Thank you, Elliot. Good morning, and welcome to Washington Trust Bancorp, Inc.'

s conference call for the first quarter of 2026. Joining us this morning are members of Washington Trust's executive team: Ned Handy, Chairman and Chief Executive Officer; Mary Noons, President and Chief Operating Officer; Ron Ohsberg, Senior Executive Vice President, Chief Financial Officer and Treasurer; and Bill Wray, Senior Executive Vice President and Chief Risk Officer.

Please note that today's presentation may contain forward-looking statements, and our actual results could differ materially from what is discussed on today's call. Our complete safe harbor statement is contained in our earnings release, which was issued yesterday, as well as other documents that are filed with the SEC.

All of these materials and other public filings are available on our Investor Relations website at ir.washtrust.com. Washington Trust trades on NASDAQ under the symbol WASH.

I'm now pleased to introduce today's host, Washington Trust Chairman and Chief Executive Officer, Ned Handy. Ned?

Thank you, Sharon. Good morning, and thank you for joining our first quarter conference call.

We appreciate your time and your continued interest in Washington Trust. I'll begin with a brief overview of our first quarter results, and then Ron will provide more detail on our financial performance for the quarter.

Following our remarks, Mary and Bill will join us for the question and answer session. Building on the momentum generated throughout 2025, quarterly performance was driven by continued net interest margin expansion, reflecting the underlying strength of our core banking business and continued benefits from our December 2024 balance sheet repositioning transactions.

The Q1 results do, however, include a higher provision related to reserve builds on two CRE credits moved to nonaccrual in March, and we'll provide details on those in the Q&A session. Our capital ratios remain strong, providing the flexibility to support continued execution across the business.

In the first quarter, we completed a digital banking conversion for personal accounts that provides enhanced security and technology and a better customer experience, reinforcing our focus on service and relationships. We will continue the conversion of our business accounts in the ensuing quarters.

With recent industry shifts locally, these investments position us well to attract new customers by pairing modern capabilities with the personalized service that defines Washington Trust. We are also leveraging our strength as a community bank that prioritizes local decision-making to attract experienced bankers to our commercial team.

We recently added new talent across C&I, CRE, and business banking, all of whom bring deep experience and strong client relationships in the region. The institutional banking team we added in January is showing strong momentum that positions us for loan and deposit growth as the year progresses.

In addition, our planned branch opening later this year in Pawtucket, Rhode Island will further expand our presence in the northern part of the state. Overall, we're encouraged by the progress we are making to position the company for long-term success.

With that, I'll turn the call over to Ron to provide additional detail on our financial results. Ron?

Okay. Thank you, Ned, and good morning, everyone.

Net income in the first quarter was $12.6 million, or 66 cents per share, compared to $16 million, or 83 cents per share last quarter. PP&R was down 6% from Q4, and up by 23% year-over-year on an adjusted basis.

Net interest income was $40.5 million, down by 1% from Q4, and up by 11% year-over-year. The margin was 263, up by 7 basis points from Q4, and up by 34 basis points year-over-year.

Q1 included $116,000 of loan prepayment fee income, which benefited NIM by 1 basis point, compared to $516,000, or 3 basis points last quarter. Noninterest income was down $1.2 million, or 6% compared to Q4, and up by 11% year-over-year on an adjusted basis.

Loan-related derivative income, which is transactional in nature, was down by $854,000 compared to Q4. Wealth management revenues were down by $205,000, or 2%.

Average AUA for Q1 decreased by 1%, and increased by 10% year-over-year. Mortgage banking revenues were $3 million, seasonally down 6%, and were up by 32% year-over-year.

Our mortgage pipeline at March 31st was $114 million, up by $33 million, or 41% from the end of December. Noninterest expense totaled $37.8 million in Q1, down by 1%.

Other noninterest expenses were down by $1.2 million in Q1, largely due to a $1 million contribution made to our charitable foundation in Q4. In the first quarter, salary and employee benefits expense was up by $693,000, or 3%, reflecting merit increases and higher payroll taxes associated with the start of a new calendar year.

