WASHINGTON TRUST BANCORP INC 10-K

ITEM 8. Financial Statements and Supplementary Data. Description Page Management’s Annual Report on Internal Control Over Financial Reporting 67 Reports of Independent Registered Public Accounting Firm (PCAOB ID: 173 ) 68 Consolidated Balance Sheets at December 31, 2025 and 2024 71 Consolidated Statements of Income (Loss) for the Years Ended December 31, 2025, 2024 and 2023 72 Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2025, 2024 and 2023 73 Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2025, 2024 and 2023 74 Consolidated Statements of Cash Flows for the Years Ended December 31, 2025, 2024 and 2023 75 Notes to Consolidated Financial Statements: 77 Note 1 - Summary of Significant Accounting Policies 77 Note 2 - Recently Issued Accounting Pronouncements 88 Note 3 - Securities 89 Note 4 - Loans 92 Note 5 - Allowance for Credit Losses on Loans 102 Note 6 - Premises and Equipment 104 Note 7 - Leases 105 Note 8 - Goodwill and Intangible Assets 106 Note 9 - Derivative Financial Instruments 107 Note 10 - Fair Value Measurements 110 Note 11 - Income Taxes 115 Note 12 - Deposits 118 Note 13 - Borrowings 119 Note 14 - Shareholders’ Equity 120 Note 15 - Revenue from Contracts with Customers 122 Note 16 - Employee Benefits 123 Note 17 - Share-Based Compensation Arrangements 127 Note 18 - Business Segments 130 Note 19 - Other Comprehensive Income 134 Note 20 - Earnings Per Common Share 136 Note 21 - Commitments and Contingencies 137 Note 22 - Parent Company Financial Statements 139 -66- Management’s Annual Report on Internal Control Over Financial Reporting The management of the Corporation is responsible for establishing and maintaining adequate internal control over financial reporting. The Corporation’s internal control over financial reporting is a process designed under the supervision of the Corporation’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Corporation’s Consolidated Financial Statements for external reporting purposes in accordance with GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. As of December 31, 2025, management assessed the effectiveness of the Corporation’s internal control over financial reporting based on the criteria established in Internal Control - Integrated Framework (2013) issued by COSO. Based on this assessment, management concluded that the Corporation’s internal control over financial reporting as of December 31, 2025 was effective. The Corporation’s internal control over financial reporting as of December 31, 2025 has been audited by Crowe LLP, an independent registered public accounting firm, as stated in their report, which follows. This report expresses an unqualified opinion on the effectiveness of the Corporation’s internal control over financial reporting as of December 31, 2025. /s/ Edward O. Handy III /s/ Ronald S. Ohsberg Edward O. Handy III Chairman and Chief Executive Officer Ronald S. Ohsberg Senior Executive Vice President, Chief Financial Officer and Treasurer February 24, 2026 -67- Report of Independent Registered Public Accounting Firm Shareholders and the Board of Directors Washington Trust Bancorp, Inc. Westerly, Rhode Island Opinion on Internal Control over Financial Reporting We have audited Washington Trust Bancorp, Inc. and Subsidiaries (the “Corporation”) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Corporation as of December 31, 2025 and 2024, the related consolidated statements of income (loss), comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”) and our report dated February 24, 2026 expressed an unqualified opinion. Basis for Opinion The Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Corporation’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A corporation’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A corporation’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the corporation; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the corporation are being made only in accordance with authorizations of management and directors of the corporation; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the corporation’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate . /s/ Crowe LLP Franklin, TN February 24, 2026 -68- Report of Independent Registered Public Accounting Firm Shareholders and the Board of Directors Washington Trust Bancorp, Inc. Westerly, Rhode Island Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Washington Trust Bancorp, Inc. and Subsidiaries (the “Corporation”) as of December 31, 2025 and 2024, the related consolidated statements of income (loss), comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Corporation as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Corporation’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated February 24, 2026 expressed an unqualified opinion. Basis for Opinion These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on the Corporation’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the Audit Committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Allowance for Credit Losses – Qualitative Factors on Total Commercial Loans As described in Note 1 to the consolidated financial statements, the Corporation accounts for credit losses under ASC 326, Financial Instruments – Credit Losses. ASC 326 requires the measurement of expected lifetime credit losses for financial assets measured at amortized cost at the reporting date. As of December 31, 2025, the balance of the allowance for credit losses (“ACL”) on loans was $37.2 million. Management employs a process and methodology to estimate the ACL on loans that evaluates both quantitative and qualitative factors. The methodology for evaluating quantitative factors involves pooling loans into portfolio segments for loans that share similar risk characteristics. Pooled loan portfolio segments include commercial real estate, commercial and industrial, residential real estate, home equity and other consumer loans. For pooled loans, the Corporation utilizes a discounted cash flow (“DCF”) methodology to estimate credit losses over the expected life of the loan. The DCF methodology combines the probability of default, the loss given default, remaining life of the loan and prepayment speed assumptions to estimate a reserve for each loan. The loss rates are adjusted by current and forecasted econometric assumptions and return to the mean after the forecasted periods. These quantitative loss factors are -69- Report of Independent Registered Public Accounting Firm also supplemented by certain qualitative risk factors reflecting management’s view of how losses may vary from those represented by quantitative loss rates. Qualitative loss factors are applied to each portfolio segment with the amounts determined by historical loan charge-offs of a peer group of similar-sized regional banks. Changes in these assumptions could have a material effect on the Corporation’s financial conditions or results of operations. We identified auditing the qualitative component of the ACL on pooled loans in the commercial real estate and commercial and industrial portfolios (total commercial loans) as a critical audit matter because the methodology to determine the estimate of credit losses uses subjective judgments by management and is subject to material variability. Performing audit procedures to evaluate the qualitative factors on the commercial loans involved a high degree of auditor judgment and required significant effort, including the need to involve more experienced audit personnel. The primary procedures we performed to address this critical audit matter included: • Testing the effectiveness of controls over the evaluation of the ACL on pooled loans, including controls addressing: ◦ Methodology and accounting policies. ◦ Data inputs, judgments and calculations used to determine the qualitative loss factors. ◦ Information technology general controls and application controls. ◦ Management’s review of the qualitative factors. • Substantively testing management’s process, including evaluating their judgments and assumptions, for developing the ACL on commercial loans collectively evaluated for impairment, which included: ◦ Evaluation of the appropriateness of the Corporation’s accounting policies and assumptions involved in the application of ASC 326. ◦ Testing the mathematical accuracy of the calculation. ◦ Testing the completeness and accuracy of data used in the calculation. ◦ Evaluation of the reasonableness of management’s judgments related to qualitative factors to determine if they are calculated to conform with management’s policies and were consistently applied period over period. Our evaluation considered the weight of evidence from internal and external sources and loan portfolio composition and performance. /s/ Crowe LLP We have served as the Corporation’s auditor since 2019. Franklin, TN February 24, 2026 -70- Washington Trust Bancorp, Inc. and Subsidiaries Consolidated Balance Sheets (Dollars in thousands, except par value) December 31, 2025 2024 Assets: Cash and due from banks $ 29,481 $ 21,534 Interest-earning deposits with correspondent banks 61,375 88,368 Short-term investments 12,878 3,987 Mortgage loans held for sale, at fair value 35,833 21,708 Mortgage loans held for sale, at lower of cost or market — 281,706 Premises and equipment held for sale, at lower of cost or market — 4,788 Available for sale debt securities, at fair value (amortized cost $ 1,035,205 ; net of allowance for credit losses on securities of $ 0 at December 31, 2025; and amortized cost of $ 1,049,557 ; net of allowance for credit losses on securities of $ 0 at December 31, 2024) 940,342 916,305 Federal Home Loan Bank stock, at cost 29,473 49,817 Loans: Total loans 5,134,388 5,137,838 Less: allowance for credit losses on loans 37,236 41,960 Net loans 5,097,152 5,095,878 Premises and equipment, net 25,402 26,873 Operating lease right-of-use assets 35,904 26,943 Investment in bank-owned life insurance 115,126 106,777 Goodwill 63,909 63,909 Identifiable intangible assets, net 4,303 2,885 Other assets 170,516 219,169 Total assets $ 6,621,694 $ 6,930,647 Liabilities: Deposits: Noninterest-bearing deposits $ 595,092 $ 661,776 Interest-bearing deposits 4,674,898 4,454,024 Total deposits 5,269,990 5,115,800 Federal Home Loan Bank advances 626,000 1,125,000 Junior subordinated debentures 22,681 22,681 Operating lease liabilities 38,726 29,578 Other liabilities 120,713 137,860 Total liabilities 6,078,110 6,430,919 Commitments and contingencies (Note 21) Shareholders’ Equity: Common stock of $ .0625 par value; authorized 60,000,000 shares; 19,561,985 shares issued and 19,034,935 shares outstanding at December 31, 2025 and 19,561,985 shares issued and 19,273,583 shares outstanding at December 31, 2024 1,223 1,223 Paid-in capital 198,323 196,947 Retained earnings 442,741 434,014 Accumulated other comprehensive loss ( 79,309 ) ( 119,171 ) Treasury stock, at cost; 527,050 shares at December 31, 2025 and 288,402 shares at December 31, 2024 ( 19,394 ) ( 13,285 ) Total shareholders’ equity 543,584 499,728 Total liabilities and shareholders’ equity $ 6,621,694 $ 6,930,647 The accompanying notes are an integral part of these consolidated financial statements. -71- Washington Trust Bancorp, Inc. and Subsidiaries Consolidated Statements of Income (Loss) (Dollars and shares in thousands, except per share amounts) Years ended December 31, 2025 2024 2023 Interest income: Interest and fees on loans $ 269,826 $ 299,297 $ 270,330 Interest on mortgage loans held for sale 2,548 1,775 980 Taxable interest on debt securities 36,529 27,850 29,059 Nontaxable interest on debt securities 30 8 — Dividends on Federal Home Loan Bank stock 3,370 4,771 3,315 Other interest income 5,788 6,977 4,975 Total interest and dividend income 318,091 340,678 308,659 Interest expense: Deposits 123,895 146,098 120,429 Federal Home Loan Bank advances 39,635 64,539 49,589 Junior subordinated debentures 1,373 1,593 1,543 Total interest expense 164,903 212,230 171,561 Net interest income 153,188 128,448 137,098 Provision for credit losses 9,200 2,400 3,200 Net interest income after provision for credit losses 143,988 126,048 133,898 Noninterest income (loss): Wealth management revenues 41,236 39,054 35,540 Mortgage banking revenues 12,089 10,981 6,660 Card interchange fees 5,136 4,996 4,921 Service charges on deposit accounts 3,236 3,032 2,806 Loan related derivative income 2,129 467 1,390 Income from bank-owned life insurance 3,349 3,041 3,488 Realized losses on securities, net — ( 31,047 ) — Losses on sale of portfolio loans, net — ( 62,888 ) — Gain on sale of bank-owned properties, net 6,994 988 — Other income 1,691 3,579 1,335 Total noninterest income (loss) 75,860 ( 27,797 ) 56,140 Noninterest expense: Salaries and employee benefits 91,768 86,260 82,458 Outsourced services 16,937 16,258 14,521 Net occupancy 10,736 9,785 9,636 Equipment 3,590 3,838 4,318 Legal, audit and professional fees 2,862 3,128 3,891 FDIC deposit insurance costs 4,580 5,513 4,667 Advertising and promotion 2,919 2,626 2,562 Amortization of intangibles 762 826 843 Pension plan settlement charge 6,436 — — Other expenses 11,845 8,835 10,661 Total noninterest expense 152,435 137,069 133,557 Income (loss) before income taxes 67,413 ( 38,818 ) 56,481 Income tax expense (benefit) 15,169 ( 10,759 ) 8,305 Net income (loss) $ 52,244 ($ 28,059 ) $ 48,176 Net income (loss) available to common shareholders $ 52,244 ($ 28,038 ) $ 48,091 Weighted average common shares outstanding - basic 19,180 17,149 17,033 Weighted average common shares outstanding - diluted 19,281 17,149 17,062 Per share information: Basic earnings (loss) per common share $ 2.72 ($ 1.63 ) $ 2.82 Diluted earnings (loss) per common share $ 2.71 ($ 1.63 ) $ 2.82 The accompanying notes are an integral part of these consolidated financial statements. -72- Washington Trust Bancorp, Inc. and Subsidiaries Consolidated Statements of Comprehensive Income (Loss) (Dollars in thousands) Years ended December 31, 2025 2024 2023 Net income (loss) $ 52,244 ($ 28,059 ) $ 48,176 Other comprehensive income (loss), net of tax: Net change in fair value of available for sale debt securities 28,696 14,152 14,442 Net change in fair value of cash flow hedges 4,796 7,681 7,026 Net change in defined benefit plan obligations 6,370 149 ( 4,821 ) Total other comprehensive income, net of tax 39,862 21,982 16,647 Total comprehensive income (loss) $ 92,106 ($ 6,077 ) $ 64,823 The accompanying notes are an integral part of these consolidated financial statements. -73- Washington Trust Bancorp, Inc. and Subsidiaries Consolidated Statements of Changes in Shareholders' Equity (Dollars and shares in thousands) Common Shares Outstanding Common Stock Paid-in Capital Retained Earnings AOCL Treasury Stock Total Balance at December 31, 2022 17,183 $ 1,085 $ 127,056 $ 492,043 ($ 157,800 ) ($ 8,715 ) $ 453,669 Net income — — — 48,176 — — 48,176 Total other comprehensive income, net of tax — — — — 16,647 — 16,647 Cash dividends declared ($ 2.24 per share) — — — ( 38,302 ) — — ( 38,302 ) Share-based compensation — — 2,064 — — — 2,064 Exercise of stock options, issuance of other compensation-related equity awards, net of awards surrendered 48 — ( 2,970 ) — — 2,216 ( 754 ) Treasury stock purchased under the 2023 Repurchase Program (1) ( 200 ) — — — — ( 8,814 ) ( 8,814 ) Balance at December 31, 2023 17,031 $ 1,085 $ 126,150 $ 501,917 ($ 141,153 ) ($ 15,313 ) $ 472,686 Net loss — — — ( 28,059 ) — — ( 28,059 ) Total other comprehensive income, net of tax — — — — 21,982 — 21,982 Cash dividends declared ($ 2.24 per share) — — — ( 39,844 ) — — ( 39,844 ) Share-based compensation — — 2,473 — — — 2,473 Common stock issued for equity offering, net 2,199 137 70,384 — — — 70,521 Exercise of stock options, issuance of other compensation-related equity awards, net of awards surrendered 44 1 ( 2,060 ) — — 2,028 ( 31 ) Balance at December 31, 2024 19,274 $ 1,223 $ 196,947 $ 434,014 ($ 119,171 ) ($ 13,285 ) $ 499,728 Net income — — — 52,244 — — 52,244 Total other comprehensive income, net of tax — — — — 39,862 — 39,862 Cash dividends declared ($ 2.24 per share) — — — ( 43,517 ) — — ( 43,517 ) Share-based compensation — — 3,026 — — — 3,026 Exercise of stock options, issuance of other compensation-related equity awards, net of awards surrendered 29 — ( 1,650 ) — — 1,252 ( 398 ) Treasury stock purchased under the 2025 Repurchase Program (1) ( 268 ) — — — — ( 7,361 ) ( 7,361 ) Balance at December 31, 2025 19,035 $ 1,223 $ 198,323 $ 442,741 ($ 79,309 ) ($ 19,394 ) $ 543,584 (1) Treasury stock includes $ 65 thousand and $ 73 thousand, respectively, of excise tax attributable to shares repurchased in 2025 and 2023. The accompanying notes are an integral part of these consolidated financial statements. -74- Washington Trust Bancorp, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Dollars in thousands) Years ended December 31, 2025 2024 2023 Cash flows from operating activities: Net income (loss) $ 52,244 ($ 28,059 ) $ 48,176 Adjustments to reconcile net income to net cash provided by operating activities: Provision for credit losses 9,200 2,400 3,200 Gain on sale of bank-owned properties, net ( 6,994 ) ( 988 ) — Depreciation of premises and equipment 3,455 3,934 4,005 Net amortization of premiums and discounts on debt securities and loans 1,121 1,267 1,352 Amortization of intangibles 762 826 843 Amortization of terminated cash flow hedge loss 8,581 8,605 6,465 Pension plan settlement charge 6,436 — — Share-based compensation 3,026 2,473 2,064 Tax expense from stock option exercises and other equity awards ( 210 ) ( 183 ) ( 34 ) Deferred income tax expense (benefit) 12,611 ( 16,737 ) ( 3,690 ) Income from bank-owned life insurance ( 3,349 ) ( 3,041 ) ( 3,488 ) Realized losses on securities, net — 31,047 — Losses on sale of portfolio loans, net — 62,888 — Net gains on loan sales, including changes in fair value ( 9,981 ) ( 8,775 ) ( 4,514 ) Proceeds from sales of loans, net 465,470 408,844 219,568 Loans originated for sale ( 469,800 ) ( 402,826 ) ( 221,637 ) Decrease (increase) in operating lease right-of-use assets 3,483 2,420 ( 2,208 ) (Decrease) increase in operating lease liabilities ( 3,296 ) ( 2,449 ) 2,469 Decrease (increase) in other assets 8,490 ( 11,141 ) ( 3,000 ) (Decrease) increase in other liabilities ( 939 ) 7,163 ( 17,968 ) Net cash provided by operating activities 80,310 57,668 31,603 Cash flows from investing activities: Purchases of: Available for sale debt securities: Mortgage-backed ( 74,869 ) ( 363,406 ) ( 39,967 ) Available for sale debt securities: Other ( 986 ) ( 16,351 ) ( 20,221 ) Proceeds from sales of: Available for sale debt securities: Mortgage-backed — 185,143 — Available for sale debt securities: Other — 193,267 — Maturities, calls and principal payments of: Available for sale debt securities: Mortgage-backed 84,846 71,184 71,732 Available for sale debt securities: Other 4,350 900 750 Net redemptions (purchases) of Federal Home Loan Bank stock 20,344 2,076 ( 8,430 ) Net (increase) decrease in loans ( 11,226 ) 165,858 ( 537,467 ) Net proceeds from sale of portfolio loans 283,182 — — Purchases of loans ( 946 ) ( 1,435 ) ( 5,743 ) Proceeds from the sale of property acquired through foreclosure or repossession — 680 — Purchases of premises and equipment ( 2,005 ) ( 4,001 ) ( 5,048 ) Net proceeds from sale of bank-owned property 11,780 1,669 — Purchases of bank-owned life insurance ( 5,000 ) — — Proceeds from surrender of bank-owned life insurance — — 1,932 Purchase of intangible asset in asset acquisition ( 2,180 ) — — Equity investments in real estate limited partnerships ( 1,486 ) ( 3,942 ) ( 8,115 ) Purchases of other equity investments, net ( 375 ) ( 338 ) ( 263 ) Net cash provided by (used in) investing activities 305,429 231,304 ( 550,840 ) The accompanying notes are an integral part of these consolidated financial statements. -75- Washington Trust Bancorp, Inc. and Subsidiaries Consolidated Statements of Cash Flows – (continued) (Dollars in thousands) Years ended December 31, 2025 2024 2023 Cash flows from financing activities: Net increase (decrease) in deposits 154,190 ( 232,360 ) 329,198 Proceeds from Federal Home Loan Bank advances 1,857,000 2,385,000 3,515,000 Repayment of Federal Home Loan Bank advances ( 2,356,000 ) ( 2,450,000 ) ( 3,305,000 ) Treasury stock purchased ( 7,361 ) — ( 8,814 ) Net proceeds from issuance of common stock in public offering — 70,521 — Net proceeds from stock option exercises and issuance of other equity awards, net of awards surrendered ( 398 ) ( 31 ) ( 754 ) Cash dividends paid ( 43,325 ) ( 38,397 ) ( 38,631 ) Net cash (used in) provided by financing activities ( 395,894 ) ( 265,267 ) 490,999 Net (decrease) increase in cash and cash equivalents ( 10,155 ) 23,705 ( 28,238 ) Cash and cash equivalents at beginning of year 113,889 90,184 118,422 Cash and cash equivalents at end of year $ 103,734 $ 113,889 $ 90,184 Noncash Activities: Loans charged-off $ 14,735 $ 2,413 $ 577 Portfolio loans transferred to held for sale — 344,594 — Loans transferred to property acquired through foreclosure or repossession — — 683 Premises and equipment transferred to held for sale — 4,788 — Commitment for equity investments in real estate limited partnerships 14,592 6,078 3,020 Supplemental Disclosures: Interest payments $ 173,917 $ 217,154 $ 156,648 Income taxes paid, net of refunds ( 142 ) 7,236 9,926 The accompanying notes are an integral part of these consolidated financial statements. -76- Notes to Consolidated Financial Statements Note 1 - Summary of Significant Accounting Policies Nature of Operations The Bancorp is a publicly-owned registered bank holding company that has elected to be a financial holding company. The Bancorp’s principal subsidiary is the Bank, a Rhode Island chartered financial institution founded in 1800. The Bank is the oldest community bank in the nation and the largest state-chartered bank headquartered in Rhode Island. Washington Trust offers a full range of financial services, including commercial, residential and consumer lending, retail and commercial deposit products, and wealth management and trust services through its offices in Rhode Island, Massachusetts and Connecticut. Basis of Presentation The accounting and reporting policies of Washington Trust conform to GAAP and to general practices of the banking industry. The 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 trust’s 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 Consolidated Balance Sheets. Interest expense on the junior subordinated debentures is included in the Consolidated Statements of Income (Loss). Reclassification Certain previously reported amounts have been reclassified to conform to the current year’s presentation. Use of Estimates In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ from those estimates. Management considers the ACL on loans to be a material estimate that is particularly susceptible to change. Cash and Cash Equivalents Cash and cash equivalents, as referenced in the accompanying Consolidated Statements of Cash Flows, consists of cash and due from banks, interest-earning deposits with correspondent banks and short-term investments. Cash and due from Banks Cash and due from banks consists of cash on hand, cash items in process of collection, and noninterest-earning cash on deposit with correspondent banks. Interest-earning Deposits with Correspondent Banks Interest-earning deposits with correspondent banks includes cash on deposit with the FRBB and other banks, including cash pledged to derivative counterparties. Cash collateral pledged to derivative counterparties represents restricted cash balances. See Note 9 for additional disclosure regarding cash collateral pledged to derivative counterparties. Short-term Investments Short-term investments consist of highly liquid investments with a maturity date of three months or less when purchased and are considered to be cash equivalents. The Corporation’s short-term investments may be composed of overnight federal funds sold, securities purchased under resale agreements, money market mutual funds and U.S. Treasury bills. Short-term investments designated in rabbi trusts or a QRP for employee benefits represent restricted cash equivalents. -77- Notes to Consolidated Financial Statements – (continued) Securities Management determines the appropriate classification of securities at the time of purchase. Investments in debt securities that management has the positive intent and ability to hold to maturity are classified as held to maturity and carried at amortized cost. Securities not classified as held to maturity are classified as available for sale. Securities available for sale consist of debt securities that are available for sale to respond to changes in market interest rates, liquidity needs, changes in funding sources and other similar factors. These assets are specifically identified and are carried at fair value. Changes in fair value of available for sale securities, net of applicable income taxes, are reported as a separate component of shareholders’ equity. Washington Trust does not currently have securities designated as held to maturity and also does not maintain a trading portfolio. Premiums and discounts are amortized and accreted over the term of the securities on a method that approximates the level yield method. The amortization and accretion is included in interest income on securities. Interest income is recognized when earned. Realized gains or losses from sales of securities are recorded on the trade date, determined using the specific identification method and recognized within noninterest income. The fair values of securities may be based on either quoted market prices or third-party pricing services. The Corporation excludes accrued interest from the amortized cost basis of debt securities and reports accrued interest in other assets. The Corporation also excludes accrued interest from the estimate of credit losses on debt securities. A debt security is placed on nonaccrual status at the time any principal or interest payments become more than 90 days delinquent or if full collection of interest or principal becomes uncertain. Accrued interest for a debt security placed on nonaccrual is reversed against interest income. Allowance for Credit Losses on Securities For available for sale debt securities in an unrealized loss position, management first assesses whether the Corporation intends to sell, or if it is likely that the Corporation will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through a provision for credit losses. For debt securities available for sale that do not meet either of these criteria, management evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers both quantitative and qualitative factors. A substantial portion of available for sale debt securities held by the Corporation are obligations issued by U.S. government agency and U.S. government-sponsored enterprises, including mortgage-backed securities. