Business Segments

9 Months Ended

Sep. 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 September 30,	2020	2019	2020	2019	2020	2019	2020	2019
Net interest income (expense)	$33,103	$28,515	($24)	($114)	($1,425)	$4,577	$31,654	$32,978
Provision for credit losses	1,325	400	—	—	—	—	1,325	400
Net interest income (expense) after provision for credit losses	31,778	28,115	(24)	(114)	(1,425)	4,577	30,329	32,578
Noninterest income	15,940	8,607	8,954	9,153	574	582	25,468	18,342
Noninterest expenses:
Depreciation and amortization expense	601	642	350	360	38	40	989	1,042
Other noninterest expenses	20,273	16,255	7,178	6,217	3,904	3,356	31,355	25,828
Total noninterest expenses	20,874	16,897	7,528	6,577	3,942	3,396	32,344	26,870
Income (loss) before income taxes	26,844	19,825	1,402	2,462	(4,793)	1,763	23,453	24,050
Income tax expense (benefit)	5,828	4,347	403	646	(1,100)	243	5,131	5,236
Net income (loss)	$21,016	$15,478	$999	$1,816	($3,693)	$1,520	$18,322	$18,814

Total assets at period end	$4,588,419	$3,994,458	$74,942	$78,812	$1,186,431	$1,125,608	$5,849,792	$5,198,878
Expenditures for long-lived assets	360	662	20	87	26	48	406	797



(Dollars in thousands)	Commercial Banking		Wealth Management Services		Corporate		Consolidated Total
Nine months ended September 30,	2020	2019	2020	2019	2020	2019	2020	2019
Net interest income (expense)	$94,692	$83,684	($117)	($361)	$626	$18,097	$95,201	$101,420
Provision for credit losses	10,561	1,575	—	—	—	—	10,561	1,575
Net interest income (expense) after provision for loan losses	84,131	82,109	(117)	(361)	626	18,097	84,640	99,845
Noninterest income	43,515	20,753	26,248	27,961	1,952	1,748	71,715	50,462
Noninterest expenses:
Depreciation and amortization expense	1,832	1,985	1,058	1,089	116	118	3,006	3,192
Other noninterest expenses	56,571	48,676	20,408	19,631	11,290	10,486	88,269	78,793
Total noninterest expenses	58,403	50,661	21,466	20,720	11,406	10,604	91,275	81,985
Income (loss) before income taxes	69,243	52,201	4,665	6,880	(8,828)	9,241	65,080	68,322
Income tax expense (benefit)	14,769	11,371	1,216	1,845	(2,168)	1,524	13,817	14,740
Net income (loss)	$54,474	$40,830	$3,449	$5,035	($6,660)	$7,717	$51,263	$53,582

Total assets at period end	$4,588,419	$3,994,458	$74,942	$78,812	$1,186,431	$1,125,608	$5,849,792	$5,198,878
Expenditures for long-lived assets	1,147	2,259	86	379	98	130	1,331	2,768