Business Segments

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Business Segments

Business Segments

Washington Trust segregates financial information in assessing its results among its Commercial Banking and Wealth Management Services operating segments.  The amounts in the Corporate unit include activity not related to the segments. The methodologies and organizational hierarchies that define the business segments are periodically reviewed and revised.  Results may be restated, when necessary, to reflect changes in organizational structure or allocation methodology. Any changes in estimates and allocations that may affect the reported results of any business segment will not affect the consolidated financial position or results of operations of Washington Trust as a whole.

Management uses certain methodologies to allocate income and expenses to the business lines.  A funds transfer pricing methodology is used to assign interest income and interest expense to each interest-earning asset and interest-bearing liability on a matched maturity funding basis.  Certain indirect expenses are allocated to segments.  These include support unit expenses such as technology and processing operations and other support functions.

Commercial Banking

The Commercial Banking segment includes commercial, residential and consumer lending activities; equity in losses of unconsolidated investments in real estate limited partnerships; mortgage banking, secondary market and loan servicing activities; deposit generation; merchant credit card services; cash management activities; and direct banking activities, which include the operation of ATMs, telephone and Internet banking services and customer support and sales.

Wealth Management Services

Wealth Management Services includes investment management; financial planning; personal trust services, including services as trustee, administrator, custodian and guardian; and estate settlement. Institutional trust services are also provided, including fiduciary services.

Corporate

Corporate includes the Treasury Unit, which is responsible for managing the wholesale investment portfolio and wholesale funding needs.  It also includes income from bank-owned life insurance, net gain on sale of business line as well as administrative and executive expenses not allocated to the operating segments and the residual impact of methodology allocations such as funds transfer pricing offsets.

The following tables present the statement of operations and total assets for Washington Trust’s reportable segments:

(Dollars in thousands)	Commercial Banking				Wealth Management Services						Corporate				Consolidated Total
Three months ended June 30,	2015		2014		2015			2014			2015		2014		2015		2014
Net interest income (expense)		$21,212		$19,799		($9	)		($7	)		$4,825		$4,676		$26,028		$24,468
Provision for loan losses	100		450		—			—			—		—		100		450
Net interest income (expense) after provision for loan losses	21,112		19,349		(9		)	(7		)	4,825		4,676		25,928		24,018
Noninterest income	5,588		3,860		8,912			8,530			761		424		15,261		12,814
Noninterest expenses:
Depreciation and amortization expense	638		621		299			272			51		52		988		945
Other noninterest expenses (1)	13,868		13,219		6,465			5,482			2,978		2,802		23,311		21,503
Total noninterest expenses	14,506		13,840		6,764			5,754			3,029		2,854		24,299		22,448
Income before income taxes	12,194		9,369		2,139			2,769			2,557		2,246		16,890		14,384
Income tax expense	3,993		3,102		838			1,018			556		467		5,387		4,587
Net income		$8,201		$6,267		$1,301			$1,751			$2,001		$1,779		$11,503		$9,797
Total assets at period end		$3,058,410		$2,704,109		$53,236			$53,303			$532,831		$559,610		$3,644,477		$3,317,022
Expenditures for long-lived assets		$943		$1,308		$87			$65			$88		$17		$1,118		$1,390

(1) Other noninterest expenses for the Wealth Management Services segment includes $433 thousand of acquisition related expenses for the three months ended June 30, 2015. See Note 19 for additional information.

(Dollars in thousands)	Commercial Banking				Wealth Management Services						Corporate				Consolidated Total
Six months ended June 30,	2015		2014		2015			2014			2015		2014		2015		2014
Net interest income (expense)		$41,837		$39,538		($23	)		($11	)		$9,916		$8,777		$51,730		$48,304
Provision for loan losses	100		750		—			—			—		—		100		750
Net interest income (expense) after provision for loan losses	41,737		38,788		(23		)	(11		)	9,916		8,777		51,630		47,554
Noninterest income	10,666		8,401		17,347			16,595			1,268		7,188		29,281		32,184
Noninterest expenses:
Depreciation and amortization expense	1,310		1,206		605			583			111		103		2,026		1,892
Other noninterest expenses (1)	27,454		26,772		12,380			10,869			5,970		12,207		45,804		49,848
Total noninterest expenses	28,764		27,978		12,985			11,452			6,081		12,310		47,830		51,740
Income before income taxes	23,639		19,211		4,339			5,132			5,103		3,655		33,081		27,998
Income tax expense	7,723		6,363		1,682			1,894			1,163		646		10,568		8,903
Net income		$15,916		$12,848		$2,657			$3,238			$3,940		$3,009		$22,513		$19,095
Total assets at period end		$3,058,410		$2,704,109		$53,236			$53,303			$532,831		$559,610		$3,644,477		$3,317,022
Expenditures for long-lived assets	2,010		2,383		201			236			133		62		2,344		2,681

(1) Other noninterest expenses for the Wealth Management Services segment includes $433 thousand of acquisition related expenses for the six months ended June 30, 2015. See Note 19 for additional information.