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What changed in WASHINGTON TRUST BANCORP INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of WASHINGTON TRUST BANCORP INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+394 added−445 removedSource: 10-K (2026-02-24) vs 10-K (2025-02-25)

Top changes in WASHINGTON TRUST BANCORP INC's 2025 10-K

394 paragraphs added · 445 removed · 300 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

71 edited+5 added−37 removed77 unchanged
Biggest changeWe evaluate compensation in relation to market trends and internal pay equity to ensure that we are providing fair and competitive pay; promote and recognize employees for their work successes; provide training and professional development opportunities for employees to enhance their skills; offer a flexible, wide-ranging benefit package to meet the differing needs of our workforce; and provide policies and benefits to help employees create a work-life balance. -8- Additionally, we employ a robust succession planning process, which begins by determining critical roles within the organization; identifying core competencies for individuals in those roles; identifying and assessing possible successors; and providing opportunities for those individuals to develop and hone core competencies through training, mentoring and professional experience.
Biggest changeWe evaluate compensation in relation to market trends and internal pay equity to ensure that we are providing fair and competitive pay; promote and recognize employees for their work successes; provide training and professional development opportunities for employees to enhance their skills; offer a flexible, wide-ranging benefit package to meet the differing needs of our workforce; and provide policies and benefits to help employees create a work-life balance.
Under the FDIC’s prompt corrective action rules, an FDIC supervised institution is considered “well capitalized” if it (i) has a total capital to risk-weighted assets ratio of 10.0% or greater; (ii) a Tier 1 capital to risk-weighted assets ratio of 8.0% or greater; (iii) a common Tier 1 equity ratio of 6.5% or greater, (iv) a leverage capital ratio of 5.0% or greater; and (v) is not subject to any written agreement, order, capital directive, or prompt corrective action directive to meet and maintain a specific capital level for any capital measure.
Under the FDIC’s prompt corrective action rules, an FDIC supervised institution is considered “well capitalized” if it (i) has a total capital to risk-weighted assets ratio of 10.0% or greater; (ii) a Tier 1 capital to risk-weighted assets ratio of 8.0% or greater; (iii) a common equity Tier 1 ratio of 6.5% or greater, (iv) a leverage capital ratio of 5.0% or greater; and (v) is not subject to any written agreement, order, capital directive, or prompt corrective action directive to meet and maintain a specific capital level for any capital measure.
Generally, however, they contain one or more of the following elements: (i) restrictions on trade with or investment in a sanctioned country, including prohibitions against direct or indirect imports from and exports to a sanctioned country and prohibitions on “U.S. persons” engaging in financial or other transactions relating to a sanctioned country or with certain designated persons and entities; (ii) a blocking of assets in which the government or specially designated nationals of the sanctioned country have an interest, by prohibiting transfers of property subject to U.S. jurisdiction (including property in the possession or -15- control of U.S. persons); and (iii) restrictions on transactions with or involving certain persons or entities.
Generally, however, they contain one or more of the following elements: (i) restrictions on trade with or investment in a sanctioned country, including prohibitions against direct or indirect imports from and exports to a sanctioned country and prohibitions on “U.S. persons” engaging in financial or other transactions relating to a sanctioned country or with certain designated persons and entities; (ii) a blocking of assets in which the government or specially designated nationals of the sanctioned country have an interest, by prohibiting transfers of property subject to U.S. jurisdiction (including property in the possession or control of U.S. persons); and (iii) restrictions on transactions with or involving certain persons or entities.
C&I loans also include tax-exempt loans made to states -5- 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.
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.
However, among other permitted activities, a bank holding company may engage directly or indirectly in, and acquire control of companies engaged in, -9- activities that the Federal Reserve has determined to be closely related to banking, subject to certain notification requirements. In 2005, the Bancorp elected financial holding company status pursuant to the provisions of the GLBA.
However, among other permitted activities, a bank holding company may engage directly or indirectly in, and acquire control of companies engaged in, activities that the Federal Reserve has determined to be closely related to banking, subject to certain notification requirements. In 2005, the Bancorp elected financial holding company status pursuant to the provisions of the GLBA.
Further, the CFPB also has a broad mandate to prohibit unfair, deceptive or abusive acts and practices and is specifically empowered to require certain disclosures to consumers and draft model disclosure forms. Failure to comply with consumer protection laws and -14- regulations can subject financial institutions to enforcement actions, fines and other penalties.
Further, the CFPB also has a broad mandate to prohibit unfair, deceptive or abusive acts and practices and is specifically empowered to require certain disclosures to consumers and draft model disclosure forms. Failure to comply with consumer protection laws and regulations can subject financial institutions to enforcement actions, fines and other penalties.
The GLBA also requires that the Bank develop, implement and maintain a comprehensive written information security program designed to ensure the security and confidentiality of customer information (as defined under GLBA), to protect against anticipated threats or hazards to the security or integrity of such information; and to protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to any customer.
The GLBA also requires that the Bank develop, implement and maintain a comprehensive written information security program designed to ensure the security and confidentiality of customer information (as defined under GLBA), to protect against anticipated threats or hazards to the -13- security or integrity of such information; and to protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to any customer.
The CRA requires the FDIC to evaluate the Bank’s performance in helping to meet the credit needs of the entire community it serves, including low- and moderate-income neighborhoods, consistent with its safe and -11- sound banking operations, and to take this record into consideration when evaluating certain applications.
The CRA requires the FDIC to evaluate the Bank’s performance in helping to meet the credit needs of the entire community it serves, including low- and moderate-income neighborhoods, consistent with its safe and sound banking operations, and to take this record into consideration when evaluating certain applications.
Possible sanctions that may be imposed in the event of such noncompliance include the suspension of individual employees, limitations on business activities for specified periods of time, revocation of registration as an investment adviser, commodity trading adviser and/or other registrations, and other censures and fines. Mortgage Lending.
Possible sanctions that may be imposed in the event of such noncompliance include the suspension of individual -14- employees, limitations on business activities for specified periods of time, revocation of registration as an investment adviser, commodity trading adviser and/or other registrations, and other censures and fines. Mortgage Lending.
Tier 2 capital generally consists of hybrid capital instruments, perpetual debt and mandatory convertible debt securities, cumulative perpetual preferred stock, term subordinated debt and intermediate-term preferred stock, and, subject to limitations, ACL on loans. The sum of Tier 1 and Tier 2 capital less certain required deductions represents qualifying total risk-based capital.
Tier 2 capital generally consists of hybrid capital instruments, perpetual debt and mandatory convertible debt securities, cumulative perpetual preferred stock, term -11- subordinated debt and intermediate-term preferred stock, and, subject to limitations, ACL on loans. The sum of Tier 1 and Tier 2 capital less certain required deductions represents qualifying total risk-based capital.
The Bank is also required to send a notice to customers whose sensitive information has been compromised if unauthorized use of the information is reasonably possible. Most states, including the states where the Bank operates, have enacted legislation concerning breaches of data security and the duties of the Bank in response to a data breach.
The Bank is also required to send a notice to customers whose sensitive information has been compromised if unauthorized use of the information is reasonably possible. Most states, including the states where the Bank operates, have enacted legislation concerning breaches of data security and the duties of the Bank in response to data breaches.
Further, under the Federal Reserve’s capital rules, the Bancorp’s ability to pay dividends is restricted if it does not maintain the required capital conservation buffer. See “-Capital Adequacy and Safety and Soundness-Regulatory Capital Requirements” above. Restrictions on Bank Dividends.
Further, under the Federal Reserve’s capital rules, the Bancorp’s ability to pay dividends is restricted if it does not maintain the required capital conservation buffer. See “-Capital Adequacy and Safety and Soundness-Regulatory Capital Requirements” above. -12- Restrictions on Bank Dividends.
In addition, the Dodd-Frank Act authorizes a state-chartered bank, such as the Bank, to establish new branches on an interstate basis to the same extent a bank chartered by the host state may establish branches. Activities and Investments of Insured State-Chartered Banks.
In addition, the Dodd-Frank Act -10- authorizes a state-chartered bank, such as the Bank, to establish new branches on an interstate basis to the same extent a bank chartered by the host state may establish branches. Activities and Investments of Insured State-Chartered Banks.
Under rebuttable presumptions of control established by the Federal Reserve, the acquisition of control of voting securities of a bank holding company constitutes an acquisition of control under the Change in Bank Control Act, requiring prior notice to the Federal Reserve, if, immediately after the transaction, the acquiring person (or persons acting in concert) will own, control, or hold with power to vote 10% or more of any class of voting securities of the bank holding company, and if either (i) the bank holding company has registered securities under Section 12 of the Exchange Act, or (ii) no other person will own, control, or hold the power to vote a greater percentage of that class of voting securities immediately after the transaction.
Under rebuttable presumptions of control established by the Federal Reserve, the acquisition of control of voting securities of a bank holding company constitutes an acquisition of control under the Change in Bank Control Act, requiring prior notice to and non-objection by the Federal Reserve, if, immediately after the transaction, the acquiring person (or persons acting in concert) will own, control, or hold with power to vote 10% or more of any class of voting securities of the bank holding company, and if either (i) the bank holding company has registered securities under Section 12 of the Exchange Act, or (ii) no other person will own, control, or hold the power to vote a greater percentage of that class of voting securities immediately after the transaction.
An insured depository institution (and its subsidiaries) may not lend money to, or engage in covered transactions with, its non-depository institution affiliates if the aggregate amount of “covered transactions” outstanding involving the bank, plus the proposed transaction, exceeds the following limits: (i) in the case of any one such affiliate, the aggregate amount of “covered transactions” of the insured depository institution and its subsidiaries cannot exceed 10% of the capital stock and surplus of the insured depository institution; and (ii) in the case of all affiliates, the aggregate amount of covered transactions of the insured depository institution and its subsidiaries cannot exceed 20% of the capital stock and surplus of the insured depository institution.
An insured depository institution (and its subsidiaries) may not lend money to, or engage in covered transactions with, its non-depository institution affiliates if the aggregate amount of “covered transactions” outstanding involving the bank, plus the proposed transaction, exceeds the following limits: (i) in the case of any one such affiliate, 10% of the capital stock and surplus of the insured depository institution; and (ii) in the case of all affiliates, 20% of the capital stock and surplus of the insured depository institution.
Washington Trust’s residential mortgage origination business conducted through our residential mortgage lending offices located outside of Rhode Island is performed by this Bank subsidiary. The Bank has other subsidiaries whose primary functions are to provide servicing on passive investments, such as loans acquired from the Bank and investment securities.
Our residential mortgage origination business conducted through our residential mortgage lending offices located outside of Rhode Island is performed by this Bank subsidiary. The Bank has other subsidiaries whose primary functions are to provide servicing on passive investments, such as loans acquired from the Bank and investment securities.
In addition, under the FDIA, the FDIC may terminate deposit insurance, among other circumstances, upon a finding that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. Acquisitions and Branching.
In addition, under the FDIA, the FDIC may terminate deposit insurance, among other circumstances, upon a finding that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.
Washington Trust’s deposit accounts consist of noninterest-bearing demand deposits, interest-bearing demand deposits, NOW accounts, money market accounts, savings accounts and time deposits. A variety of retirement deposit accounts are also offered to customers. Additional deposit services provided to customers include debit cards, ATMs, telephone banking, internet banking, mobile banking, remote deposit capture and cash management services.
Washington Trust’s deposit accounts consist of noninterest-bearing demand deposits, interest-bearing demand deposits, NOW accounts, money market accounts, savings accounts and time deposits. A variety of retirement deposit accounts are also offered to customers. Additional deposit services provided to customers include debit cards, ATMs, telephone banking, internet banking, mobile banking, remote deposit capture and treasury management services.
Deposits represent Washington Trust’s primary source of funds and are gathered primarily from the areas surrounding our branch network. The Bank offers a wide variety of products with a range of interest rates and terms to consumer, commercial, non-profit and municipal customers.
Deposits represent our primary source of funds and are gathered primarily from the areas surrounding our branch network. The Bank offers a wide variety of products with a range of interest rates and terms to consumer, commercial, non-profit and municipal customers.
Wholesale brokered deposits from out-of-market institutional sources are also utilized as part of our overall funding strategy. Washington Trust is a participant in the DDM, ICS, and CDARS programs. Washington Trust uses these deposit sweep services to place customer and client funds into interest-bearing demand accounts, money market accounts, and/or certificates of deposits issued by other participating banks.
Wholesale brokered deposits from out-of-market institutional sources are also utilized as part of our overall funding strategy. The Bank is a participant in the DDM, ICS, and CDARS programs. The Bank uses these deposit sweep services to place customer and client funds into interest-bearing demand accounts, money market accounts, and/or certificates of deposits issued by other participating banks.
In addition, the Bank has a subsidiary that was formed for the purpose of holding, monitoring and disposing of certain foreclosed properties. -7- Market Area Washington Trust’s headquarters and main office is located in Westerly in Washington County, Rhode Island. Washington Trust’s primary deposit gathering area consists of the communities that are served by its branch network.
In addition, the Bank has a subsidiary that was formed for the purpose of holding, monitoring and disposing of certain foreclosed properties. Market Area Our headquarters and main office is located in Westerly in Washington County, Rhode Island. Our primary deposit gathering area consists of the communities that are served by its branch network.
Regulation of the Bank The Bank is subject to the regulation, supervision and examination by the FDIC, the RI Division of Banking and the Connecticut Department of Banking. The Bank is also subject to various Rhode Island and Connecticut business and banking regulations and the regulations issued by the CFPB (as enforced by the FDIC).
Regulation of the Bank The Bank is subject to regulation, supervision and examination by the FDIC and the RI Division of Banking. The Bank is also subject to various Rhode Island business and banking regulations and the regulations issued by the CFPB (as enforced by the FDIC).
The FDIC, the RI Division of Banking and the Connecticut Department of Banking have the authority to issue cease and desist orders; to terminate insurance of deposits; to assess civil money penalties; to issue directives to increase capital; to -10- place the bank into receivership; and to initiate injunctive actions against banking organizations and institution-related parties. Deposit Insurance.
The FDIC and the RI Division of Banking have the authority to issue cease and desist orders; to terminate insurance of deposits; to assess civil money penalties; to issue directives to increase capital; to place the bank into receivership; and to initiate injunctive actions against banking organizations and institution-related parties. Deposit Insurance.
In evaluating an application to acquire a bank or to merge banks or effect a purchase of assets and assumption of deposits and other liabilities, the applicable federal banking regulator must consider the anti-money laundering compliance record of both the applicant and the target.
In evaluating an application to acquire a bank or to merge banks or effect a purchase of assets and assumption of deposits and other liabilities, the applicable federal banking regulator must consider the anti-money laundering compliance record of both the applicant and the target. Office of Foreign Assets Control.
Safety and Soundness Standard. Guidelines adopted by the federal bank regulatory agencies pursuant to the FDIA establish general standards relating to internal controls and information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, asset quality, earnings, and compensation and benefits.
Guidelines adopted by the federal bank regulatory agencies pursuant to the FDIA establish general standards relating to internal controls and information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, asset quality, earnings, and compensation and benefits.
Washington Trust operates in a highly competitive wealth management services marketplace. Key competitive factors include investment products, level of investment performance, client services, as well as personal relationships. Principal competitors in the wealth management services business are commercial banks and trust companies, investment advisory firms, mutual fund companies, online and full-service stock brokerage firms, and other financial companies.
We operate in a highly competitive wealth management services marketplace. Key competitive factors include investment products, level of investment performance, client services, as well as personal relationships. Principal competitors in the wealth management services business are commercial banks and trust companies, investment advisory firms, mutual fund companies, online and full-service stock brokerage firms, and other financial companies.
Many of these companies have greater resources than Washington Trust. Human Capital Washington Trust had 618 full-time equivalent employees at December 31, 2024. Our employees are the foundation of our success. They serve as trusted advisors, brand ambassadors, and leaders within the community, embodying our core values of quality, integrity and community.
Many of these companies have greater resources than Washington Trust. Human Capital Washington Trust had 642 full-time equivalent employees at December 31, 2025. Our employees are the foundation of our success. They serve as trusted advisors, brand ambassadors, and leaders within the community, embodying our core values of quality, integrity and community.
These assessments may result in clarification of debt service ratio calculations, changes in geographic and loan type concentrations, modifications to LTV standards for real estate collateral, changes in credit monitoring criteria and enhancements to monitoring of construction loans. Commercial Loans The commercial loan portfolio represented 52% of total loans at December 31, 2024.
These assessments may result in clarification of debt service ratio calculations, changes in geographic and loan type concentrations, modifications to LTV standards for real estate collateral, changes in credit monitoring criteria and enhancements to monitoring of construction loans. Commercial Loans The commercial loan portfolio represented 54% of total loans at December 31, 2025.
The capital adequacy rules define qualifying capital instruments and specify minimum amounts of capital as a percentage of assets that banking organizations are required to maintain.
The capital adequacy rules define qualifying capital instruments and specify minimum amounts of capital that banking organizations are required to maintain as a percentage of assets or risk-weighted assets.
The Bancorp and the Bank made this election. Under the capital rules, risk-based capital ratios are calculated by dividing common equity Tier 1 capital, Tier 1 capital and total capital, respectively, by risk-weighted assets. Assets and off-balance sheet credit equivalents are assigned one of several categories of risk weights based primarily on relative risk.
Under the capital rules, risk-based capital ratios are calculated by dividing common equity Tier 1 capital, Tier 1 capital and total capital, respectively, by risk-weighted assets. Assets and off-balance sheet credit equivalents are assigned one of several categories of risk weights based primarily on relative risk.
As of December 31, 2024, the Bank had 10 branch offices located in southern Rhode Island (Washington County), 17 branch offices located in the greater Providence area in Rhode Island and one branch office located in southeastern Connecticut. Washington Trust’s lending activities are conducted primarily in southern New England and, to a lesser extent, other states.
As of December 31, 2025, the Bank had 10 branch offices located in southern Rhode Island (Washington County), 17 branch offices located in the greater Providence area in Rhode Island and one branch office located in southeastern Connecticut. As mentioned above, our lending activities are conducted primarily in southern New England and, to a lesser extent, other states.
Failure of an institution to receive at least a “satisfactory” rating could inhibit the Bank or the Bancorp from undertaking certain activities, including engaging in activities permitted as a financial holding company under GLBA and acquisitions of other financial institutions. Rhode Island and Connecticut also have enacted substantially similar community reinvestment requirements.
Failure of an institution to receive at least a “satisfactory” rating could inhibit the institution or its parent company from undertaking certain activities, including engaging in activities permitted as a financial holding company under GLBA and acquisitions of other financial institutions. Rhode Island and Connecticut (with respect to the in-state branch) also have enacted substantially similar community reinvestment requirements.
The FDIC calculates deposit insurance assessment rates for established small banks, generally those banks with less than $10 billion of assets that have been insured for at least five years, using the CAMELS rating system and other factors.
