Segments

The Company segregates financial information for use in assessing its performance and allocating resources among three operating segments: Consumer, Commercial and Wealth. The Consumer segment includes the consumer portion of the retail branch network (loans, deposits and other personal banking services), indirect and other consumer financing, and consumer debit and credit card loan and fee businesses. Residential mortgage origination, sales and servicing functions are included in this consumer segment, but residential mortgage loans retained by the Company are not considered part of this segment. The Commercial segment provides corporate lending (including the Small Business Banking product line within the branch network), leasing, international services, and business, government deposit, and related commercial cash management services, as well as merchant and commercial bank card products. The Commercial segment also includes the Capital Markets Group, which sells fixed income securities and provides investment safekeeping and bond accounting services. The Wealth segment provides traditional trust and estate planning, advisory and discretionary investment management, and brokerage services. This segment also provides various loan and deposit related services to its private banking customers.

The Company’s business line reporting system derives segment information from the internal profitability reporting system used by management to monitor and manage the financial performance of the Company. This information is based on internal management accounting procedures and methods, which have been developed to reflect the underlying economics of the businesses. These methodologies are applied in connection with funds transfer pricing and assignment of overhead costs among segments. Funds transfer pricing was used in the determination of net interest income by assigning a standard cost (credit) for funds used (provided) by assets and liabilities based on their maturity, prepayment and/or repricing characteristics. Income and expense that directly relate to segment operations are recorded in the segment when incurred. Expenses that indirectly support the segments are allocated based on the most appropriate method available.

The Company uses a funds transfer pricing method to value funds used (e.g., loans, fixed assets, and cash) and funds provided (e.g., deposits, borrowings, and equity) by the business segments and their components. This process assigns a specific value to each new source or use of funds with a maturity, based on current swap rates, thus determining an interest spread at the time of the transaction. Non-maturity assets and liabilities are valued using weighted average pools. The funds transfer pricing process attempts to remove interest rate risk from valuation, allowing management to compare profitability under various rate environments.

The following tables present selected financial information by segment and reconciliations of combined segment totals to consolidated totals. There were no material intersegment revenues between the three segments. Management periodically makes changes to methods of assigning costs and income to its business segments to better reflect operating results. If appropriate, these changes are reflected in prior year information presented below.

Segment Income Statement Data



(In thousands)	Consumer			Commercial			Wealth			Segment Totals			Other/Elimination			Consolidated Totals
Year ended December 31, 2017:
Net interest income	$	279,031		$	328,345		$	47,264		$	654,640		$	79,039		$	733,679
Provision for loan losses	(41,829		)	205			(41		)	(41,665		)	(3,579		)	(45,244		)
Non-interest income	136,554			194,581			158,175			489,310			(2,706		)	486,604
Investment securities gains, net	—			—			—			—			25,051			25,051
Non-interest expense	(290,905		)	(290,874		)	(120,458		)	(702,237		)	(67,447		)	(769,684		)
Income before income taxes	$	82,851		$	232,257		$	84,940		$	400,048		$	30,358		$	430,406
Year ended December 31, 2016:
Net interest income	$	268,654		$	311,704		$	44,113		$	624,471		$	55,578		$	680,049
Provision for loan losses	(36,042		)	4,378			(122		)	(31,786		)	(4,532		)	(36,318		)
Non-interest income	131,988			199,384			144,661			476,033			(1,641		)	474,392
Investment securities losses, net	—			—			—			—			(53		)	(53		)
Non-interest expense	(282,061		)	(284,432		)	(113,888		)	(680,381		)	(36,684		)	(717,065		)
Income before income taxes	$	82,539		$	231,034		$	74,764		$	388,337		$	12,668		$	401,005
Year ended December 31, 2015:
Net interest income	$	266,328		$	296,510		$	42,653		$	605,491		$	28,829		$	634,320
Provision for loan losses	(34,864		)	1,032			75			(33,757		)	5,030			(28,727		)
Non-interest income	119,561			194,133			136,374			450,068			(1,929		)	448,139
Investment securities gains, net	—			—			—			—			6,320			6,320
Non-interest expense	(273,378		)	(267,343		)	(108,755		)	(649,476		)	(27,011		)	(676,487		)
Income before income taxes	$	77,647		$	224,332		$	70,347		$	372,326		$	11,239		$	383,565

The segment activity, as shown above, includes both direct and allocated items. Amounts in the “Other/Elimination” column include activity not related to the segments, such as that relating to administrative functions, the investment securities portfolio, and the effect of certain expense allocations to the segments. The provision for loan losses in this category contains the difference between net loan charge-offs assigned directly to the segments and the recorded provision for loan loss expense. Included in this category’s net interest income are earnings of the investment portfolio, which are not allocated to a segment.

Segment Balance Sheet Data



(In thousands)	Consumer		Commercial		Wealth		Segment Totals		Other/Elimination		Consolidated Totals
Average balances for 2017:
Assets	$	2,610,045	$	8,830,584	$	1,218,598	$	12,659,227	$	12,372,381	$	25,031,608
Loans, including held for sale	2,471,578		8,635,035		1,209,792		12,316,405		1,312,746		13,629,151
Goodwill and other intangible assets	76,734		68,538		746		146,018		—		146,018
Deposits	10,190,613		8,301,004		2,090,582		20,582,199		12,587		20,594,786
Average balances for 2016:
Assets	$	2,673,915	$	8,267,963	$	1,116,969	$	12,058,847	$	12,497,624	$	24,556,471
Loans, including held for sale	2,533,528		8,072,528		1,108,211		11,714,267		1,239,221		12,953,488
Goodwill and other intangible assets	75,971		68,848		746		145,565		—		145,565
Deposits	9,956,327		8,243,394		2,084,940		20,284,661		46,252		20,330,913

The above segment balances include only those items directly associated with the segment. The “Other/Elimination” column includes unallocated bank balances not associated with a segment (such as investment securities and federal funds sold), balances relating to certain other administrative and corporate functions, and eliminations between segment and non-segment balances. This column also includes the resulting effect of allocating such items as float, deposit reserve and capital for the purpose of computing the cost or credit for funds used/provided.

The Company’s reportable segments are strategic lines of business that offer different products and services. They are managed separately because each line services a specific customer need, requiring different performance measurement analyses and marketing strategies. The performance measurement of the segments is based on the management structure of the Company and is not necessarily comparable with similar information for any other financial institution. The information is also not necessarily indicative of the segments’ financial condition and results of operations if they were independent entities.