Our Q1 effective tax rate was 21.6%, and we expect the full year 2026 effective tax rate to be approximately 21.5%. On the balance sheet, total loans were down 2% from December 31st.

Total commercial loans decreased by $95 million, reflecting mainly payoffs in the CRE portfolio. The commercial pipeline in total is approximately $156 million.

Residential loans decreased by $21 million as we continue to amortize that portfolio. In-market deposits were down 2% from the end of Q4, and up by 3% year-over-year, and wholesale funding was down by $50 million, or 8% from the end of December.

Our loan-to-deposit ratio decreased slightly to 96.9% at the end of March. Turning to asset and credit quality, at March 31st nonaccruing loans were 81 basis points on total loans, and increased by $27.5 million from the prior quarter, largely due to two commercial real estate office loans.

Past due loans were 33 basis points on total loans. In the first quarter, we recognized a $4 million provision for credit losses, largely reflecting an increase in specific reserves on the two CRE office loans.

The allowance totaled $41.1 million, or 82 basis points. At this time, I will turn the call back to Ned.

Thanks, Ron. Now we'll take questions.

Hey, good morning, everyone.

Morning, Justin.

I was wondering if you could start off just giving a little more detail on the two office loans. Just anything on geography, and then and maybe some more specifics on, what occurred to drive the downgrades and specific reserves.

Just things like occupancy levels, or or perhaps just how close they they even were to maturity. Not sure if that maybe necessitated new appraisals.

Bill, do you want to take that? Sure.

Sure. They're both loans that have been current up until this point.

In both cases, in March there were sort of triggering events that led to us deciding to make the decision for quarter end to put them on nonaccrual. Both of them have strong, sophisticated sponsors, and we're engaged with both of them right now on One was a maturity; the other doesn't mature until next year.

We're engaged with both of them on on the right next steps. I don't want to get into too much detail on what that means, but we like with most of our assets that have been in, criticized, either special mention or or classified, most of them emerge unscathed.

In this case, though, we took the the step to put reserves in place that we thought were appropriate to reflect any potential loss down the road. Again, I we think they're both solid properties with solid sponsors, and we expect that we'll continue to drive resolution and we're hoping that, within the next few quarters, these will either exit or they will emerge back into performing status.

Got it. Then, were there any general reserves allocated to office, or was it was it all specific with with regard to these two loans?

I guess trying to get a sense of how you think about the risk in the rest of the office book at this point in the cycle for that for this asset class, and if the thinking there has changed at all.

Sure. I think our office exposure peaked at $300 million a couple years ago.

It's now down to 230. We think we've done that with a fairly small amount of charge-offs along the way relatively, we expect to continue to reduce our office exposure over time.

Within, the CECL methodology, we make sure that we use qualitative factors especially to address issues in office, and so we have taken some of those steps. We believe going forward that there's always going to be a handful of properties that are sort of on the bubble, that need some attention and focus.

As you can see, these all of our other office properties are performing. There's There's There aren't delinquencies there that we're concerned about.

We just expect that assets will move into lower ratings, and then will emerge from those, and we we certainly spend a lot of time thinking about maturity wall analysis and refinance risk, and so we're constantly juggling those handful of properties that look like they might raise some issues down the road and try to stay ahead of them. I guess the best way of saying we're cautious on office, and we'll continue to be cautious on office, but we also think the scale of the problems within it are well within our capabilities to handle from an earnings standpoint and a and a reserving standpoint.

Okay. Then, I guess somewhat larger-sized loans here.

It It sounds like they were self-originated. Was that the case, or or were either participations?

Just want to confirm that.

I'm not sure which loans you're referring to, but the there's only there's five loans The The two office

The two office loans that migrated in The two office loans that migrated this quarter, I guess, specifically. Sure.

Sure, actually they're both participations. We're the We're We're the lead on the the Class A the Class A office space one.