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major credit rating agencies and have a long history of no credit losses. For these securities, management takes into consideration the long history of no credit losses and other factors to assess the risk of nonpayment even if the U.S. government were to default. As such, the Corporation utilizes a zero credit loss estimate for these securities. For available for sale debt securities that are not guaranteed by U.S. government agencies and U.S. government-sponsored enterprises, such as individual name issuer trust preferred debt securities and corporate bonds, management utilizes a third-party credit modeling tool based on observable market data, which assists management in identifying any potential credit risk associated with these available for sale debt securities. This model estimates probability of default, loss given default and exposure at default for each security. In addition, qualitative factors are also considered, including the extent to which fair value is less than amortized cost, changes to the credit rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If a credit loss exists based on the results of this assessment, an ACL (contra asset) is recorded, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an ACL is considered market-related and is recognized in AOCL. Changes in the ACL on available for sale debt securities are recorded as provision for credit losses. Losses are charged against the ACL when management believes the uncollectability of an available for sale debt security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Federal Home Loan Bank Stock The Bank is a member of the FHLB, which is a cooperative that provides services, including funding in the form of advances, to its member banking institutions. The primary reason for the Bank’s membership is to gain access to a reliable source of -78- Notes to Consolidated Financial Statements – (continued) wholesale funding in order to manage interest rate risk. The purchase of FHLB stock is a requirement for a member to gain access to funding and the Bank must own a minimum amount of FHLB stock, calculated periodically based primarily on its level of borrowings from the FHLB. The Bank purchases FHLB stock in proportion to the volume of funding received and views the purchases as a necessary long-term investment for the purposes of balance sheet liquidity and not for investment return. No market exists for shares of FHLB stock and therefore, it is carried at cost. FHLB stock may be redeemed at par value five years following termination of FHLB membership, subject to limitations which may be imposed by the FHLB or its regulator, the Federal Housing Finance Board, to maintain capital adequacy of the FHLB. While the Bank currently has no intentions to terminate its FHLB membership, the ability to redeem its investment in FHLB stock would be subject to the conditions imposed by the FHLB. The Bank monitors its investment to determine if impairment exists. Based on the capital adequacy and the liquidity position of the FHLB, management believes there is no impairment related to the carrying amount of FHLB stock as of December 31, 2025. Long-lived Assets Held for Sale Once all the criteria for held for sale in ASC 360 are met, assets are reclassified to held for sale and measured at lower of the assets carrying value or fair value less costs to sell. If the carrying value of the assets to be sold exceed the fair value less cost to sell, a valuation allowance is established with a corresponding loss recognized within noninterest income. Mortgage Loans Held for Sale, at Lower of Cost or Market In the period when held for sale criteria are met, amortization ceases for any unamortized balances of deferred loan origination fees and costs. Premises and Equipment Held for Sale Depreciation ceases in the period when held for sale criteria are met. Mortgage Banking Activities Mortgage Loans Held for Sale, at Fair Value Residential real estate mortgage loans originated and intended for sale to the secondary market are classified as held for sale. ASC 825, “Financial Instruments” allows for the irrevocable option to elect fair value accounting for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis that may otherwise not be required to be measured at fair value under other accounting standards. The Corporation has elected the fair value option for mortgage loans that are originated and intended for sale to the secondary market in order to better match changes in fair values of the loans with changes in the fair value of the derivative forward sale commitment contracts used to economically hedge them. Changes in the fair value of mortgage loans held for sale accounted for under the fair value option are included in mortgage banking revenues. Gains and losses on residential loan sales are recognized at the time of sale and are included in mortgage banking revenues. Upfront fees and costs related to mortgage loans held for sale for which the fair value option was elected are recognized in mortgage banking revenues as received / incurred and are not deferred. Commissions received on mortgage loans brokered to various investors are recognized when received and are included in mortgage banking revenues. Loan Servicing Rights When residential real estate mortgage loans held for sale are sold with servicing retained, mortgage servicing right assets are recognized as separate assets. Mortgage servicing rights are originally recorded at fair value. Fair value is based on a valuation model that incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, ancillary income, prepayment speeds, and default rates and losses. Mortgage servicing rights are included in other assets and are amortized as an offset to mortgage banking revenues over the period of estimated net servicing income. Mortgage servicing rights are periodically evaluated for impairment based on their fair value. Impairment is measured on an aggregated basis by stratifying the rights based on homogeneous characteristics such as note rate and loan type. Any impairment is recognized through a valuation allowance and as a reduction to mortgage banking revenues. -79- Notes to Consolidated Financial Statements – (continued) Loan Servicing Fee Income Servicing fee income is recorded for fees earned for servicing loans for investors. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and recognized when earned within mortgage banking revenues. Loans Portfolio Loans Loans are carried at the principal amount outstanding, adjusted by partial charge-offs and net of unamortized deferred loan origination fees and costs. Interest income is accrued on a level yield basis based upon principal amounts outstanding, except for loans on nonaccrual status. Deferred loan origination fees and costs are amortized as an adjustment to yield over the term of the related loans. For purchased loans, which did not show signs of credit deterioration at the time of purchase, interest income is also accrued on a level yield basis based upon principal amounts outstanding and is then further adjusted by accretion of any discount or amortization of any premium associated with the loans. Nonaccrual Loans Loans, with the exception of certain well-secured loans that are in the process of collection, are placed on nonaccrual status and interest recognition is suspended when such loans are 90 days or more overdue with respect to principal and/or interest, or sooner if considered appropriate by management. Well-secured loans are permitted to remain on accrual status provided that full collection of principal and interest is assured and the loan is in the process of collection. Loans are also placed on nonaccrual status when, in the opinion of management, full collection of principal and interest is doubtful. When loans are placed on nonaccrual status, interest previously accrued but not collected is reversed against current period income. 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 (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. Troubled Loan Modifications 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 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. Debt could be bifurcated with separate terms for each tranche of the TLM. Executing a TLM in lieu of aggressively enforcing the collection of the loan may benefit the Corporation by increasing the ultimate probability of collection. The following is a description of each type of modifications for a TLM: • 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. 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. If the TLM successfully meets all repayment terms according to the modification documents for a specified period of time (generally 12 months) and the borrower is no longer experiencing financial difficulty, it would be declassified from TLM status. -80- Notes to Consolidated Financial Statements – (continued) Individually Analyzed Loans 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. Allowance for Credit Losses on Loans The ACL on loans is established through a provision for credit losses recognized in earnings. The ACL on loans is also increased by recoveries of amounts previously charged-off and is reduced by charge-offs on loans. Loan charge-offs are recognized when management believes the collectability of the principal balance outstanding is unlikely. Full or partial charge-offs on collateral dependent individually analyzed loans are generally recognized when the collateral is deemed to be insufficient to support the carrying value of the loan. The ACL on loans is management’s estimate of expected lifetime credit losses on loans carried at amortized cost. The Corporation made an accounting policy election to exclude accrued interest from the amortized cost basis of loans and reports accrued interest in other assets. The Corporation also excludes accrued interest from the estimate of credit losses on loans. 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. Historical credit loss experience provides the basis for the calculation of loss given default and the estimation of expected credit losses. As discussed further below, adjustments to historical information are made for differences in specific risk characteristics that may not be reflected in historical loss rates. Management employs a process and methodology to estimate the ACL on loans that evaluates both quantitative and qualitative factors. In accordance with the Corporation’s ACL policy, the methodology is reviewed no less than annually. The methodology for evaluating quantitative factors consists of two basic components. The first component involves pooling loans into portfolio segments for loans that share similar risk characteristics. Pooled loan portfolio segments include CRE (including a commercial construction sub-segment), C&I, residential real estate, home equity and other consumer loans. The second component involves identifying individually analyzed loans that do not share similar risk characteristics with loans that are pooled into portfolio segments. 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. For loans that are individually analyzed, the ACL is measured using a DCF method based upon the loan’s contractual effective interest rate, or at the loan’s observable market price, or, if the loan is collateral dependent, at the fair value of the collateral. Factors management considers when measuring the extent of expected credit loss include payment status, collateral value, borrower financial condition, guarantor support and the probability of collecting scheduled principal and interest payments when due. For collateral dependent loans for which repayment is to be provided substantially through the sale of the collateral, management adjusts the fair value for estimated costs to sell. For collateral dependent loans for which repayment is to be provided substantially through the operation of the collateral, estimated costs to sell are not incorporated into the measurement. Management may also adjust appraised values to reflect estimated market value declines or apply other discounts to appraised values for unobservable factors resulting from its knowledge of circumstances associated with the collateral. For pooled loans, the ACL is measured utilizing a DCF methodology to estimate credit losses over the expected life of the loan. The life of the loan excludes expected extensions, renewals and modifications, unless the extension or renewal options are included in the original or modified contract terms and not unconditionally cancellable by the Corporation. The methodology incorporates a probability of default and loss given default framework. Default triggers include the loan has become past due by 90 or more days, a charge-off has occurred, the loan has been placed on nonaccrual status, the loan has been modified as a TLM, or the loan is risk-rated as special mention or classified. Loss given default is estimated based on historical credit loss experience. Probability of default is estimated utilizing a regression model that incorporates econometric factors. Econometric factors are selected based on the correlation of the factor to historical credit losses for each portfolio segment. -81- Notes to Consolidated Financial Statements – (continued) The following table summarizes the econometric factors utilized for each loan portfolio segment as of the dates indicated: Econometric Factors Loan portfolio segment At December 31, 2025 At December 31, 2024 CRE NUR & GDP NUR & GDP C&I NUR & GDP NUR & GDP Residential real estate NUR & HPI NUR & HPI Home equity NUR & HPI NUR & HPI Other consumer GDP GDP To estimate the probability of default, the model utilizes forecasted econometric factors over a one-year reasonable and supportable forecast period. After the forecast period, the econometric factors revert to their historical mean on a straight-line basis over a one-year reversion period resulting in a constant default rate after the reversion period. The DCF methodology combines the probability of default, the loss given default, prepayment speeds and the remaining life of the loan to estimate a reserve for each loan. The sum of all the loan level reserves are aggregated for each portfolio segment and a loss rate factor is derived. Quantitative loss factors are also supplemented by certain qualitative risk factors reflecting management’s view of how losses may vary from those represented by quantitative loss rates. The qualitative risk factors management considers include: 1) changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses; 2) changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments; 3) changes in the nature and volume of the portfolio and in the terms of loans; 4) changes in the experience, ability, and depth of lending management and other relevant staff; 5) changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified or rated loans; 6) changes in the quality of the institution’s credit review system; 7) changes in the value of underlying collateral for collateral dependent loans; 8) the existence and effect of any concentrations of credit, and changes in the level of such concentrations; and 9) the effect of other external factors such as legal and regulatory requirements on the level of estimated credit losses in the institution’s existing portfolio. Qualitative loss factors are applied to each portfolio segment with the range of amounts determined by historical loan charge-offs of a peer group of similar-sized regional banks. Because the methodology is based upon historical experience and trends, current economic data, reasonable and supportable forecasts, as well as management’s judgment, factors may arise that result in different estimations. Deteriorating conditions or assumptions could lead to further increases in the ACL on loans, conversely improving conditions or assumptions could lead to further reductions in the ACL on loans. A problem with one or more loans could also require a significant increase to the ACL. In addition, various regulatory agencies periodically review the ACL on loans. Such agencies may require additions to the allowance based on their judgments about information available to them at the time of their examination. The ACL on loans is an estimate, and ultimate losses may vary from management’s estimate. Allowance for Credit Losses 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 ACL on unfunded commitments is included in other liabilities. The ACL on unfunded commitments is adjusted through a provision for credit losses recognized in earnings. -82- Notes to Consolidated Financial Statements – (continued) Premises and Equipment Land is carried at cost. Premises and equipment are carried at cost less accumulated depreciation. Depreciation for financial reporting purposes is calculated on the straight-line method over the estimated useful lives of assets. For leasehold improvements, the estimated useful life is the shorter of the expected lease term or the estimated useful life of the improvement. Expected lease terms include lease renewal options to the extent that the exercise of such renewals is reasonably assured. The estimated useful lives of premises and improvements range from 5 to 40 years. For furniture, fixtures and equipment, the estimated useful lives range from 3 to 20 years. Repairs and maintenance costs are charged to noninterest expense as incurred. Leases Under non-cancellable operating leases, the Corporation has committed to rent premises used in business operations. Management determines if an arrangement meets the definition of a lease upon inception. When an arrangement is determined to be a lease, management assesses whether it meets the criteria of an operating lease or a financing lease. This assessment is performed at inception or at the time of modification. Upon commencement, operating leases are recorded on the balance sheet, through the recognition of an operating lease ROU asset and an operating lease liability. ROU assets represent a right to use an underlying asset for the contractual lease term. Operating lease liabilities represent an obligation to make lease payments arising from the lease. The Corporation recognizes an adjustment to the ROU asset and lease liability when lease agreements are modified. The discount rate used in determining the present value of operating lease liabilities is based on the lessor’s implicit rate in the lease, if known, or the Corporation’s incremental borrowing rate for borrowing terms similar to the lease upon commencement date. The Corporation’s operating lease agreements contain both lease and non-lease components, which are generally accounted for separately. The Corporation’s lease agreements do not contain any residual value guarantees. The Corporation made an accounting policy election to include operating leases with terms of 12 months or less in ROU assets and operating lease liabilities. Operating lease terms include options to extend when it is reasonably certain that the Corporation will exercise such options, determined on a lease-by-lease basis. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable lease components, such as consumer price index adjustments, are expensed as incurred and not included in ROU assets and operating lease liabilities. Bank-Owned Life Insurance The investment in BOLI represents the cash surrender value of life insurance policies on the lives of certain employees who have provided positive consent allowing the Bank to be the beneficiary of such policies. Increases in the cash value of the policies, as well as insurance proceeds received, are recorded in noninterest income and are not subject to income taxes. The financial strength of the insurance carrier is reviewed prior to the purchase of BOLI and annually thereafter. Goodwill Goodwill represents the excess of the purchase price over the net fair value of the acquired businesses. Goodwill is not amortized, but is tested for impairment at the reporting unit level (defined as the segment level), at least annually in the fourth quarter or more frequently whenever events or circumstances occur that indicate that it is more-likely-than-not that an impairment loss has occurred. In assessing impairment, management has the option to perform a qualitative analysis to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount. If, after assessing the totality of such events or circumstances, we determine it is not more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, then we would not be required to perform an impairment test. The quantitative impairment analysis requires a comparison of each reporting unit’s fair value to its carrying value to identify potential impairment. Goodwill impairment exists when a reporting unit’s carrying value of goodwill exceeds its implied fair value. Significant judgment is applied when goodwill is assessed for impairment. This judgment includes, but may not be limited to, the selection of appropriate discount rates, the identification of relevant market comparables and the development of cash flow projections. The selection and weighting of the various fair value techniques may result in a higher or lower fair value. Judgment is applied in determining the weightings that are most representative of fair value. -83- Notes to Consolidated Financial Statements – (continued) Identifiable Intangible Assets For acquisitions that meet the definition of a business combination, the value attributed to intangible assets at the acquisition date is based on the time period over which they are expected to generate economic benefits. Additionally, asset acquisitions for single identifiable intangible assets are accounted for under a cost accumulation model. The value of the intangible asset is based on cash consideration paid to acquire the asset, as well as the direct costs associated with the asset acquisition, such as those paid to third-party legal counsel, brokers and consultants. At the acquisition date, a liability for the contingent consideration payments is not recognized, as the amounts to be paid are uncertain until a future measurement date. Instead, contingent consideration payments are capitalized as part of the intangible asset acquired when the payments are probable and reasonably estimable. Once capitalized, the contingent consideration will be amortized over the remaining life of the intangible asset. The Corporation’s intangible assets consist of wealth management client advisory contracts and are amortized over their estimated lives using a method that approximates the amount of economic benefits that are realized by the Corporation. Intangible assets with definite lives are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. If applicable, management tests each of the intangibles by comparing the carrying value of the intangible asset to the sum of undiscounted cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its undiscounted cash flows, then an impairment loss would be recognized for