Business Segments

9 Months Ended

Sep. 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, 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 September 30,	2015		2014		2015			2014			2015		2014		2015		2014
Net interest income (expense)		$21,278		$19,965		($15	)		($8	)		$4,734		$4,981		$25,997		$24,938
Provision for loan losses	200		600		—			—			—		—		200		600
Net interest income (expense) after provision for loan losses	21,078		19,365		(15		)	(8		)	4,734		4,981		25,797		24,338
Noninterest income	4,498		4,370		8,902			8,374			513		381		13,913		13,125
Noninterest expenses:
Depreciation and amortization expense	626		627		404			269			50		51		1,080		947
Other noninterest expenses (1)	13,805		12,793		6,820			5,620			2,833		2,687		23,458		21,100
Total noninterest expenses	14,431		13,420		7,224			5,889			2,883		2,738		24,538		22,047
Income before income taxes	11,145		10,315		1,663			2,477			2,364		2,624		15,172		15,416
Income tax expense	3,747		3,401		688			942			529		535		4,964		4,878
Net income		$7,398		$6,914		$975			$1,535			$1,835		$2,089		$10,208		$10,538
Total assets at period end		$3,074,611		$2,792,759		$62,461			$51,012			$537,764		$572,111		$3,674,836		$3,415,882
Expenditures for long-lived assets		$1,006		$327		$51			$241			$61		$66		$1,118		$634

(1) Other noninterest expenses for the Wealth Management Services segment includes $504 thousand of acquisition related expenses for the three months ended September 30, 2015. See Note 3 for additional information.

(Dollars in thousands)	Commercial Banking				Wealth Management Services						Corporate				Consolidated Total
Nine months ended September 30,	2015		2014		2015			2014			2015		2014		2015		2014
Net interest income (expense)		$63,115		$59,503		($38	)		($19	)		$14,650		$13,758		$77,727		$73,242
Provision for loan losses	300		1,350		—			—			—		—		300		1,350
Net interest income (expense) after provision for loan losses	62,815		58,153		(38		)	(19		)	14,650		13,758		77,427		71,892
Noninterest income	15,164		12,771		26,249			24,969			1,781		7,569		43,194		45,309
Noninterest expenses:
Depreciation and amortization expense	1,936		1,833		1,009			852			161		154		3,106		2,839
Other noninterest expenses (1)	41,259		39,565		19,200			16,489			8,803		14,894		69,262		70,948
Total noninterest expenses	43,195		41,398		20,209			17,341			8,964		15,048		72,368		73,787
Income before income taxes	34,784		29,526		6,002			7,609			7,467		6,279		48,253		43,414
Income tax expense	10,878		9,764		2,682			2,836			1,972		1,181		15,532		13,781
Net income		$23,906		$19,762		$3,320			$4,773			$5,495		$5,098		$32,721		$29,633
Total assets at period end		$3,074,611		$2,792,759		$62,461			$51,012			$537,764		$572,111		$3,674,836		$3,415,882
Expenditures for long-lived assets	2,774		2,710		252			477			194		128		3,220		3,315

(1) Other noninterest expenses for the Wealth Management Services segment includes $937 thousand of acquisition related expenses for the nine months endedSeptember 30, 2015. See Note 3 for additional information.