The FDIC calculates deposit insurance assessment rates for established small banks, generally those banks with less than $10 billion of assets that have been insured for at least five years, using supervisory ratios, financial ratios, and other factors.
For this purpose, “covered transactions” are defined by statute to include: a loan or extension of credit to an affiliate, a purchase of or investment in securities issued by an affiliate, a purchase of assets from an affiliate unless exempted by the Federal Reserve, the acceptance of securities issued by an affiliate as collateral for a loan or extension of credit to any person or company, the issuance of a guarantee, acceptance or letter of credit on behalf of an affiliate, securities borrowing or lending transactions with an affiliate that creates a credit exposure to such affiliate, or a derivatives transaction with an affiliate that creates a credit exposure to such affiliate.
For this purpose, “covered transactions” are defined by statute to include, among other things: a loan or extension of credit to an affiliate, a purchase of or investment in securities issued by an affiliate, a purchase of assets from an affiliate, the acceptance of securities issued by an affiliate as collateral for a loan or extension of credit to any person or company, the issuance of a guarantee, acceptance or letter of credit on behalf of an affiliate, or a derivatives transaction with an affiliate that creates a credit exposure to such affiliate.
Washington Trust faces strong competition from larger institutions with relatively greater resources, broader product lines and larger delivery systems. Competition could intensify in the future as a result of industry consolidation, the increasing availability of products and services from non-bank institutions and financial technology companies, greater technological developments in the industry and continued bank regulatory changes.
We face strong competition from larger institutions with relatively greater resources, broader product lines and larger delivery systems. Competition could continue to intensify as a result of industry -7- consolidation, the increasing availability of products and services from non-bank institutions and financial technology companies, greater technological developments in the industry and continued bank regulatory changes.
Investment Security Activities Washington Trust’s investment securities portfolio amounted to $916.3 million, or 13% of total assets, at December 31, 2024 and is managed to generate interest income, to implement interest rate risk management strategies and to provide a readily available source of liquidity for balance sheet management.
Investment Security Activities Investment securities amounted to $940.3 million, or 14% of total assets, at December 31, 2025 and is managed to generate interest income, to implement interest rate risk management strategies and to provide a readily available source of liquidity for balance sheet management.
Customer and client funds are placed at one or more participating banks to ensure that each deposit customer is eligible for the full amount of FDIC insurance. As a program participant, we receive reciprocal amounts of deposits from other participating banks. We consider these reciprocal deposit balances to be in-market deposits as distinguished from traditional wholesale brokered deposits.
Customer and client funds are placed at one or more participating banks to ensure that each deposit customer is eligible for the full amount of FDIC insurance. As a program participant, we receive reciprocal amounts of deposits from other participating banks.
The Bancorp’s currently outstanding trust preferred securities were grandfathered under this rule. In addition, under rules that became effective January 1, 2015, AOCI (positive or negative) must be reflected in Tier 1 -12- capital; however, the Bancorp and the Bank were permitted to make a one-time, permanent election to continue to exclude AOCI from capital.
In addition, under rules that became effective January 1, 2015, AOCI (positive or negative) must be reflected in Tier 1 capital; however, the Bancorp and the Bank were permitted to make a one-time, permanent election to continue to exclude AOCI from capital. The Bancorp and the Bank made this election.
The USA PATRIOT Act, which amended the BSA, together with the implementing regulations of various federal regulatory agencies, has caused financial institutions, such as the Bank, to adopt and implement additional policies or amend existing policies and procedures with respect to, among other things, anti-money laundering compliance, suspicious activity, currency transaction reporting, customer identity verification and customer risk analysis.
The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, which amended the BSA, together with the implementing regulations of various federal regulatory agencies, has caused financial institutions, such as the Bank, to adopt and implement additional policies or amend existing policies and procedures with respect to, among other things, anti-money laundering compliance, suspicious activity, currency transaction reporting, customer identity verification and customer risk analysis.
We recognize that a supportive and inclusive environment will foster increased collaboration, problem-solving, innovation and creativity, ultimately driving positive results. Statistical Disclosures The information required by Securities Act Guide 3 “Statistical Disclosure by Bank Holding Companies” is located on the pages noted below. Description Page I. Distribution of Assets, Liabilities and Stockholder Equity; Interest Rates and Interest Differentials 37-39 II.
We recognize that a supportive and inclusive environment will foster increased collaboration, problem-solving, innovation and creativity, ultimately driving positive results. -8- Statistical Disclosures The information required by Securities Act Guide 3 “Statistical Disclosure by Bank Holding Companies” is located on the pages noted below. Description Page I.
At December 31, 2024, C&I loans represented 20% of the total commercial loan portfolio and 10% of the total loan portfolio. Residential Real Estate Loans The residential real estate loan portfolio consists of mortgage and homeowner construction loans secured by one- to four-family residential properties and represented 41% of total loans at December 31, 2024.
At December 31, 2025, C&I loans represented 21% of the total commercial loan portfolio and 11% of the total loan portfolio. -5- Residential Real Estate Loans The residential real estate loan portfolio consists of mortgage and homeowner construction loans secured by one- to four-family residential properties and represented 40% of total loans at December 31, 2025.
The deposit obligations of the Bank are insured by the FDIC’s Deposit Insurance Fund up to $250,000 per depositor with respect to deposits held in the same right and capacity. Deposit insurance premiums are based on assets.
The deposit obligations of the Bank are insured by the DIF up to $250,000 per depositor with respect to deposits held in the same right and capacity.
Prior approval from the RI Division of Banking and the FDIC is required in order for the Bank to acquire another bank or establish a new branch office.
For 2025, the FDIC insurance expense for the Bank was $4.6 million. Acquisitions and Branching. Prior approval from the RI Division of Banking and the FDIC is required in order for the Bank to acquire another bank or establish a new branch office.
A bank that is “critically undercapitalized” (i.e., has a ratio of tangible equity to total assets that is equal to or less than 2.0%) will be subject to further restrictions, and generally will be placed in conservatorship or receivership within 90 days. Current capital rules do not establish standards for determining whether a bank holding company is well capitalized.
A bank that is “critically undercapitalized” (i.e., has a ratio of tangible equity to total assets that is equal to or less than 2.0%) will be subject to further restrictions, and generally will be placed in conservatorship or receivership within 90 days. Safety and Soundness Standards.
C&I loans are frequently collateralized by equipment, inventory, accounts receivable and/or general business assets. A portion of the Bank’s C&I loan portfolio is also collateralized by real estate.
C&I loans primarily provide 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 the Bank’s C&I loan portfolio is also collateralized by owner occupied real estate.
In making commercial loans, Washington Trust may occasionally solicit the participation of other banks. Washington Trust also participates from time to time in commercial loans originated by other banks. In such cases, these loans are individually underwritten by us using standards similar to those employed for our self-originated loans.
In making commercial loans, we may occasionally solicit the participation of other banks. We also participate from time to time in commercial loans originated by other banks. In such cases, these loans are individually underwritten by us using standards similar to those employed for our self-originated loans. Commercial loans fall into two major categories: CRE and C&I loans.
See additional information under the caption “Subsidiaries.” Washington Trust offers a full range of financial services, including commercial banking, mortgage banking, personal banking, and wealth management and trust services, through its offices located in Rhode Island, Connecticut, and Massachusetts. The accounting and reporting policies of Washington Trust conform to GAAP and to general practices of the banking industry.
See additional information under the caption “Subsidiaries.” Washington Trust (hereafter also referred to as “we,” “our,” or the “Corporation”) offers a full range of financial services, including commercial banking, mortgage banking, personal banking, and wealth management and trust services, through its offices located in Rhode Island, Connecticut, and Massachusetts.
Wealth management services are provided through the Bank and its registered investment adviser subsidiary. See additional information under the caption “Subsidiaries.” At December 31, 2024, wealth management AUA totaled $7.1 billion. These assets are not included in the Consolidated Financial Statements. Washington Trust’s wealth management revenues represent our largest source of noninterest income.
See additional information under the caption “Subsidiaries.” At December 31, 2025, wealth management AUA totaled $7.8 billion. These assets are not included in the Consolidated Financial Statements. Wealth management revenues represent our largest source of noninterest income. Subsidiaries At December 31, 2025, the Bancorp’s principal subsidiary is the Bank.
Investment Portfolio 45-46, 89 III. Loan Portfolio 46-52, 92 IV. Summary of Loan Loss Experience 55-58, 102 V. Deposits 58-60, 116 VI. Return on Equity and Assets 36 Supervision and Regulation The following discussion addresses elements of the regulatory framework applicable to Washington Trust.
Distribution of Assets, Liabilities and Stockholder Equity; Interest Rates and Interest Differentials 36-38 II. Investment Portfolio 44-45, 89 III. Loan Portfolio 45-51, 92 IV. Summary of Loan Loss Experience 55-57, 102 V. Deposits 57-59, 118 VI. Return on Equity and Assets 35 Supervision and Regulation The following discussion addresses elements of the regulatory framework applicable to Washington Trust.
The guidelines prohibit excessive compensation as an unsafe and unsound practice and describe compensation as excessive when the amounts paid are unreasonable or disproportionate to the services performed by an executive officer, employee, director or principal shareholder.
Among other things, the guidelines prohibit excessive compensation as an unsafe and unsound practice and describe compensation as excessive when the amounts paid are unreasonable or disproportionate to the services performed by an executive officer, employee, director or principal shareholder. Dividend Restrictions The Bancorp is a legal entity separate and distinct from the Bank and its other subsidiaries.
Revenues of the Bancorp are derived primarily from dividends paid to it by the Bank.
Revenues and cash flows of the Bancorp (on a non-consolidated basis) are derived primarily from dividends paid to it by the Bank.
The FDIA and FDIC regulations generally limit the ability of an insured depository institution to accept, renew or roll over any brokered deposit unless the institution’s capital category is “well capitalized” or, with the FDIC’s approval, “adequately capitalized.” Certain depository institutions that have brokered deposits in excess of 10% of total assets may be subject to increased FDIC deposit insurance premium assessments.
The FDIA and FDIC regulations generally limit the ability of an insured depository institution to accept, renew or roll over any brokered deposit unless the institution’s capital category is “well capitalized” or, with the FDIC’s approval, “adequately capitalized.” Additionally, increased reliance on brokered deposits can increase an institution’s deposit insurance assessment. Community Reinvestment Act.
CRE loans consist of commercial mortgages secured by 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 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.
If a financial holding company or any depository institution subsidiary of a financial holding company fails to remain well capitalized and well managed, the Federal Reserve may impose such limitations on the conduct or activities of the financial holding company as the Federal Reserve determines to be appropriate, and the company and its affiliates may not commence any new activity or acquire control of shares of any company engaged in any activity that is authorized particularly for financial holding companies without first obtaining the approval of the Federal Reserve.
If a financial holding company or any depository institution subsidiary of a financial holding company fails to remain well capitalized and well managed, or an insured depository institution subsidiary of a financial holding company fails to maintain -9- a “satisfactory” or better record of performance under the CRA, the financial holding company may be subject to limits that include an inability to commence any new activity or acquire control of shares of any company engaged in any activity that is authorized particularly for financial holding companies without first obtaining the approval of the Federal Reserve.
Wealth Management Services Washington Trust provides a broad range of wealth management services to personal and institutional clients. These services include 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.
These services include 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. Wealth management services are provided through the Bank and its registered investment adviser subsidiary.
The Corporation’s lending activities are conducted primarily in southern New England and, to a lesser extent, other states. Washington Trust offers a variety of commercial and retail lending products.
Our lending activities are conducted primarily in southern New England and, to a lesser extent, other states. We offer a variety of lending products to consumer, commercial, non-profit and municipal customers.
Competition Washington Trust faces considerable competition in its market area for all aspects of banking and related financial service activities. Washington Trust contends with strong competition both in generating loans and attracting deposits.
See additional disclosure in Item 2 “Properties.” Competition We face considerable competition in our market area for all aspects of banking and related financial service activities. We contend with strong competition both in generating loans and attracting deposits.
Additionally, the CFPB’s qualified mortgage rule, requires creditors, such as Washington Trust, to make a reasonable good faith determination of a consumer's ability to repay any consumer credit transaction secured by a dwelling. The Economic Growth Act included provisions that ease certain requirements related to residential mortgage transactions for certain institutions with less than $10 billion in total consolidated assets.
Additionally, the CFPB’s qualified mortgage rule, requires creditors, such as Washington Trust, to make a reasonable good faith determination of a consumer's ability to repay any consumer credit transaction secured by a dwelling.
The Bank utilizes advances from the FHLB to meet short-term liquidity needs and also to fund loan growth and additions to the securities portfolio. As a member of the FHLB, the Bank must own a minimum amount of FHLB stock, calculated periodically based primarily on its level of borrowings from the FHLB.
Wholesale Funding Activities The Bank is a member of the FHLB. The Bank utilizes advances from the FHLB to meet short-term liquidity needs and also to fund loan growth and additions to the securities portfolio.
Washington Trust provides commercial, residential and consumer lending services from its branch locations and other offices. See additional disclosure in Item 2, Properties. Washington Trust provides wealth management services from its offices located in Westerly, Narragansett and Providence, Rhode Island; Wellesley, Massachusetts; and New Haven, Connecticut.
We provide commercial, residential and consumer lending services from our branch locations and other offices. Our wealth management activities are conducted largely in southern New England and, to a lesser extent, other states. We provide wealth management services from our offices located in Westerly, Narragansett and Providence, Rhode Island; Wellesley, Massachusetts; and New Haven, Connecticut.
Washington Trust may acquire, hold and transact in various types of investment securities in accordance with applicable federal regulations, state statutes and guidelines specified in Washington Trust’s internal investment policy.
Washington Trust may acquire, hold and transact in various types of investment securities in accordance with applicable federal regulations, state statutes and guidelines specified in Washington Trust’s investment policy. At December 31, 2025, the largest component of the securities portfolio is mortgage-backed securities, all of which are issued by U.S. government agencies or U.S. government-sponsored enterprises.
Privacy and Customer Information Security. The GLBA requires financial institutions to implement policies and procedures regarding the disclosure of nonpublic personal information about consumers to non-affiliated third parties.
The Economic Growth, Regulatory Relief, and Consumer Protection Act included provisions that ease certain requirements related to residential mortgage transactions for certain institutions with less than $10 billion in total consolidated assets. Privacy and Customer Information Security. The GLBA requires financial institutions to implement policies and procedures regarding the disclosure of nonpublic personal information about consumers to non-affiliated third parties.
The Federal Reserve may also directly examine the subsidiaries of the Bancorp, including the Bank.
The Bank’s branch in Connecticut is also subject to the regulation, supervision and examination of the Connecticut Department of Banking. The Federal Reserve may also directly examine the subsidiaries of the Bancorp, including the Bank.
At December 31, 2024, Washington Trust had total assets of $6.9 billion, total deposits of $5.1 billion and total shareholders’ equity of $499.7 million. Lending Activities Washington Trust’s total loan portfolio amounted to $5.1 billion, or 74% of total assets, at December 31, 2024. The Corporation classifies loans as commercial, residential real estate or consumer.
The accounting and reporting policies of Washington Trust conform to GAAP and to general practices of the banking industry. At December 31, 2025, Washington Trust had total assets of $6.6 billion, total deposits of $5.3 billion and total shareholders’ equity of $543.6 million. Lending Activities Total loans amounted to $5.1 billion, or 78% of total assets, at December 31, 2025.
At December 31, 2024, the Bank had advances payable to the FHLB of $1.1 billion. The Bank pledges certain qualified investment securities and loans as collateral to the FHLB. At December 31, 2024, the Bank had available borrowing capacity with the FHLB of $753.0 million.
As a member of the FHLB, the Bank must own a minimum amount of FHLB stock, calculated periodically based primarily on its level of borrowings from the FHLB. At December 31, 2025, the Bank had advances payable to the FHLB of $626.0 million. The Bank pledges certain qualified investment securities and loans as collateral to the FHLB.
CRE loans frequently involve larger loan balances to single borrowers or groups of related borrowers. At December 31, 2024, CRE loans represented 80% of the total commercial loan portfolio and 42% of the total loan portfolio. C&I loans primarily provide working capital, equipment financing and financing for other business-related purposes.
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. At December 31, 2025, CRE loans represented 79% of the total commercial loan portfolio and 43% of the total loan portfolio.
Consumer loans include home equity loans and lines of credit and personal installment loans. Home equity lines and home equity loans represent 94% of the total consumer portfolio at December 31, 2024. Also included in the consumer loan portfolio are purchased loans to individuals secured by general aviation aircraft.
Consumer Loans The consumer loan portfolio represented 6% of total loans as of December 31, 2025. Consumer loans include home equity loans and lines of credit and personal installment loans. Home equity lines and home equity loans represent 95% of the total consumer portfolio at December 31, 2025. Deposit Activities At December 31, 2025, total deposits amounted to $5.3 billion.
These sanctions, which are administered by OFAC, take many different forms.
The U.S. has imposed economic sanctions that affect transactions with designated foreign countries, nationals and others. These sanctions, which are administered by OFAC, take many different forms.
The Bank also has access to a $40.0 million unused line of credit with the FHLB. Additional funding sources are available through the FRBB and in other forms of borrowing, such as securities sold under repurchase agreements. As noted above under the caption “Deposit Activities,” the Corporation also utilizes wholesale brokered deposits as part of its overall funding program.
At December 31, 2025, the Bank had available borrowing capacity with the FHLB of $1.4 billion. Additional funding sources are available through the FRBB and in other forms of borrowing, such as securities sold under repurchase agreements.
On November 16, 2023, the FDIC approved a final rule to implement a special assessment to recover such losses. For 2024, the FDIC insurance expense for the Bank was $5.5 million.
In November 2023, the FDIC approved a final rule to implement a special assessment to recover, over eight quarters beginning with the first quarter of 2024, losses to the DIF arising from the receiverships of Silicon Valley Bank and Signature Bank.
However, the new CRA regulations are currently expected to become effective on January 1, 2026. The Bank has achieved a rating of “satisfactory” on its most recent examination dated December 5, 2022. Lending Restrictions.
The Bank has achieved a rating of “satisfactory” on its most recent examination dated December 5, 2022. On October 24, 2023, the federal banking agencies issued a final rule revising their framework for evaluating banks’ records of community investment under the CRA.
Removed
Our participation in commercial loans originated by other banks also includes shared national credits. Shared national credits are defined as participation in loans or loan commitments of at least $100 million that are shared by three or more banks. Commercial loans fall into two major categories: CRE and C&I loans.
Added
As noted above under the caption “Deposit Activities,” we also utilize wholesale brokered deposits as part of our overall funding program. -6- Wealth Management Services We provide a broad range of wealth management services to personal and institutional clients.