We're We're a two-thirds participant and the lead, and then we are the minority participant on the lab space deal.

Gotcha. Then, I guess pivoting a little just on loan growth with the contraction you saw this quarter, can you refresh us just on how to think about growth from here?

I believe we talked about mid-single-digit, call it maybe 5% growth previously. I know a lot's changed since then with some of the geopolitical noise, just curious for an update there.

I'll take that one. Thanks for the question.

We're We're Yes. The quarter saw, pretty significant paydowns, payoffs, and mostly in the CRE space and and not the kind of commensurate new new origination that were that we're used to.

The the path ahead looks very good. We're sticking with our mid-single-digit growth for the year projection, and and it's important that we talk about where that's going to come from.

At this point, we're feeling like CRE is probably going to be low-single-digit growth for the year. They've got some making up to do based on the first quarter payoffs, and then and then we're thinking kind of flat to 1% growth in CRE, which which is is somewhat intentional.

Most of the growth is going to come from our core C&I business and our institutional banking business. We're expecting sort of high-single-digit growth out of our core C&I business, which ya you'll recall is has a current outstanding in the kind of $560 million level, you can you can do the math there.

Then and then most of the C&I growth is going to come out of our relatively new institutional banking group. We expect $50-plus million in fundings in this quarter, and the pipeline is growing.

I think, importantly, alongside that is is the strategic growth in in deposits that'll come from that portion of our C&I business. They're they're expecting to kind of fund at self-fund at a 30% to 40% level, which is much higher than certainly CRE and and much higher than our core C&I business.

That's that's an added benefit. They They joined the group in late January, it's it's, to be expected to take a little while for them to get up and running, but the pipeline is is growing as we expected, and and we're we're very encouraged by that.

Back to the start, sticking with the mid-single-digit growth if not if not a little higher, and and, again, very very encouraged by the by the types of credit, the quality of credit that they're that that that we're seeing in the pipeline build, more to come on that at the end of next quarter.

Great. Then, just one last one on the margin.

I think I might have missed this in the prepared remarks. I know there was some elevated prepayment fees last quarter.

Was there any of that in the in the 263 for the first quarter?

Yes, like 1 basis point.

Okay. Then, I guess just thoughts on on the margin from here.

I think you'll get that lift from the swap termination, but could you just remind us the benefit there and then just also how you're thinking about organic expansion through the year?

Yeah. The the swap termination will add 9 basis points in the second quarter and another 4 basis points in the third quarter.

Then I guess just out--

Yep.

Go ahead.

Go ahead. No, go ahead, Justin.

I was just going to ask outside of that, just beyond the benefit from the swap, just how you're thinking about, just margin lift from here as we get through the year.

There's modest expansion by quarter. First quarter was was probably a a, a a little higher, helped by the prepayment, helped actually helped a little bit by the the the shorter day count in the quarter actually added about 2 basis points to the NIM.

When we look ahead to the fourth quarter, we're we're thinking, 275 to 280 in the in the quarter.

Great. I appreciate it.

Thank you so much.

Sure. Thanks, Justin.

Hey, good morning, guys. Thanks for taking my questions.

Ron, could you just repeat the the last comment you made on the margin, the 275 to 280? Was that for the second quarter or was that for where you expect it to be at year end?

I missed that, sorry. That's

Sorry, Damon, yeah. Just to be clear, fourth quarter.

Fourth quarter, okay.

Yeah. We're looking at 265 to 270 in the second quarter.

Got it. Okay.

Yep, that that jibes with what you were describing from the benefit. Great.

Then, I guess maybe a little bit on expenses and kind of how you're you're thinking about the outlook from from there. You've made some hires.

I'm assuming that's all kind of baked into the numbers. Your I think the expenses were around, what, $37.8 million, just kind of modest growth off of this or do you think you could actually keep it kind of flat?

