Business Segments

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Business Segments

Note 15—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 segments 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 segments 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 C&I and CRE operations, primarily generates commercial loans and deposits through the bank’s commercial lending offices. Furthermore, the Company’s Commercial Banking segment offers a wide variety of international finance, trade finance, and cash management 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.

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 allocated 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 the related 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.

The Company’s internal 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. Internal funds transfer pricing assumptions and methodologies are reviewed at least annually to ensure that the Company’s process is reflective of current market conditions. The internal funds transfer pricing process is formulated with the goal of encouraging loan and deposit growth that is consistent with the Company’s overall profitability 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.

Changes in the Company’s management structure or reporting methodologies may result in changes in the measurement of operating segment results. Results for prior year periods are generally restated for comparability for changes in management structure or reporting methodologies unless it is deemed not 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, 2017 and 2016:

($ in thousands)	Three Months Ended September 30, 2017
	Retail Banking			Commercial Banking			Other			Total
Interest income	$	93,714		$	218,397		$	27,799		$	339,910
Charge for funds used	(37,979		)	(87,071		)	(7,589		)	(132,639		)
Interest spread on funds used	55,735			131,326			20,210			207,271
Interest expense	(20,090		)	(5,943		)	(10,722		)	(36,755		)
Credit on funds provided	111,812			12,770			8,057			132,639
Interest spread on funds provided (used)	91,722			6,827			(2,665		)	95,884
Net interest income before provision for credit losses	$	147,457		$	138,153		$	17,545		$	303,155
Provision for credit losses	$	2,058		$	10,938		$	—		$	12,996
Depreciation, amortization and (accretion), net	$	3,401		$	(5,449	)	$	40,001		$	37,953
Segment income before income taxes	$	68,554		$	99,025		$	7,705		$	175,284
As of September 30, 2017:
Goodwill	$	357,207		$	112,226		$	—		$	469,433
Segment assets	$	8,877,186		$	21,216,848		$	6,213,932		$	36,307,966

($ 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 (used)	53,767			4,507			(3,003		)	55,271
Net interest income before (reversal of) provision for credit losses	$	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 income before income taxes	$	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)	Nine Months Ended September 30, 2017
	Retail Banking			Commercial Banking			Other			Total
Interest income	$	263,491		$	616,689		$	85,174		$	965,354
Charge for funds used	(98,856		)	(229,330		)	(50,273		)	(378,459		)
Interest spread on funds used	164,635			387,359			34,901			586,895
Interest expense	(54,650		)	(16,225		)	(29,111		)	(99,986		)
Credit on funds provided	320,452			37,436			20,571			378,459
Interest spread on funds provided (used)	265,802			21,211			(8,540		)	278,473
Net interest income before provision for credit losses	$	430,437		$	408,570		$	26,361		$	865,368
Provision for credit losses	$	1,772		$	28,977		$	—		$	30,749
Depreciation, amortization and (accretion), net	$	6,741		$	(14,609	)	$	111,639		$	103,771
Segment income before income taxes	$	204,601		$	284,195		$	72,177		$	560,973
As of September 30, 2017:
Goodwill	$	357,207		$	112,226		$	—		$	469,433
Segment assets	$	8,877,186		$	21,216,848		$	6,213,932		$	36,307,966

($ 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 (used)	166,698			14,690			(3,837		)	177,551
Net interest income before (reversal of) provision for credit losses	$	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 income before income taxes	$	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