Removed
Also included in the residential real estate loan portfolio are mortgage loans purchased from and serviced by other financial institutions. These loans are individually evaluated at time of purchase to Washington Trust’s underwriting standards and are secured by one- to four-family residential properties in southern New England and other states.
Added
Additionally, we employ a robust succession planning process, which begins by determining critical roles within the organization; identifying core competencies for individuals in those roles; identifying and assessing possible successors; and providing opportunities for those individuals to develop and hone core competencies through training, mentoring and professional experience.
Removed
As of December 31, 2024, purchased residential mortgages serviced by others were largely secured by properties located in Massachusetts and represented 2% of the total residential real estate loan portfolio and 1% of the total loan portfolio. Consumer Loans The consumer loan portfolio represented 7% of total loans as of December 31, 2024.
Added
In December 2025, the FDIC updated its estimate of the DIF’s losses and reduced the final assessment rate for the eighth collection quarter. The FDIC has the authority to adjust deposit insurance assessment rates at any time.
Removed
These loans were individually underwritten by us at the time of purchase using standards similar to those employed for self-originated consumer loans. At December 31, 2024, these purchased loans represented 4% of the total consumer loan portfolio and 0.2% of the total loan portfolio. Deposit Activities At December 31, 2024, total deposits amounted to $5.1 billion.
Added
On July 16, 2025, the agencies issued a proposal to rescind the October 2023 final rule and reinstate the CRA framework that existed prior to the October 2023 final rule, which has remained in effect. The Bank’s most recent performance evaluation was conducted using the CRA framework that existed prior to the October 2023 final rule. Lending Restrictions.
Removed
At December 31, 2024, the investment securities portfolio consisted of obligations of U.S. government agencies and U.S. -6- government-sponsored enterprises, including mortgage-backed securities; individual name issuer trust preferred debt securities; and corporate bonds. Wholesale Funding Activities The Bank is a member of the FHLB.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

52 edited+34 added−30 removed100 unchanged
Biggest changeAdministration; supply chain disruptions; consumer spending; employment levels; labor shortages; challenging labor market conditions; wage stagnation; federal government shutdowns; energy prices; home prices; commercial property values; bankruptcies and a default by a significant market participant or class of counterparties; natural disasters; climate change; epidemics; pandemics; terrorist attacks; acts of war; or a combination of these or other factors.
Biggest changeUnfavorable or uncertain economic conditions can be caused by declines in economic growth, business activity, or investor or business confidence; limitations on the availability of or increases in the cost of credit and capital; increases in inflation or interest rates; uncertainties regarding fiscal and monetary policies; the timing and -15- impact of changing governmental policies, including changes in guidance and interpretation by regulatory authorities; changes in trade policies by the U.S. or other countries; supply chain disruptions; consumer spending; employment levels; labor shortages; challenging labor market conditions; wage stagnation; federal government shutdowns; energy prices; home prices; commercial property values; bankruptcies and a default by a significant market participant or class of counterparties; natural disasters; climate change; epidemics; pandemics; terrorist attacks; acts of war; or a combination of these or other factors.
Volatile business and economic conditions could have adverse effects on our business, including the following: • investors may have less confidence in the equity markets in general and in financial services industry stocks in particular, which could place downward pressure on our stock price and resulting market valuation; • economic and market developments may further affect consumer and business confidence levels and may cause declines in credit usage and adverse changes in payment patterns, causing increases in delinquencies and default rates; • our ability to assess the creditworthiness of our customers may be impaired if the models and approaches we use to select, manage, and underwrite loans become less predictive of future behaviors; • we could suffer decreases in demand for loans or other financial products and services or decreased deposits or other investments in accounts with us; -17- • our Wealth Management Services customers may liquidate investments, which together with lower asset values, may reduce the level of assets under management and administration, and thereby decrease our wealth management revenues; • competition in the financial services industry could intensify as a result of the increasing consolidation of financial services companies in connection with current market conditions or otherwise; and • the value of loans and other assets or collateral securing loans may decrease.
Volatile business and economic conditions could have adverse effects on our business, including the following: • investors may have less confidence in the equity markets in general and in financial services industry stocks in particular, which could place downward pressure on our stock price and resulting market valuation; • economic and market developments may further affect consumer and business confidence levels and may cause declines in credit usage and adverse changes in payment patterns, causing increases in delinquencies and default rates; • our ability to assess the creditworthiness of our customers may be impaired if the models and approaches we use to select, manage, and underwrite loans become less predictive of future behaviors; • we could suffer decreases in demand for loans or other financial products and services or decreased deposits or other investments in accounts with us; • our wealth management services customers may liquidate investments, which together with lower asset values, may reduce the level of assets under management and administration, and thereby decrease our wealth management revenues; • competition in the financial services industry could intensify as a result of the increasing consolidation of financial services companies in connection with current market conditions or otherwise; and • the value of loans and other assets or collateral securing loans may decrease.
An economic downturn or a prolonged economic recession in southern New England could result in the following consequences: • loan delinquencies may increase; • problem assets and foreclosures may increase; • demand for our products and services may decline; • collateral for our loans may decline in value, in turn reducing a customer’s borrowing power and reducing the value of collateral securing a loan; • the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; and • our ability to continue to originate real estate loans may be impaired.
An economic downturn or a prolonged economic recession in southern New England could result in the following consequences: • loan delinquencies may increase; • problem assets and foreclosures may increase; -16- • demand for our products and services may decline; • collateral for our loans may decline in value, in turn reducing a customer’s borrowing power and reducing the value of collateral securing a loan; • the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; and • our ability to continue to originate real estate loans may be impaired.
In addition, there may be risks that exist, or that develop in the future, that we have not appropriately anticipated, identified or mitigated, which could lead to unexpected losses and our results of operations or financial condition could be materially adversely affected. Damage to our reputation could significantly harm our business, including our competitive position and business prospects.
In addition, there may be risks that exist, or that develop in the future, that we have not appropriately anticipated, identified or mitigated, which could lead to unexpected losses and our results of operations or financial condition could be materially adversely affected. -21- Damage to our reputation could significantly harm our business, including our competitive position and business prospects.
While we have established and regularly test disaster recovery procedures, the occurrence of any such event could have a material adverse effect on our business, operations and financial condition. -23- Climate change and related legislative and regulatory initiatives may result in operational changes and expenditures that could significantly impact our business.
While we have established and regularly test disaster recovery procedures, the occurrence of any such event could have a material adverse effect on our business, operations and financial condition. Climate change and related legislative and regulatory initiatives may result in operational changes and expenditures that could significantly impact our business.
In addition, WTA, a registered investment advisor subsidiary, is subject to regulation under federal and state securities laws and fiduciary laws. Further, we expect to become subject to future laws, rules and regulations beyond those currently proposed, adopted or contemplated in the U.S., as well as evolving interpretations of existing and future laws, rules and regulations.
In addition, WTA, a registered investment advisor subsidiary, is -24- subject to regulation under federal and state securities laws and fiduciary laws. Further, we expect to become subject to future laws, rules and regulations beyond those currently proposed, adopted or contemplated in the U.S., as well as evolving interpretations of existing and future laws, rules and regulations.
This may result in differences in the treatment of revenues, deductions, credits and/or differences in the timing of these items. The differences in treatment may result in payment of additional taxes, interest, penalties, or litigation costs that could have a material adverse effect on our results. -24- The market price and trading volume of our stock can be volatile.
This may result in differences in the treatment of revenues, deductions, credits and/or differences in the timing of these items. The differences in treatment may result in payment of additional taxes, interest, penalties, or litigation costs that could have a material adverse effect on our results. The market price and trading volume of our stock can be volatile.
The laws, rules, regulations, and supervisory guidance and policies applicable to us are subject to regular modification and change. These changes could, among other things, subject us to additional costs, including costs of compliance; limit the types of financial services and products we may offer; and/or increase the ability of non-banks to offer competing financial -25- services and products.
The laws, rules, regulations, and supervisory guidance and policies applicable to us are subject to regular modification and change. These changes could, among other things, subject us to additional costs, including costs of compliance; limit the types of financial services and products we may offer; and/or increase the ability of non-banks to offer competing financial services and products.
A downgrade of the sovereign credit ratings of the U.S. government or the credit ratings of related institutions, agencies or instruments could significantly exacerbate the other risks to which we are subject and any related adverse effects on the business, financial condition and results of operations. The soundness of other financial institutions could adversely affect us.
A downgrade of the sovereign credit rating of the U.S. government or the credit ratings of related institutions, agencies or instruments could significantly exacerbate the other risks to which we are subject and any related adverse effects on the business, financial condition and results of operations. The soundness of other financial institutions could adversely affect us.
Additionally, significant changes to accounting standards may require costly technology changes, additional training and personnel, and other expense that will negatively impact our results of operations. Changes in tax laws and regulations, differences in interpretation of tax laws and regulations, and reductions in the value of our deferred tax assets may adversely impact our financial statements.
Additionally, significant changes to accounting standards may require costly technology changes, additional training and personnel, and other expense that will negatively impact our results of operations. -23- Changes in tax laws and regulations, differences in interpretation of tax laws and regulations, and reductions in the value of our deferred tax assets may adversely impact our financial statements.
Also, the loss of key personnel could jeopardize our relationships with customers and clients and could lead to the loss of accounts. Losses of such accounts could have a material adverse impact on our business. Natural disasters, acts of terrorism, future pandemics and other external events could harm our business.
Also, the loss of key personnel could jeopardize our relationships with customers and clients and could lead to the loss of accounts. Losses of such accounts could have a material adverse impact on our business. -22- Natural disasters, acts of terrorism, future pandemics and other external events could harm our business.
Negative public opinion about the financial services industry generally (including the -22- types of banking and wealth management services that we provide) or us specifically could adversely affect our reputation and our ability to keep and attract customers and employees.
Negative public opinion about the financial services industry generally (including the types of banking and wealth management services that we provide) or us specifically could adversely affect our reputation and our ability to keep and attract customers and employees.
If we are not able to access funding through the FHLB, we may not be able to meet our liquidity needs, which could have an adverse effect on our results of operations or financial condition.
If we are not able to access funding through the FHLB, we -17- may not be able to meet our liquidity needs, which could have an adverse effect on our results of operations or financial condition.
Any inability to access the capital markets, illiquidity or volatility in the capital markets, the decrease in value of eligible collateral or increased collateral requirements (including as a result of credit concerns for short-term borrowing), changes to our relationships with our funding providers based on real or perceived changes in our risk profile, prolonged federal government shutdowns, or changes in regulations or regulatory guidance, or other events could negatively affect our access to or cost of funding, affecting our ongoing ability to accommodate liability maturities and deposit withdrawals, meet contractual obligations, or fund asset growth and new business initiatives at a reasonable cost, in a timely manner and without adverse consequences.
Any inability to access the capital markets, illiquidity or volatility in the capital markets, a decrease in value of eligible collateral or an increase in collateral requirements (including as a result of credit concerns for short-term borrowing), changes to our relationships with our funding providers based on real or perceived changes in our risk profile, prolonged federal government shutdowns, or changes in regulations or regulatory guidance, or other events could negatively affect our access to or cost of funding, affecting our ongoing ability to accommodate liability maturities and deposit withdrawals, meet contractual obligations, or fund asset growth and new business initiatives at a reasonable cost, in a timely manner and without adverse consequences.
In addition, we rely on key personnel to manage and operate its business, including major revenue producing functions, such as loan and deposit generation and wealth management services. Competition for qualified personnel in the financial services industry can be intense, and we may not be able to hire or retain the key personnel that we depend upon for success.
In addition, we rely on key personnel to manage and operate our business, including major revenue producing functions, such as loan and deposit generation and wealth management services. Competition for qualified personnel in the financial services industry can be intense, and we may not be able to hire or retain the key personnel that we depend upon for success.
A possible future downgrade of the sovereign credit ratings of the U.S. government and a decline in the perceived creditworthiness of U.S. government-related obligations could impact our ability to obtain funding that is collateralized by affected instruments, as well as affect the pricing of that funding when it is available.
A possible future downgrade of the sovereign credit rating of the U.S. government and a decline in the perceived creditworthiness of U.S. government-related obligations could impact our ability to obtain funding that is collateralized by affected instruments, as well as affect the pricing of that funding when it is available.
Among other things, a downgrade of the sovereign credit ratings of the U.S. government could adversely impact the value of our investment securities portfolio and may trigger requirements to post additional collateral for trades relative to these securities.
Among other things, a downgrade of the sovereign credit rating of the U.S. government could adversely impact the value of our investment securities portfolio and may trigger requirements to post additional collateral for trades relative to these securities.
Market volatility that results in clients liquidating investments, as well as lower asset values, can reduce the level of assets under management and administration and decrease our wealth management revenues, which could materially adversely affect our results of operations. We face continuing and growing security risks to our information base, including the information we maintain relating to our customers.
Market volatility that results in clients liquidating investments, as well as lower asset values, can reduce the level of assets under management and administration and decrease our wealth management revenues, which could materially adversely affect our results of operations. We face continuing security risks to our data, including the information we maintain relating to our customers.
These alternatives may include generating client deposits, extending the maturity of wholesale borrowings, borrowing under certain -18- secured borrowing arrangements, using relationships developed with a variety of fixed income investors, selling or securitizing loans, and further managing loan growth and investment opportunities.
These alternatives may include generating customer deposits, extending the maturity of wholesale borrowings, borrowing under certain secured borrowing arrangements, using relationships developed with a variety of fixed income investors, selling or securitizing loans, and further managing loan growth and investment opportunities.
Similarly, if we deem all or part of our investment in FHLB stock impaired, such action could have an adverse effect on our financial condition or results of operations. Our loan portfolio includes commercial loans, which are generally riskier than other types of loans. At December 31, 2024, commercial loans represented 52% of our loan portfolio.
Similarly, if we deem all or part of our investment in FHLB stock impaired, such action could have an adverse effect on our financial condition or results of operations. Our loan portfolio includes commercial loans, which are generally riskier than other types of loans. At December 31, 2025, commercial loans represented 54% of our loan portfolio.
A downgrade may also adversely affect the market value of such instruments. We cannot predict if, when or how any changes to the credit ratings or perceived -20- creditworthiness of these organizations will affect economic conditions. Such ratings actions could result in a significant adverse impact on us.
A downgrade may also adversely affect the market value of such instruments. We cannot predict if, when or how any changes to the credit ratings or perceived creditworthiness of these organizations will affect economic conditions. Such ratings actions could have a significant adverse impact on us.
Third-party vendors provide key components of our business infrastructure such as internet connections, network access and core application processing. While we have selected these third-party vendors carefully, we do not control them or their actions.
We rely on other companies to provide key components of our business infrastructure. Third-party vendors provide key components of our business infrastructure such as internet connections, network access and core application processing. While we have selected these third-party vendors carefully, we do not control them or their actions.
The application of these capital requirements could, among other things, require us to maintain higher capital resulting in lower returns on equity, and we may be required to obtain additional capital to comply or result in regulatory actions if we are unable to comply with such requirements.
The Bancorp and the Bank are subject to regulatory capital requirements that could, among other things, require us to maintain higher capital resulting in lower returns on equity, and we may be required to obtain additional capital to comply or result in regulatory actions if we are unable to comply with such requirements.
On September 27, 2023, the Bank entered into a settlement with the DOJ through an agreement to resolve allegations that it violated fair lending laws in the state of Rhode Island from 2016 to 2021.
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.
Because of the risks associated with commercial loans, we may experience higher rates of default than if our portfolio were more heavily weighted toward residential mortgage loans. Higher rates of default could have an adverse effect on our financial condition and results of operations. We may experience losses and expenses if security interests granted for loans are not enforceable.
Because of the risks associated with commercial loans, we may experience higher rates of default than if our portfolio were more heavily weighted toward residential mortgage loans. Higher rates of default could have an adverse effect on our financial condition and results of operations.
These companies compete on the basis of, among other factors, size, location, quality and type of products and services offered, price, technology, brand recognition and reputation. Emerging technologies have the potential to further intensify competition and accelerate disruption in the financial services industry.
These companies compete on the basis of, among other factors, size, location, quality and type of products and services offered, price, technology, brand recognition, and reputation. Emerging technologies, such as artificial intelligence (including machine learning and generative artificial intelligence) and quantum computing, have the potential to further intensify competition and accelerate disruption in the financial services industry.
In that event, the market price for our common stock could decline and you may lose your investment. This report is qualified in its entirety by these risk factors. RISKS RELATED TO OUR BUSINESS AND INDUSTRY Inflationary pressures and increases in market interest rates may affect our results of operations and financial condition.
In that event, the market price for our common stock could decline and you may lose your investment. This report is qualified in its entirety by these risk factors. RISKS RELATED TO OUR BUSINESS AND INDUSTRY Fluctuations in interest rates may impair the Bank’s business.
The valuation and liquidity of our securities could be adversely impacted by reduced market liquidity, increased normal bid-asked spreads and increased uncertainty of market participants, which could reduce the market value of our securities, even those with no apparent credit exposure.
We seek to limit credit losses in our securities portfolios by generally purchasing only highly-rated securities. The valuation and liquidity of our securities could be adversely impacted by reduced market liquidity, increased normal bid-asked spreads and increased uncertainty of market participants, which could reduce the market value of our securities, even those with no apparent credit exposure.
We face significant legal risks, both from regulatory investigations and proceedings, and from private actions brought against us. As a participant in the financial services industry, many aspects of our business involve substantial risk of legal liability. From time to time, customers and others make claims and take legal action pertaining to the performance of our responsibilities.
As a participant in the financial services industry, many aspects of our business involve substantial risk of legal liability. From time to time, customers and others make claims and take legal action pertaining to the performance of our responsibilities.
If repurchase and indemnity demands increase and such demands are valid claims and are in excess of our provision for potential losses, our results of operations and financial condition may be adversely affected. Our ACL on loans may not be adequate to cover actual loan losses, and an increase in the ACL on loans will adversely affect our earnings.
If repurchase and indemnity demands increase and such demands are valid claims and are in excess of our provision for potential losses, our results of operations and financial condition may be adversely affected. -18- If our allowance for credit losses is not sufficient to cover actual loan losses, our earnings may decrease.
We compete with financial and non-financial services firms, including traditional banks, online banks, financial technology companies, and investment management and wealth advisory firms, including commercial banks and trust companies, investment advisory firms, mutual fund companies, stock brokerage firms.
We operate in a highly competitive environment that includes financial and non-financial services firms, including traditional banks, online banks, financial technology companies, and investment management and wealth advisory firms, including commercial banks and trust companies, investment advisory firms, mutual fund companies, stock brokerage firms.
In the ordinary course of business, we rely on electronic communications and information systems to conduct our business and to store sensitive data, including financial information regarding customers. Our electronic communications and information systems infrastructure could be susceptible to cyberattacks, hacking, identity theft or terrorist activity.
In the ordinary course of business, we rely on electronic communications and information systems to conduct our business and to store sensitive data, including financial information regarding customers.