We're we're actually seeing about a $1 million increase in Q2, and and some of that is really there's there's three areas we're looking at: advertising, mortgage commissions, and then we've got some project implementation expenses that will be coming through in the quarter.

Got it. Okay.

Great. Yeah.

Then,

further to that Damon, further to that, we're adding a branch, which will probably open in the towards the end of the third, beginning of the fourth quarter. Those expenses will start to hit in Q3, and so we're we're probably looking at about $500,000 in in 2026 related to the branch opening.

Okay. Got it.

Great. Then, on wealth management, AUM were down a little bit this quarter.

Was

that just fluctuation of the the market or was there some outflow of of clients?

It was mostly market. By mostly, that means that not all, yes, we we did have some net outflows.

Got it. Okay.

Markets Market, yeah,

you can see markets have rebounded so far in April, no one knows what the future holds, but if it at least, a lot of the a lot of the the declines that we saw in the quarter have reversed so far in the second quarter.

Got it. Okay.

Then just lastly, given the outlook for the loan growth going forward, how do we think about provision and kind of the reserve level? You obviously you built the reserve this quarter for those for those loans that went to nonaccrual status, but if we assume that there's no other credit deterioration, do you kind of, have the provision such that it keeps the reserve flat given the loan growth?

I I we're kind of thinking somewhere in the range of of $1 million to $2 million per quarter.

That

that covers loan growth and and, maybe that gives us a little bit, depending on what we book and when we book it, could give us a little bit of a loan build a reserve build going forward.

Got it. Okay.

Great. That's all that I had.

Thanks so much.

Thanks, Damon.

You're welcome.

Hi. Thanks.

Good morning, Ned, Ron, Mary, and Bill. Thanks for taking my questions.

Just to

just to stay with where Damon was, loan loss provision. The the $4 million loan loss provision, I know you said obviously that was heavy with the office, what exactly was the dollar amount there associated with office of the $4 million build?

Laurie, it was essentially all office. You,

all of it. Got Got it.

Perfect. Then, I just wanted to dive a little bit deeper here in office.

Just I have a series of questions here, thanks for staying with me on this. You've got 59% maturing in the next two years, $136 million.

Is any of that currently in special mention, classified, nonaccrual? If so, when is that actually maturing?

Of the five deals that are in the office space in special mention or classified, one of them matured, and that was one of the deals that we moved to nonaccrual. There's another one, the Class B special mention, that's actually maturing in the third quarter of this year.

One reason we moved it to special mention was just kind of as a marker as we work with the sponsor, who's a well-known and committed sponsor, on a refinance approach. Then the other deal that went to nonaccrual doesn't mature until the third quarter of next year.

As we disclose, we look at all of our maturing office loans very carefully, and when we know enough to, with an emphasis on caution, we will take steps to make it special mention. The deals that we talked about here both were put on special mention, one in the fourth quarter of '24, the other in the third quarter of last year, and you'll also see that we've had some positive migration out of special mention and classified.

The large lab loan, for example, is special mention now, and as free rent burns off, we believe if contractual rates pay as agreed, that that'll be coming out of special mention before too long. We think our migration track record is pretty solid, and we feel the same about the deals that are in there now.

Again, there's five that make up that disclosure.

Great. Thanks, Bill.

Just for my clarification purposes, you had two move into nonaccrual. Was it the $22 million that matured

that

triggered that, or was it the Okay. That one matured, okay.

No, the 22 the $22 million was not the one that matured. The one that matured was the $6.5 million in lab space.

The $6.5 million. That matured.

Got it. The other one, the $22 million, that matures in the third quarter of '27, you said?

Yes.

Okay. Then what is the occupancy running on that one, that Class A?

It's solid. [laughter?]

It's north of 50%, and there's actually been a fair amount of leasing momentum. The move made here was more triggered by notification of a potential lease termination for next year, but that tenant is renegotiating.

This generates a pretty material NOI, and we feel it's a solid property with a solid sponsor in a solid market, but like most sponsors, they're looking ahead and thinking about what their capital requirements are going to be, and so we're having discussions at this point on that topic.