the amount by which the carrying amount exceeds its fair value. Impairment would result in a write-down to the estimated fair value based on the anticipated discounted future cash flows. The remaining useful life of the intangible assets that are being amortized is also evaluated to determine whether events and circumstances warrant a revision to the remaining period of amortization. Property Acquired through Foreclosure Property acquired through foreclosure is initially recorded at fair value less estimated costs to sell, resulting in a new cost basis. Fair value of such assets is determined based on independent appraisals and other relevant factors. The amount by which the recorded investment in the loan exceeds the fair value (net of estimated costs to sell) at the time of foreclosure is charged to the ACL on loans. Subsequent to foreclosure, a valuation allowance on the asset is established for declines in fair value. Any subsequent increases in fair value are recorded as a reduction to the valuation allowance, but not below zero. Upon sale of foreclosed property, any excess of the carrying value over the sales proceeds is recognized as a loss on sale. Any excess of sales proceeds over the carrying value of the foreclosed property is first applied as a recovery to the valuation allowance, if any, with the remainder being recognized as a gain on sale. Changes to the valuation allowance, operating expenses associated with ownership of these properties, and gains or losses recognized upon sale are included in other noninterest expense. Investments in Real Estate Limited Partnerships The Bank invests in real estate limited partnerships that renovate, own and operate low-income housing complexes. The Bank neither actively participates in the management of nor has a controlling interest in the real estate limited partnerships. The carrying value of such investments is recorded in other assets. Investments in real estate limited partnerships are accounted for using the proportional amortization method. Unfunded commitments for future capital contributions are recognized and recorded in other liabilities. Under the proportional amortization method, the investment is amortized over the same tax period and in proportion to the total tax benefits expected to be allocated to the Bank. The amortization is recognized as a component of income tax expense. In addition, operating losses and tax credits generated by the partnership are also recorded as a reduction to income tax expense. Other Equity Investments The Corporation invests in equity investments without readily determinable fair value. Such equity investments are classified within other assets. The Corporation has elected to carry equity investments without readily determinable fair value at cost, less impairment, if any, plus or minus changes in observable prices. A qualitative impairment analysis for equity investments without readily determinable fair value is performed quarterly. If the equity investment is deemed to be impaired, an impairment loss is recognized in the amount by which the carrying value of the equity investment exceeds its estimated fair value. The impairment loss is recognized as a reduction of other noninterest income. An impairment loss can be reversed in a subsequent period if there are observable transactions for the identical or similar investment of the same issuer at an amount that is greater than the carrying value of the investment that was established when the impairment loss was recognized. The -84- Notes to Consolidated Financial Statements – (continued) reversal of any impairment loss or other changes resulting from observable transactions are recognized in other noninterest income. Impairment of Long - Lived Assets Other than Goodwill Long-lived assets, including premises and equipment, operating lease ROU assets and investments in real estate limited partnerships, are tested for impairment whenever events or changes in business circumstances indicate that the carrying amount may not be fully recoverable. If impairment is determined to exist, any related impairment loss is calculated based on fair value. Impairment losses on assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal. An impairment loss is recognized within noninterest expense. A previously recognized impairment loss cannot be reversed in a subsequent period. Transfers and Servicing of Assets and Extinguishments of Liabilities The accounting for transfers and servicing of financial assets and extinguishments of liabilities is based on consistent application of a financial components approach that focuses on control. This approach distinguishes transfers of financial assets that are sales from transfers that are secured borrowings. Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Corporation, (2) the transferee obtains the right to pledge or exchange the transferred assets with no conditions that constrain the transferee and provide more than a trivial benefit to the Corporation, and (3) the Corporation does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. If a transfer does not meet the criteria for a sale, the transfer is accounted for as a secured borrowing with a pledge of collateral. Wealth Management AUA AUA represents assets held in a fiduciary or agency capacity for wealth management clients and are not included in the Consolidated Balance Sheets, as these are not assets of the Corporation. Revenue from Contracts with Customers ASC 606, Revenue from Contracts with Customers, provides a revenue recognition framework for contracts with customers unless those contracts are within the scope of other accounting standards. The Corporation recognizes revenue from contracts with customers by identifying the performance obligations in its contracts, determining the transaction price in the contract, allocating the transaction price to each performance obligation contained within the contract, as applicable, and then recognizing revenue from its contracts with customers when it satisfies its performance obligations . The performance obligations are generally satisfied as services are rendered and can either be satisfied at a point in time or over time. Revenue that is earned at a point in time is derived from transactional information and is recognized as revenue immediately as the transactions occur or upon providing the service to complete the customer’s transaction. This includes card interchange fees (fee income related to debit card transactions), certain service charges on deposits accounts such as overdraft charges, ATM fees for customers, stop-payment fees, and certain other income such as wire transfer fees and ATM fees for non-customers. Revenue that is earned over time is generally recognized over the term of the contract as services are performed and performance obligations are satisfied. Such revenue includes wealth management revenues, monthly service charges on deposit accounts and certain other income such as safe deposit box rental fees. In certain cases, other parties are involved with providing services to our customers. If the Corporation is a principal in the transaction (providing services itself or through a third party on its behalf), revenues are reported based on the gross consideration received from the customer and any related expenses are reported gross in noninterest expense. If the Corporation is an agent in the transaction (referring customers to another party to provide services), the Corporation reports its net fee or commission retained as revenue. For certain commissions and incentives, such as those paid to employees in our Wealth Management Services and 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. Contract cost assets are included in other assets. The amortization of contract cost assets is recorded within salaries and employee benefits expense. -85- Notes to Consolidated Financial Statements – (continued) Pension Costs The net periodic benefit cost accounting method recognizes the compensation cost of an employee’s pension benefit over that employee’s approximate service period. Pension benefit costs and benefit obligations incorporate various actuarial and other assumptions, including discount rates, mortality, rates of return on plan assets and compensation increases. Management evaluates assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends when it is appropriate to so do. The effect of modifications to those assumptions is recorded in other comprehensive income and amortized to net periodic cost over future periods. The service cost component of net periodic benefit cost, when it was applicable, was recognized within salaries and employee benefits expense. All other components of net periodic benefit cost are recognized in other noninterest expense. The funded status of defined benefit pension plans, measured as the difference between the fair value of plan assets and the projected benefit obligation, is recognized in the Consolidated Balance Sheets. The changes in the funded status of the defined benefit plans, including actuarial gains and losses, are recognized in comprehensive income in the year in which the changes occur. Share-Based Compensation Share-based compensation plans provide for awards of stock options and other equity incentives, including restricted stock units and performance share units. Compensation expense for awards is recognized over the service period based on the fair value at the date of grant and is included in salaries and employee benefits expense. Grant date fair value for stock options is estimated using the Black-Scholes option-pricing model. Awards of restricted stock units and performance share units are valued at the fair market value of the Bancorp’s common stock as of the award date. Performance share unit compensation expense is based on the most recent performance assumption available and is adjusted as assumptions change. Forfeitures are recognized when they occur. Vesting of the awards may accelerate or may be subject to proportional vesting if there is a change in control, disability, retirement or death. Vested equity awards are issued from treasury stock, when available, or from authorized but unissued stock. Excess tax benefits (expenses) result when tax return deductions differ from recognized share-based compensation cost that are determined using the grant-date fair value approach for financial statement purposes. Excess tax benefits (expenses) related to the settlement of share-based awards are recorded as a decrease (increase) to income tax expense and are classified in the Consolidated Statements of Cash Flows as an operating activity. Dividends declared on restricted stock units issued under the 2013 Stock Option and Incentive Plan are nonforfeitable and paid quarterly in conjunction with dividends declared and paid to common shareholders. Dividends declared on restricted stock units issued under the 2022 Long Term Incentive Plan are accrued at each dividend declaration date and paid upon the issuance of the shares after the award vests. Dividends on performance share units are accrued at each dividend declaration date based on the most recent performance assumptions available and paid upon the issuance of the shares after the award vest. Income Taxes Income tax expense is determined based on the asset and liability method, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The impact of tax legislation changes is recognized as a component of income tax expense in the period of enactment. Valuation allowances are established when necessary to reduce deferred tax assets to an amount, which is more-likely-than-not to be realizable. Additionally, a liability for unrecognized tax benefits is recorded for uncertain tax positions taken by the Corporation on its tax returns for which there is less than a 50% likelihood of being recognized upon a tax examination. Interest related to unrecognized tax benefits is recorded in income tax expense. Penalties, if incurred, would be recognized as a component of income tax expense. -86- Notes to Consolidated Financial Statements – (continued) Segment Reporting The Corporation manages its operations through two reportable business segments, consisting of Banking and Wealth Management Services, as determined by the Corporation’s designated CODMs. Additional information on the Corporation’s reportable business segments is presented in Note 18. An allocation methodology is utilized to allocate income and expenses to the business segments. Direct activities are assigned to the appropriate business segment to which the activity relates. Indirect activities, such as corporate, technology and other support functions, are allocated to business segments primarily based upon full-time equivalent employee computations. Earnings Per Common Share EPS is calculated utilizing the two-class method. The two-class method is an earnings allocation formula that determines earnings per share of each class of stock according to dividends and participation rights in undistributed earnings. Share‑based awards that entitle holders to receive nonforfeitable dividends before vesting are considered participating securities (i.e., restricted stock units awarded under the 2013 Stock Option and Incentive Plan), not subject to performance-based measures. Undistributed income is allocated to common shareholders and participating securities under the two-class method based upon the proportion of each to the total weighted average shares available. Under the two-class method, basic EPS is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding. Diluted EPS is computed using the weighted-average number of shares determined for the basic EPS computation plus the dilutive effect on common shares outstanding, using the treasury stock method. Comprehensive Income (Loss) Comprehensive income (loss) is defined as all changes in equity, except for those resulting from transactions with shareholders. Net income is a component of comprehensive income (loss). All other components are referred to in the aggregate as other comprehensive income (loss). Other comprehensive income (loss) includes the after-tax effect of net changes in the fair value of securities available for sale, net changes in fair value of cash flow hedges and net changes in defined benefit pension plan obligations. Guarantees Standby letters of credit are considered a guarantee of the Corporation. Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loan facilities to customers. Under the standby letters of credit, the Corporation is required to make payments to the beneficiary of the letters of credit upon request by the beneficiary contingent upon the customer’s failure to perform under the terms of the underlying contract with the beneficiary. Derivative Instruments and Hedging Activities Derivatives are recognized as either assets or liabilities and are measured at fair value. Derivative assets are included in other assets and derivative liabilities are included in other liabilities. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and resulting designation. For derivatives designated as cash flow hedges, the changes in the fair value are recorded in other comprehensive income (loss) and subsequently reclassified to earnings when gains or losses are realized. When a cash flow hedge is discontinued, but the hedged cash flows or forecasted transaction is still expected to occur, changes in value that were accumulated in other comprehensive income (loss) are amortized or accreted into earnings over the same periods that the hedged transactions will affect earnings. For derivatives designated as fair value hedges, the hedged item is measured at fair value through a basis adjustment recognized on the balance sheet. The changes in fair value of derivatives designated as fair value hedges, as well as the offsetting changes in fair value of the hedged item are recognized in earnings. For derivatives not designated as hedges, changes in fair value of the derivative instruments are recognized in earnings, in noninterest income. -87- Notes to Consolidated Financial Statements – (continued) Net accrued interest receivable or payable on derivatives that qualify for hedge accounting are recorded in interest income or interest expense based on the item being hedged. Net accrued interest receivable or payable on derivatives that do not qualify for hedge accounting are reported in noninterest income. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820, “Fair Value Measurements and Disclosures”, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The required disclosures about fair value measurements have been included in Note 10. Note 2 - Recently Issued Accounting Pronouncements Accounting Standards Adopted in 2025 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 annual periods beginning after December 15, 2024. The Corporation adopted the provisions of ASU 2023-09 on a retrospective basis. The adoption of ASU 2023-09 did not have a material impact on the Corporation’s financial statements. Accounting Standards Pending Adoption Income Statement - Reporting Comprehensive Income - Subtopic 220 Accounting Standards Update No. 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) - Disaggregation of Income Statement Expenses” (“ASU 2024-03”), was issued in November 2024 to enhance and provide additional disclosure on certain costs and expenses. The effective date of ASU 2024-03 was further clarified in ASU 2025-01, which was subsequently issued in January 2025. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The provisions under ASU 2024-03 can be applied on either a prospective or retrospective basis. ASU 2024-03 is not expected to have a material impact on the Corporation’s financial statements. Financial Instruments - Credit Losses - Topic 326 Accounting Standards Update No. 2025-05, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets” (“ASU 2025-05”) was issued in July 2025 to introduce a practical expedient intended to simplify the estimation of expected credit losses on current accounts receivable and contract assets arising from revenue transactions under ASC 606. The practical expedient permits entities to assume that current conditions as of the reporting date remain unchanged for the remaining life of the asset. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years, with early adoption permitted. The provisions under ASU 2025-05 should be applied on a prospective basis. ASU 2025-05 is not expected to have a material impact on the Corporation’s financial statements. Intangibles - Goodwill and Other - Internal-Use Software - Subtopic 350 Accounting Standards Update No. 2025-06, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software” (“ASU 2025-06”) was issued in September 2025 to modernize the accounting framework for internal-use software development costs to better reflect contemporary development practices. ASU 2025-06 eliminates the previous stage-based model (i.e. preliminary, application development, and post-implementation stages) and introduces a principles-based capitalization model. Under this ASU, software development costs are capitalized when management has authorized and committed to funding the project, and it is probable that the project will be completed and the software will perform its intended function. The ASU also consolidates guidance for website development costs into ASC 350-40 and aligns disclosure requirements with those under ASC 360-10, including the nature and amount of capitalized internal-use software costs, the accounting policy and capitalization criteria, any significant judgments and estimates applied, amortization methods and useful lives, and qualitative and quantitative information about major software projects. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, including interim periods within those annual periods, with early adoption permitted. The provisions under ASU 2025-06 can be applied on either a prospective, modified retrospective, or full retrospective basis. The Corporation is currently evaluating the impact of ASU 2025-06 on its financial statements. -88- Notes to Consolidated Financial Statements – (continued) Derivatives and Hedging - Topic 815 Accounting Standards Update No. 2025‑09, “Derivatives and Hedging (Topic 815): Hedge Accounting Improvements” (“ASU 2025-09”) was issued in November 2025 to make targeted amendments to the hedge accounting guidance to better align accounting outcomes with an entity’s risk management activities and to clarify certain aspects of the guidance originally amended by ASU 2017‑12. The amendments primarily affect cash flow hedges, but also include limited changes related to fair value hedges and net investment hedges. Among other things, ASU 2025-09 expands the ability to hedge groups of forecasted transactions with similar risk exposures, provides a framework to facilitate hedge accounting for forecasted interest payments on variable‑rate debt instruments that permit changes to the reference rate and tenor, clarifies hedge accounting for forecasted purchases and sales of nonfinancial assets, updates guidance related to net written options used as hedging instruments, and addresses certain recognition and presentation matters involving foreign currency‑denominated debt used in multiple hedging relationships. ASU 2025-09 is effective for annual reporting periods beginning after December 15, 2026, and interim periods within those periods, with early adoption permitted. The amendments are required to be applied on a prospective basis, with transition provisions that allow certain hedging relationships to continue without de-designation. The Corporation is currently evaluating the impact of ASU 2025-09 on its financial statements. Interim Reporting - Topic 270 Accounting Standards Update No. 2025‑11, “Interim Reporting (Topic 270): Narrow‑Scope Improvements” (“ASU 2025-11”) was issued in December 2025 to clarify the scope and applicability of interim reporting guidance, reorganize and clarify interim disclosure requirements, and introduce a disclosure principle requiring entities to disclose events occurring since the end of the most recent annual reporting period that have a material impact on the entity. The amendments are intended to improve clarity and consistency in interim reporting and do not change the underlying recognition or measurement requirements under U.S. GAAP. ASU 2025‑11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The amendments can either be applied on a prospective or retrospective basis. ASU 2025-11 is not expected to have a material impact on the Corporation’s financial statements. Note 3 - Securities Available for Sale Debt Securities The following tables present the amortized cost, gross unrealized holding gains, gross unrealized holding losses, ACL on securities and fair value of securities by major security type and class of security: (Dollars in thousands) December 31, 2025 Amortized Cost Unrealized Gains Unrealized Losses ACL Fair Value Available for Sale Debt Securities: Obligations of U.S. government agencies and U.S. government-sponsored enterprises $ 41,639 $ 93 ($ 1,774 ) $ — $ 39,958 Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises 973,520 5,100 ( 97,726 ) — 880,894 Obligations of states and political subdivisions 650 13 — — 663 Individual name issuer trust preferred debt securities 6,186 — ( 83 ) — 6,103 Corporate bonds 13,210 2 ( 488 ) — 12,724 Total available for sale debt securities $ 1,035,205 $ 5,208 ($ 100,071 ) $ — $ 940,342 -89- Notes to Consolidated Financial Statements – (continued) (Dollars in thousands) December 31, 2024 Amortized Cost Unrealized Gains Unrealized Losses ACL Fair Value Available for Sale Debt Securities: Obligations of U.S. government agencies and U.S. government-sponsored enterprises $ 41,751 $ — ($ 3,139 ) $ — $ 38,612 Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises 984,546 52 ( 129,451 ) — 855,147 Obligations of states and political subdivisions 650 5 — — 655 Individual name issuer trust preferred debt securities 9,414 — ( 193 ) — 9,221 Corporate bonds 13,196 — ( 526 ) — 12,670 Total available for sale debt securities $ 1,049,557 $ 57 ($ 133,309 ) $ — $ 916,305 Available for sale debt securities balances exclude accrued interest receivable of $ 3.1 million and $ 3.2 million, respectively, as of December 31, 2025 and 2024. At December 31, 2025 and 2024, securities with a fair value of $ 392.4 million and $ 310.5 million, respectively, were pledged as collateral for FHLB borrowings, potential borrowings with the FRBB, certain public deposits and for other purposes. See Note 13 for additional discussion of FHLB borrowings. Following the public offering of common stock by the Bancorp disclosed in Note 14, the Bank sold available for sale debt securities with an amortized cost balance of $ 409.5 million (fair value of $ 378.4 million) and reinvested $ 378.4 million into purchases of available for sale debt securities. The sale of debt securities resulted in a net realized pre-tax loss of $ 31.0 million that was recognized in the December 2024. The following table summarizes amounts related to the sale of available for debt securities: (Dollars in thousands) For the periods ended December 31, 2025 2024 2023 Proceeds from sales $ — $ 378,410 $ — Gross realized gains $ — $ — $ — Gross realized losses — ( 31,047 ) — Net realized losses on securities $ — ($ 31,047 ) $ — The schedule of maturities of available for sale debt securities is presented below. Mortgage-backed securities are included based on weighted average maturities, adjusted for anticipated prepayments. All other debt securities are included based on contractual maturities. 