Business Segments

3 Months Ended

Mar. 31, 2020

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. The methodologies are periodically reviewed and revised. Results may be restated, when necessary, to reflect changes in organizational structure or allocation methodology. 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 indirect 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 automated teller machines (“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,	2020		2019		2020			2019			2020		2019		2020		2019
Net interest income (expense)		$29,009		$27,302		($67	)		($127	)		$3,660		$7,409		$32,602		$34,584
Provision for credit losses	7,036		650		—			—			—		—		7,036		650
Net interest income (expense) after provision for credit losses	21,973		26,652		(67		)	(127		)	3,660		7,409		25,566		33,934
Noninterest income	10,665		5,455		8,689			9,252			573		660		19,927		15,367
Noninterest expenses:
Depreciation and amortization expense	619		672		354			365			40		40		1,013		1,077
Other noninterest expenses	18,842		15,758		6,846			6,478			3,752		3,651		29,440		25,887
Total noninterest expenses	19,461		16,430		7,200			6,843			3,792		3,691		30,453		26,964
Income before income taxes	13,177		15,677		1,422			2,282			441		4,378		15,040		22,337
Income tax expense	2,764		3,421		356			617			19		804		3,139		4,842
Net income		$10,413		$12,256		$1,066			$1,665			$422		$3,574		$11,901		$17,495

Total assets at period end		$4,367,469		$3,884,052		$74,283			$76,657			$1,179,227		$1,194,020		$5,620,979		$5,154,729
Expenditures for long-lived assets	526		1,300		53			292			49		63		628		1,655