Business Segments

6 Months Ended

Jun. 30, 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 June 30,	2020		2019		2020			2019			2020			2019		2020		2019
Net interest income (expense)		$32,580		$27,867		($26	)		($120	)		($1,609	)		$6,111		$30,945		$33,858
Provision for credit losses	2,200		525		—			—			—			—		2,200		525
Net interest income (expense) after provision for credit losses	30,380		27,342		(26		)	(120		)	(1,609		)	6,111		28,745		33,333
Noninterest income	16,910		6,690		8,605			9,557			805			506		26,320		16,753
Noninterest expenses:
Depreciation and amortization expense	611		672		354			363			39			39		1,004		1,074
Other noninterest expenses	17,615		16,660		6,225			6,937			3,634			3,480		27,474		27,077
Total noninterest expenses	18,226		17,332		6,579			7,300			3,673			3,519		28,478		28,151
Income (loss) before income taxes	29,064		16,700		2,000			2,137			(4,477		)	3,098		26,587		21,935
Income tax expense (benefit)	6,177		3,603		457			582			(1,087		)	477		5,547		4,662
Net income (loss)		$22,887		$13,097		$1,543			$1,555			($3,390	)		$2,621		$21,040		$17,273

Total assets at period end		$4,579,720		$3,916,915		$74,803			$77,757			$1,222,437			$1,195,000		$5,876,960		$5,189,672
Expenditures for long-lived assets	261		297		13			—			23			19		297		316




(Dollars in thousands)	Commercial Banking				Wealth Management Services						Corporate					Consolidated Total
Six months ended June 30,	2020		2019		2020			2019			2020			2019		2020		2019
Net interest income (expense)		$61,590		$55,169		($93	)		($247	)		$2,050			$13,520		$63,547		$68,442
Provision for credit losses	9,236		1,175		—			—			—			—		9,236		1,175
Net interest income (expense) after provision for loan losses	52,354		53,994		(93		)	(247		)	2,050			13,520		54,311		67,267
Noninterest income	27,575		12,146		17,294			18,808			1,378			1,166		46,247		32,120
Noninterest expenses:
Depreciation and amortization expense	1,231		1,342		708			729			78			79		2,017		2,150
Other noninterest expenses	36,298		32,421		13,230			13,414			7,386			7,130		56,914		52,965
Total noninterest expenses	37,529		33,763		13,938			14,143			7,464			7,209		58,931		55,115
Income (loss) before income taxes	42,400		32,377		3,263			4,418			(4,036		)	7,477		41,627		44,272
Income tax expense (benefit)	8,941		7,024		813			1,199			(1,068		)	1,281		8,686		9,504
Net income (loss)		$33,459		$25,353		$2,450			$3,219			($2,968	)		$6,196		$32,941		$34,768

Total assets at period end		$4,579,720		$3,916,915		$74,803			$77,757			$1,222,437			$1,195,000		$5,876,960		$5,189,672
Expenditures for long-lived assets	787		1,597		66			292			72			82		925		1,971