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. (Dollars in thousands) December 31, 2025 Amortized Cost Fair Value Due in one year or less $ 127,431 $ 116,244 Due after one year to five years 363,046 330,618 Due after five years to ten years 249,847 226,075 Due after ten years 294,881 267,405 Total securities $ 1,035,205 $ 940,342 -90- Notes to Consolidated Financial Statements – (continued) Included in the above table are debt securities with an amortized cost balance of $ 46.7 million and a fair value of $ 44.4 million at December 31, 2025 that are callable at the discretion of the issuers. Final maturities of the callable securities range from 1 year to 19 years, with call features ranging from 1 month to 7 years. Assessment of Available for Sale Debt Securities for Impairment Management assesses the decline in fair value of investment securities on a regular basis. Unrealized losses on debt securities may occur from current market conditions, increases in interest rates since the time of purchase, a structural change in an investment, volatility of earnings of a specific issuer, or deterioration in credit quality of the issuer. Management evaluates both qualitative and quantitative factors to assess whether an impairment exists. The following tables summarize available for sale debt securities in an unrealized loss position, for which an ACL on securities has not been recorded, segregated by length of time that the securities have been in a continuous unrealized loss position: (Dollars in thousands) Less than 12 Months 12 Months or Longer Total December 31, 2025 # Fair Value Unrealized Losses # Fair Value Unrealized Losses # Fair Value Unrealized Losses Obligations of U.S. government agencies and U.S. government-sponsored enterprises 2 $ 611 ($ 5 ) 3 $ 23,582 ($ 1,769 ) 5 $ 24,193 ($ 1,774 ) Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises 1 1,519 ( 1 ) 91 453,251 ( 97,725 ) 92 454,770 ( 97,726 ) Individual name issuer trust preferred debt securities — — — 2 6,103 ( 83 ) 2 6,103 ( 83 ) Corporate bonds — — — 3 10,724 ( 488 ) 3 10,724 ( 488 ) Total temporarily impaired securities 3 $ 2,130 ($ 6 ) 99 $ 493,660 ($ 100,065 ) 102 $ 495,790 ($ 100,071 ) (Dollars in thousands) Less than 12 Months 12 Months or Longer Total December 31, 2024 # Fair Value Unrealized Losses # Fair Value Unrealized Losses # Fair Value Unrealized Losses Obligations of U.S. government-sponsored enterprises 2 $ 15,289 ($ 12 ) 6 $ 23,323 ($ 3,127 ) 8 $ 38,612 ($ 3,139 ) Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises 57 384,164 ( 3,632 ) 93 466,741 ( 125,819 ) 150 850,905 ( 129,451 ) Individual name issuer trust preferred debt securities — — — 3 9,221 ( 193 ) 3 9,221 ( 193 ) Corporate bonds — — — 4 12,670 ( 526 ) 4 12,670 ( 526 ) Total temporarily impaired securities 59 $ 399,453 ($ 3,644 ) 106 $ 511,955 ($ 129,665 ) 165 $ 911,408 ($ 133,309 ) There were no debt securities on nonaccrual status at December 31, 2025 and 2024 and, therefore there was no accrued interest related to debt securities reversed against interest income for 2025 and 2024. As of December 31, 2025, 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. Therefore, no ACL was recorded at both December 31, 2025 and 2024. Obligations of U.S. Government Agencies and U.S. Government-Sponsored Enterprise Securities, including Mortgage-Backed Securities The contractual cash flows for these securities are either explicitly or implicitly guaranteed by the U.S. 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 December 31, 2025. -91- Notes to Consolidated Financial Statements – (continued) As disclosed in Note 1, 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 December 31, 2025 included two trust preferred securities issued by two 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 December 31, 2025, there was one individual name issuer trust preferred debt security with an amortized cost of $ 2.0 million and an unrealized loss of $ 60 thousand that was rated below investment grade by S&P. We noted no downgrades to below investment grade between December 31, 2025 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 December 31, 2025 included three corporate bond holdings issued by three individual companies in the financial services industry. 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 December 31, 2025, there was one corporate bond debt security with an amortized cost of $ 2.0 million and an unrealized gain of $ 2 thousand that was rated below investment grade by S&P. We noted no downgrades to below investment grade between December 31, 2025 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. Note 4 - Loans The following table presents a summary of loans: (Dollars in thousands) December 31, 2025 2024 Commercial: Commercial real estate (1) $ 2,183,985 $ 2,154,504 Commercial & industrial (2) 564,082 542,474 Total commercial 2,748,067 2,696,978 Residential Real Estate: Residential real estate (3) 2,050,399 2,126,171 Consumer: Home equity 318,862 297,119 Other (4) 17,060 17,570 Total consumer 335,922 314,689 Total loans (5) $ 5,134,388 $ 5,137,838 (1) CRE consists of commercial mortgages primarily secured by non-owner occupied income-producing property, as well as construction and development loans. Construction and development loans are made to businesses for land development or the on-site construction of industrial, commercial, or residential buildings. (2) C&I consists of loans to businesses and individuals, a portion of which are fully or partially collateralized by real estate. (3) Residential real estate consists of mortgage and homeowner construction loans secured by one- to four-family residential properties. Also, includes a negative basis adjustment associated with fair value hedges of $ 335 thousand and $ 1.5 million, respectively, at December 31, 2025 and 2024. See Note 9 for additional disclosure. (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 $ 11.0 million and $ 10.9 million, respectively, at December 31, 2025 and 2024 and net unamortized premiums on loans purchased from and serviced by other financial institutions of $ 198 thousand and $ 242 thousand, respectively, at December 31, 2025 and 2024. The carrying value of loans excludes accrued interest receivable of $ 20.1 million and $ 22.1 million, respectively, as of December 31, 2025 and 2024. -92- Notes to Consolidated Financial Statements – (continued) As of December 31, 2025 and 2024, loans amounting to $ 2.9 billion and $ 2.8 billion, respectively, were pledged as collateral to the FHLB under a blanket pledge agreement and to the FRBB for the discount window. See Note 13 for additional disclosure regarding borrowings. Concentrations of Credit Risk A significant portion of our loan portfolio is concentrated among borrowers in southern New England, and a substantial portion of the portfolio is collateralized by real estate in this area. The ability of single family residential and consumer borrowers to honor their repayment commitments is generally dependent on the level of overall economic activity within the market area and real estate values. 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. Past Due Loans Past due status is based on the contractual payment terms of the loan. The following tables present an aging analysis of past due loans, segregated by class of loans: (Dollars in thousands) Days Past Due December 31, 2025 Current 30-59 60-89 90 or More Total Past Due Total Loans Commercial: Commercial real estate $ 2,183,337 $ 648 $ — $ — $ 648 $ 2,183,985 Commercial & industrial 564,075 7 — — 7 564,082 Total commercial 2,747,412 655 — — 655 2,748,067 Residential Real Estate: Residential real estate 2,041,304 3,533 2,560 3,002 9,095 2,050,399 Consumer: Home equity 317,255 1,095 166 346 1,607 318,862 Other 17,034 26 — — 26 17,060 Total consumer 334,289 1,121 166 346 1,633 335,922 Total loans $ 5,123,005 $ 5,309 $ 2,726 $ 3,348 $ 11,383 $ 5,134,388 (Dollars in thousands) Days Past Due December 31, 2024 Current 30-59 60-89 90 or More Total Past Due Total Loans Commercial: Commercial real estate $ 2,154,504 $ — $ — $ — $ — $ 2,154,504 Commercial & industrial 541,574 518 382 — 900 542,474 Total commercial 2,696,078 518 382 — 900 2,696,978 Residential Real Estate: Residential real estate 2,118,430 3,476 1,892 2,373 7,741 2,126,171 Consumer: Home equity 294,172 1,630 410 907 2,947 297,119 Other 17,176 44 350 — 394 17,570 Total consumer 311,348 1,674 760 907 3,341 314,689 Total loans $ 5,125,856 $ 5,668 $ 3,034 $ 3,280 $ 11,982 $ 5,137,838 Included in past due loans as of December 31, 2025 and 2024, were nonaccrual loans of $ 8.3 million and $ 6.4 million, respectively. In addition, all loans 90 days or more past due at December 31, 2025 and 2024 were classified as nonaccrual. -93- Notes to Consolidated Financial Statements – (continued) Nonaccrual Loans The following is a summary of nonaccrual loans, segregated by class of loans: (Dollars in thousands) December 31, 2025 December 31, 2024 Nonaccrual Loans Nonaccrual Loans With an ACL Without an ACL Total With an ACL Without an ACL Total Commercial: Commercial real estate $ — $ — $ — $ 10,053 $ — $ 10,053 Commercial & industrial — — — 515 — 515 Total commercial — — — 10,568 — 10,568 Residential Real Estate: Residential real estate 9,830 1,269 11,099 9,743 1,024 10,767 Consumer: Home equity 1,824 — 1,824 1,972 — 1,972 Other — — — — — — Total consumer 1,824 — 1,824 1,972 — 1,972 Total nonaccrual loans $ 11,654 $ 1,269 $ 12,923 $ 22,283 $ 1,024 $ 23,307 Accruing loans 90 days or more past due $ — $ — Nonaccrual loans of $ 4.6 million and $ 16.9 million, respectively, at December 31, 2025 and 2024 were current as to the payment of principal and interest. As of December 31, 2025 and 2024, nonaccrual loans secured by one- to four-family residential property amounting to $ 3.0 million and $ 1.0 million, respectively, were in process of foreclosure. The following table presents interest income recognized on nonaccrual loans: (Dollars in thousands) Interest Income Recognized Years Ended December 31, 2025 2024 2023 Commercial: Commercial real estate $ — $ 197 $ 2,719 Commercial & industrial — 8 59 Total commercial — 205 2,778 Residential Real Estate: Residential real estate 489 542 466 Consumer: Home equity 157 161 107 Other — — 4 Total consumer 157 161 111 Total $ 646 $ 908 $ 3,355 Troubled Loan Modifications 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 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 -94- Notes to Consolidated Financial Statements – (continued) 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. Debt could be bifurcated with separate terms for each tranche of the TLM. Executing a TLM in lieu of aggressively enforcing the collection of the loan may benefit the Corporation by increasing the ultimate probability of collection. 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. If the TLM successfully meets all repayment terms according to the modification documents for a specified period of time (generally 12 months) and the borrower is no longer experiencing financial difficulty, it would be declassified from TLM status. The following table presents the carrying value at December 31, 2025, of TLMs made during the year, segregated by class of loans and type of concession granted: (Dollars in thousands) Other-than-Insignificant Payment Delay Total % of Total Loan Class (1) Commercial: Commercial real estate $ 5,605 $ 5,605 — % Commercial & industrial — — — Total commercial 5,605 5,605 — Residential Real Estate: Residential real estate 2,310 2,310 — Total $ 7,915 $ 7,915 — % (1) Percentage of TLMs to the total loans outstanding within the respective loan class. The following table presents the carrying value at December 31, 2024, of TLMs made during the year, segregated by class of loans and type of concession granted: (Dollars in thousands) Maturity Extension Other-than-Insignificant Payment Delay Combination (1) Total % of Total Loan Class (2) Commercial: Commercial real estate $ 3,340 $ — $ 6,713 $ 10,053 — % Commercial & industrial 515 5,000 — 5,515 1 Total commercial 3,855 5,000 6,713 15,568 1 Residential Real Estate: Residential real estate — 260 — 260 — Total $ 3,855 $ 5,260 $ 6,713 $ 15,828 — % (1) Combination includes an interest rate reduction, payment deferral and maturity extension. (2) Percentage of TLMs to the total loans outstanding within the respective loan class. -95- Notes to Consolidated Financial Statements – (continued) The following tables present the financial effect of TLMs made during the periods indicated, segregated by class of loans: Year ended December 31, 2025 Financial Effect Other-than-Insignificant Payment Delay: Commercial real estate Provided payment delay for a weighted average period of 6 months Residential real estate Provided payment delay for a weighted average period of 6 months Year ended December 31, 2024 Financial Effect Interest Rate Reduction: Commercial real estate Provided interest rate reduction by a weighted average rate of 3 % Maturity Extension: Commercial real estate Provided maturity extension for a weighted average period of 12 months Commercial & industrial Provided maturity extension for a weighted average period of 120 months Other-than-Insignificant Payment Delay: Commercial real estate Provided payment delay for a weighted average period of 5 months Commercial & industrial Provided payment delay for a weighted average period of 12 months Residential real estate Provided payment delay for a weighted average period of 6 months Management closely monitors the performance of TLMs to understand the effectiveness of the modifications. As of the dates indicated, the following table presents an aging analysis of TLMs that have been modified in the past 12 months: (Dollars in thousands) Days Past Due December 31, 2025 Current 30-59 60-89 Over 90 Total Past Due Total Loans Commercial: Commercial real estate $ 5,605 $ — $ — $ — $ — $ 5,605 Commercial & industrial — — — — — — Total commercial 5,605 — — — — 5,605 Residential Real Estate: Residential real estate 2,047 263 — — 263 2,310 Total loans $ 7,652 $ 263 $ — $ — $ 263 $ 7,915 At December 31, 2025, a $ 263 thousand residential real estate loan, which was modified as a TLM in the previous 12 months, had a subsequent payment default. (Dollars in thousands) Days Past Due December 31, 2024 Current 30-59 60-89 Over 90 Total Past Due Total Loans Commercial: Commercial real estate $ 10,053 $ — $ — $ — $ — $ 10,053 Commercial & industrial 5,000 515 — — 515 5,515 Total commercial 15,053 515 — — 515 15,568 Residential Real Estate: Residential real estate 260 — — — — 260 Total loans $ 15,313 $ 515 $ — $ — $ 515 $ 15,828 At December 31, 2024, a $ 515 thousand C&I loan and a $ 260 thousand residential real estate loan, which were modified as -96- Notes to Consolidated Financial Statements – (continued) TLMs in the previous 12 months, had a subsequent payment default. There were no significant commitments to lend additional funds to borrowers experiencing financial difficulty whose loans were TLMs at December 31, 2025. 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. As of December 31, 2025 and 2024, the carrying value of individually analyzed loans amounted to $ 8.9 million and $ 16.6 million, respectively. The carrying value of collateral dependent individually analyzed loans was $ 7.5 million and $ 11.6 million, respectively, at December 31, 2025 and 2024. 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 10 for additional disclosure regarding fair value of individually analyzed collateral dependent loans. The following table presents the carrying value of collateral dependent individually analyzed loans: (Dollars in thousands) December 31, 2025 December 31, 2024 Carrying Value Related Allowance Carrying Value Related Allowance Commercial: Commercial real estate (1) $ 5,605 $ — $ 10,053 $ 1,252 Commercial & industrial (2) — — 515 259 Total commercial 5,605 — 10,568 1,511 Residential Real Estate: Residential real estate (3) 1,903 — 1,023 — Total $ 7,508 $ — $ 11,591 $ 1,511 (1) Secured by income-producing property. (2) Secured by business assets. (3) Secured by one- to four-family residential properties. Credit Quality Indicators Commercial The Corporation utilizes an internal rating system to assign a risk to each of its commercial loans. Loans are rated on a scale of 1 to 10. This scale can be assigned to three broad categories including “pass” for ratings 1 through 6, “special mention” for 7-rated loans, and “classified” for loans rated 8, 9 or 10. The loan risk rating system takes into consideration parameters including the borrower’s financial condition, the borrower’s performance with respect to loan terms, the adequacy of collateral, the adequacy of guarantees, and other credit quality characteristics. The Corporation takes the risk rating into consideration along with other credit attributes in the establishment of an appropriate ACL on loans. See Note 5 for additional information. A description of the commercial loan categories is as follows: Pass - Loans with acceptable credit quality, defined as ranging from superior or very strong to a status of lesser stature. Superior or very strong credit quality is characterized by a high degree of cash collateralization or strong balance sheet liquidity. Lesser stature loans have an acceptable level of credit quality, but may exhibit some weakness in various credit metrics such as collateral adequacy, cash flow, performance or may be in an industry or of a loan type known to have a higher degree of risk. These weaknesses may be mitigated by secondary sources of repayment, including SBA guarantees. Special Mention - Loans with potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Bank’s position as creditor -97- Notes to Consolidated Financial Statements – (continued) at some future date. Special Mention assets are not adversely classified and do not expose the Bank to sufficient risk to warrant adverse classification. Examples of these conditions include but are not limited to outdated or poor quality financial data, strains on liquidity and leverage, losses or negative trends in operating results, marginal cash flow, weaknesses in occupancy rates or trends in the case of commercial real estate, and frequent delinquencies. 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, 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. The loans are closely watched and are either already on nonaccrual status or may be placed on nonaccrual status when management determines there is uncertainty of collectability. A “doubtful” loan is placed on nonaccrual status and has a high probability of loss, but the extent of the loss is difficult to quantify due to dependency upon collateral having a value that is difficult to determine or upon some near-term event which lacks certainty. A loan in the “loss” category is considered generally uncollectible or the timing or amount of payments cannot be determined. “Loss” is not intended to imply that the loan has no recovery value, but rather, it is not practical or desirable to continue to carry the asset. 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. Management’s review focuses on the current status of the loans, the appropriateness of risk ratings and strategies to improve the credit. An annual credit review program is conducted by a third party to provide an independent evaluation of the creditworthiness of the commercial loan portfolio, the quality of the underwriting and credit risk management practices, and the appropriateness of the risk rating classifications. This review is supplemented with selected targeted internal reviews of the commercial loan portfolio. Residential and Consumer Management monitors the relatively homogeneous residential real estate and consumer loan portfolios on an ongoing basis using delinquency information by loan type. In addition, other techniques are utilized to monitor indicators of credit deterioration in the residential real estate loans and home equity consumer loans. Among these techniques is the periodic tracking of loans with an updated Fair Isaac Corporation (commonly known as “FICO”) score and an updated estimated LTV ratio. LTV is estimated based on such factors as geographic location, the original appraised value, and changes in median home prices, and takes into consideration the age of the loan. The results of these analyses and other credit review procedures, including selected targeted internal reviews, are taken into account in the determination of qualitative loss factors for residential real estate and home equity consumer credits. -98- Notes to Consolidated Financial Statements – (continued) Washington Trust may renew commercial loans at or immediately prior to their maturity. In the tables below, renewals subject to full credit evaluation before being granted are reported as originations in the period renewed. Loans with extensions of maturity dates of more than three months, including TLMs, are reported as originations in the period extended. Gross charge-offs are reported in the loan’s initial origination year. 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, 2025: (Dollars in thousands) Term Loans Amortized Cost by Origination Year 2025 2024 2023 2022 2021 Prior Revolving Loans Amortized Cost Revolving Loans Converted to Term Loans Total Commercial: CRE: Pass $ 432,404 $ 102,312 $ 338,922 $ 490,011 $ 302,383 $ 438,112 $ 9,426 $ 942 $ 2,114,512 Special mention 33,416 — — 27,743 — 2,157 — — 63,316 Classified — — — — — 6,157 — — 6,157 Total CRE 465,820 102,312 338,922 517,754 302,383 446,426 9,426 942 2,183,985 Gross charge-offs — — — — — 5,715 — — 5,715 C&I: Pass 87,523 39,556 54,047 125,846 20,057 159,707 58,146 315 545,197 Special mention 3,569 788 — 3,442 1,095 3,865 6,000 — 18,759 Classified — — — — 126 — — — 126 Total C&I 91,092 40,344 54,047 129,288 21,278 163,572 64,146 315 564,082 Gross charge-offs 49 — 8,345 — — 299 — — 8,693 Residential Real Estate: Current (1) 161,291 50,709 332,253 690,150 345,038 462,198 — — 2,041,639 Past due — — — — 543 8,552 — — 9,095 Total residential real estate 161,291 50,709 332,253 690,150 345,581 470,750 — — 2,050,734 Gross charge-offs — — — — — — — — — Consumer: Home equity: Current 16,839 10,508 14,662 9,969 5,190 6,086 238,734 15,267 317,255 Past due — 34 58 — 137 223 814 341 1,607 Total home equity 16,839 10,542 14,720 9,969 5,327 6,309 239,548 15,608 318,862 Gross charge-offs — — — — — — — — — Other: Current 4,295 2,588 3,366 1,790 1,616 3,123 256 — 17,034 Past due 26 — — — — — — — 26 Total other 4,321 2,588 3,366 1,790 1,616 3,123 256 — 17,060 Gross charge-offs 323 — 1 — — 3 — — 327 Totals: Loans, amortized cost $ 739,363 $ 206,495 $ 743,308 $ 1,348,951 $ 676,185 $ 1,090,180 $ 313,376 $ 16,865 $ 5,134,723 Gross charge-offs $ 372 $ — $ 8,346 $ — $ — $ 6,017 $ — $ — $ 14,735 (1) Excludes a $ 335 thousand negative basis adjustment associated with fair value hedges. See Note 9 for additional disclosure. -99- Notes to 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 December 31, 2024: (Dollars in thousands) Term Loans Amortized Cost by Origination Year 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Revolving Loans Converted to Term Loans Total Commercial: CRE: Pass $ 172,931 $ 432,763 $ 598,805 $ 362,292 $ 125,834 $ 405,381 $ 9,879 $ 989 $ 2,108,874 Special mention — 6,116 — — — 2,237 — — 8,353 Classified 31,010 — — — — 6,267 — — 37,277 Total CRE 203,941 438,879 598,805 362,292 125,834 413,885 9,879 989 2,154,504 Gross charge-offs — — — — — 1,961 — — 1,961 C&I: Pass 38,128 51,162 136,449 23,474 36,954 159,522 76,857 469 523,015 Special mention — — 3,593 1,172 1,398 6,428 5,381 — 17,972 Classified 811 — — 161 — 515 — — 1,487 Total C&I 38,939 51,162 140,042 24,807 38,352 166,465 82,238 469 542,474 Gross charge-offs 33 — — — — 175 — — 208 Residential Real Estate: Current (1) 74,458 383,983 746,566 375,848 173,676 365,380 — — 2,119,911 Past due — 287 1,434 — 1,290 4,730 — — 7,741 Total residential real estate 74,458 384,270 748,000 375,848 174,966 370,110 — — 2,127,652 Gross charge-offs — — — — — — — — — Consumer: Home equity: Current 12,850 18,301 12,749 6,165 2,282 4,815 225,522 11,488 294,172 Past due — 61 — — 142 630 871 1,243 2,947 Total home equity 12,850 18,362 12,749 6,165 2,424 5,445 226,393 12,731 297,119 Gross charge-offs — — — — — — — — — Other: Current 4,176 4,497 2,331 2,175 757 2,989 251 — 17,176 Past due 24 — 370 — — — — — 394 Total other 4,200 4,497 2,701 2,175 757 2,989 251 — 17,570 Gross charge-offs 229 10 — — 2 3 — — 244 Totals: Loans, amortized cost $ 334,388 $ 897,170 $ 1,502,297 $ 771,287 $ 342,333 $ 958,894 $ 318,761 $ 14,189 $ 5,139,319 Gross charge-offs $ 262 $ 10 $ — $ — $ 2 $ 2,139 $ — $ — $ 2,413 (1) Excludes a $ 1.5 million negative basis adjustment associated with fair value hedges. See Note 9 for additional disclosure. -100- Notes to Consolidated Financial Statements – (continued) Loan Servicing Activities Loans sold with servicing retained result in the capitalization of loan servicing rights. The following table presents an analysis of loan servicing rights: (Dollars in thousands) Loan Servicing Rights Valuation Allowance Total Balance at December 31, 2022 $ 9,015 $ — $ 9,015 Loan servicing rights capitalized 1,069 — 1,069 Amortization ( 1,538 ) — ( 1,538 ) Increase in impairment reserve — ( 34 ) ( 34 ) Balance at December 31, 2023 8,546 ( 34 ) 8,512 Loan servicing rights capitalized 688 — 688 Amortization ( 1,567 ) — ( 1,567 ) Decrease in impairment reserve — 34 34 Balance at December 31, 2024 7,667 — 7,667 Loan servicing rights capitalized 345 — 345 Amortization ( 1,458 ) — ( 1,458 ) Decrease in impairment reserve — — — Balance at December 31, 2025 $ 6,554 $ — $ 6,554 The following table presents estimated aggregate amortization expense related to loan servicing assets: (Dollars in thousands) Years ending December 31: 2026 $ 1,297 2027 1,040 2028 834 2029 669 2030 537 2031 and thereafter 2,177 Total estimated amortization expense $ 6,554 Loans sold to others may be serviced by the Corporation on a fee basis under various agreements. Loans serviced for others are not included in the Consolidated Balance Sheets. The following table presents the balance of loans serviced for others by loan portfolio: (Dollars in thousands) December 31, 2025 2024 Residential real estate $ 1,312,227 $ 1,409,920 Commercial 200,861 179,626 Total $ 1,513,088 $ 1,589,546 -101- Notes to Consolidated Financial Statements – (continued) Note 5 - Allowance for Credit Losses on Loans The ACL on loans is management’s estimate of expected lifetime credit losses on loans carried at amortized cost. 