BUSINESS SEGMENTS

9 Months Ended

Sep. 30, 2016

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 Note 1 — Summary of Significant Accounting Policies to the Consolidated Financial Statements of the Company’s 2015 Form 10-K. 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 as of and for the three and nine months ended September 30, 2016 and 2015:

($ in thousands)	Three Months Ended September 30, 2016
	Retail Banking			Commercial Banking			Other			Total
Interest income	$	77,186		$	180,095		$	23,036		$	280,317
Charge for funds used	(24,320		)	(53,262		)	(3,858		)	(81,440		)
Interest spread on funds used	52,866			126,833			19,178			198,877
Interest expense	(14,855		)	(3,699		)	(7,615		)	(26,169		)
Credit on funds provided	68,622			8,206			4,612			81,440
Interest spread on funds provided	53,767			4,507			(3,003		)	55,271
Net interest income	$	106,633		$	131,340		$	16,175		$	254,148
(Reversal of) provision for credit losses	$	(3,709	)	$	13,234		$	—		$	9,525
Depreciation, amortization and (accretion), net	$	782		$	(5,875	)	$	40,541		$	35,448
Segment pretax profit	$	32,304		$	80,393		$	10,767		$	123,464
As of September 30, 2016:
Goodwill	$	357,207		$	112,226		$	—		$	469,433
Segment assets	$	7,606,611		$	18,549,562		$	7,099,102		$	33,255,275

($ in thousands)	Three Months Ended September 30, 2015
	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), net (1)	$	1,827		$	(13,496	)	$	18,765		$	7,096
Segment pretax profit (loss)	$	52,325		$	96,605		$	(9,941	)	$	138,989
As of September 30, 2015:
Goodwill	$	357,207		$	112,226		$	—		$	469,433
Segment assets	$	7,274,494		$	17,125,065		$	6,720,117		$	31,119,676

($ in thousands)	Nine Months Ended September 30, 2016
	Retail Banking			Commercial Banking			Other			Total
Interest income	$	233,192		$	534,603		$	67,559		$	835,354
Charge for funds used	(70,770		)	(159,734		)	(22,465		)	(252,969		)
Interest spread on funds used	162,422			374,869			45,094			582,385
Interest expense	(44,133		)	(11,965		)	(19,320		)	(75,418		)
Credit on funds provided	210,831			26,655			15,483			252,969
Interest spread on funds provided	166,698			14,690			(3,837		)	177,551
Net interest income	$	329,120		$	389,559		$	41,257		$	759,936
(Reversal of) provision for credit losses	$	(2,846	)	$	19,864		$	—		$	17,018
Depreciation, amortization and (accretion), net	$	279		$	(25,915	)	$	86,316		$	60,680
Segment pretax profit	$	114,513		$	268,401		$	28,137		$	411,051
As of September 30, 2016:
Goodwill	$	357,207		$	112,226		$	—		$	469,433
Segment assets	$	7,606,611		$	18,549,562		$	7,099,102		$	33,255,275

($ in thousands)	Nine Months Ended September 30, 2015
	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), net (1)	$	6,743		$	(30,027	)	$	40,625		$	17,341
Segment pretax profit (loss)	$	160,609		$	287,049		$	(17,422	)	$	430,236
As of September 30, 2015:
Goodwill	$	357,207		$	112,226		$	—		$	469,433
Segment assets	$	7,274,494		$	17,125,065		$	6,720,117		$	31,119,676

(1) Includes amortization and accretion related to the FDIC indemnification asset/net payable to the FDIC.