BUSINESS SEGMENTS

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

BUSINESS SEGMENTS

BUSINESS SEGMENTS

The Company is managed by its CEO on a divisional basis. The Company’s two business segments are Consumer Banking and Commercial Banking. The business segments are determined based on the products and services provided, or the type of customer served. Each segment has a Vice Chairman who reports directly to the CEO. The CEO has final authority over resource allocation decisions and performance assessment. The business segments reflect this management structure and the manner in which financial information is currently evaluated by the CEO. Non-segment operations are classified as Other, which includes corporate functions, the Treasury function, the securities portfolio, wholesale funding activities, intangible assets, Community Development, Non-Core assets, and other unallocated assets, liabilities, revenues and expenses.

Reportable Segments

Segment results are determined based upon the Company’s management reporting system, which assigns balance sheet and income statement items to each of the business segments. The process is designed around the Company’s organizational and management structure and, accordingly, the results derived are not necessarily comparable with similar information published by other financial institutions. A description of each reportable segment and table of financial results is presented below:

Consumer Banking

The Consumer Banking segment focuses on retail customers and small businesses with annual revenues of up to $25 million. It offers traditional banking products and services, including checking, savings, home loans, student loans, credit cards, business loans and financial management services. It also operates an indirect auto financing business, providing financing for both new and used vehicles through auto dealerships. The segment’s distribution channels include a branch network, ATMs and a work force of experienced specialists ranging from financial consultants, mortgage loan officers and business banking officers to private bankers.

Commercial Banking

The Commercial Banking segment primarily targets companies with annual revenues from $25 million to $2.5 billion and provides a full complement of financial products and solutions, including loans, leases, trade financing, deposits, cash management, foreign exchange, interest rate risk management, corporate finance and capital markets advisory capabilities. It focuses on small and middle-market companies and has dedicated teams with industry expertise in government banking, not-for-profit, healthcare, technology, asset finance, franchise finance, asset-based lending, commercial real estate, private equity and sponsor finance. While the segment’s business development efforts are predominantly focused on the Company's twelve-state core footprint, some of its specialized industry businesses also operate selectively on a national basis (such as healthcare, asset finance and franchise finance). Commercial Banking is organized by teams that target different client segments. A key component of the segment’s growth strategy is to expand its loan portfolio by originating high-quality commercial loans, which produce revenues consistent with its financial objectives and complies with its conservative credit policies. Commercial underwriting is driven by cash flow analysis supported by collateral analysis and review. The commercial lending teams offer a wide range of commercial loan products, including commercial real estate loans; working capital loans and lines of credit; demand, term and time loans; and equipment, inventory and accounts receivable financing.

Non-segment Operations

Other

In addition to non-segment operations, Other includes certain reconciling items in order to translate the segment results that are based on management accounting practices into consolidated results. For example, Other includes goodwill and the associated pre-tax $4.4 billion goodwill impairment charge recorded in 2013.

	As of and for the Three Months Ended September 30, 2014
(in millions)	Consumer Banking		Commercial Banking		Other			Consolidated
Net interest income		$532		$270		$18			$820
Noninterest income	226		104		11			341
Total revenue	758		374		29			1,161
Noninterest expense	609		162		39			810
Profit (loss) before provision for credit losses	149		212		(10		)	351
Provision for credit losses	66		—		11			77
Income (loss) before income tax expense (benefit)	83		212		(21		)	274
Income tax expense (benefit)	29		73		(17		)	85
Net income (loss)		$54		$139		($4	)		$189
Total Average Assets		$49,012		$38,854		$40,825			$128,691

	As of and for the Three months ended September 30, 2013
(in millions)	Consumer Banking		Commercial Banking		Other			Consolidated
Net interest income (expense)		$543		$263		($36	)		$770
Noninterest income	246		93		44			383
Total revenue	789		356		8			1,153
Noninterest expense	622		156		10			788
Profit (loss) before provision for credit losses	167		200		(2		)	365
Provision for credit losses	87		3		55			145
Income (loss) before income tax expense (benefit)	80		197		(57		)	220
Income tax expense (benefit)	28		70		(22		)	76
Net income (loss)		$52		$127		($35	)		$144
Total Average Assets		$46,169		$35,019		$36,198			$117,386

	As of and for the Nine Months Ended September 30, 2014
(in millions)	Consumer Banking		Commercial Banking			Other		Consolidated
Net interest income		$1,615		$790			$56		$2,461
Noninterest income	681		318			340		1,339
Total revenue	2,296		1,108			396		3,800
Noninterest expense	1,902		472			194		2,568
Profit before provision for credit losses	394		636			202		1,232
Provision for credit losses	195		(7		)	59		247
Income before income tax expense	199		643			143		985
Income tax expense	69		222			26		317
Net income		$130		$421			$117		$668
Total Average Assets		$48,398		$37,951			$40,249		$126,598

	As of and for the Nine Months Ended September 30, 2013
(in millions)	Consumer Banking		Commercial Banking			Other			Consolidated
Net interest income (expense)		$1,633		$771			($125	)		$2,279
Noninterest income	790		284			179			1,253
Total revenue	2,423		1,055			54			3,532
Noninterest expense	1,884		471			4,506			6,861
Profit (loss) before provision for credit losses	539		584			(4,452		)	(3,329		)
Provision for credit losses	243		(21		)	125			347
Income (loss) before income tax expense (benefit)	296		605			(4,577		)	(3,676		)
Income tax expense (benefit)	104		214			(416		)	(98		)
Net income (loss)		$192		$391			($4,161	)		($3,578	)
Total Average Assets		$46,546		$34,938			$39,542			$121,026

Management accounting practices utilized by the Company as the basis for presentation for segment results include the following:

FTP adjustments

The Company utilizes an FTP system to eliminate the effect of interest rate risk from the segments’ net interest income because such risk is centrally managed within the Treasury function. The FTP system credits (or charges) the segments with the economic value of the funds created (or used) by the segments. The FTP system provides a funds credit for sources of funds and a funds charge for the use of funds by each segment. The sum of the interest income/expense and FTP charges/credits for each segment is its designated net interest income. The variance between the Company’s cumulative FTP charges and cumulative FTP credits is offset in Other.

Provision for credit losses allocations

Provision for credit losses is allocated to each business segment based on actual net charge-offs that have been recognized by the business segment. The difference between the consolidated provision for credit losses and the business segments’ net charge-offs is reflected in Other.

Income tax allocations

Income taxes are assessed to each line of business at a standard tax rate with the residual tax expense or benefit to arrive at the consolidated effective tax rate included in Other.

Expense allocations

Noninterest expenses incurred by centrally managed operations or business lines that directly support another business line’s operations are charged to the applicable business line based on its utilization of those services.

Goodwill

For impairment testing purposes, the Company allocates goodwill to its Consumer Banking and Commercial Banking reporting units. For management reporting purposes, the Company presents the goodwill balance (and any related impairment charges) in Other.

Substantially all revenues generated and long-lived assets held by the Company’s business segments are derived from clients that reside in the United States. Neither business segment earns revenue from a single external customer that represents 10 percent or more of the Company’s total revenues.