We maintain a securities portfolio, which may include obligations of U.S. government-sponsored enterprises and agencies, including mortgage-backed securities; obligations of states and political subdivisions; individual name issuer trust preferred debt securities; and corporate bonds. We seek to limit credit losses in our securities portfolios by generally purchasing only highly-rated securities.
We have credit and market risk inherent in our investment securities portfolio. We maintain a securities portfolio, which may include obligations of U.S. government-sponsored enterprises and agencies, including mortgage-backed securities; obligations of states and political subdivisions; individual name issuer trust preferred debt securities; and corporate bonds.
There can be no assurance that future evaluations of goodwill or intangible assets will not result in findings of impairment and related write-downs, which would have an adverse effect on our financial condition and results of operations. Changes in accounting standards can materially impact our financial statements.
There can be no assurance that future evaluations of goodwill or intangible assets will not result in findings of impairment and related write-downs, which would have an adverse effect on our financial condition and results of operations. Our financial statements are based in part on assumptions and estimates, which, if wrong, could cause unexpected losses in the future.
Inflation and rapid increases in interest rates led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates. The valuation of our securities requires judgment and as market conditions change security values may also change.
Inflation and rapid increases in interest rates led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates.
Significant negative changes to valuations could result in impairments in the value of our securities portfolio, which could have an adverse effect on our financial condition or results of operations.
The valuation of our securities requires judgment and as market conditions change security values may also change. -19- Significant negative changes to valuations could result in impairments in the value of our securities portfolio, which could have an adverse effect on our financial condition or results of operations.
The settlement included no civil penalties levied against the Bank. -26- Failure to comply with these and other regulations or any applicable enforcement actions or settlement agreements, and supervisory expectations related thereto, may result in fines, penalties, lawsuits, regulatory sanctions, reputation damage, or restrictions on our business.
Failure to comply with these and other regulations or any applicable enforcement actions or settlement agreements, and supervisory expectations related thereto, may result in fines, penalties, lawsuits, regulatory sanctions, reputation damage, or restrictions on our business. We face significant legal risks, both from regulatory investigations and proceedings, and from private actions brought against us.
In recent years, non-financial services firms, such as financial technology companies, have begun to offer services traditionally provided by financial institutions. These firms attempt to use technology and mobile platforms to enhance the ability of companies and individuals to borrow, save and invest money.
Financial technology companies now offer services traditionally provided by financial institutions. These firms use technology and mobile platforms to enhance the ability of companies and individuals to borrow, save and invest money. Additionally, financial technology companies and other firms have begun to offer services such as stablecoins that may serve as alternatives to traditional banking products such as deposits.
When mortgage loans are sold, we are required to make customary representations and warranties to purchasers, guarantors and insurers, including government-sponsored entities, about the mortgage loans and the manner in which they were -19- originated.
When mortgage loans are sold, we are required to make customary representations and warranties to purchasers, guarantors and insurers, including government-sponsored entities, about the mortgage loans and the manner in which they were originated. Whole loan sale agreements require us to repurchase or substitute mortgage loans, or indemnify buyers against losses, in the event we breach these representations or warranties.
In recent years, governments across the world have entered into international agreements to attempt to reduce global temperatures, in part by limiting greenhouse gas emissions. Despite the recent changes in the U.S.
In recent years, governments across the world have entered into international agreements to attempt to reduce global temperatures, in part by limiting greenhouse gas emissions. Despite the recent changes in the U.S. Administration, state legislatures and regulatory agencies may continue to propose and advance numerous legislative and regulatory initiatives seeking to mitigate the effects of climate change.
Whole loan sale agreements require us to repurchase or substitute mortgage loans, or indemnify buyers against losses, in the event we breach these representations or warranties. In addition, we may be required to repurchase mortgage loans as a result of early payment default of the borrower on a mortgage loan.
In addition, we may be required to repurchase mortgage loans as a result of early payment default of the borrower on a mortgage loan.
When we make loans, we sometimes obtain liens, such as real estate mortgages or other asset pledges, to provide us with a security interest in collateral. If there is a loan default, we may seek to foreclose upon collateral and enforce the security interests to obtain repayment and eliminate or mitigate our loss.
If there is a loan default, we may seek to foreclose upon collateral and enforce the security interests to obtain repayment and eliminate or mitigate our loss. Drafting errors, recording errors, other defects or imperfections in the security interests granted to us and/or changes in law may render liens granted to us unenforceable.
In addition, we may incur significant training, licensing, maintenance, consulting and amortization expenses during and after systems implementations, and any such costs may continue for an extended period of time. Our business may be adversely affected if we fail to adapt our products and services to evolving industry standards and consumer preferences.
In addition, we may incur significant training, licensing, maintenance, consulting and amortization expenses during and after systems implementations, and any such costs may continue for an extended period of time. We may incur significant losses as a result of ineffective risk management processes and strategies.
Drafting errors, recording errors, other defects or imperfections in the security interests granted to us and/or changes in law may render liens granted to the us unenforceable. We may incur losses or expenses if security interests granted to us are not enforceable. Environmental liability associated with our lending activities could result in losses.
We may incur losses or expenses if security interests granted to us are not enforceable. Environmental liability associated with our lending activities could result in losses. In the course of business, we may acquire, through foreclosure, properties securing loans we have originated that are in default.
The real estate collateral securing the Bank’s loans provides an alternate source of repayment in the event of default by the borrower. However, unlike other larger institutions, we are not able to spread the risks of unfavorable local economic conditions across a large number of diversified economies.
However, unlike other larger institutions, we are not able to spread the risks of unfavorable local economic conditions across a large number of diversified economies. An economic downturn could, therefore, result in losses that materially and adversely affect our business.
As a result, cybersecurity and the continued enhancement of our controls and processes to protect our systems, data and networks from attacks, unauthorized access or significant damage remain a priority. Accordingly, we may be required to expend additional resources to enhance our protective measures or to investigate and remediate any information security vulnerabilities or exposures.
We regularly assess and test our security systems and disaster preparedness, including back-up systems, but the risks are ongoing. As a result, cybersecurity and the continued enhancement of our controls and processes to protect our systems, data and networks from attacks, unauthorized access or significant damage remain a priority.
We are a holding company and depend on the Bank for dividends, distributions and other payments. The Bancorp is a legal entity separate and distinct from the Bank. Revenues of the Bancorp are derived primarily from dividends paid to it by the Bank.
Revenues and cash flows of the Bancorp (on a non-consolidated basis) are derived primarily from dividends paid to it by the Bank.
Changes in the business and economic conditions in southern New England could adversely affect our financial condition and results of operations. We primarily serve individuals and businesses located in southern New England, and a substantial portion of our loans are secured by properties in southern New England.
We primarily serve individuals and businesses located in southern New England, and a substantial portion of our loans are secured by properties in southern New England. The real estate collateral securing the Bank’s loans provides an alternate source of repayment in the event of default by the borrower.
These and other restrictions limit the manner in which we may conduct business and obtain financing. Federal regulations establish minimum capital requirements for insured depository institutions, including minimum risk-based capital and leverage ratios, and define “capital” for calculating these ratios.
These and other restrictions limit the manner in which we may conduct business and obtain financing.
Any breach of our system security could result in disruption of our operations, unauthorized access to confidential customer information, significant regulatory costs, litigation exposure and other liability. A breach could negatively impact customer confidence, damaging our reputation and undermining our ability to attract and keep customers. -21- We rely on other companies to provide key components of our business infrastructure.
Accordingly, we may be required to expend additional resources to enhance our protective measures or to investigate and remediate any information security vulnerabilities or exposures. Any breach of our system security could result in disruption of our operations, unauthorized access to confidential customer information, significant regulatory costs, litigation exposure, and other possible damages, loss, or liability.
We may be required to repurchase mortgage loans or indemnify buyers against losses in some circumstances, which could adversely affect our results of operations and financial condition.
We are subject to a variety of risks in connection with any sale of loans we may conduct, which could adversely affect our results of operations and financial condition. We routinely sell newly originated residential mortgage loans and may also sell other loans or loan portfolios.
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 previously announced new branch in Olneyville, Rhode Island.
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 -25- period in which the activities occur and are consistent with historical spending levels.
Removed
Inflation continued at elevated levels in 2024 and may remain elevated in 2025. In response to a pronounced rise in inflation, the Federal Reserve raised the federal funds rate several times in 2023.
Added
Inflation can have an adverse impact on our business and on our customers. The future rate of inflation and other economic factors remain uncertain, and the Federal Reserve may decrease or increase interest rates slower or faster than anticipated.
Removed
While the Federal Reserve cut the federal funds rate in 2024, we cannot predict whether or when the Federal Reserve may increase or decrease the federal funds rate in the future. Moreover, while the inflation rate has decreased, prices remain high.
Added
If inflation increases and interest rates rise, the value of our investment securities, particularly those with longer maturities, will decrease, although this effect is less pronounced for floating rate instruments.
Removed
Small to medium-sized businesses may be impacted by higher costs as they are not able to leverage economies of scale to mitigate cost pressures compared to larger businesses. -16- Consequently, the ability of our business customers to repay their loans may deteriorate, and in some cases this deterioration may occur quickly.
Added
Prolonged periods of inflation also may impact our profitability by negatively impacting our costs and expenses, including elevated funding costs and expenses related to talent acquisition and retention, and negatively impacting the demand for our products and services.
Removed
Sustained higher interest rates by the Federal Reserve, changes to fiscal policy, including expansion of U.S. federal deficit spending and resultant debt issuance, could also affect market interest rates, push down asset prices and weaken economic activity.
Added
Moreover, our customers are also affected by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans. Changes in U.S. trade policies, including the imposition of tariffs and retaliatory tariffs, may adversely affect our business, financial condition, and results of operations.
Removed
A deterioration in economic conditions in the United States and our markets could result in an increase in loan delinquencies and non-performing assets, decreases in loan collateral values and a decrease in demand for our products and services, any of which, could adversely affect our business, our financial condition and results of operations.
Added
There have been significant changes to U.S. trade policies, including tariffs affecting many countries, and there continues to be significant discussion regarding other potential changes to U.S. trade policies, treaties, and tariffs, including the potential for additional tariffs. In addition, retaliatory tariffs have been imposed and additional retaliatory tariffs are likely.
Removed
Further, continued high market interest rates may reduce our loan origination volume, particularly refinance volume, and/or reduce our interest rate spread, which could have an adverse effect on our profitability and results of operations. Fluctuations in interest rates may impair the Bank’s business.
Added
Tariffs, retaliatory tariffs or other trade restrictions on products and materials that our customers import or export could cause the prices of our customers’ products to increase, which could reduce demand for such products.
Removed
Unfavorable or uncertain economic conditions can be caused by declines in economic growth, business activity, or investor or business confidence; limitations on the availability of or increases in the cost of credit and capital; increases in inflation or interest rates; uncertainties regarding fiscal and monetary policies; the timing and impact of changing governmental policies, including changes in guidance and interpretation by regulatory authorities; changes in trade policies by the U.S. or other countries, such as tariffs or retaliatory tariffs as those proposed by the incoming U.S.
Added
Any of these effects could adversely affect the ability of our customers to pay their loans or result in changes to our customers’ borrowing patterns that could have a negative effect on our business and results of operations. Changes in the business and economic conditions in southern New England could adversely affect our financial condition and results of operations.
Removed
An economic downturn could, therefore, result in losses that materially and adversely affect our business.
Added
A portion of our commercial loan portfolio consists of loan participations, which may have a higher risk of loss than loans we originate because we are not the lead lender and we have limited control over credit monitoring. We occasionally purchase commercial loan participations.
Removed
In the course of business, we may acquire, through foreclosure, properties securing loans we have originated that are in default.
Added
Although these loan participations are individually underwritten by us using standards similar to those employed for our self-originated loans, loan participations may have a higher risk of loss than loans we originate because we are limited in our ability to monitor the performance of the loan and rely significantly on the lead lender.
Removed
We maintain an ACL on loans that is based on relevant internal and external information related to past events, current economic conditions and reasonable supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses.
Added
Moreover, our decisions regarding the classification of a loan participation and provisions for credit losses associated with a loan participation are made in part based upon information provided by the lead lender. A lead lender also may not monitor a participation loan in the same manner as we would for loans that we originate.
Removed
We make various assumptions and judgments about the quality and collectability of the loan portfolio, the creditworthiness of borrowers, the value of the underlying collateral, the enforceability of the loan documents, current economic conditions and reasonable and supportable forecasts.
Added
At December 31, 2025, our participation in commercial loan originated by other banks amounted to $613.5 million. We may experience losses and expenses if security interests granted for loans are not enforceable. When we make loans, we sometimes obtain liens, such as real estate mortgages or other asset pledges, to provide us with a security interest in collateral.
Removed
If the assumptions underlying the determination of the ACL prove to be incorrect, the ACL may not be sufficient to cover actual loan losses and an increase to the ACL may be necessary to allow for different assumptions or adverse developments. In addition, a problem with one or more loans could require a significant increase to the ACL.
Added
We periodically make a determination of an ACL based on available information, including, but not limited to, the quality of the loan portfolio as indicated by trends in loan risk ratings, payment performance, economic conditions, the value of the underlying collateral, and the level of nonperforming and criticized loans.
Removed
Federal and state regulators, in reviewing our loan portfolio as part of a regulatory examination, may request that we increase our ACL. Any increases in our ACL will result in a decrease in our net income and, possibly, our capital, and could have an adverse effect on our financial condition and results of operations.
Added
Management relies on its loan officers and credit quality reviews, its experience, and its evaluation of economic conditions, among other factors, in determining the amount of provision required for the ACL. Provisions to this allowance result in an expense for the period.
Removed
The Federal Reserve has authority to prohibit bank holding companies from paying dividends if such payment is deemed to be an unsafe or unsound practice. Additionally, the FDIC has the authority to use its enforcement powers to prohibit the Bank from paying dividends if, in its opinion, the payment of dividends would constitute an unsafe or unsound practice.
Added
If, as a result of general economic conditions, previously incorrect assumptions, or an increase in defaulted loans, we determine that additional increases in the ACL are necessary, additional expenses may be incurred.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

11 edited+3 added−0 removed16 unchanged
Biggest changeAs described in more detail below, we have established policies, standards, processes, and practices for assessing, identifying, and managing material risks from cybersecurity threats.
Biggest changeAs described in more detail below, we have established policies, standards, processes, and practices for assessing, identifying, and managing material risks from cybersecurity threats. We have Information Assurance and technology teams who monitor emerging threats and vulnerabilities, and remain vigilant when it comes to threat intelligence and vulnerability management.
We maintain controls and procedures that are designed to ensure prompt escalation of certain cybersecurity incidents so that decisions regarding public disclosure and reporting of such incidents can be made to management and the Audit Committee of the Board of Directors ("Audit Committee") in a timely manner.
We maintain controls and procedures that are designed to ensure prompt escalation of certain cybersecurity incidents so that decisions regarding public disclosure and -26- reporting of such incidents can be made to management and the Audit Committee of the Board of Directors ("Audit Committee") in a timely manner.
The results -27- of the assessment are used to develop plans for, and prioritization of, initiatives to enhance our security controls, and to make recommendations to improve processes. Technical Safeguards We regularly assess and deploy technical safeguards designed to protect our information systems from cybersecurity threats.
The results of the assessment are used to develop plans for, and prioritization of, initiatives to enhance our security controls, and to make recommendations to improve processes. Technical Safeguards We regularly assess and deploy technical safeguards designed to protect our information systems from cybersecurity threats.
This reporting also includes information concerning material security risks and information security vulnerabilities, cybersecurity risk resulting from risk assessments, progress of risk reduction initiatives, external auditor feedback, control maturity assessments, and relevant internal and industry cybersecurity incidents.
This reporting also includes information concerning material security risks and information security vulnerabilities, cybersecurity risk resulting from risk assessments, -27- progress of risk reduction initiatives, external auditor feedback, control maturity assessments, and relevant internal and industry cybersecurity incidents.
Our CIO joined Washington Trust as CISO in 2016 and has more than 35 years of experience in the financial, technology, auditing, and banking industries. He has expertise in technology deployment, information technology risk management and information security policies and programs. Our current CISO has served in that position since 2018 and is a 28-year employee of Washington Trust.
Our CIO joined Washington Trust as CISO in 2016 and has more than 35 years of experience in the financial, technology, auditing, and banking industries. He has expertise in technology deployment, information technology risk management and information security policies and programs. Our current CISO has served in that position since 2018 and is a 29-year employee of Washington Trust.
The Audit Committee directly oversees our cybersecurity program and receives regular reports from management about the status of our control environment based on the CIS controls, and the prevention, detection, mitigation, and remediation of cybersecurity incidents.
The Audit Committee directly oversees our cybersecurity program and receives related policies and regular reports from management about the status and effectiveness of our control environment based on the CIS controls, as well as the prevention, detection, mitigation, and remediation of cybersecurity incidents.
He has broad technical experience and expertise in information technology and holds a Bachelor of Science in Information Science and several certifications, including Cisco Certified Network Associate.
He has broad technical experience and expertise in information technology and holds a Bachelor of Science in Information Science and several certifications.
Such providers are subject to security risk assessments at the time of onboarding, contract renewal, and based on risk profile. We use a variety of inputs in such risk assessments, including information supplied by providers and third parties.
Third-Party Risk Management We have implemented controls designed to identify and mitigate cybersecurity threats associated with our use of third-party service providers. Such providers are subject to security risk assessments at the time of onboarding, contract renewal, and based on risk profile. We use a variety of inputs in such risk assessments, including information supplied by providers and third parties.
ITEM 1C. Cybersecurity. All companies utilizing technology are subject to threats of breaches of their cybersecurity programs. In addition, as a financial services company, we are subject to extensive regulatory compliance requirements, including those established by the Federal Reserve, FDIC, RI Division of Banking and Connecticut Department of Banking.
In addition, as a financial services company, we are subject to extensive regulatory compliance requirements, including those established by the Federal Reserve, FDIC, and RI Division of Banking.
He has extensive experience and expertise in information technology risk management and -28- information security policies and programs. He holds a Bachelor of Science in Computer Information Systems and several certifications, including Certified Information Systems Security Professional and Certified Information Security Auditor. Our CTO has served in that position since 2021 and is a 13-year employee of Washington Trust.
He has extensive experience and expertise in information technology risk management and information security policies and programs. He holds a Bachelor of Science in Computer Information Systems and several certifications, including Certified Information Systems Security Professional and Certified Information Security Auditor.
These plans address the prevention, detection, mitigation, and remediation of incidents, and include appropriate timely incident escalations to be followed during an incident. Third-Party Risk Management We have implemented controls designed to identify and mitigate cybersecurity threats associated with our use of third-party service providers.
These plans address the prevention, detection, mitigation, and remediation of incidents, and include appropriate timely incident escalations to be followed during an incident.
