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BUSINESS SEGMENTS
 6 Months Ended
Jun. 30, 2015
BUSINESS SEGMENTS  
BUSINESS SEGMENTS
NOTE 14 — BUSINESS SEGMENTS

The Company utilizes an internal reporting system to measure the performance of various operating segments within the Bank and the Company. The Company has identified three operating segments for purposes of management reporting: (1) Retail Banking; (2) Commercial Banking; and (3) Other. These three business divisions meet the criteria of an operating segment: the segment engages in business activities from which it earns revenues and incurs expenses, its operating results are regularly reviewed by the Company’s chief operating decision-maker to render decisions about resources to be allocated to the segment and assess its performance, and discrete financial information is available.

The Retail Banking segment focuses primarily on retail operations through the Bank’s branch network. The Commercial Banking segment, which includes CRE, primarily generates commercial loans through the commercial lending offices located in the Bank’s production offices. Furthermore, the Company’s Commercial Banking segment offers a wide variety of international finance and trade services and products. The remaining centralized functions, including treasury activities and eliminations of inter-segment amounts, have been aggregated and included in the “Other” segment, which provides broad administrative support to the two core segments.

The Company’s funds transfer pricing assumptions are intended to promote core deposit growth and to reflect the current risk profiles of various loan categories within the credit portfolio. Transfer pricing assumptions and methodologies are reviewed at least annually to ensure that the Company’s process is reflective of current market conditions. The transfer pricing process is formulated with the goal of incenting loan and deposit growth that is consistent with the Company’s overall growth objectives as well as to provide a reasonable and consistent basis for the measurement of the Company’s business segments and product net interest margins.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Operating segment results are based on the Company’s internal management reporting process, which reflects assignments and allocations of certain operating and administrative costs and the provision for loan losses. Net interest income is based on the Company’s internal funds transfer pricing system which assigns a cost of funds or a credit for funds to assets or liabilities based on their type, maturity or repricing characteristics. Noninterest income and noninterest expense, including depreciation and amortization, directly attributable to a segment are assigned to that business segment. Indirect costs, including overhead expense, are allocated to the segments based on several factors, including, but not limited to, full-time equivalent employees, loan volume and deposit volume. The provision for credit losses is allocated based on actual charge-offs for the period as well as average loan balances for each segment during the period. The Company evaluates overall performance based on profit or loss from operations before income taxes excluding nonrecurring gains and losses.

Changes in the Company’s management structure or reporting methodologies may result in changes in the measurement of operating segment results. Results for prior periods are generally restated for comparability for changes in management structure or reporting methodologies unless it is not deemed practicable to do so.

The following tables present the operating results and other key financial measures for the individual operating segments for the three and six months ended June 30, 2015 and 2014:
 
Three Months Ended June 30, 2015
($ in thousands)
Retail Banking
Commercial Banking
Other
Total
Interest income
$
82,729

$
157,337

$
15,379

$
255,445

Charge for funds used
(21,357
)
(38,328
)
(13,723
)
(73,408
)
Interest spread on funds used
61,372

119,009

1,656

182,037

Interest expense
(12,996
)
(4,710
)
(10,247
)
(27,953
)
Credit on funds provided
60,950

7,995

4,463

73,408

Interest spread on funds provided
47,954

3,285

(5,784
)
45,455

Net interest income (loss)
$
109,326

$
122,294

$
(4,128
)
$
227,492

(Reversal of) provision for loan losses
$
(3,454
)
$
6,948

$
—

$
3,494

Depreciation, amortization and accretion (1)
$
3,235

$
(6,054
)
$
8,938

$
6,119

Goodwill
$
357,207

$
112,226

$
—

$
469,433

Segment pre-tax profit (loss)
$
55,349

$
97,269

$
(8,197
)
$
144,421

Segment assets
$
7,373,641

$
16,141,368

$
6,549,063

$
30,064,072

 
Three Months Ended June 30, 2014
($ in thousands)
Retail Banking
Commercial Banking
Other
Total
Interest income
$
99,792