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 year ended December 31, 2025: (Dollars in thousands) Commercial Consumer CRE C&I Total Commercial Residential Real Estate Home Equity Other Total Consumer Total Beginning Balance $ 26,485 $ 7,277 $ 33,762 $ 6,832 $ 1,031 $ 335 $ 1,366 $ 41,960 Charge-offs ( 5,715 ) ( 8,693 ) ( 14,408 ) — — ( 327 ) ( 327 ) ( 14,735 ) Recoveries 318 139 457 — 18 36 54 511 Provision ( 1,322 ) 11,027 9,705 ( 562 ) 137 220 357 9,500 Ending Balance $ 19,766 $ 9,750 $ 29,516 $ 6,270 $ 1,186 $ 264 $ 1,450 $ 37,236 The elevated provision for credit losses in 2025 reflected the impact of charge-offs on two commercial loan relationships. See additional disclosure regarding these two commercial loans in Note 10 under the caption “Items Recorded at Fair Value on a Nonrecurring Basis.” The following table presents the activity in the ACL on loans for the year ended December 31, 2024: (Dollars in thousands) Commercial Consumer CRE C&I Total Commercial Residential Real Estate Home Equity Other Total Consumer Total Beginning Balance $ 24,144 $ 8,088 $ 32,232 $ 7,403 $ 1,048 $ 374 $ 1,422 $ 41,057 Charge-offs ( 1,961 ) ( 208 ) ( 2,169 ) — — ( 244 ) ( 244 ) ( 2,413 ) Recoveries — 22 22 160 197 37 234 416 Provision 4,302 ( 625 ) 3,677 ( 731 ) ( 214 ) 168 ( 46 ) 2,900 Ending Balance $ 26,485 $ 7,277 $ 33,762 $ 6,832 $ 1,031 $ 335 $ 1,366 $ 41,960 The following table presents the activity in the ACL on loans for the year ended December 31, 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 ( 373 ) ( 37 ) ( 410 ) — — ( 167 ) ( 167 ) ( 577 ) Recoveries — 12 12 3 10 32 42 57 Provision 6,082 ( 2,243 ) 3,839 ( 340 ) ( 77 ) 128 51 3,550 Ending Balance $ 24,144 $ 8,088 $ 32,232 $ 7,403 $ 1,048 $ 374 $ 1,422 $ 41,057 For the purpose of estimating the ACL, management segregated the loan portfolio into the portfolio segments detailed in the above tables. Each of these segments possesses unique risk characteristics that are considered when determining the appropriate level of ACL for each segment. Some of the characteristics unique to each loan category include: Commercial Loans CRE loans consist of commercial mortgages secured by non-owner occupied real property where the primary source of repayment is derived from rental income associated with the property or the proceeds of the sale, refinancing or permanent financing of the property. CRE loans also include construction loans made to businesses for land development or the on-site construction of industrial, commercial or residential buildings. CRE loans frequently involve larger loan balances to single borrowers or groups of related borrowers. Washington Trust’s commercial real estate loans are secured by a variety of -102- Notes to Consolidated Financial Statements – (continued) property types, such as multi-family retail, industrial and warehouse, office, hospitality, healthcare facilities, as well as other specific use properties. Collateral values are determined based upon third-party appraisals. Permissible loan to value ratios at origination are governed by the Corporation’s policy and regulatory guidelines. C&I loans consist of revolving, non-revolving and term loans extended to commercial borrowers for the purpose of providing working capital, equipment financing and financing for other business-related purposes. C&I loans are frequently collateralized by equipment, inventory, accounts receivable and/or general business assets. A portion of Washington Trust’s C&I loan portfolio is also collateralized by owner occupied real estate. C&I loans also include tax-exempt loans made to states and political subdivisions, as well as industrial development or revenue bonds issued through quasi-public corporations for the benefit of a private or non-profit entity where that entity rather than the governmental entity is obligated to pay the debt service. Washington Trust’s C&I loan portfolio includes loans to business sectors such as health care and social assistance, real estate rental and leasing, transportation and warehousing, educational services, retail trade, as well as other business sectors. For the commercial portfolio, the Corporation typically obtains personal guarantees for payment from individuals holding material ownership interests in the borrowing entities. Residential Real Estate Loans Residential real estate loans held in the Corporation’s portfolio are made to borrowers who demonstrate the ability to make scheduled payments with full consideration to underwriting factors such as current and expected income, employment status, current assets, other financial resources, credit history and the value of the collateral. Collateral consists of mortgage liens on one-to-four family residential properties, including condominiums. Residential real estate loans also include loans to construct owner-occupied one-to-four family residential properties. Collateral values are determined based upon third-party appraisals. In general, loans must meet the underwriting and purchase standards imposed by Federal Home Loan Mortgage Corporation, Federal National Mortgage Association and other institutional investors as applicable. Consumer Loans: Home equity loans and credit lines are made to qualified individuals and are primarily secured by senior or junior mortgage liens on one-to-four family residential properties, including condominiums. Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan to value ratios within established guidelines, as set forth in the Corporation’s policy. Other consumer loans consist of loans to individuals that are secured by general aviation aircraft and other installment loans made to qualified individuals for various purposes. Borrower qualifications include favorable credit history combined with supportive income and collateral requirements within established guidelines, as set forth in the Corporation’s policy. -103- Notes to Consolidated Financial Statements – (continued) Note 6 - Premises and Equipment The following presents a summary of premises and equipment: (Dollars in thousands) December 31, 2025 2024 Land $ 4,640 $ 3,920 Premises and improvements 37,427 36,499 Furniture, fixtures and equipment 20,798 21,482 Total premises and equipment 62,865 61,901 Less: accumulated depreciation 37,463 35,028 Total premises and equipment, net $ 25,402 $ 26,873 The following table presents a summary of depreciation expense: (Dollars in thousands) Year ended December 31, Fixed Asset Type Income Statement Line Item 2025 2024 2023 Premises and improvements Net occupancy $ 1,609 $ 1,907 $ 1,840 Furniture, fixtures and equipment Equipment 1,846 2,027 2,165 Total depreciation expense $ 3,455 $ 3,934 $ 4,005 In the second quarter of 2024, the Bank sold an operations facility and a net gain of $ 988 thousand was recognized within other noninterest income. For the year ended December 31, 2023, there were no sales of premises and equipment and therefore, no gains or losses were recognized in that period. In the fourth quarter of 2024, land and premises associated with five branch locations with a total net book value of $ 4.8 million were reclassified to held for sale, as the Bank committed to sell these assets and lease them back from the buyers. The sale-leaseback transactions were completed for these five branch locations in the first quarter of 2025. See Note 7 for additional information related to the leaseback of the assets. -104- Notes to Consolidated Financial Statements – (continued) Note 7 - Leases Under non-cancellable operating leases, the Corporation has committed to rent premises used in business operations, including branch offices, lending offices, and wealth management offices. In the first quarter of 2025, sale-leaseback transactions were completed for five branch locations. The transactions qualified as a sale under GAAP and as a result a pre-tax net gain on the sale of bank-owned properties totaling $ 7.0 million was recognized in noninterest income. In addition, operating lease ROU assets of $ 10.0 million and operating lease liabilities of $ 10.0 million were recorded. These leases expire in 17 years and include the option to renew for two additional 15 -year terms. As of both December 31, 2025 and 2024, there were no operating leases that had not yet commenced. The following table presents information regarding the Corporation’s operating leases: At December 31, 2025 2024 Operating lease ROU assets $ 35,904 $ 26,943 Operating lease liabilities $ 38,726 $ 29,578 Weighted average discount rate 5.41 % 3.80 % Range of lease expiration dates 4 months - 22 years 4 months - 23 years Range of lease renewal options 3 years - 15 years 1 year - 5 years Weighted average remaining lease term 12.9 years 12.6 years The following table presents the undiscounted annual lease payments under the terms of the Corporation’s operating leases at December 31, 2025, including a reconciliation to the present value of operating lease liabilities recognized in the Consolidated Balance Sheets: (Dollars in thousands) Years ending December 31: 2026 $ 4,882 2027 4,485 2028 4,205 2029 4,101 2030 4,109 2031 and thereafter 32,472 Total operating lease payments 54,254 Less: interest 15,528 Present value of operating lease liabilities (1) $ 38,726 (1) Includes short-term operating lease liabilities of $ 3.0 million. The following table presents the components of total lease expense and operating cash flows: (Dollars in thousands) Year ended December 31, 2025 2024 2023 Lease Expense: Operating lease expense $ 5,298 $ 4,482 $ 4,476 Variable lease expense 206 170 201 Total lease expense (1) $ 5,504 $ 4,652 $ 4,677 Cash Paid: Cash paid reducing operating lease liabilities $ 5,111 $ 4,510 $ 4,275 (1) Included in net occupancy expenses in the Consolidated Statements of Income (Loss). -105- Notes to Consolidated Financial Statements – (continued) Note 8 - Goodwill and Intangible Assets The following table presents the carrying value of goodwill at the reporting unit (or business segment) level: (Dollars in thousands) December 31, 2025 2024 Banking Segment $ 22,591 $ 22,591 Wealth Management Services Segment 41,318 41,318 Total goodwill $ 63,909 $ 63,909 The balance of goodwill in the Banking segment arose from the acquisition of First Financial Corp. in 2002. The balance of goodwill in the Wealth Management Services segment arose from the 2005 acquisition of Weston and the 2015 acquisition of Halsey. On July 31, 2025, the Bank's registered investment adviser subsidiary completed the purchase of wealth management client advisory contracts from Lighthouse in an asset acquisition. This resulted in the recognition of an intangible asset totaling $ 2.2 million on the acquisition date. The Corporation has not recognized a liability for the contingent consideration payments, as the amounts to be paid are uncertain until a future measurement date. The contingent consideration payments are capitalizable as part of the intangible asset acquired when the payments are probable and reasonably estimable. The following table presents the components of intangible assets: (Dollars in thousands) December 31, 2025 2024 Gross carrying amount $ 22,983 $ 20,803 Accumulated amortization 18,680 17,918 Net amount $ 4,303 $ 2,885 Weighted average remaining life (in years) 9.5 5.2 The gross carrying amount of intangible assets includes wealth management client advisory contracts resulting from the 2005 acquisition of Weston and the 2015 acquisition of Halsey, which were accounted for as business combinations. In addition, the balance at December 31, 2025 includes wealth management client advisory contracts resulting from the Lighthouse asset acquisition. In the third quarter of 2025, the Weston wealth management client advisory contracts were fully amortized. Both the Halsey and Lighthouse wealth management client advisory contracts are being amortized on a straight-line basis over a 15 -year life. Amortization expense for the years ended December 31, 2025, 2024, and 2023, amounted to $ 762 thousand, $ 826 thousand and $ 843 thousand, respectively. The following table presents estimated annual amortization expense for intangible assets at December 31, 2025: (Dollars in thousands) Years ending December 31, 2026 $ 622 2027 622 2028 622 2029 622 2030 423 2031 and thereafter 1,392 -106- Notes to Consolidated Financial Statements – (continued) Note 9 - Derivative Financial Instruments The Corporation’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Corporation’s known or expected cash receipts and its known or expected cash payments, principally to manage the Corporation’s interest rate risk. Additionally, the Corporation enters into interest rate derivatives to accommodate the business requirements of its customers. Derivatives 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. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and resulting designation. Interest Rate Risk Management Agreements Interest rate risk management agreements, such as swaps, caps, floors, and collars, are used from time to time as part of the Corporation’s interest rate risk management strategy. Interest rate swaps are agreements in which the Corporation and another party agree to exchange interest payments (e.g., fixed-rate for variable-rate payments or variable-rate for fixed-rate payments) computed on a notional principal amount. Interest rate caps and floors represent options purchased by the Corporation to manage the interest rate paid throughout the term of the option contract. An interest rate collar is a derivative instrument that represents simultaneously buying an interest rate cap and selling an interest rate floor. The credit risk associated with these derivative 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. The notional amounts of these agreements do not represent amounts exchanged by the parties and, thus, are not a measure of the potential loss exposure. Cash Flow Hedging Instruments As of December 31, 2025 and 2024, the Corporation had interest rate swap contracts and interest rate collars that were designated as cash flow hedges. These interest rate swaps and collars were executed to hedge the interest rate risk associated with short-term borrowings. See Note 13 for additional disclosure on borrowings. In addition, as of December 31, 2025, the Corporation had interest rate floor contracts that were also designated as cash flow hedges. These interest rate floors were executed to hedge the interest rate risk associated with a pool of variable rate commercial loans. The changes in fair value of these derivatives designated as cash flow hedges are recorded in other comprehensive income (loss) and subsequently reclassified to earnings when gains or losses are realized (i.e., in the same period during which the hedged transactions affect earnings.) The Corporation previously 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. On March 31, 2023, the Corporation terminated this interest rate swap contract and the derivative liability was derecognized. The loss on this interest rate swap included in the AOCL component of shareholders’ equity was updated to its termination date fair value of $ 26.5 million, or $ 20.1 million after tax. 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 December 31, 2025, the remaining unamortized balance of the loss included in the AOCL component of shareholders’ equity was $ 2.8 million, or $ 2.1 million after tax. Fair Value Hedging Instruments As of December 31, 2025 and 2024, the Corporation had interest rate swap contracts that were designated as fair value hedges. The fair value hedges were executed to hedge the interest rate risk associated with a closed-pool of fixed-rate residential real estate loans (the “hedged item”). The hedged item is measured at fair value through a basis adjustment recognized on the balance sheet. The changes in fair value of derivatives designated as fair value hedges, as well as the offsetting changes in fair value of the hedged item are recognized in earnings. Loan Related Derivative Contracts Interest Rate Derivative Contracts with Customers The Corporation enters into interest rate swap and interest rate cap contracts to help commercial loan borrowers manage their interest rate risk. These interest rate swap contracts allow borrowers to convert variable-rate loan payments to fixed-rate loan payments, while interest rate cap contracts allow borrowers to limit their interest rate exposure in a rising rate environment. When the Corporation enters into an interest rate derivative contract with a commercial loan borrower, it simultaneously enters into a “mirror” interest rate contract with a third party. 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 -107- Notes to Consolidated Financial Statements – (continued) 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. Risk Participation Agreements The Corporation has entered into risk participation agreements with other banks in commercial loan arrangements. Participating banks guarantee the performance on borrower-related interest rate swap contracts. These derivatives are not designated as hedges and therefore, changes in fair value are recognized in earnings. Under a risk participation-out agreement, a derivative asset, the Corporation participates out a portion of the credit risk associated with the interest rate swap position executed with the commercial borrower for a fee paid to the participating bank. 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. 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 rate locks and mortgage loans that are originated and intended for sale, the Corporation enters into forward sale commitments. Forward sale commitments are contracts for delayed delivery or net settlement of the underlying instrument, such as a residential mortgage loan, where the seller agrees to deliver on a specified future date, either a specified instrument at a specified price or yield or the net cash equivalent of an underlying instrument. 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. -108- Notes to Consolidated Financial Statements – (continued) Derivative assets are included in other assets and derivative liabilities are included in other liabilities in the Consolidated Balance Sheets. The following table presents the notional amounts and the fair values of derivative instruments: (Dollars in thousands) December 31, 2025 December 31, 2024 Fair Value Fair Value Notional Amounts Derivative Assets Derivative Liabilities Notional Amounts Derivative Assets Derivative Liabilities Derivatives Designated as Cash Flow Hedging Instruments: Interest rate risk management contracts: Interest rate swaps (1) $ 120,000 $ 126 $ 979 $ 120,000 $ 1,529 $ 229 Interest rate collar 100,000 — 17 50,000 — 30 Interest rate floors 200,000 125 — — — — Derivatives Designated as Fair Value Hedging Instruments: Interest rate risk management contracts: Interest rate swaps 100,000 335 — 100,000 1,477 — Derivatives not Designated as Hedging Instruments: Loan related derivative contracts: Interest rate contracts with customers 882,941 6,326 27,959 886,912 2,468 51,372 Mirror interest rate contracts with counterparties 882,941 27,857 6,392 886,912 51,176 2,529 Risk participation agreements 304,854 28 1 343,935 29 — Mortgage loan commitments: Interest rate lock commitments 30,373 603 12 20,238 248 — Forward sale commitments 90,813 13 828 52,100 163 291 Gross amounts 35,413 36,188 57,090 54,451 Less: amounts offset (2) 6,643 6,643 2,788 2,788 Derivative balances, net of offset 28,770 29,545 54,302 51,663 Less: collateral pledged (3) — — — — Net amounts $ 28,770 $ 29,545 $ 54,302 $ 51,663 (1) The fair value of derivative assets includes accrued interest receivable of $ 35 thousand and $ 120 thousand, respectively, at December 31, 2025 and 2024. The fair value of derivative liabilities includes accrued interest payable of $ 23 thousand at December 31, 2025. There was no accrued interest payable included in the fair value of derivative liabilities at December 31, 2024. (2) Interest rate risk management contracts and loan related derivative contracts with counterparties are subject to master netting arrangements. (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 balance sheet location, carrying value, and cumulative basis adjustment of the hedged item associated with fair value hedges: (Dollars in thousands) December 31, 2025 December 31, 2024 Balance Sheet Location Carrying Value of Hedged Item (1) Cumulative Basis Adjustment Carrying Value of Hedged Item (1) Cumulative Basis Adjustment Residential real estate loans $ 99,665 ($ 335 ) $ 98,519 ($ 1,481 ) (1) Represents the carrying value of the hedged item associated with fair value hedges on a closed-pool of fixed-rate residential real estate loans that are expected to be outstanding for the designated hedged periods. The amortized cost balance of the closed-pool of residential real estate loans used in the fair value hedges was $ 608.5 million and $ 733.2 million, respectively, at December 31, 2025 and 2024. -109- Notes to Consolidated Financial Statements – (continued) The following table presents the effect of derivative instruments in the Consolidated Statements of Changes in Shareholders’ Equity: (Dollars in thousands) Amounts Recognized in Other Comprehensive Income (Loss), Net of Tax Years ended December 31, 2025 2024 2023 Derivatives Designated as Cash Flow Hedging Instruments: Interest rate risk management contracts: Interest rate swaps $ 4,887 $ 7,703 $ 7,026 Interest rate collar 10 ( 22 ) — Interest rate floors ( 101 ) — — Total $ 4,796 $ 7,681 $ 7,026 The following table presents the effect of derivative instruments in the Consolidated Statements of Income (Loss): (Dollars in thousands) Amount of Gain (Loss) Recognized in the Consolidated Statements of Income (Loss) Years ended December 31, Statement of Income Location 2025 2024 2023 Derivatives Designated as Cash Flow Hedging Instruments: Interest rate risk management contracts: Interest rate swaps Interest income: Interest and fees on loans ($ 8,581 ) ($ 8,605 ) ($ 9,228 ) Interest rate swaps Interest expense: FHLB advances 675 1,775 1,665 Interest rate floors Interest income: Interest and fees on loans ( 50 ) — — Derivatives Designated as Fair Value Hedging Instruments: Interest rate risk management contracts: Interest rate swaps Interest income: Interest and fees on loans ( 1,142 ) 1,477 — Hedged item Interest income: Interest and fees on loans 1,146 ( 1,481 ) — Derivatives not Designated as Hedging Instruments: Loan related derivative contracts: Interest rate contracts with customers Loan related derivative income 11,896 ( 28,561 ) ( 1,408 ) Mirror interest rate contracts with counterparties Loan related derivative income ( 10,068 ) 28,963 3,211 Risk participation agreements Loan related