Added
ITEM 1C. Cybersecurity. Cybersecurity threats pose a risk to Washington Trust, as crimes committed through or involving the internet, such as phishing, hacking, denial of service attacks, stealing information, unauthorized intrusions into our internal systems or the systems of our third-party vendors could adversely impact our operations or damage our reputation.
Added
In order to detect and respond to incidents in a timely manner, we have a Managed Detection and Response (“MDR”) service that continuously monitors our internal systems and alerts the our Information Assurance and technology teams of any detected anomalies or suspicious activity. Any event/threat that is deemed dangerous to our internal systems or networks is mitigated quickly.
Added
Our CISO is supported by experienced Information Assurance team members that have substantial knowledge and expertise in how to manage information security and cybersecurity risks. These team members maintain education and certification requirements necessary to fulfill their responsibilities. Our CTO has served in that position since 2021 and is a 14-year employee of Washington Trust.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed4 unchanged
Biggest changeAt December 31, 2024, nine of the Corporation’s facilities were owned, 31 were leased and one branch office was owned on leased land. Lease expiration dates range from 4 months to 23 years, with additional renewal options on certain leases ranging from 1 year to 5 years.
Biggest changeAt December 31, 2025, four of the Corporation’s facilities were owned, 36 were leased and one branch office was owned on leased land. Lease expiration dates range from 4 months to 22 years, with additional renewal options on certain leases ranging from 3 years to 15 years.
As of December 31, 2024, Washington Trust conducts business from 10 branch offices located in southern Rhode Island (Washington County), 17 branch offices located in the greater Providence area in Rhode Island and one branch office located in southeastern Connecticut. In addition to branches, Washington Trust has a number of offices in which other services are offered or conducted.
As of December 31, 2025, Washington Trust conducts business from 10 branch offices located in southern Rhode Island (Washington County), 17 branch offices located in the greater Providence area in Rhode Island and one branch office located in southeastern Connecticut. In addition to branches, Washington Trust has a number of offices in which other services are offered or conducted.
Wealth management services are offered from offices that are located in Rhode Island (Westerly, Narragansett and Providence); in New Haven, Connecticut; and in Wellesley, Massachusetts. In addition, Washington Trust has an executive office in Providence, Rhode Island, an employment and training center in Westerly, Rhode Island, as well as a loan servicing facility in Stonington, CT.
Wealth management services are offered from offices that are located in Rhode Island (Westerly, Narragansett and Providence); in New Haven, Connecticut; and in Wellesley, Massachusetts. In addition, Washington Trust has an executive office in Providence, Rhode Island, an employment and training center in Westerly, Rhode Island, and a loan servicing facility in Stonington, Connecticut.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+3 added−1 removed1 unchanged
Biggest changeStock Performance Graph Set forth below is a line graph comparing the cumulative total shareholder return on the Corporation’s common stock against the cumulative total return of the KBW Nasdaq Regional Banking Index and the Nasdaq Composite Index (U.S.) from December 31, 2019 to December 31, 2024.
Biggest changeThe 2025 Repurchase Program commenced on May 15, 2025 and expires on May 15, 2026 and may be modified, suspended, or discontinued at any time. -29- Stock Performance Graph Set forth below is a line graph comparing the cumulative total shareholder return on the Bancorp’s common stock against the cumulative total return of the KBW Nasdaq Regional Banking Index and the Nasdaq Composite Index (U.S.) from December 31, 2020 to December 31, 2025.
Information used in the graph and table was obtained from a third-party provider, a source believed to be reliable, but the Corporation is not responsible for any errors or omissions in such information.
Information used in the graph and table was obtained from a third-party provider. While the source is believed to be reliable, the Corporation is not responsible for any errors or omissions in such information.
The results presented assume that the value of the Corporation’s common stock and each index was $100.00 on December 31, 2019. The total return assumes reinvestment of dividends. The stock price performance shown on the stock performance graph and associated table below is not necessarily indicative of future price performance.
The results presented assume that the value of the Bancorp’s common stock and each index was $100.00 on December 31, 2020. The total return assumes reinvestment of dividends. The stock price performance shown on the stock performance graph and associated table below is not necessarily indicative of future price performance.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. The Bancorp’s common stock trades on the Nasdaq under the symbol WASH. At January 31, 2025, there were 1,344 holders of record of the Bancorp’s common stock.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. The Bancorp’s common stock trades on the Nasdaq under the symbol WASH. At January 31, 2026, there were 1,279 holders of record of the Bancorp’s common stock.
The Bancorp (including the Bank prior to 1984) has recorded consecutive quarterly dividends for more than 100 years.
The number of record-holders may not reflect the number of persons or entities holding stock in nominee name through banks, brokerage firms, or other nominees. The Bancorp (including the Bank prior to 1984) has recorded consecutive quarterly dividends for more than 100 years.
For the period ending December 31, 2019 2020 2021 2022 2023 2024 Washington Trust Bancorp, Inc. $100.00 $88.20 $115.44 $101.04 $74.73 $76.82 KBW Nasdaq Regional Banking Index $100.00 $91.32 $124.78 $116.15 $115.69 $130.96 Nasdaq Composite Index (U.S.) $100.00 $145.05 $177.27 $119.63 $173.11 $224.34
For the period ending December 31, 2020 2021 2022 2023 2024 2025 Washington Trust Bancorp, Inc. $100.00 $130.88 $114.55 $84.73 $87.09 $88.57 KBW Nasdaq Regional Banking Index $100.00 $136.65 $127.65 $126.69 $143.42 $152.74 Nasdaq Composite Index (U.S.) $100.00 $122.22 $82.48 $119.35 $154.67 $187.42
Removed
Management believes that the Bank will continue to generate adequate earnings to continue to pay dividends in the future. -29- See additional disclosures on Equity Compensation Plan Information in Part III, Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.” The Bancorp did not repurchase any shares during the fourth quarter of December 31, 2024.
Added
Management believes that the Bank will continue to generate adequate earnings to continue to pay dividends in the future.
Added
See additional disclosures on Equity Compensation Plan Information in Part III, Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.” The following table summarizes repurchases of shares of the Bancorp’s common stock in the fourth quarter of 2025: Issuer Purchases of Equity Securities Period (a) Total number of shares purchased (b) Average price paid per share (c) Total number of shares purchased as part of publicly announced plans (d) Maximum number of shares that may yet be purchased under plans October 1 - 31, 2025 20,855 $27.03 20,855 582,342 November 1 - 30, 2025 — — — 582,342 December 1 - 31, 2025 — — — 582,342 Total (1) 20,855 $27.03 20,855 582,342 (1) During the second quarter of 2025, the Board of Directors of the Corporation 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.
Added
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.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

157 edited+49 added−77 removed85 unchanged
Biggest changeYears ended December 31, 2024 2023 Change (Dollars in thousands) Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate Assets: Cash and short-term investments $129,119 $6,977 5.40 % $101,166 $4,975 4.92 % $27,953 $2,002 0.48 % Mortgage loans held for sale 34,040 1,775 5.21 17,384 980 5.64 16,656 795 (0.43) Taxable debt securities 1,118,092 27,850 2.49 1,185,102 29,059 2.45 (67,010) (1,209) 0.04 Nontaxable debt securities 185 9 4.86 — — — 185 9 4.86 Total securities 1,118,277 27,859 2.49 1,185,102 29,059 2.45 (66,825) (1,200) 0.04 FHLB stock 57,286 4,771 8.33 46,880 3,315 7.07 10,406 1,456 1.26 Commercial real estate 2,145,496 135,323 6.31 1,970,580 118,887 6.03 174,916 16,436 0.28 Commercial & industrial 583,827 37,623 6.44 615,494 38,326 6.23 (31,667) (703) 0.21 Total commercial 2,729,323 172,946 6.34 2,586,074 157,213 6.08 143,249 15,733 0.26 Residential real estate 2,537,903 105,253 4.15 2,490,991 96,080 3.86 46,912 9,173 0.29 Home equity 302,980 21,136 6.98 297,396 17,129 5.76 5,584 4,007 1.22 Other 18,277 882 4.83 18,085 854 4.72 192 28 0.11 Total consumer 321,257 22,018 6.85 315,481 17,983 5.70 5,776 4,035 1.15 Total loans 5,588,483 300,217 5.37 5,392,546 271,276 5.03 195,937 28,941 0.34 Total interest-earning assets 6,927,205 341,599 4.93 6,743,078 309,605 4.59 184,127 31,994 0.34 Noninterest-earning assets 253,957 255,962 (2,005) Total assets $7,181,162 $6,999,040 $182,122 Liabilities and Shareholders’ Equity: Interest-bearing demand deposits (in-market) $550,652 $24,156 4.39 % $415,725 $17,521 4.21 % $134,927 $6,635 0.18 % NOW accounts 701,989 1,572 0.22 766,492 1,594 0.21 (64,503) (22) 0.01 Money market accounts 1,127,960 42,710 3.79 1,191,036 37,145 3.12 (63,076) 5,565 0.67 Savings accounts 489,998 3,704 0.76 526,275 1,687 0.32 (36,277) 2,017 0.44 Time deposits (in-market) 1,172,500 47,595 4.06 1,010,629 33,609 3.33 161,871 13,986 0.73 Interest-bearing in-market deposits 4,043,099 119,737 2.96 3,910,157 91,556 2.34 132,942 28,181 0.62 Wholesale brokered demand deposits — — — 4,015 178 4.43 (4,015) (178) (4.43) Wholesale brokered time deposits 504,638 26,361 5.22 602,423 28,695 4.76 (97,785) (2,334) 0.46 Wholesale brokered deposits 504,638 26,361 5.22 606,438 28,873 4.76 (101,800) (2,512) 0.46 Total interest-bearing deposits 4,547,737 146,098 3.21 4,516,595 120,429 2.67 31,142 25,669 0.54 FHLB advances 1,312,391 64,539 4.92 1,056,726 49,589 4.69 255,665 14,950 0.23 Junior subordinated debentures 22,681 1,593 7.02 22,681 1,543 6.80 — 50 0.22 Total interest-bearing liabilities 5,882,809 212,230 3.61 5,596,002 171,561 3.07 286,807 40,669 0.54 Noninterest-bearing demand deposits 664,557 778,152 (113,595) Other liabilities 154,019 169,842 (15,823) Shareholders’ equity 479,777 455,044 24,733 Total liabilities and shareholders’ equity $7,181,162 $6,999,040 $182,122 Net interest income (FTE) $129,369 $138,044 ($8,675) Interest rate spread 1.32 % 1.52 % (0.20 %) Net interest margin 1.87 % 2.05 % (0.18 %) -37- Management's Discussion and Analysis Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency: (Dollars in thousands) Years ended December 31, 2024 2023 Change Commercial loans $916 $946 ($30) Nontaxable debt securities 1 — 1 Total $917 $946 ($29) Net Interest Income Net interest income, the primary source of our operating income, totaled $128.4 million and $137.1 million, respectively, for 2024 and 2023.
Biggest changeYears ended December 31, 2025 2024 Change (Dollars in thousands) Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate Assets: Cash and short-term investments $136,515 $5,788 4.24 % $129,119 $6,977 5.40 % $7,396 ($1,189) (1.16 %) Mortgage loans held for sale 50,609 2,548 5.03 34,040 1,775 5.21 16,569 773 (0.18) Taxable debt securities 1,059,255 36,529 3.45 1,118,092 27,850 2.49 (58,837) 8,679 0.96 Nontaxable debt securities 650 32 4.92 185 9 4.86 465 23 0.06 Total securities 1,059,905 36,561 3.45 1,118,277 27,859 2.49 (58,372) 8,702 0.96 FHLB stock 40,088 3,370 8.41 57,286 4,771 8.33 (17,198) (1,401) 0.08 Commercial real estate 2,162,523 124,597 5.76 2,145,496 135,323 6.31 17,027 (10,726) (0.55) Commercial & industrial 550,955 32,336 5.87 583,827 37,623 6.44 (32,872) (5,287) (0.57) Total commercial 2,713,478 156,933 5.78 2,729,323 172,946 6.34 (15,845) (16,013) (0.56) Residential real estate 2,091,742 92,211 4.41 2,537,903 105,253 4.15 (446,161) (13,042) 0.26 Home equity 303,202 20,693 6.82 302,980 21,136 6.98 222 (443) (0.16) Other 16,849 844 5.01 18,277 882 4.83 (1,428) (38) 0.18 Total consumer 320,051 21,537 6.73 321,257 22,018 6.85 (1,206) (481) (0.12) Total loans 5,125,271 270,681 5.28 5,588,483 300,217 5.37 (463,212) (29,536) (0.09) Total interest-earning assets 6,412,388 318,948 4.97 6,927,205 341,599 4.93 (514,817) (22,651) 0.04 Noninterest-earning assets 286,013 253,957 32,056 Total assets $6,698,401 $7,181,162 ($482,761) Liabilities and Shareholders’ Equity: Interest-bearing demand deposits $678,515 $25,005 3.69 % $550,652 $24,156 4.39 % $127,863 $849 (0.70 %) NOW accounts 672,808 1,423 0.21 701,989 1,572 0.22 (29,181) (149) (0.01) Money market accounts 1,196,803 38,273 3.20 1,127,960 42,710 3.79 68,843 (4,437) (0.59) Savings accounts 677,064 12,010 1.77 489,998 3,704 0.76 187,066 8,306 1.01 Time deposits (in-market) 1,213,692 44,727 3.69 1,172,500 47,595 4.06 41,192 (2,868) (0.37) Interest-bearing in-market deposits 4,438,882 121,438 2.74 4,043,099 119,737 2.96 395,783 1,701 (0.22) Wholesale brokered time deposits 48,703 2,457 5.04 504,638 26,361 5.22 (455,935) (23,904) (0.18) Total interest-bearing deposits 4,487,585 123,895 2.76 4,547,737 146,098 3.21 (60,152) (22,203) (0.45) FHLB advances 885,668 39,635 4.48 1,312,391 64,539 4.92 (426,723) (24,904) (0.44) Junior subordinated debentures 22,681 1,373 6.05 22,681 1,593 7.02 — (220) (0.97) Total interest-bearing liabilities 5,395,934 164,903 3.06 5,882,809 212,230 3.61 (486,875) (47,327) (0.55) Noninterest-bearing demand deposits 633,193 664,557 (31,364) Other liabilities 142,557 154,019 (11,462) Shareholders’ equity 526,717 479,777 46,940 Total liabilities and shareholders’ equity $6,698,401 $7,181,162 ($482,761) Net interest income (FTE) $154,045 $129,369 $24,676 Interest rate spread 1.91 % 1.32 % 0.59 % Net interest margin 2.40 % 1.87 % 0.53 % -36- Management's Discussion and Analysis Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency: (Dollars in thousands) Years ended December 31, 2025 2024 Change Commercial loans $858 $916 ($58) Nontaxable debt securities 2 1 1 Total $860 $917 ($57) Net Interest Income Net interest income, the primary source of our operating income, totaled $153.2 million and $128.4 million, respectively, for 2025 and 2024.
See Note 11 to the Consolidated Financial Statements for additional information regarding income taxes. Segment Reporting The Corporation manages its operations through two reportable business segments, consisting of Commercial Banking and Wealth Management Services. See Note 18 to the Consolidated Financial Statements.
See Note 11 to the Consolidated Financial Statements for additional information regarding income taxes. Segment Reporting The Corporation manages its operations through two reportable business segments, consisting of Banking and Wealth Management Services. See Note 18 to the Consolidated Financial Statements.
Potential problem loans include classified accruing commercial loans that were less than 90 days past due at December 31, 2024 and other loans for which known information about possible credit problems of the related borrowers causes management to have doubts as to the ability of such borrowers to comply with the present loan repayment terms and which may result in disclosure of such loans as nonperforming at some time in the future.
Potential problem loans include classified accruing commercial loans that were less than 90 days past due at December 31, 2025 and other loans for which known information about possible credit problems of the related borrowers causes management to have doubts as to the ability of such borrowers to comply with the present loan repayment terms and which may result in disclosure of such loans as nonperforming at some time in the future.
The largest risk to the BOLI program is credit risk of the insurance carriers. To mitigate this risk, annual financial condition reviews are completed on all carriers. BOLI is invested in the “general account” of quality insurance companies. All such general account carriers were rated as investment grade at December 31, 2024 by credit rating agencies such as A.M.
The largest risk to the BOLI program is credit risk of the insurance carriers. To mitigate this risk, annual financial condition reviews are completed on all carriers. BOLI is invested in the “general account” of quality insurance companies. All such general account carriers were rated as investment grade at December 31, 2025 by credit rating agencies such as A.M.
Customer and client funds are placed at one or more participating banks to ensure that each deposit customer is eligible for the full amount of FDIC insurance. As a program participant, we receive reciprocal amounts of -58- Management's Discussion and Analysis deposits from other participating banks.
Customer and client funds are placed at one or more participating banks to ensure that each deposit customer is eligible for the full amount of FDIC insurance. As a program participant, we receive reciprocal amounts of -57- Management's Discussion and Analysis deposits from other participating banks.
The sensitivity and related range of impact is a hypothetical analysis and is not intended to represent management’s judgments or assumptions of qualitative loss factors that were utilized at December 31, 2024 in estimation of the ACL on loans recognized on the Consolidated Balance Sheets.
The sensitivity and related range of impact is a hypothetical analysis and is not intended to represent management’s judgments or assumptions of qualitative loss factors that were utilized at December 31, 2025 in estimation of the ACL on loans recognized on the Consolidated Balance Sheets.
In addition, management periodically performs independent price tests of securities to ensure proper valuation and to verify our understanding of how securities are priced. As of December 31, 2024 and 2023, management did not make any adjustments to the prices provided by the pricing service.
In addition, management periodically performs independent price tests of securities to ensure proper valuation and to verify our understanding of how securities are priced. As of December 31, 2025 and 2024, management did not make any adjustments to the prices provided by the pricing service.
For additional information on these arrangements and the expected timing of applicable payments as of December 31, 2024 , see the following notes to the Consolidated Financial Statements: Note 7 for leases, Note 12 for time deposits, Note 13 for borrowings and Note 16 for defined benefit pension plans.
For additional information on these arrangements and the expected timing of applicable payments as of December 31, 2025 , see the following notes to the Consolidated Financial Statements: Note 7 for leases, Note 12 for time deposits, Note 13 for borrowings and Note 16 for defined benefit pension plans.
Our home equity line and home equity loan origination activities are conducted primarily in southern New England. The Bank estimates that approximately 50% of the combined home equity lines of credit and home equity loan balances are first lien positions or subordinate to other Washington Trust mortgages.
Our home equity line and home equity loan origination activities are conducted primarily in southern New England. The Bank estimates that approximately 45% of the combined home equity lines of credit and home equity loan balances are first lien positions or subordinate to other Washington Trust mortgages.
