturing liability obligations and customer loan demand.

The Corporation’s primary source of liquidity is in-market deposits, which funded approximately 74% of total average assets in the six months ended June 30, 2025.

The Corporation’s primary source of liquidity is in-market deposits, which funded approximately 75% of total average assets in the nine months ended September 30, 2025.

While the generally preferred funding strategy is to attract and retain low-cost deposits, the ability to do so is affected by competitive interest rates and terms in the marketplace.

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and (3) maturing time deposits.

The Corporation has established

Management's Discussion and Analysis

collateralized borrowing capacity with the FRBB and also maintains additional collateralized borrowing capacity with the FHLB in excess of levels used in the ordinary course of business.

The Corporation has established collateralized borrowing capacity with the FRBB and also maintains additional collateralized borrowing capacity with the FHLB in excess of levels used in the ordinary course of business.

Borrowing capacity is impacted by the amount and type of assets available to be pledged.

Management's Discussion and Analysis

The table below presents a summary of contingent liquidity balances by source:

(Dollars in thousands)

September 30,

2025 December 31,

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Percentage of total contingent liquidity to uninsured deposits, after exclusions 163.0 % 136.1 %

(1) As of June 30, 2025 and December 31, 2024, loans with a carrying value of $2.9 billion and $2.8 billion, respectively, and securities available for sale with carrying values of $73.0 million and $74.2 million, respectively, were pledged to the FHLB resulting in this additional borrowing capacity.

(2) As of June 30, 2025 and December 31, 2024, loans with a carrying value of $65.7 million and $68.5 million, respectively, and securities available for sale with a carrying value of $58.8 million and $13.9 million, respectively, were pledged to the FRBB for the discount window resulting in this additional unused borrowing capacity.

(1) As of September 30, 2025 and December 31, 2024, loans with a carrying value of $2.7 billion and $2.8 billion, respectively, and securities available for sale with carrying values of $72.9 million and $74.2 million, respectively, were pledged to the FHLB resulting in this additional borrowing capacity.

(2) As of September 30, 2025 and December 31, 2024, loans with a carrying value of $62.3 million and $68.5 million, respectively, and securities available for sale with a carrying value of $58.7 million and $13.9 million, respectively, were pledged to the FRBB for the discount window resulting in this additional unused borrowing capacity.

(3) Available cash liquidity excludes amounts restricted for collateral purposes and designated for operating needs.

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On January 24, 2025, the sale was completed and the cash proceeds received were used to pay down FHLB advances and wholesale brokered time deposits in the first quarter of 2025.

In addition to the amounts presented above, the Bank also had access to a $40.0 million unused line of credit with the FHLB at June 30, 2025 and December 31, 2024.

In addition to the amounts presented above, the Bank also had access to a $40.0 million unused line of credit with the FHLB at September 30, 2025 and December 31, 2024.

The ALCO establishes and monitors internal liquidity measures to manage liquidity exposure.

Liquidity remained within target ranges established by the ALCO during the six months ended June 30, 2025.

Liquidity remained within target ranges established by the ALCO during the nine months ended September 30, 2025.

Based on its assessment of the liquidity considerations described above, management believes the Corporation’s sources of funding meet anticipated funding needs.

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Capital Resources

Total shareholders’ equity amounted to $527.5 million at June 30, 2025, up by $27.8 million from December 31, 2024.

This net increase primarily reflected net income of $25.4 million, improvement of $23.2 million in the AOCL component of shareholders' equity, and a reduction of $21.9 million due to dividend declarations.

The improvement in AOCL included an increase in fair value of available for sale debt securities, as well as the effects of the remeasurement of the qualified pension plan upon settlement and the reclassification of the after-tax pension plan settlement charge to noninterest expenses.

Total shareholders’ equity amounted to $533.0 million at September 30, 2025, up by $33.3 million from December 31, 2024.

This net increase primarily reflected net income of $36.3 million and an improvement of $34.3 million in the AOCL component of shareholders' equity, partially offset by dividend declarations of $32.7 million and a net increase in treasury stock of $5.7 million.

The improvement in AOCL included an increase in fair value of available for sale debt securities, as well as the effects of the remeasurement of the qualified pension plan upon settlement and reclassification of the after-tax pension plan settlement charge to noninterest expenses.

See Note 16 to the Unaudited Consolidated Financial Statements for additional disclosure regarding changes in AOCL.

Washington Trust declared a quarterly dividend of 56 cents per share for the three months ended June 30, 2025, unchanged from the 56 cents per share declared for the same period in 2024.

The net increase in treasury stock included the Corporation’s repurchase of 246,803 shares, at an average price of $27.28 and a total cost of $6.7 million, under its 2025 Repurchase Program.

Washington Trust declared a quarterly dividend of 56 cents per share for the three months ended September 30, 2025, unchanged from the 56 cents per share declared for the same period in 2024.

Management's Discussion and Analysis

The ratio of total equity to total assets amounted to 7.82% at June 30, 2025, compared to a ratio of 7.21% at December 31, 2024.

