Washington Trust Bancorp (WASH)

Regional bank Washington Trust Bancorp (NASDAQ:WASH) reported Q4 CY2025 results exceeding the market’s revenue expectations, with sales up 20.4% year on year to $59.25 million. Its non-GAAP profit of $0.83 per share was 10.8% above analysts’ consensus estimates.

Company Overview

Founded in 1800 and operating as Rhode Island's oldest community bank, Washington Trust Bancorp (NASDAQ:WASH) is a regional bank holding company offering commercial banking, mortgage lending, personal banking, and wealth management services.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

Washington Trust Bancorp competes with other New England regional and community banks like Brookline Bancorp (NASDAQ:BRKL), Cambridge Bancorp (NASDAQ:CATC), and Berkshire Hills Bancorp (NYSE:BHLB), as well as larger institutions operating in the region such as Citizens Financial Group (NYSE:CFG) and Bank of America (NYSE:BAC).

In general, banks make money from two primary sources. The first is net interest income, which is interest earned on loans, mortgages, and investments in securities minus interest paid out on deposits. The second source is non-interest income, which can come from bank account, credit card, wealth management, investing banking, and trading fees. Unfortunately, Washington Trust Bancorp struggled to consistently increase demand as its $222.7 million of revenue for the trailing 12 months was close to its revenue five years ago. This was below our standards and suggests it’s a low quality business.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Washington Trust Bancorp’s annualized revenue growth of 7.2% over the last two years is above its five-year trend, but we were still disappointed by the results. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Washington Trust Bancorp reported robust year-on-year revenue growth of 20.4%, and its $59.25 million of revenue topped Wall Street estimates by 3.8%.

Net interest income made up 67.6% of the company’s total revenue during the last five years, meaning lending operations are Washington Trust Bancorp’s largest source of revenue.

Net interest income commands greater market attention due to its reliability and consistency, whereas non-interest income is often seen as lower-quality revenue that lacks the same dependable characteristics.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Washington Trust Bancorp, its EPS declined by 7.8% annually over the last five years while its revenue was flat. This tells us the company struggled because its fixed cost base made it difficult to adjust to choppy demand.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Washington Trust Bancorp, its two-year annual EPS declines of 2.3% show it’s still underperforming. These results were bad no matter how you slice the data.

In Q4, Washington Trust Bancorp reported adjusted EPS of $0.83, up from $0.59 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Washington Trust Bancorp’s full-year EPS of $2.68 to grow 18.8%.

Banks profit by intermediating between depositors and borrowers, making them fundamentally balance sheet-driven enterprises. Market participants emphasize balance sheet quality and sustained book value growth when evaluating these institutions.

When analyzing banks, tangible book value per share (TBVPS) takes precedence over many other metrics. This measure isolates genuine per-share value by removing intangible assets of debatable liquidation worth. Other (and more commonly known) per-share metrics like EPS can sometimes be murky due to M&A or accounting rules allowing for loan losses to be spread out.

Washington Trust Bancorp’s TBVPS declined at a 1.5% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 2.5% annually over the last two years from $23.78 to $24.97 per share.

Over the next 12 months, Consensus estimates call for Washington Trust Bancorp’s TBVPS to grow by 4% to $25.97, lousy growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Washington Trust Bancorp has averaged a Tier 1 capital ratio of 11.2%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity, or ROE, quantifies bank profitability relative to shareholder equity - an essential capital source for these institutions. Over extended periods, superior ROE performance drives faster shareholder wealth compounding through reinvestment, share repurchases, and dividend growth.

Over the last five years, Washington Trust Bancorp has averaged an ROE of 8.8%, uninspiring for a company operating in a sector where the average shakes out around 7.5%.

We enjoyed seeing Washington Trust Bancorp beat analysts’ revenue expectations this quarter. We were also glad its net interest income outperformed Wall Street’s estimates. Zooming out, we think this was a solid print. The stock remained flat at $30.19 immediately following the results.

Updated: January 28, 2026 at 11:52 PM EST

Before deciding whether to buy Washington Trust Bancorp or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

Washington Trust Bancorp falls short of our quality standards. For starters, its revenue growth was weak over the last five years. And while its expanding net interest margin shows its loan book is becoming more profitable, the downside is its TBVPS has declined over the last five years. On top of that, its declining EPS over the last five years makes it a less attractive asset to the public markets.

Washington Trust Bancorp’s P/B ratio based on the next 12 months is 1x. This valuation tells us a lot of optimism is priced in - we think there are better opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $31 on the company (compared to the current share price of $30.76).