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Derivative Financial Instruments
 9 Months Ended
Sep. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments Derivative Financial Instruments
The Corporation’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Corporation’s known or expected cash receipts and its known or expected cash payments, principally to manage the Corporation’s interest rate risk. Additionally, the Corporation enters into interest rate derivatives to accommodate the business requirements of its customers. Derivatives are measured at fair value.  Derivative assets are included in other assets and derivative liabilities are included in other liabilities in the Unaudited Consolidated Balance Sheets. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and resulting designation.

Interest Rate Risk Management Agreements
Interest rate risk management agreements, such as swaps, caps, floors, and collars, are used from time to time as part of the Corporation’s interest rate risk management strategy. Interest rate swaps are agreements in which the Corporation and another party agree to exchange interest payments (e.g., fixed-rate for variable-rate payments or variable-rate for fixed-rate payments) computed on a notional principal amount. Interest rate caps and floors represent options purchased by the
Corporation to manage the interest rate paid throughout the term of the option contract. An interest rate collar is a derivative instrument that represents simultaneously buying an interest rate cap and selling an interest rate floor. The credit risk associated with these derivative transactions is the risk of default by the counterparty. To minimize this risk, the Corporation enters into interest rate agreements only with highly rated counterparties that management believes to be creditworthy. The notional amounts of these agreements do not represent amounts exchanged by the parties and, thus, are not a measure of the potential loss exposure.

Cash Flow Hedging Instruments
As of September 30, 2026 and December 31, 2025, the Corporation had interest rate swaps, interest rate collars, and interest rate floors that were designated as cash flow hedges. The interest rate swaps and collars were executed to hedge the interest rate risk associated with short-term borrowings. See Note 9 for additional disclosure on borrowings. The interest rate floors were executed to hedge the interest rate risk associated with a pool of variable rate commercial loans.

The changes in fair value of these derivatives designated as cash flow hedges are recorded in other comprehensive income (loss) and subsequently reclassified to earnings when gains or losses are realized (i.e., in the same period during which the hedged transactions affect earnings.)

The Corporation previously had an interest rate swap contract that was designated as a cash flow hedge to hedge the interest rate risk associated with a pool of variable rate commercial loans. On March 31, 2023, the Corporation terminated this interest rate swap contract. On that date, the derivative liability was derecognized and the deferred loss that was included in the AOCL component of shareholders’ equity was updated to its termination date fair value of $26.5 million, or $20.1 million after tax. The deferred loss was amortized into earnings as a reduction of interest income on a straight-line basis over the life of the original interest rate swap term. The deferred loss was fully amortized as of May 1, 2026.

Fair Value Hedging Instruments
As of September 30, 2026 and December 31, 2025, the Corporation had interest rate swap contracts that were designated as fair value hedges. The fair value hedges were executed to hedge the interest rate risk associated with a closed-pool of fixed-rate residential real estate loans (the “hedged item”). The hedged item is measured at fair value through a basis adjustment recognized on the balance sheet. The changes in fair value of derivatives designated as fair value hedges, as well as the offsetting changes in fair value of the hedged item are recognized in earnings.

Loan Related Derivative Contracts
Interest Rate Derivative Contracts with Customers
The Corporation enters into interest rate swap and interest rate cap contracts to help commercial loan borrowers manage their interest rate risk.  These interest rate swap contracts allow borrowers to convert variable-rate loan payments to fixed-rate loan payments, while interest rate cap contracts allow borrowers to limit their interest rate exposure in a rising rate environment.  When the Corporation enters into an interest rate derivative contract with a commercial loan borrower, it simultaneously enters into a “mirror” interest rate contract with a third party.  The Corporation’s credit policies with respect to interest rate contracts with commercial borrowers are similar to those used for loans. The Corporation retains the risk that is associated with the potential failure of counterparties and the risk inherent in originating loans.  The interest rate contracts with counterparties are generally subject to bilateral collateralization terms. These derivatives are not designated as hedges and therefore, changes in fair value are recognized in earnings.

Risk Participation Agreements
The Corporation has entered into risk participation agreements with other banks in commercial loan arrangements. Participating banks guarantee the performance on borrower-related interest rate swap contracts. These derivatives are not designated as hedges and therefore, changes in fair value are recognized in earnings.

Under a risk participation-out agreement, a derivative asset, the Corporation participates out a portion of the credit risk associated with the interest rate swap position executed with the commercial borrower for a fee paid to the participating bank. Under a risk participation-in agreement, a derivative liability, the Corporation assumes, or participates in, a portion of the credit risk associated with the interest rate swap position with the commercial borrower for a fee received from the other bank.
Mortgage Loan Commitments
Interest rate lock commitments are extended to borrowers and relate to the origination of mortgage loans held for sale.  To mitigate the interest rate risk and pricing risk associated with rate locks and mortgage loans that are originated and intended for sale, the Corporation enters into forward sale commitments. Forward sale commitments are contracts for delayed delivery or net settlement of the underlying instrument, such as a mortgage loan, where the seller agrees to deliver on a specified future date, either a specified instrument at a specified price or yield or the net cash equivalent of an underlying instrument. Both interest rate lock commitments and forward sale commitments are derivative financial instruments, but do not meet criteria for hedge accounting and therefore, the changes in fair value of these commitments are recognized in earnings.