In addition to the amounts presented above, the Bank also access to a $40.0 million unused line of credit with the FHLB at December 31, 2024, 2023 and 2022. The ALCO establishes and monitors internal liquidity measures to manage liquidity exposure. Liquidity remained within target ranges established by the ALCO during 2024.
In addition to the amounts presented above, the Bank also had access to a $40.0 million unused line of credit with the FHLB at December 31, 2025, 2024 and 2023. The ALCO establishes and monitors internal liquidity measures to manage liquidity exposure. Liquidity remained within target ranges established by the ALCO during 2025.
As of December 31, 2024 and December 31, 2023, net interest income simulations indicated that exposure to changing interest rates over the simulation horizons remained within tolerance levels established by the Corporation.
As of December 31, 2025 and December 31, 2024, net interest income simulations indicated that exposure to changing interest rates over the simulation horizons remained within tolerance levels established by the Corporation.
Our principal noninterest expenses include salaries and employee benefit costs, outsourced services provided by third-party vendors, occupancy and facility-related costs, and other administrative expenses. We continue to leverage our strong regional brand to build market share and remain steadfast in our commitment to provide superior service.
Our principal noninterest expenses include salaries and employee benefit costs, outsourced services (including software-as-a-service) provided by third-party vendors, occupancy and facility-related costs, and other administrative expenses. We continue to leverage our strong regional brand to build market share and remain steadfast in our commitment to provide superior service.
Due to the fact that the Bank may, consistent with industry practice, renew a significant portion of commercial loans at or immediately prior to their maturity by renewing the loans on substantially similar or revised terms, the principal repayments actually received by the Bank are anticipated to be significantly less than the amounts contractually due in any -47- Management's Discussion and Analysis particular period.
Due to the fact that the Bank may, consistent with industry practice, renew a significant portion of commercial loans at or immediately prior to their maturity by renewing the loans on substantially similar or revised terms, the principal repayments actually received by the Bank are anticipated to be significantly less than the amounts contractually due in any particular period.
While the ALCO reviews and updates simulation assumptions and also periodically back-tests the simulation results to ensure that the assumptions are reasonable and current, income simulation may not always prove to be an accurate indicator of interest rate risk or future NIM.
While the ALCO reviews and updates simulation assumptions and also periodically back-tests the simulation results to ensure that the assumptions are reasonable and current, income simulation may not always prove to be an accurate indicator of -61- Management's Discussion and Analysis interest rate risk or future NIM.
The ALCO uses income simulation to measure interest rate risk inherent in the Corporation’s financial instruments at a given point in time by showing the effect of interest rate shifts on net interest income over a 12-month horizon and a 13- to 24- -62- Management's Discussion and Analysis month horizon.
The ALCO uses income simulation to measure interest rate risk inherent in the Corporation’s financial instruments at a given point in time by showing the effect of interest rate shifts on net interest income over a 12-month horizon and a 13- to 24-month horizon.
The simulations assume that the size and general composition of the Corporation’s balance sheet remain static over the simulation horizons, with the exception of certain deposit mix shifts from low-cost savings to higher-cost time deposits in selected interest rate scenarios.
The simulations assume that the size and general composition of the Corporation’s balance sheet remain static over the simulation horizons, with the exception of certain deposit mix shifts from lower-cost to higher-cost deposits in selected interest rate scenarios.
The simulations at December 31, 2024 incorporated the reclassification of residential mortgage loans from portfolio to held for sale and the sale of these loans completing in January 2025. The simulations at December 31, 2024 assume the proceeds from the sale of loans are used to pay down maturing wholesale funding balances.
The simulations at December 31, 2024 incorporated the reclassification of residential mortgage loans from portfolio to held for sale and the sale of these loans completing in January 2025. The simulations at December 31, 2024 assumed the proceeds from the sale of loans were used to pay down maturing wholesale funding balances.
Loans are sold with servicing retained or released. Loans sold with servicing rights retained result in the capitalization of servicing rights. Loan servicing rights are included in other assets and are subsequently amortized as an offset to mortgage banking revenues over the estimated period of servicing.
Loans are sold with servicing retained or released. Loans sold with servicing rights retained result in the capitalization of servicing rights. Loan servicing rights are included in other assets and are subsequently amortized as an offset to mortgage -50- Management's Discussion and Analysis banking revenues over the estimated period of servicing.
Furthermore, a prolonged period of inflation could cause wages and other costs to increase. -64- Management's Discussion and Analysis Critical Accounting Policies and Estimates Estimates and assumptions are necessary in the application of certain accounting policies and procedures and can be susceptible to significant change.
Furthermore, a prolonged period of inflation could cause wages and other costs to increase. Critical Accounting Policies and Estimates Estimates and assumptions are necessary in the application of certain accounting policies and procedures and can be susceptible to significant change.
(2) Represents fair value changes on mortgage loans held for sale and forward loan commitments. (3) Represents loan servicing fee income, net of servicing right amortization and valuation adjustments. (4) Includes brokered loans (loans originated for others). Mortgage banking revenues increased by $4.3 million, or 65%, in 2024.
(2) Represents fair value changes on mortgage loans held for sale and forward loan commitments. (3) Represents loan servicing fee income, net of servicing right amortization and valuation adjustments. (4) Includes brokered loans (loans originated for others). Mortgage banking revenues increased by $1.1 million, or 10%, in 2025.
The following table sets forth the estimated change in net interest income from an unchanged rate scenario over the periods indicated for parallel changes in market interest rates using the Corporation’s on- and off-balance sheet financial instruments as of December 31, 2024 and December 31, 2023.
The following table sets forth the estimated change in net interest income compared to an unchanged rate scenario over the periods indicated for parallel changes in market interest rates using the Corporation’s on- and off-balance sheet financial instruments as of December 31, 2025 and December 31, 2024.
During 2024, the Corporation made no changes in its practices or policies concerning the placement of loans into nonaccrual status. Interest income that would have been recognized if loans on nonaccrual status had been current in accordance with their original terms was approximately $1.6 million in 2024, compared to $3.4 million in 2023.
During 2025, the Corporation made no changes in its practices or policies concerning the placement of loans into nonaccrual status. Interest income that would have been recognized if loans on nonaccrual status had been current in accordance with their original terms was approximately $933 thousand in 2025, compared to $1.6 million in 2024.
Consumer Loans The consumer loan portfolio represented 7% of total loans at December 31, 2024, compared to 6% at December 31, 2023. Consumer loans include home equity loans and lines of credit and personal installment loans. Home equity lines of credit and home equity loans represented 94% of the total consumer portfolio at December 31, 2024.
Consumer Loans The consumer loan portfolio represented 6% of total loans at December 31, 2025, compared to 7% at December 31, 2024. Consumer loans include home equity loans and lines of credit and personal installment loans. Home equity lines of credit and home equity loans represented 95% of the total consumer portfolio at December 31, 2025.
The Board of Directors is responsible for oversight of the ERM program. The ERM program enables the aggregation of risk across the Corporation and ensures the Corporation has the tools, programs and processes in place to support informed decision making, to anticipate risks before they materialize and to maintain the Corporation’s risk profile consistent with its risk strategy.
The ERM program enables the aggregation of risk across the Corporation and ensures the Corporation has the tools, programs and processes in place to support informed decision making, to anticipate risks before they materialize and to maintain the Corporation’s risk profile consistent with its risk strategy.
For further -34- Management's Discussion and Analysis discussion regarding the credit risk and the credit quality of the Corporation’s loan portfolio, see Notes 4 and 5 to the Consolidated Financial Statements. For further discussion regarding credit risk associated with unfunded commitments, see Note 21 to the Consolidated Financial Statements.
For further discussion regarding the credit risk and the credit quality of the Corporation’s loan portfolio, see Notes 4 and 5 to the Consolidated Financial Statements. For further discussion regarding credit risk associated with unfunded commitments, see Note 21 to the Consolidated Financial Statements. For further discussion regarding the Corporation’s securities portfolio, see Note 3 to the Consolidated Financial Statements.
The blended statutory rates include the federal income tax rate of 21% and a blended state income tax rate net of a federal tax benefit. In 2024, the Corporation recognized an income tax benefit of $10.8 million, compared to income tax expense of $8.3 million in 2023.
The blended statutory rates include the federal income tax rate of 21% and a blended state income tax rate net of a federal tax benefit. In 2025, the Corporation recognized income tax expense of $15.2 million, compared to an income tax benefit of $10.8 million in 2024.
(2) Calculated as income tax expense (benefit), adjusted for the tax impact of the adjustments as outlined in the table above, divided by income (loss) before income taxes, adjusted for the pre-tax impact of the adjustments as outlined in the table above. -32- Management's Discussion and Analysis The following table presents adjusted diluted earnings per common share and adjusted dividend payout ratio: (Dollars in thousands, except per share amounts) Years Ended December 31, 2024 2023 Adjusted Diluted Earnings per Common Share: Diluted (loss) earnings per common share, as reported (1) ($1.63) $2.82 Less: impact of adjustments 4.00 (0.19) Adjusted diluted earnings per common share (non-GAAP) (2) $2.37 $2.63 Adjusted Dividend Payout Ratio: Cash dividends declared per share, as reported $2.24 $2.24 Diluted (loss) earnings per common share, as reported (1.63) 2.82 Less: impact of adjustments 4.00 (0.19) Adjusted diluted earnings per common share (non-GAAP) $2.37 $2.63 Dividend payout ratio, as reported (3) (137.4 %) 79.43 % Adjusted dividend payout ratio (non-GAAP) (4) 94.51 % 85.17 % (1) Net income (loss) available to common shareholders divided by weighted average diluted common and potential shares outstanding.
(2) Calculated as income tax expense (benefit), adjusted for the tax impact of the adjustments as outlined in the table above, divided by income (loss) before income taxes, adjusted for the pre-tax impact of the adjustments as outlined in the table above. -32- Management's Discussion and Analysis The following table presents adjusted diluted earnings per common share and adjusted dividend payout ratio: (Dollars in thousands, except per share amounts) Years Ended December 31, 2025 2024 Adjusted Diluted Earnings per Common Share: Diluted earnings (loss) per common share, as reported (1) $2.71 ($1.63) Less: impact of adjustments 0.02 (4.00) Adjusted diluted earnings per common share (non-GAAP) (2) $2.69 $2.37 Adjusted Dividend Payout Ratio: Cash dividends declared per share, as reported $2.24 $2.24 Diluted earnings (loss) per common share, as reported 2.71 (1.63) Less: impact of adjustments 0.02 (4.00) Adjusted diluted earnings per common share (non-GAAP) $2.69 $2.37 Dividend payout ratio, as reported (3) 82.66 % (137.42 %) Adjusted dividend payout ratio (non-GAAP) (4) 83.27 % 94.51 % (1) Net income (loss) available to common shareholders divided by weighted average diluted common and potential shares outstanding.
The following table presents a summary of performance metrics and ratios: Years Ended December 31, 2024 2023 Diluted (loss) earnings per common share ($1.63) $2.82 Adjusted diluted earnings per common share (non-GAAP) $2.37 $2.63 Return on average assets (0.39 %) 0.69 % Adjusted return on average assets (non-GAAP) 0.57 % 0.64 % Return on average equity (5.84 %) 10.57 % Adjusted return on average equity (non-GAAP) 8.52 % 9.85 % -36- Management's Discussion and Analysis Average Balances/Net Interest Margin - Fully Taxable Equivalent Basis The following table presents daily average balance, interest, and yield/rate information, as well as net interest margin on an FTE basis.
The following table presents a summary of performance metrics and ratios: Years Ended December 31, 2025 2024 Diluted earnings (loss) per common share $2.71 ($1.63) Adjusted diluted earnings per common share (non-GAAP) $2.69 $2.37 Return on average assets 0.78 % (0.39 %) Adjusted return on average assets (non-GAAP) 0.77 % 0.57 % Return on average equity 9.92 % (5.84 %) Adjusted return on average equity (non-GAAP) 9.84 % 8.52 % -35- Management's Discussion and Analysis Average Balances/Net Interest Margin - Fully Taxable Equivalent Basis The following table presents daily average balance, interest, and yield/rate information, as well as net interest margin on an FTE basis.
Accordingly, there can be no assurance that other loans will not become 90 days or more past due, be placed on nonaccrual, become modified, or require increased allowance coverage and provision for credit losses on loans. -55- Management's Discussion and Analysis Management has identified $28.2 million in potential problem loans at December 31, 2024, compared to $22.9 million at December 31, 2023.
Accordingly, there can be no assurance that other loans will not become 90 days or more past due, be placed on nonaccrual, become modified, or require increased allowance coverage and provision for credit losses on loans. Management has identified $28.4 million in potential problem loans at December 31, 2025, compared to $28.2 million at December 31, 2024.
Total past due loans included $6.4 million of nonaccrual loans as of December 31, 2024, compared to $6.9 million of as of December 31, 2023. All loans 90 days or more past due at December 31, 2024 and 2023 were classified as nonaccrual.
Total past due loans included $8.3 million of nonaccrual loans as of December 31, 2025, compared to $6.4 million of as of December 31, 2024. All loans 90 days or more past due at December 31, 2025 and 2024 were classified as nonaccrual.
These include payments related to lease obligations, time deposits with stated maturity dates, borrowings and defined benefit pension plans.
These include payments related to lease obligations, time deposits with stated maturity dates, borrowings and defined benefit -63- Management's Discussion and Analysis pension plans.
See Note 9 to the Consolidated Financial Statements for additional disclosure. 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 consists of two basic components. The first component involves pooling loans into portfolio segments for loans that share similar risk characteristics.
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 consists of two basic components. The first component involves pooling loans into portfolio segments for loans that share similar risk characteristics.
Investment in Bank-Owned Life Insurance BOLI amounted to $106.8 million and $103.7 million, respectively, at December 31, 2024 and 2023. BOLI provides a means to mitigate increasing employee benefit costs.
Investment in Bank-Owned Life Insurance BOLI amounted to $115.1 million and $106.8 million, respectively, at December 31, 2025 and 2024. BOLI provides a means to mitigate increasing employee benefit costs.
The Corporation is also exposed to financial market risk and housing market risk. Compliance risk represents the risk of regulatory sanctions or financial loss resulting from the failure to comply with laws, rules, and regulations and standards of good banking practice.
Interest rate risk, discussed above, is the most significant market risk to which the Corporation is exposed. The Corporation is also exposed to financial market risk and housing market risk. Compliance risk represents the risk of regulatory sanctions or financial loss resulting from the failure to comply with laws, rules, and regulations and standards of good banking practice.
The net unrealized losses at December 31, 2024 and 2023 were concentrated mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises and were primarily attributable to relative changes in market interest rates since the time of purchase. See Note 3 to the Consolidated Financial Statements for additional information.
The net unrealized losses were primarily concentrated in obligations of U.S. government agencies and U.S. government-sponsored enterprises, including mortgage-backed securities, and primarily attributable to relative changes in market interest rates since the time of purchase. See Note 3 to the Consolidated Financial Statements for additional information.
(2) As of December 31, 2024, 2023 and 2022, loans with a carrying value of $68.5 million, $71.0 million and $20.9 million, respectively, and securities available for sale with a carrying value of $13.9 million, $13.1 million and $12.7 million, respectively, were pledged to the FRBB resulting in this additional unused borrowing capacity.
(2) As of December 31, 2025, 2024 and 2023, loans with a carrying value of $58.3 million, $68.5 million and $71.0 million, respectively, and securities available for sale with a carrying value of $57.6 million, $13.9 million and $13.1 million, respectively, were pledged to the FRBB resulting in this additional unused borrowing capacity.
Book value per share was $25.93 at December 31, 2024, compared to $27.75 at December 31, 2023. The Bancorp and the Bank are subject to various regulatory capital requirements and are considered “well capitalized,” with a total risk-based capital ratio of 12.47% at December 31, 2024, compared to 11.58% at December 31, 2023.
Book value per share was $28.56 at December 31, 2025, compared to $25.93 at December 31, 2024. The Bancorp and the Bank are subject to various regulatory capital requirements and are considered “well capitalized,” with a total risk-based capital ratio of 12.95% at December 31, 2025, compared to 12.47% at December 31, 2024.
FHLB advances totaled $1.1 billion at December 31, 2024, down by $65.0 million from the balance at the end of 2023. For additional information regarding FHLB advances see Note 13 to the Consolidated Financial Statements.
FHLB advances totaled $626.0 million at December 31, 2025, down by $499.0 million from the balance at the end of 2024. For additional information regarding FHLB advances see Note 13 to the Consolidated Financial Statements.
At December 31, 2024, the credit quality of the healthcare and social assistance segment was 86% pass-rated and 14% was special mention. Also, there were no nonaccrual loans and all loans in this segment were current with respect to payment terms at December 31, 2024.
At December 31, 2025, the credit quality of the healthcare and social assistance segment was 89% pass-rated and 11% was special mention. Also, there were no nonaccrual loans and all loans were current with respect to payment terms at December 31, 2025.
Given the concentration of ACL allocation to the total commercial portfolio and the significant judgments made by management in deriving the qualitative loss factors, management analyzed the impact that changes in qualitative judgments could have. The range of impact was an ACL allocated to the total commercial loan portfolio between $24.3 million and $53.5 million at December 31, 2024.
Given the concentration of ACL allocation to the total commercial portfolio and the significant judgments made by management in deriving the qualitative loss factors, management analyzed the impact that changes in qualitative judgments could have. The range of impact was an ACL allocated to the total commercial loan portfolio between $20.7 million and $56.6 million at December 31, 2025.
Potential problem loans are not included in the amounts of nonaccrual presented above. They are assessed for loss exposure using the methods described in Note 4 to the Consolidated Financial Statements under the caption “Credit Quality Indicators.” Management cannot predict the extent to which economic conditions or other factors may impact borrowers and the potential problem loans.
They are assessed for loss exposure using the methods described in Note 4 to the Consolidated Financial Statements under the caption “Credit Quality -54- Management's Discussion and Analysis Indicators.” Management cannot predict the extent to which economic conditions or other factors may impact borrowers and the potential problem loans.
In other circumstances, a loan, or a portion of a loan, may not be repaid due to the borrower’s inability to satisfy the contractual terms of the loan. Commercial Loans The commercial loan portfolio represented 52% of total loans at December 31, 2024, compared to 48% of total loans at December 31, 2023.
In other circumstances, a loan, or a portion of a loan, may not be repaid due to the borrower’s inability to satisfy the contractual terms of the loan. -46- Management's Discussion and Analysis Commercial Loans The commercial loan portfolio represented 54% of total loans at December 31, 2025, compared to 52% of total loans at December 31, 2024.
Commercial Real Estate Loans CRE loans totaled $2.2 billion at December 31, 2024, up by $48.1 million, or 2%, from the balance at December 31, 2023. In 2024, CRE loan originations and advances amounted to $272.5 million and were partially offset by principal payments.