$
181,880

$
12,770

$
294,442

Charge for funds used
(23,854
)
(34,281
)
(9,929
)
(68,064
)
Interest spread on funds used
75,938

147,599

2,841

226,378

Interest expense
(11,950
)
(3,421
)
(12,621
)
(27,992
)
Credit on funds provided
54,139

8,983

4,942

68,064

Interest spread on funds provided
42,189

5,562

(7,679
)
40,072

Net interest income (loss)
$
118,127

$
153,161

$
(4,838
)
$
266,450

(Reversal of) provision for loan losses
$
(440
)
$
8,440

$
—

$
8,000

Depreciation, amortization and accretion (1) (2)
$
4,096

$
(1,286
)
$
12,148

$
14,958

Goodwill
$
354,163

$
104,304

$
—

$
458,467

Segment pre-tax profit (loss) (2)
$
48,939

$
77,844

$
(3,817
)
$
122,966

Segment assets (2)
$
7,822,020

$
14,177,634

$
5,557,346

$
27,557,000

(1)
Includes amortization and accretion related to the FDIC indemnification asset.
(2)
Prior periods were restated to reflect the retrospective application of adopting the new accounting guidance related to the Company’s investments in qualified affordable housing projects ASU 2014-01. See Note 10 of the Notes to Consolidated Financial Statements for additional information.
 
Six Months Ended June 30, 2015
($ in thousands)
Retail Banking
Commercial Banking
Other
Total
Interest income
$
170,175

$
316,122

$
32,409

$
518,706

Charge for funds used
(44,656
)
(75,678
)
(23,168
)
(143,502
)
Interest spread on funds used
125,519

240,444

9,241

375,204

Interest expense
(25,219
)
(8,973
)
(21,305
)
(55,497
)
Credit on funds provided
118,618

16,010

8,874

143,502

Interest spread on funds provided
93,399

7,037

(12,431
)
88,005

Net interest income (loss)
$
218,918

$
247,481

$
(3,190
)
$
463,209

(Reversal of) provision for loan losses
$
(2,723
)
$
11,204

$
—

$
8,481

Depreciation, amortization and accretion (1)
$
4,917

$
(16,531
)
$
21,860

$
10,246

Goodwill
$
357,207

$
112,226

$
—

$
469,433

Segment pre-tax profit (loss)
$
108,284

$
190,444

$
(7,481
)
$
291,247

Segment assets
$
7,373,641

$
16,141,368

$
6,549,063

$
30,064,072

 
Six Months Ended June 30, 2014
($ in thousands)
Retail Banking
Commercial Banking
Other
Total
Interest income
$
198,517

$
350,956

$
31,142

$
580,615

Charge for funds used
(48,150
)
(66,098
)
(14,312
)
(128,560
)
Interest spread on funds used
150,367

284,858

16,830

452,055

Interest expense
(23,661
)
(6,701
)
(25,837
)
(56,199
)
Credit on funds provided
102,332

17,419

8,809

128,560

Interest spread on funds provided
78,671

10,718

(17,028
)
72,361

Net interest income (loss)
$
229,038

$
295,576

$
(198
)
$
524,416

Provision for loan losses
$
2,212

$
12,721

$
—

$
14,933

Depreciation, amortization and accretion (1) (2)
$
6,667

$
(4,614
)
$
21,968

$
24,021

Goodwill
$
354,163

$
104,304

$
—

$
458,467

Segment pre-tax profit (loss) (2)
$
93,355

$
154,769

$
(8,995
)
$
239,129

Segment assets (2)
$
7,822,020

$
14,177,634

$
5,557,346

$
27,557,000

(1)
Includes amortization and accretion related to the FDIC indemnification asset.
(2)
Prior periods were restated to reflect the retrospective application of adopting the new accounting guidance related to the Company’s investments in qualified affordable housing projects ASU 2014-01. See Note 10 of the Notes to Consolidated Financial Statements for additional information.