The following table presents the notional amounts and fair values of derivative instruments in the Unaudited Consolidated Balance Sheets:
(Dollars in thousands)September 30, 2026December 31, 2025
Fair ValueFair Value
Notional AmountsDerivative AssetsDerivative LiabilitiesNotional AmountsDerivative AssetsDerivative Liabilities
Derivatives Designated as Cash Flow Hedging Instruments:
Interest rate risk management contracts:
Interest rate swaps (1)
$120,000 $1,562 $47 $120,000 $126 $979 
Interest rate collars50,000 55 — 100,000 — 17 
Interest rate floors
200,000 12 — 200,000 125 — 
Derivatives Designated as Fair Value Hedging Instruments:
Interest rate risk management contracts:
Interest rate swaps100,000 2,255 — 100,000 335 — 
Derivatives not Designated as Hedging Instruments:
Loan related derivative contracts:
Interest rate contracts with customers965,418 163 50,933 882,941 6,326 27,959 
Mirror contracts with counterparties965,418 50,777 163 882,941 27,857 6,392 
Risk participation agreements
293,229 — — 304,854 28 1 
Mortgage loan commitments:
Interest rate lock commitments
40,517 267 207 30,373 603 12 
Forward sale commitments
72,877 1,077 186 90,813 13 828 
Gross amounts
56,168 51,536 35,413 36,188 
Less: amounts offset (2)
210 210 6,643 6,643 
Derivative balances, net of offset55,958 51,326 28,770 29,545 
Less: collateral pledged (3)
— — — — 
Net amounts$55,958 $51,326 $28,770 $29,545 
(1)The fair value of derivative assets includes accrued interest receivable of $31 thousand and $35 thousand, respectively, at September 30, 2026 and December 31, 2025. The fair value of derivative liabilities includes accrued interest payable of $47 thousand and $23 thousand, respectively, at September 30, 2026 and December 31, 2025.
(2)Interest rate risk management contracts and loan related derivative contracts with counterparties are subject to master netting arrangements.
(3)Collateral contractually required to be pledged to derivative counterparties is in the form of cash. Washington Trust may need to post additional collateral in the future in proportion to potential increases in unrealized loss positions.
The following table presents the balance sheet location, carrying amount, and cumulative basis adjustment of the hedged item associated with fair value hedges:
(Dollars in thousands)
September 30, 2026December 31, 2025
Balance Sheet Location
Carrying Amount of Hedged Item (1)
Cumulative Basis Adjustment
Carrying Amount of Hedged Item (1)
Cumulative Basis Adjustment
Residential real estate loans$97,790 ($2,210)$99,665 ($335)
(1)Represents the carrying amount of the hedged item associated with fair value hedges on a closed-pool of fixed-rate residential real estate loans that are expected to be outstanding for the designated hedged periods. The amortized cost balance of the closed-pool of residential real estate loans used in the fair value hedges was $577.3 million and $608.5 million, respectively, at September 30, 2026 and December 31, 2025.

The following table presents the effect of derivative instruments in the Unaudited Consolidated Statements of Changes in Shareholders’ Equity:
(Dollars in thousands)Amounts Recognized in
Other Comprehensive Income, Net of Tax
Three MonthsNine Months
Periods ended September 30, 2026202520262025
Derivatives Designated as Cash Flow Hedging Instruments:
Interest rate risk management contracts:
Interest rate swaps
$676 $1,576 $3,931 $3,269 
Interest rate collars26 27 54 3 
Interest rate floors
14 (81)— (81)
Total$716 $1,522 $3,985 $3,191 
The following table presents the effect of derivative instruments in the Unaudited Consolidated Statements of Income:
(Dollars in thousands)Amount of Gain (Loss)
Recognized in the Unaudited Consolidated Statements of Income
Three MonthsNine Months
Periods ended September 30, Statement of Income Location2026202520262025
Derivatives Designated as Cash Flow Hedging Instruments:
Interest rate risk management contracts:
Interest rate swapsInterest income: Interest and fees on loans$— ($2,163)($2,845)($6,418)
Interest rate swaps
Interest expense: FHLB advances
81 195 107 581 
Interest rate floorsInterest income: Interest and fees on loans(38)(11)(113)(11)
Derivatives Designated as Fair Value Hedging Instruments:
Interest rate risk management contracts:
Interest rate swapsInterest income: Interest and fees on loans718 75 1,858 (1,223)
Hedged itemInterest income: Interest and fees on loans(726)(76)(1,875)1,226 
Derivatives not Designated as Hedging Instruments:
Loan related derivative contracts:
Interest rate contracts with customersLoan related derivative income($23,536)($25)($35,353)$14,129 
Mirror interest rate contracts with counterpartiesLoan related derivative income25,002 300 37,789 (13,118)
Risk participation agreements
Loan related derivative income41 (4)(119)37 
Mortgage loan commitments:
Interest rate lock commitments
Mortgage banking revenues(1,030)240 (531)755 
Forward sale commitments
Mortgage banking revenues1,921 (26)1,999 (752)
Total$2,433 ($1,495)$917 ($4,794)
For derivatives designated as cash flow hedging instruments in the table above, the amounts represent the pre-tax reclassifications from AOCL into earnings.