Commercial Real Estate Loans CRE loans totaled $2.2 billion at December 31, 2025, up by $29.5 million, or 1%, from the balance at December 31, 2024. In 2025, CRE loan originations and advances amounted to $359.1 million and were largely offset by payments.
The average balance of noninterest-bearing demand deposits for 2024 decreased by $113.6 million, or 15%, from the average balance in 2023. Volume/Rate Analysis - Interest Income and Expense (FTE Basis) The following table presents certain information on an FTE basis regarding changes in our interest income and interest expense for the period indicated.
The average balance of noninterest-bearing demand deposits for 2025 decreased by $31.4 million, or 5%, from 2024. -37- Management's Discussion and Analysis Volume/Rate Analysis - Interest Income and Expense (FTE Basis) The following table presents certain information on an FTE basis regarding changes in our interest income and interest expense for the period indicated.
The following table presents nonperforming assets and additional asset quality data: (Dollars in thousands) December 31, 2024 2023 Commercial: Commercial real estate $10,053 $32,827 Commercial & industrial 515 682 Total commercial 10,568 33,509 Residential Real Estate: Residential real estate 10,767 9,626 Consumer: Home equity 1,972 1,483 Other — — Total consumer 1,972 1,483 Total nonaccrual loans 23,307 44,618 OREO, net — 683 Total nonperforming assets $23,307 $45,301 Nonperforming assets to total assets 0.34% 0.63% Nonperforming loans to total loans 0.45% 0.79% Total past due loans to total loans 0.23% 0.20% Allowance for credit losses on loans to total loans 0.82% 0.73% Allowance for credit losses on loans to nonaccrual loans 180.03% 92.02% Accruing loans 90 days or more past due $— $— 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.
The following table presents nonperforming assets and additional asset quality data: (Dollars in thousands) December 31, 2025 2024 Commercial: Commercial real estate $— $10,053 Commercial & industrial — 515 Total commercial — 10,568 Residential Real Estate: Residential real estate 11,099 10,767 Consumer: Home equity 1,824 1,972 Other — — Total consumer 1,824 1,972 Total nonaccrual loans 12,923 23,307 OREO, net — — Total nonperforming assets $12,923 $23,307 Nonperforming assets to total assets 0.20% 0.34% Nonperforming loans to total loans 0.25% 0.45% Total past due loans to total loans 0.22% 0.23% Allowance for credit losses on loans to total loans 0.73% 0.82% Allowance for credit losses on loans to nonaccrual loans 288.14% 180.03% Accruing loans 90 days or more past due $— $— 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.
See Notes 3 and 10 to the Consolidated Financial Statements for additional information regarding the determination of fair value of investment securities. -45- Management's Discussion and Analysis Securities Portfolio The carrying amounts of securities held are as follows: (Dollars in thousands) December 31, 2024 2023 Amount % of Total Amount % of Total Available for Sale Debt Securities: Obligations of U.S. government agencies and U.S. government-sponsored enterprises $38,612 4 % $225,742 23 % Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises 855,147 94 753,956 75 Obligations of states and political subdivisions 655 — — — Individual name issuer trust preferred debt securities 9,221 1 8,793 1 Corporate bonds 12,670 1 11,889 1 Total available for sale debt securities $916,305 100 % $1,000,380 100 % The securities portfolio represented 13% of total assets at December 31, 2024, compared to 14% of total assets at December 31, 2023.
See Notes 3 and 10 to the Consolidated Financial Statements for additional information regarding the determination of fair value of investment securities. -44- Management's Discussion and Analysis Securities Portfolio The carrying amounts of securities held are as follows: (Dollars in thousands) December 31, 2025 2024 Amount % of Total Amount % of Total Available for Sale Debt Securities: Obligations of U.S. government agencies and U.S. government-sponsored enterprises $39,958 4 % $38,612 4 % Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises 880,894 94 855,147 94 Obligations of states and political subdivisions 663 — 655 — Individual name issuer trust preferred debt securities 6,103 1 9,221 1 Corporate bonds 12,724 1 12,670 1 Total available for sale debt securities $940,342 100 % $916,305 100 % The securities portfolio represented 14% of total assets at December 31, 2025, compared to 13% of total assets at December 31, 2024.
See Note 4 to the Consolidated Financial Statements for additional information regarding TLMs. -52- Management's Discussion and Analysis Nonperforming Assets Nonperforming assets include nonaccrual loans and OREO.
See Note 4 to the Consolidated Financial Statements for additional information regarding TLMs. -51- Management's Discussion and Analysis Nonperforming Assets Nonperforming assets are typically comprised of nonaccrual loans and OREO.
Net interest income is affected by the level of and changes in interest rates, and changes in the amount and composition of interest-earning assets and interest-bearing liabilities. Prepayment penalty income associated with loan payoffs is included in net interest income.
Net interest income is affected by the level of and changes in interest rates, and changes in the amount and composition of interest-earning assets and interest-bearing liabilities. Net interest income may also include the periodic recognition of prepayment penalty fee income associated with commercial loan payoffs.
(3) Uninsured deposits of states and political subdivisions, which are secured or collateralized as required by state law. -59- Management's Discussion and Analysis The following table presents the amount of time certificates of deposit in denominations of $250 thousand or more at December 31, 2024, maturing during the periods indicated: (Dollars in thousands) Three months or less $144,460 Over three months to six months 101,973 Over six months to 12 months 57,614 Over 12 months 49,838 Total time deposits $353,885 Borrowings Borrowings primarily consist of FHLB advances, which are used as a source of funding for liquidity and interest rate risk management purposes.
(3) Uninsured deposits of states and political subdivisions, which are secured or collateralized as required by state law. -58- Management's Discussion and Analysis The following table presents the amount of time certificates of deposit in denominations of $250 thousand or more at December 31, 2025, maturing during the periods indicated: (Dollars in thousands) Three months or less $129,445 Over three months to six months 139,120 Over six months to 12 months 59,609 Over 12 months 27,732 Total time deposits $355,906 Borrowings Borrowings primarily consist of FHLB advances, which are used as a source of funding for liquidity and interest rate risk management purposes.
Wealth management revenues represent our largest source of noninterest income. A substantial portion of wealth -40- Management's Discussion and Analysis management revenues is dependent on the value of wealth management AUA and is closely tied to the performance of the financial markets. This portion of wealth management revenues is referred to as “asset-based” and includes trust and investment management fees.
A substantial portion of wealth management revenues is dependent on the value of wealth management AUA and is closely tied to the performance of the financial markets. This portion of wealth management revenues is referred to as “asset-based” and includes trust and investment management fees.
The analysis of net interest income, NIM and the yield on loans is also impacted by changes in the level of net amortization of premiums and discounts on securities and loans, which is included in interest income. Changes in market interest rates affect the level of loan prepayments and the receipt of payments on mortgage-backed securities.
The analysis of net interest income, NIM and the yield on loans is also impacted by changes in the level of net amortization of premiums and discounts on securities and loans, which is included in interest income.
The largest component of the securities portfolio is mortgage-backed securities, all of which are issued by U.S. government agencies or U.S. government-sponsored enterprises.
The largest component of the securities portfolio is mortgage-backed securities, all of which are issued by U.S. government agencies or U.S. government-sponsored enterprises. The securities portfolio increased by $24.0 million, or 3%, from the end of 2024.
(Dollars in thousands) December 31, 2024 December 31, 2023 Allocated ACL ACL to Loans Loans to Total Portfolio (1) Allocated ACL ACL to Loans Loans to Total Portfolio (1) Commercial: Commercial real estate $26,485 1.23 % 42 % $24,144 1.15 % 37 % Commercial & industrial 7,277 1.34 10 8,088 1.34 11 Total commercial 33,762 1.25 52 32,232 1.19 48 Residential Real Estate: Residential real estate 6,832 0.32 41 7,403 0.28 46 Consumer: Home equity 1,031 0.35 6 1,048 0.34 6 Other 335 1.91 1 374 1.95 — Total consumer 1,366 0.43 7 1,422 0.43 6 Total ACL on loans at end of period $41,960 0.82 % 100 % $41,057 0.73 % 100 % (1) Percentage of loans outstanding in respective class to total loans outstanding. -57- Management's Discussion and Analysis The following table reflects the activity in the ACL on loans during the years presented: (Dollars in thousands) December 31, 2024 2023 2022 Balance at beginning of period $41,057 $38,027 $39,088 Charge-offs: Commercial: Commercial real estate 1,961 373 — Commercial & industrial 208 37 36 Total commercial 2,169 410 36 Residential real estate: Residential real estate — — — Consumer: Home equity — — — Other 244 167 148 Total consumer 244 167 148 Total charge-offs 2,413 577 184 Recoveries: Commercial: Commercial real estate — — 445 Commercial & industrial 22 12 29 Total commercial 22 12 474 Residential real estate: Residential real estate 160 3 21 Consumer: Home equity 197 10 12 Other 37 32 45 Total consumer 234 42 57 Total recoveries 416 57 552 Net charge-offs (recoveries) 1,997 520 (368) Provision charged to earnings 2,900 3,550 (1,429) Balance at end of period $41,960 $41,057 $38,027 Net charge-offs (recoveries) to average loans 0.04 % 0.01 % (0.01 %) Sources of Funds Our sources of funds include in-market deposits, wholesale brokered deposits, FHLB advances, other borrowings, and proceeds from the sales, maturities, and payments of loans and investment securities.
(Dollars in thousands) December 31, 2025 December 31, 2024 Allocated ACL ACL to Loans Loans to Total Portfolio (1) Allocated ACL ACL to Loans Loans to Total Portfolio (1) Commercial: Commercial real estate $19,766 0.91 % 43 % $26,485 1.23 % 42 % Commercial & industrial 9,750 1.73 11 7,277 1.34 10 Total commercial 29,516 1.07 54 33,762 1.25 52 Residential Real Estate: Residential real estate 6,270 0.31 40 6,832 0.32 41 Consumer: Home equity 1,186 0.37 6 1,031 0.35 6 Other 264 1.55 — 335 1.91 1 Total consumer 1,450 0.43 6 1,366 0.43 7 Total ACL on loans at end of period $37,236 0.73 % 100 % $41,960 0.82 % 100 % (1) Percentage of loans outstanding in respective class to total loans outstanding. -56- Management's Discussion and Analysis The following table reflects the activity in the ACL on loans during the years presented: (Dollars in thousands) December 31, 2025 2024 2023 Balance at beginning of period $41,960 $41,057 $38,027 Charge-offs: Commercial: Commercial real estate 5,715 1,961 373 Commercial & industrial 8,693 208 37 Total commercial 14,408 2,169 410 Residential real estate: Residential real estate — — — Consumer: Home equity — — — Other 327 244 167 Total consumer 327 244 167 Total charge-offs 14,735 2,413 577 Recoveries: Commercial: Commercial real estate 318 — — Commercial & industrial 139 22 12 Total commercial 457 22 12 Residential real estate: Residential real estate — 160 3 Consumer: Home equity 18 197 10 Other 36 37 32 Total consumer 54 234 42 Total recoveries 511 416 57 Net charge-offs 14,224 1,997 520 Provision charged to earnings 9,500 2,900 3,550 Balance at end of period $37,236 $41,960 $41,057 Net charge-offs to average loans 0.28 % 0.04 % 0.01 % Sources of Funds Our sources of funds include in-market deposits, wholesale brokered deposits, FHLB advances, other borrowings, and proceeds from the sales, maturities, and payments of loans and investment securities.
The table below presents residential real estate loan origination activity: (Dollars in thousands) Years ended December 31, 2024 2023 Amount % of Total Amount % of Total Originations for retention in portfolio (1) $92,466 18 % $459,892 64 % Originations for sale to the secondary market (2) 418,080 82 260,592 36 Total $510,546 100 % $720,484 100 % (1) Includes the full commitment amount of homeowner construction loans.
The table below presents residential real estate loan origination activity: (Dollars in thousands) Years ended December 31, 2025 2024 Amount % of Total Amount % of Total Originations for retention in portfolio (1) $176,757 26 % $92,466 18 % Originations for sale to the secondary market (2) 490,441 74 418,080 82 Total $667,198 100 % $510,546 100 % (1) Includes the full commitment amount of homeowner construction loans.
If the assumptions underlying the determination of the ACL prove to be incorrect, the ACL may not be sufficient to cover actual loan losses and an increase to the ACL may be necessary to allow for different assumptions or adverse developments.
If the assumptions underlying the determination of the ACL prove to be incorrect, the ACL may not be sufficient to cover actual loan losses and an increase to the ACL may be necessary to allow for different assumptions or adverse developments. In addition, a problem with one or more loans could require a significant increase to the ACL.
The table below presents residential real estate loan sales activity: (Dollars in thousands) Years ended December 31, 2024 2023 Amount % of Total Amount % of Total Loans sold with servicing rights retained $128,918 31 % $108,177 43 % Loans sold with servicing rights released (1) 287,223 69 141,795 57 Total $416,141 100 % $249,972 100 % (1) Includes brokered loans (loans originated for others).
The table below presents residential real estate loan sales activity: (Dollars in thousands) Years ended December 31, 2025 2024 Amount % of Total Amount % of Total Loans sold with servicing rights retained $41,816 9 % $128,918 31 % Loans sold with servicing rights released (1) 434,913 91 287,223 69 Total $476,729 100 % $416,141 100 % (1) Includes brokered loans (loans originated for others).
The dividend payout ratio was (137.4 %) in 2024, compared to 79.4% in 2023. The adjusted dividend payout ratio (non-GAAP) was 94.5% in 2024, compared to 85.2% in 2023. The ratio of total equity to total assets amounted to 7.21% at December 31, 2024, compared to a ratio of 6.56% at December 31, 2023.
The dividend payout ratio was 82.7 % in 2025, compared to (137.4%) in 2024. The adjusted dividend payout ratio (non-GAAP) was 83.3% in 2025, compared to 94.5% in 2024. The ratio of total equity to total assets amounted to 8.21% at December 31, 2025, compared to a ratio of 7.21% at December 31, 2024.
The first component involves pooling loans into portfolio segments for loans that share similar risk characteristics. The second component involves individually analyzed loans that do not share similar risk characteristics with loans that are pooled into portfolio segments. The ACL for pooled loans is measured utilizing a DCF methodology to estimate credit losses for each pooled portfolio segment.
The second component involves individually analyzed loans that do not share similar risk characteristics with loans that are pooled into portfolio segments. -64- Management's Discussion and Analysis The ACL for pooled loans is measured utilizing a DCF methodology to estimate credit losses for each pooled portfolio segment. The methodology incorporates a probability of default and loss given default framework.
The purpose is to determine market value exposure that may not be captured by income simulation, but which might result in changes to the Corporation’s capital position. Results are calculated using industry-standard analytical techniques and securities data.
Additionally, the Corporation monitors the potential change in market value of its available for sale debt securities in changing interest rate environments. The purpose is to determine market value exposure that may not be captured by income simulation, but which might result in changes to the Corporation’s capital position. Results are calculated using industry-standard analytical techniques and securities data.
As noted in the Consolidated Statements of Cash Flows, net amortization of premiums and discounts on securities and loans (a net reduction to net interest income) amounted to $1.3 million in 2024, compared to $1.4 million in 2023. FTE net interest income in 2024 amounted to $129.4 million, down by $8.7 million, or 6%, from 2023.
As noted in the Consolidated Statements of Cash Flows, net amortization of premiums and discounts on securities and loans (a net reduction to net interest income) amounted to $1.1 million in 2025, compared to $1.3 million in 2024.
Borrowing capacity is impacted by the amount and type of assets available to be pledged. -60- Management's Discussion and Analysis The table below presents a summary of contingent liquidity balances by source: (Dollars in thousands) December 31, 2024 2023 2022 Contingent Liquidity: Federal Home Loan Bank of Boston (1) $752,951 $1,086,607 $668,295 Federal Reserve Bank of Boston (2) 70,286 65,759 27,059 Available cash liquidity (3) 36,647 54,970 49,727 Unencumbered securities 597,771 680,857 691,893 Total contingent liquidity $1,457,655 $1,888,193 $1,436,974 Percentage of total contingent liquidity to uninsured deposits 106.9 % 149.8 % 94.9 % Percentage of total contingent liquidity to uninsured deposits, after exclusions 136.1 % 195.9 % 147.4 % (1) As of December 31, 2024, 2023 and 2022, loans with a carrying value of $2.8 billion, $3.4 billion and $2.4 billion, respectively, and securities available for sale with a carrying value of $74.2 million, $94.3 million and $102.1 million, respectively, were pledged to the FHLB resulting in this additional borrowing capacity.
The table below presents a summary of contingent liquidity balances by source: (Dollars in thousands) December 31, 2025 2024 2023 Contingent Liquidity: Federal Home Loan Bank of Boston (1) $1,356,005 $752,951 $1,086,607 Federal Reserve Bank of Boston (2) 104,379 70,286 65,759 Available cash liquidity (3) 17,460 36,647 54,970 Unencumbered securities 539,830 597,771 680,857 Total contingent liquidity $2,017,674 $1,457,655 $1,888,193 Percentage of total contingent liquidity to uninsured deposits 142.4 % 106.9 % 149.8 % Percentage of total contingent liquidity to uninsured deposits, after exclusions 181.7 % 136.1 % 195.9 % (1) As of December 31, 2025, 2024 and 2023, loans with a carrying value of $2.9 billion, $2.8 billion and $3.4 billion, respectively, and securities available for sale with a carrying value of $71.8 million, $74.2 million and $94.3 million, respectively, were pledged to the FHLB resulting in this additional borrowing capacity.
All changes are measured in comparison to the projected net interest income that would result from an “unchanged” rate scenario where both interest rates and the composition of the Corporation’s balance sheet remain stable.
All changes are measured in comparison to the projected net interest income that would result from an “unchanged” rate scenario where both interest rates and the composition of the Corporation’s balance sheet remain stable. The unchanged rate scenario as of December 31, 2025 shows net interest income trending higher over the next 12- and 24-month periods.
The Corporation has established collateralized borrowing capacity with the FRBB and also maintains additional collateralized borrowing capacity with the FHLB in excess of levels used in the ordinary course of business.
The Corporation has established collateralized borrowing capacity with the FRBB and also maintains additional collateralized borrowing capacity with the FHLB in excess of levels used in the ordinary course of business. Borrowing capacity is impacted by the amount and type of assets available to be pledged.
The following table presents additional detail on the Corporation’s loan portfolio and associated allowance: (Dollars in thousands) December 31, 2024 December 31, 2023 Loans Related Allowance Allowance / Loans Loans Related Allowance Allowance / Loans Individually analyzed loans $16,591 $1,543 9.30 % $34,640 $97 0.28 % Pooled (collectively evaluated) loans (1) 5,122,728 40,417 0.79 5,613,066 40,960 0.73 Total $5,139,319 $41,960 0.82 % $5,647,706 $41,057 0.73 % (1) The amount reported for pooled loans excludes a $1.5 million negative basis adjustment associated with fair value hedges at December 31, 2024.