derivative income 301 65 ( 413 ) Mortgage loan commitments: Interest rate lock commitments Mortgage banking revenues 343 ( 256 ) 363 Forward sale commitments Mortgage banking revenues ( 1,176 ) 514 61 Total ($ 6,656 ) ($ 6,109 ) ($ 5,749 ) For derivatives designated as cash flow hedging instruments in the table above, the amounts represent the pre-tax reclassifications from AOCL into earnings. Note 10 - Fair Value Measurements The Corporation uses fair value measurements to record fair value adjustments on certain assets and liabilities and to determine fair value disclosures. Items recorded at fair value on a recurring basis include securities available for sale, mortgage loans that are originated and intended for sale to the secondary market, and derivatives. Additionally, from time to time, we may be required to record other assets at fair value on a nonrecurring basis, such as collateral dependent individually analyzed loans, loan servicing rights, property acquired through foreclosure or repossession, and mortgage loans reclassified to held for sale from portfolio. Fair value is a market-based measurement, not an entity-specific measurement. Fair value measurements are determined based on the assumptions the market participants would use in pricing the asset or liability. In addition, GAAP specifies a -110- Notes to Consolidated Financial Statements – (continued) hierarchy of valuation techniques based on whether the types of valuation information, or “inputs”, are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Corporation’s market assumptions. These two types of inputs have created the following fair value hierarchy: • Level 1 – Quoted prices for identical assets or liabilities in active markets. • Level 2 – 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 inputs and significant value drivers are observable in active markets. • Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable in the markets and which reflect the Corporation’s market assumptions. Fair Value Option Election GAAP allows for the irrevocable option to elect fair value accounting for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis. The Corporation has elected the fair value option for mortgage loans that are originated and intended for sale to the secondary market to better match changes in fair value of the loans with changes in the fair value of the forward sale commitment contracts used to economically hedge them. The following table presents a summary of mortgage loans held for sale accounted for under the fair value option: (Dollars in thousands) December 31, 2025 2024 Aggregate fair value $ 35,833 $ 21,708 Aggregate principal balance 35,130 21,420 Difference between fair value and principal balance $ 703 $ 288 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 Consolidated Statements of Income (Loss). Changes in fair value amounted to an increase in mortgage banking revenues of $ 415 thousand in 2025, compared to a decrease in mortgage banking revenues of $ 310 thousand in 2024. There were no mortgage loans held for sale 90 days or more past due as of December 31, 2025 and 2024. Valuation Techniques for Items Recorded at Fair Value on a Recurring Basis Available for Sale Debt Securities Available for sale debt securities are recorded at fair value on a recurring basis. When available, the Corporation uses quoted market prices to determine the fair value of debt securities; such items are classified as Level 1. There were no Level 1 debt securities held at December 31, 2025 and 2024. Level 2 debt securities are traded less frequently than exchange-traded instruments. The fair value of these securities is determined using matrix pricing with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category includes obligations of U.S. government-sponsored enterprises, including mortgage-backed securities, individual name issuer trust preferred debt securities, and corporate bonds. 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 December 31, 2025 and 2024. Mortgage Loans Held for Sale, at Fair Value The Corporation has elected the fair value option for mortgage loans that are originated and intended for sale to the secondary market. The fair value is estimated based on current market prices for similar loans in the secondary market and therefore are classified as Level 2 assets. Derivatives Interest rate derivative contracts are traded in over-the-counter markets where quoted market prices are not readily available. Fair value measurements are determined using independent valuation software, which utilizes the present value of -111- Notes to Consolidated Financial Statements – (continued) future cash flows discounted using market observable inputs such as forward rate assumptions. The Corporation evaluates the credit risk of its counterparties, as well as that of the Corporation. Accordingly, factors such as the likelihood of default by the Corporation and its counterparties, its net exposures, and remaining contractual life are considered in determining if any fair value adjustments related to credit risk are required. Counterparty exposure is evaluated by netting positions that are subject to master netting agreements, as well as considering the amount of collateral securing the position, if any. The Corporation has determined that the majority of the inputs used to value its derivative positions fall within Level 2 of the fair value hierarchy. However, the credit valuation adjustments utilize Level 3 inputs. As of December 31, 2025 and 2024, 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. Fair value measurements of forward loan commitments (interest rate lock commitments and forward sale commitments) are primarily based on current market prices for similar assets in the secondary market and therefore are classified as Level 2 assets. The fair value of interest rate lock commitments is also dependent on the ultimate closing of the loans. Pull-through rates are based on the Corporation’s historical data and reflect the Corporation’s best estimate of the likelihood that a commitment will result in a closed loan. Although the pull-through rates are Level 3 inputs, the Corporation has assessed the significance of the impact of pull-through rates on the overall valuation of its interest rate lock commitments and has determined that they are not significant to the overall valuation. As a result, the Corporation has classified its interest rate lock commitments as Level 2. Items Recorded at Fair Value on a Recurring Basis The following tables present the balances of assets and liabilities reported at fair value on a recurring basis: (Dollars in thousands) Total Level 1 Level 2 Level 3 December 31, 2025 Assets: Available for sale debt securities: Obligations of U.S. government agencies and U.S government-sponsored enterprises $ 39,958 $ — $ 39,958 $ — Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises 880,894 — 880,894 — Obligations of states and political subdivisions 663 — 663 — Individual name issuer trust preferred debt securities 6,103 — 6,103 — Corporate bonds 12,724 — 12,724 — Mortgage loans held for sale 35,833 — 35,833 — Derivative assets 28,770 — 28,770 — Total assets at fair value on a recurring basis $ 1,004,945 $ — $ 1,004,945 $ — Liabilities: Derivative liabilities $ 29,545 $ — $ 29,545 $ — Total liabilities at fair value on a recurring basis $ 29,545 $ — $ 29,545 $ — -112- Notes to Consolidated Financial Statements – (continued) (Dollars in thousands) Total Level 1 Level 2 Level 3 December 31, 2024 Assets: Available for sale debt securities: Obligations of U.S. government agencies and U.S government-sponsored enterprises $ 38,612 $ — $ 38,612 $ — Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises 855,147 — 855,147 — Obligations of states and political subdivisions 655 — 655 — Individual name issuer trust preferred debt securities 9,221 — 9,221 — Corporate bonds 12,670 — 12,670 — Mortgage loans held for sale 21,708 — 21,708 — Derivative assets 54,302 — 54,302 — Total assets at fair value on a recurring basis $ 992,315 $ — $ 992,315 $ — Liabilities: Derivative liabilities $ 51,663 $ — $ 51,663 $ — Total liabilities at fair value on a recurring basis $ 51,663 $ — $ 51,663 $ — Valuation Techniques for Items Recorded at Fair Value on a Nonrecurring Basis Collateral Dependent Individually Analyzed Loans Collateral dependent individually analyzed loans are valued based upon the lower of amortized cost or fair value. Fair value is determined based on the appraised value of the underlying collateral. Such collateral primarily consists of real estate and, to a lesser extent, other business assets. For collateral dependent loans that are expected to be repaid substantially through the sale of the collateral, management adjusts the fair value for estimated costs to sell. Management may also adjust appraised values to reflect estimated market value declines or apply other discounts to appraised values resulting from its knowledge of the collateral. Internal valuations may be utilized to determine the fair value of other business assets. Collateral dependent individually analyzed loans are categorized as Level 3. Mortgage Loans Held for Sale, at Lower of Cost or Market Following the public offering of common stock by the Bancorp disclosed in Note 14 and pursuant to the terms of a sales agreement effective December 30, 2024, the Bank committed to sell residential mortgage loans with an amortized cost balance of $ 344.6 million that were held in portfolio. These loans were reclassified to held for sale and written down to a fair value of $ 281.7 million, resulting in a net pre-tax loss of $ 62.9 million that was recognized in December 2024. The fair value of these loans was based on the terms of the sales agreement with an unrelated third party and therefore are categorized as Level 2. The sale of these loans was completed on January 24, 2025. Items Recorded at Fair Value on a Nonrecurring Basis Assets written down to fair value in 2025 consisted of two collateral dependent individually analyzed loan relationships, which had no carrying value at December 31, 2025. The first was a C&I relationship in which the borrower declared 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, the C&I relationship had a carrying value of $ 9.3 million and a specific reserve of $ 2.3 million. Based on ensuing developments in the bankruptcy proceedings during the third quarter of 2025, which resulted in 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 of 2025. The remaining carrying value of $ 1.0 million on this relationship was collected early in October 2025. The second was a CRE loan with a carrying value, net of previous charge-offs taken, of $ 4.3 million at June 30, 2025. This loan was previously placed on nonaccrual status in 2023 and was previously modified and reported as a TLM. In September 2025, the Corporation changed its exit strategy and decided to sell this loan. The sale closed, proceeds of $ 1.2 million were received, and a charge-off of $ 3.0 million was recognized in September 2025. -113- Notes to Consolidated Financial Statements – (continued) The following table presents the carrying value of assets held at December 31, 2024, which were written down to fair value during the year ended December 31, 2024. (Dollars in thousands) Total Level 1 Level 2 Level 3 Assets: Collateral dependent individually analyzed loans $ 9,057 $ — $ — $ 9,057 Mortgage loans held for sale, at lower of cost or market 281,706 — 281,706 — Total assets at fair value on a nonrecurring basis $ 290,763 $ — $ 281,706 $ 9,057 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 Range of Inputs Utilized (Weighted Average) December 31, 2024 Collateral dependent individually analyzed loans $ 9,057 Appraisals of collateral Discount for costs to sell 14 % - 49 % ( 16 %) Appraisal adjustments 0 % - 10 % ( 7 %) 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 in the tables below: (Dollars in thousands) Carrying Amount Total Fair Value Level 1 Level 2 Level 3 December 31, 2025 Financial Assets: Cash and cash equivalents $ 103,734 $ 103,734 $ 103,734 $ — $ — Loans, net of allowance for credit losses on loans (1) 5,097,152 4,972,651 — — 4,972,651 FHLB stock 29,473 29,473 — 29,473 — Investment in BOLI 115,126 115,126 — 115,126 — Financial Liabilities: Non-maturity deposits $ 4,049,307 $ 4,049,307 $ — $ 4,049,307 $ — Time deposits 1,220,683 1,218,361 — 1,218,361 — FHLB advances 626,000 629,484 — 629,484 — Junior subordinated debentures 22,681 19,953 — 19,953 — (1) The estimated fair value excludes a $ 335 thousand negative basis adjustment associated with fair value hedges. See Note 9 for additional disclosure. -114- Notes to Consolidated Financial Statements – (continued) (Dollars in thousands) Carrying Amount Total Fair Value Level 1 Level 2 Level 3 December 31, 2024 Financial Assets: Cash and cash equivalents $ 113,889 $ 113,889 $ 113,889 $ — $ — Loans, net of allowance for credit losses on loans (1) 5,095,878 4,952,110 — — 4,952,110 FHLB stock 49,817 49,817 — 49,817 — Investment in BOLI 106,777 106,777 — 106,777 — Financial Liabilities: Non-maturity deposits $ 3,626,152 $ 3,626,152 $ — $ 3,626,152 $ — Time deposits 1,489,648 1,479,267 — 1,479,267 — FHLB advances 1,125,000 1,125,819 — 1,125,819 — Junior subordinated debentures 22,681 19,602 — 19,602 — (1) The estimated fair value excludes a $ 1.5 million negative basis adjustment associated with fair value hedges. See Note 9 for additional disclosure. Note 11 - Income Taxes The following table presents income (loss) before income tax expense (benefit): (Dollars in thousands) Years ended December 31, 2025 2024 2023 Income (Loss) Before Income Tax Expense (Benefit): U.S. $ 67,413 ($ 38,818 ) $ 56,481 Total income (loss) before income tax expense (benefit) $ 67,413 ($ 38,818 ) $ 56,481 The following table presents the components of income tax expense (benefit): (Dollars in thousands) Years ended December 31, 2025 2024 2023 Current Tax Expense: U.S. Federal $ 2,246 $ 5,166 $ 10,494 U.S. State 312 812 1,501 Total current tax expense 2,558 5,978 11,995 Deferred Tax Expense (Benefit): U.S. Federal 10,392 ( 14,618 ) 412 U.S. State 2,219 ( 2,119 ) ( 4,102 ) Total deferred tax expense (benefit) (1) 12,611 ( 16,737 ) ( 3,690 ) Total income tax expense (benefit) $ 15,169 ($ 10,759 ) $ 8,305 (1) The deferred income tax benefit recognized in 2024 was largely associated with loans that were reclassified to held for sale and written down to fair value in December 2024. The sale of these loans was completed on January 24, 2025. -115- Notes to Consolidated Financial Statements – (continued) Total income tax expense varies from the amount determined by applying the Federal income tax rate to income before income taxes. The following table presents the reasons for the differences: Years ended December 31, 2025 2024 2023 (Dollars in thousands) Amount Rate Amount Rate Amount Rate U.S. federal statutory income tax $ 14,157 21.0 % ($ 8,152 ) 21.0 % $ 11,861 21.0 % State and local income tax expense (benefit), net of federal tax effect (1) 2,212 3.3 ( 1,037 ) 2.7 ( 2,145 ) ( 3.7 ) Foreign tax effects — — — — — — Effect of changes in tax laws or rates enacted in the current period — — — — — — Effect of cross-border tax laws — — — — — — Tax credits: Investments in low-income housing limited partnerships ( 1,976 ) ( 2.9 ) ( 1,905 ) 4.9 ( 1,812 ) ( 3.2 ) Changes in valuation allowance — — — — — — Nontaxable or nondeductible items: BOLI ( 703 ) ( 1.0 ) ( 639 ) 1.6 ( 732 ) ( 1.3 ) Investments in low-income housing limited partnerships proportional amortization and other benefits 1,594 2.3 1,485 ( 3.8 ) 1,455 2.6 Tax-exempt income ( 1,145 ) ( 1.7 ) ( 1,115 ) 2.9 ( 1,077 ) ( 1.9 ) Nondeductible interest expense 592 0.9 655 ( 1.7 ) 534 0.9 Other 438 0.6 ( 51 ) 0.1 221 0.3 Changes in unrecognized tax benefits — — — — — — Total income tax expense (benefit) $ 15,169 22.5 % ($ 10,759 ) 27.7 % $ 8,305 14.7 % (1) Massachusetts taxes represent the majority (greater than 50%) of state and local tax expense (benefit). Also, 2023 includes the impact of a revaluation of deferred tax assets and liabilities due to a Commonwealth of Massachusetts tax bill enacted into law. Income tax expense in 2024 was impacted by the execution of balance sheet repositioning transactions, including the sale of lower-yielding loans and securities. See additional disclosure in Note 14 regarding use of proceeds from the public offering of common stock by the Bancorp. The following table presents information regarding income taxes paid, net of refunds: Years ended December 31, 2025 2024 2023 U.S. federal tax $ — $ 5,700 $ 8,500 U.S. state tax (1): Massachusetts — 1,300 1,225 Connecticut ( 170 ) — — New York 21 150 130 All other 7 86 71 Income taxes paid, net of refunds ($ 142 ) $ 7,236 $ 9,926 (1) Amounts separately stated for jurisdictions exceeding 5% of total income tax paid (net of refunds). -116- Notes to Consolidated Financial Statements – (continued) The following table presents the approximate tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities: (Dollars in thousands) December 31, 2025 2024 Deferred Tax Assets: Net unrealized losses on available for sale debt securities $ 23,716 $ 33,646 Operating lease liabilities 9,681 7,469 Allowance for credit losses on loans 9,309 10,595 Deferred compensation liabilities 5,548 5,439 State net operating loss carryforwards 3,559 2,840 Defined benefit pension obligations 3,255 1,246 Share-based compensation 1,907 1,779 Deferred loan origination fees 1,673 1,857 Federal tax credit carryforwards 1,535 — Cash flow hedges 965 2,595 Capital loss carryforward 368 1,550 Loss on portfolio loans reclassified to held for sale — 15,093 Other 1,822 2,068 Deferred tax assets 63,338 86,177 Valuation allowance ( 4,396 ) ( 3,780 ) Deferred tax assets, net of valuation allowance 58,942 82,397 Deferred Tax Liabilities: Operating lease ROU assets ( 8,976 ) ( 6,803 ) Deferred loan origination costs ( 5,772 ) ( 6,784 ) Non-elective employer 401(k) contributions ( 2,403 ) — Loan servicing rights ( 1,639 ) ( 1,936 ) Depreciation of premises and equipment ( 1,257 ) ( 1,956 ) Deferred compensation assets ( 786 ) ( 577 ) Amortization of intangibles ( 546 ) ( 729 ) Other ( 711 ) ( 590 ) Deferred tax liabilities ( 22,090 ) ( 19,375 ) Net deferred tax asset $ 36,852 $ 63,022 The Corporation’s net deferred tax asset is included in other assets in the Consolidated Balance Sheets. Net deferred tax assets decreased by $ 26.2 million during 2025. This decrease included the realization of a deferred tax asset established in December 2024 associated with the loans that were reclassified to held for sale and written down to fair value as part of the balance sheet repositioning transactions. This deferred tax asset was realized in January 2025 when the loan sale was completed. Excluding that item, the decrease largely reflected reductions in deferred tax assets associated with increases in fair value of securities available for sale. Deferred tax assets are to be reduced by a valuation allowance if, based on the weight of available evidence, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets are realized primarily through future reversals of existing taxable temporary differences or by offsetting projected future taxable income. The valuation allowance amounted to $ 4.4 million and $ 3.8 million, respectively, at December 31, 2025 and 2024 and reflected management’s estimate regarding the realizability of a portion of the Corporation’s state deferred tax assets, largely associated with state net operating loss carryforwards. These operating loss carryforwards have various expirations beginning in 2042, the majority of which are subject to annual usage limitations. Management’s assessment considered the -117- Notes to Consolidated Financial Statements – (continued) Corporation’s forecasted future taxable income, existing taxable temporary differences along with tax planning strategies. Management believes deferred tax assets, net of the valuation allowance, are more-likely-than-not to be realized. The Corporation established a deferred tax asset of $ 1.5 million related to tax credit carryforwards in 2025. These credits have various expirations beginning in 2041. The Corporation had no unrecognized tax benefits as of December 31, 2025 and 2024. The Corporation files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. Generally, the Corporation is no longer subject to U.S. federal income and state tax examinations by tax authorities for years before 2022. Note 12 - Deposits The following table presents a summary of deposits: (Dollars in thousands) December 31, 2025 2024 Noninterest-bearing: Noninterest-bearing demand deposits $ 595,092 $ 661,776 Interest-bearing: Interest-bearing demand deposits 756,794 592,904 NOW accounts 715,114 692,812 Money market accounts 1,185,420 1,154,745 Savings accounts 796,887 523,915 Time deposits (1) 1,220,683 1,489,648 Total interest-bearing deposits 4,674,898 4,454,024 Total deposits $ 5,269,990 $ 5,115,800 (1) There were no wholesale brokered time deposits at December 31, 2025. Included in time deposits were $ 297.5 million of wholesale brokered time deposits at December 31, 2024. The following table presents scheduled maturities of time certificates of deposit: (Dollars in thousands) Scheduled Maturity Weighted Average Rate Years ending December 31: 2026 $ 1,104,935 3.56 % 2027 70,547 2.73 2028 33,525 3.65 2029 5,563 2.85 2030 6,113 2.15 2031 and thereafter — — Balance at December 31, 2025 $ 1,220,683 3.51 % Time certificates of deposit in denominations of $250 thousand or more totaled $ 355.9 million and $ 353.9 million, respectively, at December 31, 2025 and 2024. -118- Notes to Consolidated Financial Statements – (continued) Note 13 - Borrowings Federal Home Loan Bank Advances Advances payable to the FHLB amounted to $ 626.0 million and $ 1.1 billion, respectively, at December 31, 2025 and 2024. See Note 9 for additional disclosure on derivatives designated as cash flow hedges that were executed to hedge the interest rate risk associated with short-term FHLB advances. The Bank pledges certain qualified investment securities and loans as collateral to the FHLB. As of December 31, 2025 and 2024, the Bank had available borrowing capacity of $ 1.4 billion and $ 753.0 million, respectively, with the FHLB. In addition, the Bank had access to a $ 40.0 million unused line of credit with the FHLB at both December 31, 2025 and 2024. Furthermore, the Bank had standby letters of credit with the FHLB of $ 66.0 million at both December 31, 2025 and December 31, 2024 to collateralize institutional deposits. The following table presents maturities and weighted average interest rates on FHLB advances outstanding as of December 31, 2025: (Dollars in thousands) Scheduled Maturity Weighted Average Rate 2026 $ 390,000 4.26 % 2027 60,000 4.12 2028 90,000 4.33 2029 80,000 3.82 2030 6,000 3.33 2031 and thereafter — — Total $ 626,000 4.19 % Junior Subordinated Debentures Junior subordinated debentures amounted to $ 22.7 million at December 31, 2025 and 2024. The Bancorp sponsored the creation of Trust I and Trust II, Delaware statutory trusts created for the sole purpose of issuing trust preferred securities and investing the proceeds in junior subordinated debentures of the Bancorp. The Bancorp is the owner of all of the common securities of the trusts. In accordance with GAAP, the trusts are treated as unconsolidated subsidiaries. The $ 8.3 million of junior subordinated debentures associated with Trust I mature on September 15, 2035 and bear interest at a rate equal to the three-month SOFR rate plus 1.71 %, or 5.43 % and 6.07 %, respectively, as of December 31, 2025 and 2024. The $ 14.4 million of junior subordinated debentures associated with Trust II mature on November 23, 2035 and bear interest at a rate equal to the three-month SOFR rate plus 1.71 %, or 5.59 % and 6.23 %, respectively, as of December 31, 2025 and 2024. The debentures may be redeemed at par at the Bancorp’s option, subject to the approval of the applicable banking regulator to the extent required under applicable guidelines or policies. See Note 14 for additional discussion of the regulatory capital treatment of trust preferred securities. -119- Notes to Consolidated Financial Statements – (continued) Note 14 - Shareholders' Equity Common Stock Issued in Public Offering On December 16, 2024, the Bancorp completed an underwritten public offering of 2,198,528 shares of its common stock at a public offering price of $ 34.00 per share, and disclosed that the use of proceeds would include investments in the Bank and Bank balance sheet optimization strategies involving the sale of lower-yielding loans and securities, the purchase of debt securities, and the repayment of wholesale funding balances. The net proceeds received from the offering, after deducting underwriting discounts and commissions and operating expenses were $ 70.5 million. Stock Repurchase Program During the second quarter of 2025, the Board of Directors adopted the 2025 Repurchase Program, which authorizes the repurchase of up to 850,000 shares, or approximately 4 %, of the Bancorp’s outstanding common stock. This authority may be exercised from time to time and in such amounts as market conditions warrant, and subject to regulatory considerations. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions, and other corporate liquidity requirements and priorities. Repurchases under the 2025 Repurchase Program are conducted pursuant to a trading plan adopted by the Bancorp that is designed to qualify under Rule 10b5-1 under the Exchange Act. The 2025 Repurchase Program commenced on May 15, 2025 and expires on May 15, 2026 and may be modified, suspended, or discontinued at any time. For the year ended December 31, 2025, the Bancorp repurchased a total of 267,658 shares, at an average price of $ 27.26 and a total cost of $ 7.4 million, under its 2025 Repurchase Program. The total cost included $ 65 thousand of excise tax attributable to shares that were repurchased in 2025. For the year ended December 31, 2024, there were no shares repurchased under the 2024 Repurchase Program. The 2024 Repurchase Program expired on December 31, 2024. For the year ended December 31, 2023, the Bancorp repurchased 200,000 shares at an average price of $ 43.70 and a total cost of $ 8.8 million, under its 2023 Repurchase Program. The total cost included $ 73 thousand of excise tax attributable to shares that were repurchased in 2023. The 2023 Repurchase Program expired on December 31, 2023. Dividends The primary source of liquidity for the Bancorp is dividends received from the Bank. The Bancorp and the Bank are regulated entities and their abilities to pay dividends are subject to regulatory review and restriction. Certain regulatory and statutory restrictions exist regarding dividends, loans, and advances from the Bank to the Bancorp. Generally, the Bank has the ability to pay dividends to the Bancorp subject to minimum regulatory capital requirements. The FDIC and the FRBB have the authority to use their enforcement powers to prohibit a bank or bank holding company, respectively, from paying dividends if, in their opinion, the payment of dividends would constitute an unsafe or unsound practice. Payment of dividends by a bank is also restricted pursuant to various state regulatory limitations. Dividends paid by the Bank to the Bancorp amounted to $ 55.3 million and $ 40.8 million, respectively, for the years ended December 31, 2025 and 2024. Regulatory Capital Requirements The Bancorp and the Bank are subject to various regulatory capital requirements administered by the FRBB and the FDIC, respectively. Regulatory authorities can initiate certain mandatory actions if the Bancorp or the Bank fail to meet minimum capital requirements, which could have a direct material effect on the Corporation’s financial statements. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. These quantitative measures, to ensure capital adequacy, require minimum amounts and ratios. Capital levels at December 31, 2025 exceeded the regulatory minimum levels to be considered “well capitalized.” -120- Notes to Consolidated Financial Statements – (continued) 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: (Dollars in thousands) Actual For Capital Adequacy Purposes To Be “Well Capitalized” Under Prompt Corrective Action Regulations Amount Ratio Amount Ratio Amount Ratio December 31, 2025 Total Capital (to Risk-Weighted Assets): Corporation $ 615,600 12.95 % $ 380,342 8.00 % N/A N/A Bank 607,862 12.79 380,144 8.00 $ 475,180 10.00 % Tier 1 Capital (to Risk-Weighted Assets): Corporation 577,224 12.14 285,256 6.00 N/A N/A Bank 569,486 11.98 285,108 6.00 380,144 8.00 Common Equity Tier 1 Capital (to Risk-Weighted Assets): Corporation 555,227 11.68 213,942 4.50 N/A N/A Bank 569,486 11.98 213,831 4.50 308,867 6.50 Tier 1 Capital (to Average Assets): (1) Corporation 577,224 8.65 267,046 4.00 N/A N/A Bank 569,486 8.53 266,921 4.00 333,651 5.00 December 31, 2024 Total Capital (to Risk-Weighted Assets): Corporation 617,762 12.47 396,309 8.00 N/A N/A Bank 612,603 12.37 396,150 8.00 495,187 10.00 Tier 1 Capital (to Risk-Weighted Assets): Corporation 576,731 11.64 297,232 6.00 N/A N/A Bank 571,572 11.54 297,112 6.00 396,150 8.00 Common Equity Tier 1 Capital (to Risk-Weighted Assets): Corporation 554,734 11.20 222,924 4.50 N/A N/A Bank 571,572 11.54 222,834 4.50 321,872 6.50 Tier 1 Capital (to Average Assets): (1) Corporation 576,731 8.13 283,730 4.00 N/A N/A Bank 571,572 8.06 283,628 4.00 354,536 5.00 (1) Leverage ratio. 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 December 31, 2025 and December 31, 2024. 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 December 31, 2025 and 2024, $ 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. -121- Notes to Consolidated Financial Statements – (continued) 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. The cumulative difference attributable to the adoption of ASC 326 that was quantified at the end of the deferral period was fully phased-in to regulatory capital on January 1, 2025. Note 15 - Revenue from Contracts with Customers The following table summarizes total revenues as presented in the Consolidated Statements of Income (Loss) 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. Years ended December 31, 2025 2024 2023 (Dollars in thousands) Revenue (1) ASC 606 Revenue (2) Revenue (1) ASC 606 Revenue (2) Revenue (1) ASC 606 Revenue (2) Net interest income $ 153,188 $ — $ 128,448 $ — $ 137,098 $ — Noninterest income: Wealth management revenues 41,236 41,236 39,054 39,054 35,540 35,540 Mortgage banking revenues 12,089 — 10,981 — 6,660 — Card interchange fees 5,136 5,136 4,996 4,996 4,921 4,921 Service charges on deposit accounts 3,236 3,236 3,032 3,032 2,806 2,806 Loan related derivative income 2,129 — 467 — 1,390 — Income from bank-owned life insurance 3,349 — 3,041 — 3,488 — Realized losses on securities, net — — ( 31,047 ) — — — Losses on sale of portfolio loans, net — — ( 62,888 ) — — — Gain on sale of bank-owned properties, net (3) 6,994 6,994 988 — — — Other income 1,691 1,142 3,579 1,142 1,335 1,226 Total noninterest income 75,860 57,744 ( 27,797 ) 48,224 56,140 44,493 Total revenues $ 229,048 $ 57,744 $ 100,651 $ 48,224 $ 193,238 $ 44,493 (1) As reported in the Consolidated Statements of Income (Loss). (2) Revenue from contracts with customers in scope of ASC 606. (3) For the year ended December 31, 2025, included herein in accordance with sale-leaseback transaction provisions of ASC 842 and ASC 606. The following table presents revenue from contracts with customers segregated by revenue recognition timing: (Dollars in thousands) Years ended December 31, 2025 2024 2023 Revenue recognized at a point in time: Card interchange fees $ 5,136 $ 4,996 $ 4,921 Service charges on deposit accounts 2,127 1,922 1,842 Gain on sale of bank-owned properties, net 6,994 — — Other income 915 903 983 Revenue recognized over time: Wealth management revenues 41,236 39,054 35,540 Service charges on deposit accounts 1,109 1,110 964 Other income 227 239 243 Total revenues from contracts with customers in scope of ASC 606 $ 57,744 $ 48,224 $ 44,493 Receivables for revenue from contracts with customers consist primarily of amounts due for wealth management services performed for which the Corporation’s performance obligations have been fully satisfied. Receivables amounted to $ 7.0 million and $ 6.0 million, respectively, at December 31, 2025 and 2024 and were included in other assets in the Consolidated Balance Sheets. -122- Notes to Consolidated Financial Statements – (continued) 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 December 31, 2025 and 2024 and were included in other liabilities in the Consolidated Balance Sheets. For commissions and incentives that are in scope of ASC 606, such as those paid to employees in our Wealth Management Services and 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 $ 2.3 million and $ 2.1 million, respectively, at December 31, 2025 and 2024 and were included in other assets in the Consolidated Balance Sheets. The amortization of contract cost assets is recorded within salaries and employee benefits expense Consolidated Statements of Income (Loss). Note 16 - Employee Benefits Defined Benefit Pension Plans Washington Trust maintained a qualified pension plan for the benefit of certain eligible employees who were hired prior to October 1, 2007. 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, 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. In the first quarter of 2025, the qualified pension plan liability was settled through a combination of lump sum payments to participants and the purchase of a group annuity contract from a highly-rated insurance company. This resulted in a pre-tax non-cash pension settlement charge of $ 6.4 million being recognized in noninterest expenses the first quarter of 2025. The settlement charge included the recognition of pre-tax actuarial losses accumulated in AOCL and the effects of the remeasurement of plan assets and liabilities upon settlement. In the third quarter of 2025 and as a result of the plan’s over-funded status, remaining surplus plan assets of $ 10.5 million were transferred directly to the Corporation’s 401(k) Plan (a QRP) to fund non-elective employer contributions. Pension benefit costs and benefit obligations may incorporate various actuarial and other assumptions, such as discount rates, mortality, rate of return on plan assets, and compensation increases. Starting in 2024, pension benefit cost for the qualified pension plan also included considerations for the termination of the qualified pension plan. Washington Trust evaluates assumptions annually. -123- Notes to Consolidated Financial Statements – (continued) The following table presents the plans’ projected benefit obligations, fair value of plan assets and funded (unfunded) status: (Dollars in thousands) Qualified Pension Plan Non-Qualified Retirement Plans At December 31, 2025 2024 2025 2024 Change in Benefit Obligation: Benefit obligation at beginning of period $ 69,667 $ 75,284 $ 12,720 $ 13,195 Service cost (1) — 500 — — Interest cost 15 3,331 652 649 Actuarial (gain) loss ( 1,216 ) ( 3,021 ) 620 ( 176 ) Benefits paid ( 68,195 ) ( 5,586 ) ( 981 ) ( 948 ) Administrative expenses ( 271 ) ( 841 ) — — Benefit obligation at end of period — 69,667 13,011 12,720 Change in Plan Assets: Fair value of plan assets at beginning of period 77,401 82,837 — — Actual return on plan assets 1,572 991 — — Employer contributions — — 981 948 Benefits paid ( 68,195 ) ( 5,586 ) ( 981 ) ( 948 ) Administrative expenses ( 271 ) ( 841 ) — — Transfer to QRP ( 10,507 ) — — — Fair value of plan assets at end of period — 77,401 — — Funded (unfunded) status at end of period (2) $ — $ 7,734 ($ 13,011 ) ($ 12,720 ) (1) Service cost for 2024 represents administrative expenses related to the termination of the qualified pension plan. (2) Funded status of the qualified pension plan is included in other assets in the Consolidated Balance Sheets. Unfunded status of the non-qualified retirement plans is included in other liabilities in the Consolidated Balance Sheets. The non-qualified retirement plans provide for the designation of assets in rabbi trusts. Securities available for sale and other short-term investments designated for this purpose, with the carrying value of $ 12.8 million and $ 13.0 million are included in the Consolidated Balance Sheets at December 31, 2025 and 2024, respectively. There was no accumulated benefit obligation for the qualified pension plan at December 31, 2025, compared to $ 69.7 million at December 31, 2024. The accumulated benefit obligation for the non-qualified retirement plans amounted to $ 13.0 million and $ 12.7 million, respectively, at December 31, 2025 and 2024. The following table presents the amounts included in AOCL related to the qualified pension plan and non-qualified retirement plans: (Dollars in thousands) Qualified Pension Plan Non-Qualified Retirement Plans At December 31, 2025 2024 2025 2024 Net actuarial loss included in AOCL, pre-tax $ — $ 8,936 $ 3,144 $ 2,640 -124- Notes to Consolidated Financial Statements – (continued) The following table presents components of net periodic benefit cost and other amounts recognized in other comprehensive income (loss), on a pre-tax basis: (Dollars in thousands) Qualified Pension Plan Non-Qualified Retirement Plans Years ended December 31, 2025 2024 2023 2025 2024 2023 Net Periodic Benefit Cost: Service cost (1) $ — $ 500 $ 1,403 $ — $ — $ 156 Interest cost (2) 15 3,331 3,540 652 649 706 Expected return on plan assets (2) ( 34 ) ( 4,111 ) ( 4,590 ) — — — Recognized net actuarial loss (2) — — — 115 123 237 Net periodic benefit cost before settlement ( 19 ) ( 280 ) 353 767 772 1,099 Pension plan settlement charge 6,436 — — — — — Net periodic benefit cost 6,417 ( 280 ) 353 767 772 1,099 Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss) (on a pre-tax basis): Net change ( 8,936 ) 99 6,991 504 ( 299 ) ( 516 ) Recognized in other comprehensive income (loss) ( 8,936 ) 99 6,991 504 ( 299 ) ( 516 ) Total recognized in net periodic benefit cost and other comprehensive income (loss) ($ 2,519 ) ($ 181 ) $ 7,344 $ 1,271 $ 473 $ 583 (1) Included in salaries and employee benefits expense in the Consolidated Statements of Income (Loss). Service cost for 2024 represents administrative expenses related to the termination of the qualified pension plan. (2) Included in other expenses in the Consolidated Statements of Income (Loss). Assumptions The following table presents the measurement date and weighted-average assumptions used to determine benefit obligations at December 31, 2025 and 2024: Qualified Pension Plan Non-Qualified Retirement Plans 2025 2024 2025 2024 Measurement date Dec 31, 2025 Dec 31, 2024 Dec 31, 2025 Dec 31, 2024 Discount rate N/A 4.53 % 5.33 % 5.60 % Rate of compensation increase N/A N/A N/A N/A The following table presents the measurement date and weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31, 2025, 2024 and 2023: Qualified Pension Plan Non-Qualified Retirement Plans 2025 2024 2023 2025 2024 2023 Measurement date Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Equivalent single discount rate for benefit obligations N/A 4.51 % 5.54 % 5.64 % 5.15 % 5.50 % Equivalent single discount rate for service cost N/A N/A 5.60 N/A 5.27 5.61 Equivalent single discount rate for interest cost N/A 4.51 5.43 5.34 5.11 5.40 Expected long-term return on plan assets N/A 4.75 5.25 N/A N/A N/A Rate of compensation increase N/A 0.50 5.00 N/A N/A 5.00 The discount rate assumption for defined benefit pension plans is reset on the measurement date. Discount rates are selected by matching expected future benefit payments stream to a yield curve based on a selection of high-quality fixed-income debt securities. Decreases in discount rates increase the present value of pension obligations and increase our pension costs, while increases in discount rates have the opposite effect. -125- Notes to Consolidated Financial Statements – (continued) The "spot rate approach" was utilized in the calculation of interest and service cost. The spot rate approach applies separate discount rates for each projected benefit payment in the calculation of interest and service cost. This approach provides a more precise measurement of interest cost and service cost by improving the correlation between projected benefit cash flows and their corresponding spot rates. As noted above, the defined benefit pension plans were previously amended to freeze benefit accruals, and therefore there is no longer a service cost component. The expected long-term rate of return on plan assets was based on what the Corporation believed was realistically achievable based on the types of assets held by the plan and the plan’s investment practices. The assumption was updated annually, taking into account the asset allocation, historical asset return trends on the types of assets held and the current and expected economic conditions. Decreases in the long-term rate of return assumption on plan assets increase pension costs. Plan Assets As disclosed, the termination of the qualified pension plan was completed in 2025 and remaining surplus assets were transferred directly to the Corporation’s 401(k) plan. The following table presents the fair values of the qualified pension plan’s assets at December 31, 2024: (Dollars in thousands) Fair Value Measurements Using Fair Value December 31, 2024 Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 29,950 $ — $ — $ 29,950 Obligations of U.S. government-sponsored enterprises — 42,052 — 42,052 Obligations of states and political subdivisions — 816 — 816 Corporate bonds — 496 — 496 Mutual funds 4,087 — — 4,087 Total plan assets $ 34,037 $ 43,364 $ — $ 77,401 The qualified pension plan used fair value measurements to record fair value adjustments to the securities held in its investment portfolio. When available, the qualified pension plan used quoted market prices to determine the fair value of securities; such items were classified as Level 1. This category included cash and cash equivalents, as well as exchange-traded mutual funds. Level 2 securities in the qualified pension plan included debt securities with quoted prices, which are traded less frequently than exchange-traded instruments, whose values were determined using matrix pricing with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category included obligations of U.S. government-sponsored enterprises, obligations of states and political subdivisions and corporate bonds. In certain cases where there was limited activity or less transparency around inputs to the valuation, securities would be classified as Level 3. As of December 31, 2024, the qualified pension plan did not have any securities in the Level 3 category. The following table presents the asset allocations of the qualified pension plan, by asset category, at December 31, 2024: Allocation Asset Category: Cash and cash equivalents 38.7 % Fixed income securities (1) 56.0 Mutual funds 5.3 Total 100.0 % (1) Includes obligations of U.S. government agencies, U.S. government-sponsored enterprises, states and political subdivisions, and corporate bonds. -126- Notes to Consolidated Financial Statements – (continued) Cash Flows Contributions The Code permits flexibility in plan contributions so that normally a range of contributions is possible. The Corporation expects to contribute $ 1.0 million in benefits payments to the non-qualified retirement plans in 2026. Estimated Future Benefit Payments The following table presents the benefit payments expected to be paid: (Dollars in thousands) Non-Qualified Retirement Plans Years ending December 31, 2026 $ 1,017 2027 1,044 2028 1,049 2029 1,051 2030 1,025 2031 and thereafter 4,847 401(k) Plan The Corporation’s 401(k) Plan, which covers substantially all employees, provides a matching contribution of up to a maximum of 3 % of an employee’s eligible compensation. In addition, effective January 1, 2024, participating employees receive a non-elective employer contribution of 4 % of eligible compensation. Prior to January 1, 2024, only employees who were ineligible for participation in the qualified defined benefit pension plan received the non-elective employer contribution of 4%. As noted above, as the result of the terminated qualified pension plan’s over-funded status, remaining surplus assets were transferred directly to the Corporation’s 401(k) Plan, a QRP, and are being used to fund non-elective employer contributions. QRP assets amounted to $ 10.0 million at December 31, 2025, are invested in a money market mutual fund and are included in short-term investments in the Consolidated Balance Sheets. Total employer contributions under this plan amounted to $ 4.3 million, $ 4.2 million and $ 3.5 million in 2025, 2024 and 2023, respectively. Deferred Compensation Plan The Amended and Restated Nonqualified Deferred Compensation Plan provides supplemental retirement and tax benefits to directors and certain officers. The plan is funded primarily through pre-tax contributions made by the participants. The assets and liabilities of the Deferred Compensation Plan are recorded at fair value in the Consolidated Balance Sheets. The participants in the plan bear the risk of market fluctuations of the underlying assets. The accrued liability related to this plan amounted to $ 22.2 million and $ 21.5 million, respectively, at December 31, 2025 and 2024, and is included in other liabilities on the accompanying Consolidated Balance Sheets. The corresponding invested assets are reported in other assets in the Consolidated Balance Sheets. Note 17 - Share-Based Compensation Arrangements The Corporation’s equity compensation plans include the 2003 Stock Incentive Plan, the 2013 Stock Option and Incentive Plan and the 2022 Long Term Incentive Plan, which have been approved by the Corporation’s Board of Directors and shareholders. Awards are being granted from the 2022 Long Term Incentive Plan, as there are no securities remaining available for grants under the 2003 Stock Incentive Plan or 2013 Stock Option and Incentive Plan. The maximum number of shares of common stock that may be issued under the 2022 Long Term Incentive Plan is 770,486 at December 31, 2025 and is subject to adjustment in accordance with the terms of this plan. The types of permitted equity awards under the 2022 Long Term Incentive Plan include stock options (both incentive and non-qualified options), stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, cash-based awards, and dividend equivalent rights. See Item 12 for additional information regarding the equity compensation plans. Reserved Shares As of December 31, 2025, a total of 999,105 common stock shares were reserved for issuance under the 2003 Stock Incentive Plan, 2013 Stock Option and Incentive Plan and 2022 Long Term Incentive Plan. -127- Notes to Consolidated Financial Statements – (continued) Share-based Compensation Expense The following table presents share-based compensation expense and the related income tax benefits recognized in the Consolidated Statements of Income (Loss) for stock options, restricted stock units and performance share units: (Dollars in thousands) Years ended December 31, 2025 2024 2023 Share-based compensation expense $ 3,026 $ 2,473 $ 2,064 Related income tax benefits (1) $ 547 $ 441 $ 492 (1) Includes $ 210 thousand, $ 183 thousand, and $ 34 thousand, respectively, of excess tax expense recognized upon the settlement of share-based compensation awards in 2025, 2024, and 2023. As of December 31, 2025, there was $ 4.8 million of total unrecognized compensation cost related to share-based compensation arrangements, including stock options, restricted stock units and performance share units granted under the Plans. That cost is expected to be recognized over a weighted average period of 2.1 years. Stock Options The exercise price of each stock option may not be less than the fair market value of the Bancorp’s common stock on the date of grant, and options shall have a term of no more than ten years. Stock options are designated as either non-qualified or incentive stock options. For the years ended 2025, 2024 and 2023, all stock options granted by the Corporation were designated as non-qualified stock options. Washington Trust uses historical data to estimate stock option exercise and employee departure behavior in the option-pricing model. The expected term of options granted was derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding. Expected volatility was based on historical volatility of Washington Trust shares. The risk-free rate for periods within the contractual life of the stock option was based on the U.S. Treasury yield curve in effect at the date of grant. The following presents the assumptions used in determining the grant date fair value of the stock option awards granted to certain key employees: 2025 2024 2023 Options granted 63,950 64,050 49,000 Cliff vesting period (years) 3 3 3 Expected term (years) 7 7 6.5 Expected dividend yield 5.61 % 4.99 % 4.38 % Weighted average expected volatility 36.40 % 35.63 % 33.15 % Weighted average risk-free interest rate 3.91 % 4.50 % 4.85 % Weighted average grant-date fair value $ 6.92 $ 7.89 $ 6.71 -128- Notes to Consolidated Financial Statements – (continued) The following table presents a summary of stock options outstanding as of and for the year ended December 31, 2025: Number of Stock Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (000’s) Options outstanding at beginning of period 432,220 $ 42.84 Granted 63,950 30.79 Exercised — — Forfeited or expired ( 17,300 ) 39.17 Options outstanding at end of period 478,870 $ 41.36 5.78 $ 118 Options exercisable at end of period 305,870 $ 47.79 3.94 $ — The total intrinsic value is the amount by which the fair value of the underlying stock exceeds the exercise price of an option on the exercise