Okay. Then, just the Class B that you mentioned, that $3.8 million that's on special mention, that was new to special mention, what is the occupancy on that and how are you thinking about a resolution there?

It's in the high 60s. It's got some solid tenants.

It's a well-known sponsor to us. By the way, all of these are in our core markets in the tri-state area, and so our expectation is that we'll work something out with the sponsor, and keep it on special mention as long as we need to to make sure it's payments seasoned and then potentially do an upgrade.

Again, special mention here is sort of more just a prudential judgment to put a marker on something and watch it through its refinance process.

Okay. Then, obviously with the 60% occupancy--

Again, it's a fully performing loan at this point, and we expect it to continue that way, but we are being cautious as we face the maturity issue in the third quarter.

Gotcha. Okay.

Then, the lab space, I had thought there were the $33 million, $34 million, I thought that was all related and then it looked like just one piece moved over. Are those two completely separate loans?

Two completely separate loans.

Gotcha. Okay.

The 6.6, that was triggered by the maturity. Debt service coverage here is zero.

Occupancy here is zero, am I thinking about that the right way? Or what is occupancy?

Occupancy, that building is still in its initial lease-up phase, it's zero. The other building is effectively fully leased, and it's just a matter of, as that's a very competitive market.

As free rent burns off and as payments season, we expect that to come back to fully performing and pass-rated. We're just watching as tenants come out of free rent and make their payments.

There's very strong positive momentum on that one. On the other one, again, we're in a situation where it matured, and we're talking to the sponsors about what's going to happen next.

Gotcha. Okay.

The one that's fully leased, the $27.5 million, in other words, positive momentum happens this year, happens next year? I guess when's the free is that Oh, go ahead.

I'm sorry. You cut out a little bit, but if you're asking when that comes back out, again, we think it's probably within the next few quarters.

We want to make sure the tenants are making their payments as agreed and that we're going to let it season a little bit and judge that, but we're feeling very solid about the leasing status and the performance status to date.

Gotcha. Okay.

Then one last question on this lab loan: when does this $27.5 million mature?

That is 2029.

Okay. 2029, okay.

Great. Okay.

Then, yeah, I think that answers all my questions on that. Really appreciate the details that you guys put on page 11.

Actually, oh, I'm so sorry, one more question. You had $2.2 million of Class C that was in special mention last quarter and now it's gone, which is great.

How was that resolved? Was that sold, or what happened there?

No, it ended up being fully leased, and it was performing all along. They were paying as agreed, but now that it's fully leased and we've gone through that process, we moved it back into pass-rated.

Perfect. Okay.

Great. Just two more questions.

Now for you, Bill, I guess. This goes back to you, Ron.

Do you have the spot margin for March?

Yeah, 259.

259, great. Okay.

Then Ned, Ned for you, and this is my last question. Thanks again for taking all my questions.

Buybacks: your capital levels are very, very strong, and your credit obviously ex-office is very, very strong. You're one of the few banks in New England not repurchasing shares.

Can you just help us think a little bit about your approach to buybacks and how you're thinking about it here? Thanks.

Laurie, I'll take it. We consider that all the time, and I think we've talked about it on previous calls.

I can make some arguments in favor of and also against doing the buybacks. Our dividend is still relatively high.

The payout ratio is still relatively high, and so at this point, we maintain a buyback program, but we really are not at this point intending to be buying back shares, yeah, at this point in time.

Great. Thanks for taking my questions.

Sure.

Thanks, Laurie.

Thank you all for joining. As we move through 2026, we remain focused on what has defined us for 226 years: pairing personalized service and local decision-making with a comprehensive suite of financial products and services.

We very much look forward to the quarters ahead and sharing the news about those quarters with you as we progress. Thank you for your time today.

We certainly appreciate your interest and support, and we look forward to speaking with you again soon. Have a great day, everybody.