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 bank-owned life insurance (“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,	2019		2018		2019			2018			2019		2018		2019		2018
Net interest income (expense)		$27,302		$25,976		($127	)		($58	)		$7,409		$5,934		$34,584		$31,852
Provision for loan losses	650		—		—			—			—		—		650		—
Net interest income (expense) after provision for loan losses	26,652		25,976		(127		)	(58		)	7,409		5,934		33,934		31,852
Noninterest income	5,455		4,936		9,252			10,273			660		534		15,367		15,743
Noninterest expenses:
Depreciation and amortization expense	672		637		365			396			40		42		1,077		1,075
Other noninterest expenses	15,758		15,466		6,478			7,199			3,651		3,390		25,887		26,055
Total noninterest expenses	16,430		16,103		6,843			7,595			3,691		3,432		26,964		27,130
Income before income taxes	15,677		14,809		2,282			2,620			4,378		3,036		22,337		20,465
Income tax expense	3,421		3,103		617			643			804		508		4,842		4,254
Net income		$12,256		$11,706		$1,665			$1,977			$3,574		$2,528		$17,495		$16,211

Total assets at period end		$3,884,052		$3,521,309		$76,657			$66,567			$1,194,020		$978,450		$5,154,729		$4,566,326
Expenditures for long-lived assets	1,300		598		292			154			63		59		1,655		811