The following table presents additional detail on the Corporation’s loan portfolio and associated allowance: (Dollars in thousands) December 31, 2025 December 31, 2024 Loans Related Allowance Allowance / Loans Loans Related Allowance Allowance / Loans Individually analyzed loans $8,922 $43 0.48 % $16,591 $1,543 9.30 % Pooled (collectively evaluated) loans (1) 5,125,801 37,193 0.73 5,122,728 40,417 0.79 Total $5,134,723 $37,236 0.73 % $5,139,319 $41,960 0.82 % (1) The amount reported for pooled loans excludes negative basis adjustment associated with fair value hedges of $335 thousand and $1.5 million, respectively, at December 31, 2025 and December 31, 2024.
Past Due Loans The following table presents past due loans by class: (Dollars in thousands) December 31, 2024 2023 Amount % (1) Amount % (1) Commercial: Commercial real estate $— — % $— — % Commercial & industrial 900 0.17 10 — Total commercial 900 0.03 10 — Residential Real Estate: Residential real estate 7,741 0.36 8,116 0.31 Consumer: Home equity 2,947 0.99 3,196 1.02 Other 394 2.24 23 0.12 Total consumer 3,341 1.06 3,219 0.97 Total past due loans $11,982 0.23 % $11,345 0.20 % (1) Percentage of past due loans to the total loans outstanding within the respective class.
Past Due Loans The following table presents past due loans by class: (Dollars in thousands) December 31, 2025 2024 Amount % (1) Amount % (1) Commercial: Commercial real estate $648 0.03 % $— — % Commercial & industrial 7 — 900 0.17 Total commercial 655 0.02 900 0.03 Residential Real Estate: Residential real estate 9,095 0.44 7,741 0.36 Consumer: Home equity 1,607 0.50 2,947 0.99 Other 26 0.15 394 2.24 Total consumer 1,633 0.49 3,341 1.06 Total past due loans $11,383 0.22 % $11,982 0.23 % (1) Percentage of past due loans to the total loans outstanding within the respective class.
Financial Statements and Supplementary Data.” Information pertaining to 2022 was included in the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, starting on page 32 under Part II, Item 7. “Management’s Discussion and Analysis of Results of Operations and Financial Condition,” which was filed with the SEC on February 26, 2024.
For a full understanding of this analysis, it should be read in conjunction with other sections of this Annual Report on Form 10-K, including Part I, Item 1 “Business” and Part II, Item 8 “Financial Statements and Supplementary Data.” Information pertaining to 2023 was included in the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, starting on page 31 under Part II, Item 7 “Management’s Discussion and Analysis of Results of Operations and Financial Condition,” which was filed with the SEC on February 25, 2025.
Of the two categories, potential runoff of deposit balances would have the most significant impact on contingent liquidity. Our stress test scenarios, therefore, emphasize attempts to quantify deposits at risk over selected time horizons.
In management’s estimation, risks are concentrated in two major categories: (1) runoff of in-market deposit balances; and (2) unexpected drawdown of loan commitments. Of the two categories, potential runoff of deposit balances would have the most significant impact on contingent liquidity. Our stress test scenarios, therefore, emphasize attempts to quantify deposits at risk over selected time horizons.
We cannot predict whether or when the Federal Reserve may increase or decrease the Federal Funds rate in the future. For additional discussion on interest due to changes in interest rates, see the caption “Asset/Liability Management and Interest Rate Risk” above.
There is no precise method, however, to measure the effects of inflation on the Corporation’s consolidated financial statements. And, we cannot predict whether or when the Federal Reserve may increase or decrease interest rates in the future. For additional discussion on interest due to changes in interest rates, see the caption “Asset/Liability Management and Interest Rate Risk” above.
The following table presents a summary of the Bank’s uninsured deposits: (Dollars in thousands) December 31, 2024 December 31, 2023 Balance % of Total Deposits Balance % of Total Deposits Uninsured Deposits: Uninsured deposits (1) $1,363,689 27 % $1,260,672 24 % Less: affiliate deposits (2) 94,740 2 92,645 2 Uninsured deposits, excluding affiliate deposits 1,268,949 25 1,168,027 22 Less: fully-collateralized preferred deposits (3) 197,638 4 204,327 4 Uninsured deposits, after exclusions $1,071,311 21 % $963,700 18 % (1) Determined in accordance with regulatory reporting requirements, which includes affiliate deposits and fully-collateralized preferred deposits.
The following table presents a summary of the Bank’s uninsured deposits: (Dollars in thousands) December 31, 2025 December 31, 2024 Balance % of Total Deposits Balance % of Total Deposits Uninsured Deposits: Uninsured deposits (1) $1,417,127 27 % $1,363,689 27 % Less: affiliate deposits (2) 85,651 2 94,740 2 Uninsured deposits, excluding affiliate deposits 1,331,476 25 1,268,949 25 Less: fully-collateralized preferred deposits (3) 220,937 4 197,638 4 Uninsured deposits, after exclusions $1,110,539 21 % $1,071,311 21 % (1) Determined in accordance with regulatory reporting requirements, which includes affiliate deposits and fully-collateralized preferred deposits.
December 31, 2024 December 31, 2023 Months 1-12 Months 13-24 Months 1-12 Months 13-24 100 basis point rate decrease (1.83 %) (0.53 %) (3.38 %) 0.94 % 200 basis point rate decrease (3.78 %) (1.67 %) (6.82 %) 1.53 % 300 basis point rate decrease (5.89 %) (3.73 %) (10.38 %) 1.59 % 100 basis point rate increase (0.16 %) (3.52 %) 0.72 % (6.08 %) 200 basis point rate increase 1.54 % (3.98 %) 4.16 % (7.57 %) 300 basis point rate increase 3.25 % (4.81 %) 7.55 % (9.21 %) -63- Management's Discussion and Analysis The relative change in interest rate sensitivity from December 31, 2023, as shown in the above table, was attributable to changes in balance sheet composition and market interest rates.
December 31, 2025 December 31, 2024 Months 1-12 Months 13-24 Months 1-12 Months 13-24 100 basis point rate decrease (1.72 %) (2.33 %) (1.83 %) (0.53 %) 200 basis point rate decrease (3.30 %) (5.07 %) (3.78 %) (1.67 %) 300 basis point rate decrease (4.77 %) (8.28 %) (5.89 %) (3.73 %) 100 basis point rate increase 0.52 % (0.54 %) (0.16 %) (3.52 %) 200 basis point rate increase 2.07 % 2.36 % 1.54 % (3.98 %) 300 basis point rate increase 3.72 % 4.54 % 3.25 % (4.81 %) The relative change in interest rate sensitivity from December 31, 2024, as shown in the above table, was attributable to changes in balance sheet composition and market interest rates.
See additional discussion under the caption “Provision for Credit Losses.” Noninterest income derived from the Commercial Banking segment was a loss of $69.6 million, compared to income of $20.0 million in 2023. Noninterest income in 2024 included net losses recognized on balance sheet repositioning transactions, as well as a net gain recognized on the sale of a bank-owned operations facility.
See additional discussion under the caption “Provision for Credit Losses.” Noninterest income derived from the Banking segment was $33.9 million, compared to a loss of $69.6 million in 2024. Noninterest income in 2025 included a net gain recognized on sale-leaseback transactions.
The ACL is management’s estimate, at the reporting date, of expected lifetime credit losses and includes consideration of current forecasted economic conditions.
The ACL is management’s estimate, at the reporting date, of expected lifetime credit losses and includes consideration of current forecasted economic conditions. Estimating an appropriate level of ACL necessarily involves a high degree of judgment.
The composition of past due loans (loans past due 30 days or more) was 92% residential and consumer and 8% commercial at December 31, 2024 and essentially all residential and consumer at December 31, 2023. Total past due loans increased by $637 thousand from the end of 2023.
The composition of past due loans (loans past due 30 days or more) was 94% residential and consumer and 6% commercial at December 31, 2025. This compared to 92% residential and consumer and 8% commercial of December 31, 2024. Total past due loans decreased by $599 thousand from the end of 2024.
The ACL on loans as a percentage of total loans, also known as the reserve coverage ratio, was 0.82% at December 31, 2024, compared to 0.73% at December 31, 2023. The Corporation recorded a provision for credit losses on loans of $2.9 million in 2024.
The ACL on loans as a percentage of total loans, also known as the reserve coverage ratio, was 0.73% at December 31, 2025, compared to 0.82% at December 31, 2024.
The following table presents a geographic summary of CRE loans by property location: (Dollars in thousands) December 31, 2024 December 31, 2023 Outstanding Balance % of Total Outstanding Balance % of Total Connecticut $839,079 39 % $815,975 39 % Massachusetts 663,026 31 645,736 31 Rhode Island 434,244 20 430,899 20 Subtotal 1,936,349 90 1,892,610 90 All other states 218,155 10 213,749 10 Total $2,154,504 100 % $2,106,359 100 % -48- Management's Discussion and Analysis Management considers the CRE portfolio to be well-diversified with loans across several property types.
The following table presents a geographic summary of CRE loans by property location: (Dollars in thousands) December 31, 2025 December 31, 2024 Outstanding Balance % of Total Outstanding Balance % of Total Connecticut $816,532 37 % $839,079 39 % Massachusetts 713,856 33 663,026 31 Rhode Island 375,905 17 434,244 20 Subtotal 1,906,293 87 1,936,349 90 All other states 277,692 13 218,155 10 Total $2,183,985 100 % $2,154,504 100 % -47- Management's Discussion and Analysis Management considers the CRE portfolio to be well-diversified with loans across several property types.
The following table presents adjusted return on average assets and adjusted return on average equity: (Dollars in thousands) Years Ended December 31, 2024 2023 Adjusted Return on Average Assets: Net (loss) income, as reported ($28,059) $48,176 Less: adjustments, after-tax (68,927) 3,253 Adjusted net income (non-GAAP) 40,868 44,923 Total average assets, as reported 7,181,162 6,999,040 Return on average assets (1) (0.39 %) 0.69 % Adjusted return on average assets (non-GAAP) (2) 0.57 % 0.64 % Adjusted Return on Average Equity: Net (loss) income available to common shareholders, as reported ($28,038) $48,091 Less: adjustments, after-tax (68,907) 3,249 Adjusted net income available to common shareholders (non-GAAP) 40,869 44,842 Total average equity, as reported 479,777 455,044 Return on average equity (3) (5.84 %) 10.57 % Adjusted return on average equity (non-GAAP) (4) 8.52 % 9.85 % (1) Net income (income) loss divided by total average assets.
The following table presents adjusted return on average assets and adjusted return on average equity: (Dollars in thousands) Years Ended December 31, 2025 2024 Adjusted Return on Average Assets: Net (loss) income, as reported $52,244 ($28,059) Less: adjustments, after-tax 417 (68,927) Adjusted net income (non-GAAP) 51,827 40,868 Total average assets, as reported 6,698,401 7,181,162 Return on average assets (1) 0.78 % (0.39 %) Adjusted return on average assets (non-GAAP) (2) 0.77 % 0.57 % Adjusted Return on Average Equity: Net (loss) income available to common shareholders, as reported $52,244 ($28,038) Less: adjustments, after-tax 417 (68,906) Adjusted net income available to common shareholders (non-GAAP) 51,827 40,868 Total average equity, as reported 526,717 479,777 Return on average equity (3) 9.92 % (5.84 %) Adjusted return on average equity (non-GAAP) (4) 9.84 % 8.52 % (1) Net income (loss) divided by total average assets.
Our participation in commercial loans originated by other banks amounted to $685.7 million and $652.7 million, respectively, at December 31, 2024 and 2023. Our participation in commercial loans originated by other banks also includes shared national credits. Commercial loans fall into two main categories, CRE and C&I loans.
Our participation in commercial loans originated by other banks amounted to $613.5 million and $685.7 million, respectively, at December 31, 2025 and 2024. Our participation in commercial loans originated by other banks also includes shared national credits.
The following table presents a summary of C&I loan by industry segmentation: (Dollars in thousands) December 31, 2024 December 31, 2023 Outstanding Balance (1) % of Total Outstanding Balance (1) % of Total C&I Portfolio Segmentation: Healthcare and social assistance $126,547 23 % $166,490 28 % Real estate rental and leasing 63,992 12 70,540 12 Transportation and warehousing 55,784 10 63,789 11 Educational services 47,092 9 41,968 7 Retail trade 41,132 8 43,746 7 Manufacturing 32,140 6 54,905 9 Finance and insurance 26,557 5 33,617 6 Information 22,265 4 22,674 4 Arts, entertainment and recreation 19,861 4 22,249 4 Accommodation and food services 12,368 2 13,502 2 Professional, scientific and technical services 10,845 2 7,998 1 Public administration 2,186 — 3,019 — Other 81,705 15 60,575 9 Total C&I loans $542,474 100 % $605,072 100 % Average C&I loan size (2) $798 $844 Largest individual C&I loan outstanding $25,333 $25,324 (1) Does not include unfunded commitments of $307.9 million and $341.9 million, respectively, as of December 31, 2024 and 2023.
The following table presents a summary of C&I loan by industry segmentation: (Dollars in thousands) December 31, 2025 December 31, 2024 Outstanding Balance (1) % of Total Outstanding Balance (1) % of Total C&I Portfolio Segmentation: Healthcare and social assistance $150,061 27 % $126,547 23 % Real estate rental and leasing 57,113 10 63,992 12 Transportation and warehousing 55,315 10 55,784 10 Educational services 54,245 10 47,092 9 Retail trade 48,289 9 41,132 8 Accommodation and food services 26,431 5 12,368 2 Manufacturing 23,714 4 32,140 6 Finance and insurance 22,727 4 26,557 5 Arts, entertainment and recreation 22,043 4 19,861 4 Information 21,843 4 22,265 4 Professional, scientific and technical services 12,490 2 10,845 2 Public administration 1,448 — 2,186 — Other 68,363 11 81,705 15 Total C&I loans $564,082 100 % $542,474 100 % Participation in C&I loans originated by other banks, included above (2) $95,047 $110,889 Average C&I loan size (3) $839 $798 Largest individual C&I loan outstanding $33,001 $25,333 (1) Does not include unfunded commitments of $306.9 million and $307.9 million, respectively, as of December 31, 2025 and 2024.
We believe the key to future growth is providing customers with convenient in-person service and digital banking solutions. In January 2024, we opened a new full-service branch in Smithfield, Rhode Island and in September 2024, we opened a new full-service branch in the Olneyville section of Providence.
We believe the key to future growth is providing customers with convenient in-person service and digital banking solutions. We plan to open a new full-service branch in Pawtucket, Rhode Island in the latter half of 2026.
Each presentation below reconciles the “as reported” GAAP measure to the adjusted non-GAAP measure. -31- Management's Discussion and Analysis The following table presents adjusted noninterest income, adjusted income before income taxes, adjusted income tax expense, adjusted effective tax rate, adjusted net income, and adjusted net income available to common shareholders: (Dollars in thousands, except per share amounts) Years Ended December 31, 2024 2023 Adjusted Noninterest Income: Noninterest (loss) income, as reported ($27,797) $56,140 Less adjustments: Realized losses on securities, net (31,047) — Losses on sale of portfolio loans, net (62,888) — Net gain on sale of bank-owned operations facility 988 — Litigation settlement income 2,100 — Total adjustments, pre-tax (90,847) — Adjusted noninterest income (non-GAAP) $63,050 $56,140 Adjusted Income Before Income Taxes: (Loss) income before income taxes ($38,818) $56,481 Less: total adjustments, pre-tax (90,847) — Adjusted income before income taxes (non-GAAP) $52,029 $56,481 Adjust Income Tax Expense: Income tax (benefit) expense, as reported ($10,759) $8,305 Less: tax on total adjustments (21,920) — Less: state legislative tax change, net (tax only adjustment) — (3,253) Total tax adjustments (21,920) (3,253) Adjusted income tax expense (non-GAAP) $11,161 $11,558 Adjusted Effective Tax Rate: Effective tax rate (1) 27.7 % 14.7 % Less: impact of adjustments (6.2) 5.8 Adjusted effective tax rate (non-GAAP) (2) 21.5 % 20.5 % Adjusted Net Income: Net (loss) income, as reported ($28,059) $48,176 Less: total adjustments, after-tax (68,927) 3,253 Adjusted net income (non-GAAP) $40,868 $44,923 Adjusted Net Income Available to Common Shareholders: Net (loss) income available to common shareholders, as reported ($28,038) $48,091 Less: total adjustments available to common shareholders, after-tax (68,907) 3,249 Adjusted net income available to common shareholders (non-GAAP) $40,869 $44,842 (1) Calculated as income tax expense (benefit) divided by income (loss) before income taxes.
Each presentation below reconciles the “as reported” GAAP measure to the adjusted non-GAAP measure. -31- Management's Discussion and Analysis The following table presents adjusted noninterest income, adjusted noninterest expense, adjusted income before income taxes, adjusted income tax expense, adjusted effective tax rate, adjusted net income, and adjusted net income available to common shareholders: (Dollars in thousands, except per share amounts) Years Ended December 31, 2025 2024 Adjusted Noninterest Income: Noninterest income (loss), as reported $75,860 ($27,797) Less adjustments: 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 Litigation settlement income — 2,100 Total adjustments, pre-tax 6,994 (90,847) Adjusted noninterest income (non-GAAP) $68,866 $63,050 Adjusted Noninterest Expense: Noninterest expense, as reported $152,435 $137,069 Less adjustments: Pension plan settlement charge 6,436 — Total adjustments, pre-tax 6,436 — Adjusted noninterest expense (non-GAAP) $145,999 $137,069 Adjusted Income Before Income Taxes: Income (loss) before income taxes, as reported $67,413 ($38,818) Less: total adjustments, pre-tax 558 (90,847) Adjusted income before income taxes (non-GAAP) $66,855 $52,029 Adjusted Income Tax Expense: Income tax expense (benefit), as reported $15,169 ($10,759) Less: tax on total adjustments 141 (21,920) Adjusted income tax expense (non-GAAP) $15,028 $11,161 Adjusted Effective Tax Rate: Effective tax rate, as reported (1) 22.5 % 27.7 % Less: impact of adjustments — 6.2 Adjusted effective tax rate (non-GAAP) (2) 22.5 % 21.5 % Adjusted Net Income: Net income (loss), as reported $52,244 ($28,059) Less: total adjustments, after-tax 417 (68,927) Adjusted net income (non-GAAP) $51,827 $40,868 Adjusted Net Income Available to Common Shareholders: Net income (loss) available to common shareholders, as reported $52,244 ($28,038) Less: total adjustments available to common shareholders, after-tax 417 (68,906) Adjusted net income available to common shareholders (non-GAAP) $51,827 $40,868 (1) Calculated as income tax expense (benefit) divided by income (loss) before income taxes.

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