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BUSINESS SEGMENTS
 9 Months Ended
Sep. 30, 2015
Segment Reporting [Abstract]  
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 credit 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 nine months ended September 30, 2015 and 2014:
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2015
($ in thousands)
 
Retail Banking
 
Commercial Banking
 
Other
 
Total
Interest income
 
$
81,911

 
$
166,693

 
$
16,028

 
$
264,632

Charge for funds used
 
(20,795
)
 
(41,447
)
 
(20,485
)
 
(82,727
)
Interest spread on funds used
 
61,116

 
125,246

 
(4,457
)
 
181,905

Interest expense
 
(13,727
)
 
(4,765
)
 
(5,851
)
 
(24,343
)
Credit on funds provided
 
68,783

 
8,849

 
5,095

 
82,727

Interest spread on funds provided
 
55,056

 
4,084

 
(756
)
 
58,384

Net interest income (loss)
 
$
116,172

 
$
129,330

 
$
(5,213
)
 
$
240,289

Provision for credit losses
 
$
1,455

 
$
6,281

 
$
—

 
$
7,736

Depreciation, amortization and accretion (1)
 
$
1,827

 
$
(13,496
)
 
$
18,765

 
$
7,096

Goodwill
 
$
357,207

 
$
112,226

 
$
—

 
$
469,433

Segment pre-tax profit (loss)
 
$
52,325

 
$
96,605

 
$
(9,941
)
 
$
138,989

Segment assets
 
$
7,274,494

 
$
17,125,065

 
$
6,720,117

 
$
31,119,676

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2014
($ in thousands)
 
Retail Banking
 
Commercial Banking
 
Other
 
Total
Interest income
 
$
95,911

 
$
175,032

 
$
15,005

 
$
285,948

Charge for funds used
 
(24,738
)
 
(35,809
)
 
(15,265
)
 
(75,812
)
Interest spread on funds used
 
71,173

 
139,223

 
(260
)
 
210,136

Interest expense
 
(12,057
)
 
(4,692
)
 
(12,225
)
 
(28,974
)
Credit on funds provided
 
60,770

 
9,908

 
5,134

 
75,812

Interest spread on funds provided
 
48,713

 
5,216

 
(7,091
)
 
46,838

Net interest income (loss)
 
$
119,886

 
$
144,439

 
$
(7,351
)
 
$
256,974

Provision for credit losses
 
$
394

 
$
14,831

 
$
—

 
$
15,225

Depreciation, amortization and accretion (1) (2)
 
$
4,806

 
$
(412
)
 
$
34,499

 
$
38,893

Goodwill
 
$
354,163

 
$
104,304

 
$
—

 
$
458,467

Segment pre-tax profit (loss) (2)
 
$
45,163

 
$
49,364

 
$
(9,228
)
 
$
85,299

Segment assets (2)
 
$
7,775,343

 
$
14,879,699

 
$
5,829,127

 
$
28,484,169

 
 
 
 
 
 
 
 
 

(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 — Investments in Qualified Affordable Housing Partnerships, Tax Credit and Other Investments, Net to the Consolidated Financial Statements for additional information.
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2015
($ in thousands)
 
Retail Banking
 
Commercial Banking
 
Other
 
Total
Interest income
 
$
252,085

 
$
482,816

 
$
48,437

 
$
783,338

Charge for funds used
 
(65,452
)
 
(117,125
)
 
(43,653
)
 
(226,230
)
Interest spread on funds used
 
186,633

 
365,691

 
4,784

 
557,108

Interest expense
 
(38,946
)
 
(13,738
)
 
(27,156
)
 
(79,840
)
Credit on funds provided
 
187,401

 
24,859

 
13,970

 
226,230

Interest spread on funds provided
 
148,455

 
11,121

 
(13,186
)
 
146,390

Net interest income (loss)
 
$
335,088

 
$
376,812

 
$
(8,402
)
 
$
703,498

(Reversal of) provision for credit losses
 
$
(1,268
)
 
$
17,485

 
$
—

 
$
16,217

Depreciation, amortization and accretion (1)
 
$
6,743

 
$
(30,027
)
 
$
40,625

 
$
17,341

Goodwill
 
$
357,207

 
$
112,226

 
$
—

 
$
469,433

Segment pre-tax profit (loss)
 
$
160,609

 
$
287,049

 
$
(17,422
)
 
$
430,236

Segment assets
 
$
7,274,494

 
$
17,125,065

 
$
6,720,117

 
$
31,119,676

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2014
($ in thousands)
 
Retail Banking
 
Commercial Banking
 
Other
 
Total
Interest income
 
$
294,428

 
$
525,987

 
$
46,148

 
$
866,563

Charge for funds used
 
(72,888
)
 
(101,907
)
 
(29,578
)
 
(204,373
)
Interest spread on funds used
 
221,540

 
424,080

 
16,570

 
662,190

Interest expense
 
(35,718
)
 
(11,393
)
 
(38,062
)
 
(85,173
)
Credit on funds provided
 
163,102

 
27,328

 
13,943

 
204,373

Interest spread on funds provided
 
127,384

 
15,935

 
(24,119
)
 
119,200

Net interest income (loss)
 
$
348,924

 
$
440,015

 
$
(7,549
)
 
$
781,390

Provision for credit losses
 
$
2,606

 
$
27,552

 
$
—

 
$
30,158

Depreciation, amortization and accretion (1) (2)
 
$
11,473

 
$
(5,026
)
 
$
56,467

 
$
62,914

Goodwill
 
$
354,163

 
$
104,304

 
$
—

 
$
458,467

Segment pre-tax profit (loss) (2)
 
$
138,518

 
$
204,134

 
$
(18,224
)
 
$
324,428

Segment assets (2)
 
$
7,775,343

 
$
14,879,699

 
$
5,829,127

 
$
28,484,169

 
 
 
 
 
 
 
 
 
(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 — Investments in Qualified Affordable Housing Partnerships, Tax Credit and Other Investments, Net to the Consolidated Financial Statements for additional information.