Washington Trust Q2 profit rises on higher net interest income

Overview

• US community bank's Q2 net income and diluted EPS rose both sequentially and yr/yr

• Net interest income grew 3% from Q1 and 12% yr/yr, aided by margin improvement

• Loan balances rose 2% and deposits increased 4% from Q1, led by commercial lending

Outlook

• Company expects full-year 2026 effective tax rate to be approximately 21.5%

• Company sees permanent improvement to earnings and margin run rate from Q3 2026

• Washington Trust expresses confidence in outlook for remainder of 2026

Result Drivers

• INSTITUTIONAL BANKING - Growth in commercial and industrial loans and deposits was driven by the institutional banking team, per CEO Edward O. Handy III

• CASH FLOW HEDGE AMORTIZATION - Net interest income and margin benefited from the end of cash flow hedge amortization, adding $1.4 mln to net interest income and 9 basis points to NIM

• NONINTEREST INCOME - Wealth management revenues rose 5% and mortgage banking revenues increased 14%, driven by higher transaction-based fees and loan sales volume

Company press release: ID:nPn8x6LRHa

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 1 "strong buy" or "buy", 3 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the banks peer group is "buy."

• Wall Street's median 12-month price target for Washington Trust Bancorp Inc is $34.00, about 7.2% below its July 17 closing price of $36.62

• The stock recently traded at 11 times the next 12-month earnings vs. a P/E of 10 three months ago

Reuters Recommended Reads

• July 20 - MainStreet Bancshares Q2 profit rises on higher interest margin

• July 20 - Peoples Bancorp of North Carolina Q2 net interest income rises

• July 17 - Hingham Institution for Savings Q2 net income more than doubles on higher loan yields, lower funding costs

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)