date. There were no stock options exercised in 2025 or 2023. The total intrinsic value of stock options exercised in 2024 was $ 56 thousand. The following table presents additional information concerning options outstanding and options exercisable at December 31, 2025: Options Outstanding Options Exercisable Exercise Price Ranges Number of Shares Weighted Average Remaining Life (Years) Weighted Average Exercise Price Number of Shares Weighted Average Exercise Price $ 20.01 to $ 30.00 46,050 7.80 $ 26.42 — $ — $ 30.01 to $ 40.00 186,139 7.83 31.60 59,189 32.23 $ 40.01 to $ 50.00 121,544 4.31 47.33 121,544 47.33 $ 50.01 to $ 60.00 125,137 3.41 55.60 125,137 55.60 Total 478,870 5.78 $ 41.36 305,870 $ 47.79 Restricted Stock Units The Corporation grants restricted stock units to directors and certain key employees, which vest over 3 -years with either cliff or graded vesting. The Corporation granted restricted stock units totaling 80,462 , 74,751 and 30,862 , respectively, in 2025, 2024 and 2023. The following table presents a summary of restricted stock units as of and for the year ended December 31, 2025: Number of Shares Weighted Average Grant Date Fair Value Beginning of period 108,590 $ 30.98 Granted 80,462 30.90 Vested ( 17,552 ) 46.79 Forfeited — — End of period 171,500 $ 29.33 Performance Share Units The Corporation grants performance share units to certain key employees providing the opportunity to earn shares of common stock over a 3 -year performance period. The number of shares to be vested will be contingent upon the Corporation’s attainment of certain performance measures as detailed in the performance share unit award agreements. -129- Notes to Consolidated Financial Statements – (continued) The following table presents a summary of outstanding performance share units as of December 31, 2025: Grant Date Fair Value per Share Weighted Average Current Performance Assumption Expected Number of Shares Performance share units awarded in: 2025 $ 31.33 100 % 32,240 2024 24.70 100 % 39,053 2023 47.35 84 % 28,006 Total 99,299 The following table presents a summary of performance share units as of and for the year ended December 31, 2025: Number of Shares Weighted Average Grant Date Fair Value Beginning of period 96,093 $ 40.53 Granted 32,240 31.33 Vested ( 24,761 ) 57.27 Forfeited (1) ( 4,273 ) 43.56 End of period 99,299 $ 33.24 (1) The number of forfeited shares also includes adjustments made to performance measure estimates on outstanding awards that have not yet vested. Note 18 - Business Segments The Corporation manages its operations through two reportable business segments, consisting of Banking and Wealth Management Services. The Corporation’s reportable business segments are determined by the Chairman and Chief Executive Officer, and the Senior Executive Vice President, Chief Financial Officer and Treasurer, the designated CODMs. An allocation methodology is utilized to allocate income and expenses to the business segments. Direct activities are assigned to the appropriate business segment to which the activity relates. Indirect activities, such as corporate, technology and other support functions, are allocated to business segments primarily based upon full-time equivalent employee computations. The Banking segment includes commercial, residential, and consumer lending activities; mortgage banking activities; deposit generation; treasury management services; other banking activities, including customer support and the operation of ATMs, telephone banking, internet banking, and mobile banking services; as well as investment portfolio and wholesale funding activities. Wealth management services and operations are provided through the Bank and its registered investment adviser subsidiary. The Wealth Management Services segment provides investment management; holistic financial planning services; personal trust and estate services, including services as trustee, personal representative, and custodian; settlement of decedents’ estates; and institutional trust services, including custody and fiduciary services. The CODMs evaluate the financial performance of each business segment, which is measured based upon the business segment’s net income. Components of net income for the business segments that are reviewed by the CODMs include net interest income, provision for credit losses, noninterest income, noninterest expense, and income tax expense. The CODMs, in conjunction with management committees (such as the ALCO) and certain members of executive management, evaluates financial performance to make decisions related to the products and services that are offered, pricing, and the allocation of resources, for each business segment. -130- Notes to Consolidated Financial Statements – (continued) The following tables presents the components of net income (loss), as well as other supplemental information for Washington Trust’s reportable business segments: (Dollars in thousands) Year ended December 31, 2025 Banking Wealth Management Services Consolidated Total Total interest income and dividend income $ 318,091 $ — $ 318,091 Total interest expense 164,903 — 164,903 Net interest income 153,188 — 153,188 Provision for credit losses 9,200 — 9,200 Net interest income after provision for credit losses 143,988 — 143,988 Noninterest income 33,887 41,973 75,860 Noninterest expenses: Salaries and employee benefits 69,485 22,283 91,768 Outsourced services 13,552 3,385 16,937 Net occupancy 9,793 943 10,736 Equipment 3,303 287 3,590 Legal, audit and professional fees 2,199 663 2,862 FDIC deposit insurance costs 4,580 — 4,580 Advertising and promotion 2,439 480 2,919 Amortization of intangibles — 762 762 Other expenses 14,563 3,718 18,281 Total noninterest expense 119,914 32,521 152,435 Income before income taxes 57,961 9,452 67,413 Income tax expense 12,772 2,397 15,169 Net income $ 45,189 $ 7,055 $ 52,244 Supplemental Information: Total assets at period end $ 6,558,488 $ 63,206 $ 6,621,694 Expenditures for long-lived assets 1,956 49 2,005 Depreciation expense (1) 3,125 330 3,455 (1) Included in net occupancy and equipment expenses in the table above. Noninterest income in 2025 for the Banking segment included a $ 7.0 million net gain associated with sale-leaseback transactions that were completed for five branch locations. See additional disclosure regarding the sale-leaseback transactions in Note 7. Also, in 2025, total other expenses included a $ 6.4 million pension plan settlement charge, of which $ 4.9 million was included in the Banking segment and $ 1.5 million was included in the Wealth Management Services segment. See additional disclosure regarding the pension plan settlement charge in Note 16. -131- Notes to Consolidated Financial Statements – (continued) (Dollars in thousands) Year ended December 31, 2024 Banking Wealth Management Services Consolidated Total Total interest and dividend income $ 340,678 $ — $ 340,678 Total interest expense 212,230 — 212,230 Net interest income 128,448 — 128,448 Provision for credit losses 2,400 — 2,400 Net interest income after provision for credit losses 126,048 — 126,048 Noninterest (loss) income ( 69,609 ) 41,812 ( 27,797 ) Noninterest expenses: Salaries and employee benefits 66,482 19,778 86,260 Outsourced services 12,340 3,918 16,258 Net occupancy 8,726 1,059 9,785 Equipment 3,486 352 3,838 Legal, audit and professional fees 2,473 655 3,128 FDIC deposit insurance costs 5,513 — 5,513 Advertising and promotion 2,252 374 2,626 Amortization of intangibles — 826 826 Other expenses 7,517 1,318 8,835 Total noninterest expense 108,789 28,280 137,069 (Loss) income before income taxes ( 52,350 ) 13,532 ( 38,818 ) Income tax (benefit) expense ( 13,530 ) 2,771 ( 10,759 ) Net (loss) income ($ 38,820 ) $ 10,761 ($ 28,059 ) Supplemental Information: Total assets at period end $ 6,870,612 $ 60,035 $ 6,930,647 Expenditures for long-lived assets 3,862 139 4,001 Depreciation expense (1) 3,530 404 3,934 (1) Included in net occupancy and equipment expenses in the statement of operations above. Noninterest income in 2024 for the Wealth Management Services segment included income of $ 2.1 million associated with a litigation settlement. Additionally, the sale of securities and reclassification of residential mortgage loans to held for sale in connection with the balance sheet repositioning transactions that were executed in December 2024 impacted the results for the Banking segment. See additional discussion of the impact of these transactions in Notes 3 and 10. -132- Notes to Consolidated Financial Statements – (continued) (Dollars in thousands) Year ended December 31, 2023 Banking Wealth Management Services Consolidated Total Total interest and dividend income $ 308,622 $ 37 $ 308,659 Total interest expense 171,561 — 171,561 Net interest income 137,061 37 137,098 Provision for credit losses 3,200 — 3,200 Net interest income after provision for credit losses 133,861 37 133,898 Noninterest income 20,006 36,134 56,140 Noninterest expenses: Salaries and employee benefits 62,013 20,445 82,458 Outsourced services 10,972 3,549 14,521 Net occupancy 8,313 1,323 9,636 Equipment 3,841 477 4,318 Legal, audit and professional fees 2,751 1,140 3,891 FDIC deposit insurance costs 4,667 — 4,667 Advertising and promotion 2,140 422 2,562 Amortization of intangibles — 843 843 Other expenses 8,269 2,392 10,661 Total noninterest expense 102,966 30,591 133,557 Income before income taxes 50,901 5,580 56,481 Income tax expense 7,028 1,277 8,305 Net income $ 43,873 $ 4,303 $ 48,176 Supplemental Information: Total assets at period end $ 7,146,096 $ 56,751 $ 7,202,847 Expenditures for long-lived assets 5,013 35 5,048 Depreciation expense (1) 3,460 545 4,005 (1) Included in net occupancy and equipment expenses in the statement of operations above. -133- Notes to Consolidated Financial Statements – (continued) Note 19 - Other Comprehensive Income The following tables present the activity in other comprehensive income: (Dollars in thousands) Year ended December 31, 2025 Pre-tax Amounts Income Tax (Expense) Benefit Net of Tax Available for Sale Debt Securities: Changes in fair value of available for sale debt securities $ 38,389 ($ 9,693 ) $ 28,696 Cash Flow Hedges: Changes in fair value of cash flow hedges ( 1,540 ) 383 ( 1,157 ) Net cash flow hedge losses reclassified into earnings (1) 7,956 ( 2,003 ) 5,953 Net change in the fair value of cash flow hedges 6,416 ( 1,620 ) 4,796 Defined Benefit Plan Obligations: Defined benefit plan obligation remeasurement 1,881 ( 408 ) 1,473 Amortization of net actuarial losses into earnings (2) 115 ( 29 ) 86 Pension plan settlement charge reclassified into earnings 6,436 ( 1,625 ) 4,811 Net change in defined benefit plan obligations 8,432 ( 2,062 ) 6,370 Total other comprehensive income $ 53,237 ($ 13,375 ) $ 39,862 (1) See Note 9 for additional information on the pre-tax amounts related to cash flow hedges that were reclassified into earnings. (2) See Note 16 for additional information on the pre-tax amounts related to defined benefit plans that were reclassified into earnings. (Dollars in thousands) Year ended December 31, 2024 Pre-tax Amounts Income Tax (Expense) Benefit Net of Tax Available for Sale Debt Securities: Changes in fair value of available for sale debt securities ($ 12,050 ) $ 2,657 ($ 9,393 ) Net losses on securities reclassified into earnings 31,047 ( 7,502 ) 23,545 Net change in fair value of available for sale debt securities 18,997 ( 4,845 ) 14,152 Cash Flow Hedges: Changes in fair value of cash flow hedges 3,506 ( 918 ) 2,588 Net cash flow hedge losses reclassified into earnings (1) 6,830 ( 1,737 ) 5,093 Net change in the fair value of cash flow hedges 10,336 ( 2,655 ) 7,681 Defined Benefit Plan Obligations: Defined benefit plan obligation remeasurement 77 ( 19 ) 58 Amortization of net actuarial losses into earnings (2) 123 ( 32 ) 91 Net change in defined benefit plan obligations 200 ( 51 ) 149 Total other comprehensive income $ 29,533 ($ 7,551 ) $ 21,982 (1) See Note 9 for additional information on the pre-tax amounts related to cash flow hedges that were reclassified into earnings. (2) See Note 16 for additional information on the pre-tax amounts related to defined benefit plans that were reclassified into earnings. -134- Notes to Consolidated Financial Statements – (continued) (Dollars in thousands) Year ended December 31, 2023 Pre-tax Amounts Income Tax (Expense)Benefit Net of Tax Available for Sale Debt Securities: Changes in fair value of available for sale debt securities $ 20,163 ($ 5,721 ) $ 14,442 Cash Flow Hedges: Changes in fair value of cash flow hedges 1,647 ( 346 ) 1,301 Net cash flow hedge losses reclassified into earnings (1) 7,563 ( 1,838 ) 5,725 Net change in the fair value of cash flow hedges 9,210 ( 2,184 ) 7,026 Defined Benefit Plan Obligations: Defined benefit plan obligation remeasurement ( 6,712 ) 1,712 ( 5,000 ) Amortization of net actuarial losses into earnings (2) 237 ( 58 ) 179 Net change in defined benefit plan obligations ( 6,475 ) 1,654 ( 4,821 ) Total other comprehensive income $ 22,898 ($ 6,251 ) $ 16,647 (1) See Note 9 for additional information on the pre-tax amounts related to cash flow hedges that were reclassified into earnings. (2) See Note 16 for additional information on the pre-tax amounts related to defined benefit plans that were reclassified into earnings. The following tables present the changes in AOCL by component, net of tax: (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 Balance at December 31, 2024 ($ 102,439 ) ($ 7,938 ) ($ 8,794 ) ($ 119,171 ) Other comprehensive income (loss) before reclassifications 28,696 ( 1,157 ) 1,473 29,012 Amounts reclassified from AOCL — 5,953 4,897 10,850 Net other comprehensive income 28,696 4,796 6,370 39,862 Balance at December 31, 2025 ($ 73,743 ) ($ 3,142 ) ($ 2,424 ) ($ 79,309 ) (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 Balance at December 31, 2023 ($ 116,591 ) ($ 15,619 ) ($ 8,943 ) ($ 141,153 ) Other comprehensive (loss) income before reclassifications ( 9,393 ) 2,588 58 ( 6,747 ) Amounts reclassified from AOCL 23,545 5,093 91 28,729 Net other comprehensive income 14,152 7,681 149 21,982 Balance at December 31, 2024 ($ 102,439 ) ($ 7,938 ) ($ 8,794 ) ($ 119,171 ) -135- Notes to 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 Balance at December 31, 2022 ($ 131,033 ) ($ 22,645 ) ($ 4,122 ) ($ 157,800 ) Other comprehensive income (loss) before reclassifications 14,442 1,301 ( 5,000 ) 10,743 Amounts reclassified from AOCL — 5,725 179 5,904 Net other comprehensive income (loss) 14,442 7,026 ( 4,821 ) 16,647 Balance at December 31, 2023 ($ 116,591 ) ($ 15,619 ) ($ 8,943 ) ($ 141,153 ) Note 20 - Earnings per Common Share The following table presents the calculation of EPS: (Dollars and shares in thousands, except per share amounts) Years ended December 31, 2025 2024 2023 Earnings for basic and diluted EPS calculations: Net income (loss) $ 52,244 ($ 28,059 ) $ 48,176 Less: dividends and undistributed earnings allocated to participating securities — ( 21 ) 85 Net income (loss) available to common shareholders $ 52,244 ($ 28,038 ) $ 48,091 Shares for basic and diluted EPS calculations: Weighted average common shares outstanding for basic EPS 19,180 17,149 17,033 Dilutive effect of common stock equivalents 101 — 29 Weighted average common and potential common shares outstanding for diluted EPS 19,281 17,149 17,062 EPS: Basic earnings (loss) per common share $ 2.72 ($ 1.63 ) $ 2.82 Diluted earnings (loss) per common share $ 2.71 ($ 1.63 ) $ 2.82 Shares excluded from the calculation of diluted EPS: Weighted average anti-dilutive common stock equivalents (1) 431 481 466 (1) For 2025 and 2023, weighted average anti-dilutive common stock equivalents represent share-based compensation awards not included in the calculation of common shares outstanding for purposes of calculating diluted EPS as the grant prices were greater than the average market price of Bancorp’s common stock, and therefore were anti-dilutive. For 2024, the dilutive effect of common stock equivalents was excluded from the calculation of diluted EPS because the Corporation reported a net loss and the inclusion would have an anti-dilutive effect. -136- Notes to Consolidated Financial Statements – (continued) Note 21 - Commitments and Contingencies Financial Instruments with Off-Balance Risk 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 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 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 9 for additional disclosure pertaining to derivative financial instruments. Financial Instruments Whose Contract Amounts Represent Credit Risk (Unfunded Commitments) Commitments to Extend Credit Commitments to extend credit are agreements to lend to a customer as long as there are no violations of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments are expected to expire without being drawn upon, total commitment amounts do not necessarily represent future cash requirements. Each borrower’s creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained is based on management’s credit evaluation of the borrower. Standby Letters of Credit Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. These standby letters of credit are primarily issued to support the financing needs of the Bank’s commercial customers. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loan facilities to customers. The collateral supporting those commitments is essentially the same as for other commitments. Most standby letters of credit extend for one year. At December 31, 2025 and 2024, 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. The following table presents the contractual and notional amounts of financial instruments with off-balance sheet risk: (Dollars in thousands) December 31, 2025 2024 Financial instruments whose contract amounts represent credit risk: Commitments to extend credit $ 952,599 $ 968,858 Standby letters of credit 7,774 12,455 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. The activity in the ACL on unfunded commitments for the year ended December 31, 2025 is presented below: (Dollars in thousands) Commercial Consumer CRE C&I Total Commercial Residential Real Estate Home Equity Other Total Consumer Total Beginning Balance $ 822 $ 589 $ 1,411 $ 18 $ — $ 11 $ 11 $ 1,440 Provision ( 304 ) 1 ( 303 ) 5 — ( 2 ) ( 2 ) ( 300 ) Ending Balance $ 518 $ 590 $ 1,108 $ 23 $ — $ 9 $ 9 $ 1,140 -137- Notes to Consolidated Financial Statements – (continued) The activity in the ACL on unfunded commitments for the year ended December 31, 2024 is presented below: (Dollars in thousands) Commercial Consumer CRE C&I Total Commercial Residential Real Estate Home Equity Other Total Consumer Total Beginning Balance $ 1,091 $ 822 $ 1,913 $ 15 $ — $ 12 $ 12 $ 1,940 Provision ( 269 ) ( 233 ) ( 502 ) 3 — ( 1 ) ( 1 ) ( 500 ) Ending Balance $ 822 $ 589 $ 1,411 $ 18 $ — $ 11 $ 11 $ 1,440 The activity in the ACL on unfunded commitments for the year ended December 31, 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 ( 145 ) ( 166 ) ( 311 ) ( 35 ) — ( 4 ) ( 4 ) ( 350 ) Ending Balance $ 1,091 $ 822 $ 1,913 $ 15 $ — $ 12 $ 12 $ 1,940 Other Contingencies Litigation The Corporation is involved in various claims and legal proceedings arising out of the ordinary course of business. 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 (loss) of the Corporation. Other Matters As previously disclosed in 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 agreed, over a five-year period, to (i) provide $ 7.0 million in loan subsidies and (ii) commit $ 2.0 million for focused community outreach and marketing efforts. The expenses associated with community outreach and marketing efforts are being recorded in the period in which the activities occur and are consistent with historical spending levels. In addition, the Bank committed to opening two full-service branches in specific census tracts in Rhode Island, including the branch in Olneyville, Rhode Island that opened in 2024 and the branch in Pawtucket, Rhode Island, which is expected to open in the latter half of 2026. The settlement included no civil penalties levied against the Bank. Other When selling a residential real estate mortgage loan or acting as originating agent on behalf of a third party, Washington Trust generally makes various representations and warranties. The specific representations and warranties depend on the nature of the transaction and the requirements of the buyer. Contractual liability may arise when the representations and warranties are breached. In the event of a breach of these representations and warranties, Washington Trust may be required to either repurchase the residential real estate mortgage loan (generally at unpaid principal balance plus accrued interest) with the identified defects or indemnify (“make-whole”) the investor for its losses. In the case of a repurchase, the Corporation will bear any subsequent credit loss on the residential real estate mortgage loan. Washington Trust has experienced an insignificant number of repurchase demands over a period of many years. The carrying value of loans repurchased due to representation and warranty claims was $ 1.4 million and $ 1.5 million, respectively, as of December 31, 2025 and 2024. Washington Trust has recorded a reserve for its exposure to losses for premium recapture and the obligation to indemnify or repurchase previously sold residential real estate mortgage loans. The reserve balance amounted to $ 310 thousand and $ 245 thousand, respectively, at December 31, 2025 and 2024, and is included in other liabilities in the Consolidated Balance Sheets. Any change in the estimate is recorded in mortgage banking revenues in the Consolidated Statements of Income (Loss). -138- Notes to Consolidated Financial Statements – (continued) Note 22 - Parent Company Financial Statements The following tables present parent company only condensed financial statements of the Bancorp, reflecting the investment in the Bank on the equity basis of accounting. The Statements of Changes in Shareholders’ Equity for the parent company only are identical to the Consolidated Statements of Changes in Shareholders’ Equity and are therefore not presented. Balance Sheets (Dollars in thousands) December 31, 2025 2024 Assets: Cash on deposit with bank subsidiary $ 6,193 $ 5,099 Investment in subsidiaries at equity value: Bank 557,843 516,566 Non-bank 684 684 Dividends receivable from bank subsidiary 11,000 10,200 Other assets 2,385 1,871 Total assets $ 578,105 $ 534,420 Liabilities and Shareholders’ Equity: Junior subordinated debentures $ 22,681 $ 22,681 Dividends payable 11,661 11,469 Other liabilities 179 542 Shareholders’ equity 543,584 499,728 Total liabilities and shareholders’ equity $ 578,105 $ 534,420 Statements of Income (Loss) (Dollars in thousands) Years ended December 31, 2025 2024 2023 Income: Dividends from subsidiaries: Bank $ 55,286 $ 40,800 $ 38,822 Non-bank 42 48 46 Other losses — ( 100 ) ( 300 ) Total income 55,328 40,748 38,568 Expenses: Interest on junior subordinated debentures 1,373 1,593 1,543 Other expenses 475 530 681 Total expenses 1,848 2,123 2,224 Income before income taxes 53,480 38,625 36,344 Income tax benefit 375 456 542 Income before equity in undistributed (losses) earnings of subsidiaries 53,855 39,081 36,886 Equity in undistributed (losses) earnings of subsidiaries: Bank ( 1,611 ) ( 67,139 ) 11,290 Non-bank — ( 1 ) — Net income (loss) $ 52,244 ($ 28,059 ) $ 48,176 -139- Notes to Consolidated Financial Statements – (continued) Statements of Cash Flows (Dollars in thousands) Years ended December 31, 2025 2024 2023 Cash flows from operating activities: Net income (loss) $ 52,244 ($ 28,059 ) $ 48,176 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Equity in undistributed losses (earnings) of subsidiaries: Bank 1,611 67,139 ( 11,290 ) Non-bank — 1 — Deferred income tax expense (benefit) 21 ( 7 ) ( 56 ) (Increase) decrease in dividend receivable ( 801 ) ( 275 ) 653 (Increase) decrease in other assets ( 159 ) 77 8 (Decrease) increase in accrued expenses and other liabilities ( 363 ) 266 113 Other, net — 1 2 Net cash provided by operating activities 52,553 39,143 37,606 Cash flows from investing activities: Equity investment in subsidiary bank — ( 70,500 ) — Purchases of other equity investments, net ( 375 ) ( 338 ) ( 263 ) Net cash used in investing activities ( 375 ) ( 70,838 ) ( 263 ) Cash flows from financing activities: Treasury stock purchased ( 7,361 ) — ( 8,814 ) Net proceeds from issuance of common stock in public offering — 70,521 — Net proceeds from stock option exercises and issuance of other equity awards, net of awards surrendered ( 398 ) ( 31 ) ( 754 ) Cash dividends paid ( 43,325 ) ( 38,397 ) ( 38,631 ) Net cash (used in) provided by financing activities ( 51,084 ) 32,093 ( 48,199 ) Net increase (decrease) in cash 1,094 398 ( 10,856 ) Cash at beginning of year 5,099 4,701 15,557 Cash at end of year $ 6,193 $ 5,099 $ 4,701 -140- ITEM 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None.