Book value per share was $27.36 at June 30, 2025, compared to $25.93 at December 31, 2024.

The Bancorp and the Bank are subject to various regulatory capital requirements and are considered “well capitalized,” with a total risk-based capital ratio of 13.06% at June 30, 2025, compared to 12.47% at December 31, 2024.

The ratio of total equity to total assets amounted to 7.93% at September 30, 2025, compared to a ratio of 7.21% at December 31, 2024.

Book value per share was $27.98 at September 30, 2025, compared to $25.93 at December 31, 2024.

The Bancorp and the Bank are subject to various regulatory capital requirements and are considered “well capitalized,” with a total risk-based capital ratio of 12.90% at September 30, 2025, compared to 12.47% at December 31, 2024.

See Note 12 to the Unaudited Consolidated Financial Statements for additional discussion regarding shareholders’ equity.

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The simulations at December 31, 2024 incorporated the reclassification of residential mortgage loans from portfolio to held for sale and the sale of these loans completing in January 2025.

The simulations at December 31, 2024 assume the proceeds from the sale of loans are used to pay down maturing wholesale funding balances.

The simulations at December 31, 2024 assumed the proceeds from the sale of loans were used to pay down maturing wholesale funding balances.

Additionally, the simulations take into account the specific repricing, maturity, call options, and prepayment characteristics of differing financial instruments that may vary under different interest rate scenarios.

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The ALCO reviews simulation results to determine whether the Corporation’s exposure to a decline in net interest income remains within established tolerance levels over the simulation horizons and to develop appropriate strategies to manage this exposure.

As of June 30, 2025 and December 31, 2024, net interest income simulations indicated that exposure to changing interest rates over the simulation horizons remained within tolerance levels established by the Corporation.

As of September 30, 2025 and December 31, 2024, net interest income simulations indicated that exposure to changing interest rates over the simulation horizons remained within tolerance levels established by the Corporation.

All changes are measured in comparison to the projected net interest income that would result from an “unchanged” rate scenario where both interest rates and the composition of the Corporation’s balance sheet remain stable.

The ALCO regularly reviews a wide variety of interest rate shift scenario results to evaluate interest rate risk exposure, including parallel changes in interest rates and scenarios showing the effect of steepening or flattening changes in the yield

Because income simulations assume that the Corporation’s balance sheet will generally remain static over the

Management's Discussion and Analysis

Because income simulations assume that the Corporation’s balance sheet will generally remain static over the simulation horizon, the results do not reflect adjustments in strategy that the ALCO could implement in response to rate shifts.

simulation horizon, the results do not reflect adjustments in strategy that the ALCO could implement in response to rate shifts.

It should also be noted that the static balance sheet assumption does not necessarily reflect the Corporation’s expectation for future balance sheet growth, which is a function of the business environment and customer behavior.

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Over time, the repricing, maturity, and prepayment characteristics of financial instruments and the composition of the Corporation’s balance sheet may change to a different degree than estimated.

The following table sets forth the estimated change in net interest income from an unchanged rate scenario over the periods indicated for parallel changes in market interest rates using the Corporation’s on- and off-balance sheet financial instruments as of June 30, 2025 and December 31, 2024.

Interest rates are assumed to shift by parallel rate changes as shown in the table below.

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It should be noted that the rate scenarios shown do not necessarily reflect the ALCO’s view of the “most likely” change in interest rates over the periods indicated.

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Months 1 - 12 Months 13 - 24 Months 1 - 12 Months 13 - 24

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The relative change in interest rate sensitivity from December 31, 2024, as shown in the above table, was attributable to changes in balance sheet composition and market interest rates.

The changes included in-market deposit growth and also reflected the balance sheet repositioning transactions previously announced in December 2024 that included a reduction in loans and a lower level of wholesale funding.

The changes included in-market deposit growth and also reflected the balance sheet repositioning transactions previously announced in December 2024, which included a reduction in loans and a lower level of wholesale funding.

Lower levels of wholesale funding improve the Corporation’s interest rate exposure in rising rate scenarios, but have the opposite effect in declining rate scenarios because wholesale funding reprices more quickly and by a greater amount than the repricing of in-market deposits in response to changes in market rates.

The ALCO estimates that as interest rates change, interest-earning assets would reprice more quickly than interest-bearing liabilities.

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Management's Discussion and Analysis

The following table summarizes the potential change in market value of the Corporation’s available for sale debt securities as of June 30, 2025 and December 31, 2024 resulting from immediate parallel rate shifts:

The following table summarizes the potential change in market value of the Corporation’s available for sale debt securities as of September 30, 2025 and December 31, 2024 resulting from immediate parallel rate shifts:

(Dollars in thousands)

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Trust preferred debt and other corporate debt securities 69 (150)

Total change in market value as of June 30, 2025 $54,876 ($124,884)

Total change in market value as of September 30, 2025 $48,209 ($116,670)

Total change in market value as of December 31, 2024 $75,007 ($140,027)

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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 2. Management’s Discussion and Analysis