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.

Management uses certain methodologies to allocate income and expenses to the business lines. A funds transfer pricing (“FTP”) 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. The matched maturity funding concept considers the origination date and the earlier of the maturity date or the repricing date of a financial instrument to assign an FTP rate for loans and deposits originated. Loans are assigned a FTP rate for funds used and deposits are assigned a FTP rate for funds provided. 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; mortgage banking activities; deposit generation; 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 and estate services, including services as trustee, personal representative, custodian and guardian; and settlement of decedents’ estates. 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 BOLI, as well as administrative and executive expenses not allocated to the operating segments and the residual impact of methodology allocations such as FTP offsets.

The following table presents 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 March 31,	2018		2017		2018			2017			2018		2017		2018		2017
Net interest income (expense)		$25,976		$23,557		($58	)		($32	)		$5,934		$5,154		$31,852		$28,679
Provision for loan losses	—		400		—			—			—		—		—		400
Net interest income (expense) after provision for loan losses	25,976		23,157		(58		)	(32		)	5,934		5,154		31,852		28,279
Noninterest income	4,936		4,442		10,273			9,477			534		591		15,743		14,510
Noninterest expenses:
Depreciation and amortization expense	637		663		396			463			42		52		1,075		1,178
Other noninterest expenses	15,466		14,607		7,199			6,448			3,390		3,053		26,055		24,108
Total noninterest expenses	16,103		15,270		7,595			6,911			3,432		3,105		27,130		25,286
Income before income taxes	14,809		12,329		2,620			2,534			3,036		2,640		20,465		17,503
Income tax expense	3,103		4,029		643			978			508		714		4,254		5,721
Net income		$11,706		$8,300		$1,977			$1,556			$2,528		$1,926		$16,211		$11,782

Total assets at period end		$3,521,309		$3,344,773		$66,567			$64,984			$978,450		$979,006		$4,566,326		$4,388,763
Expenditures for long-lived assets	598		373		154			302			59		58		811		733