BUSINESS SEGMENTS

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

BUSINESS SEGMENTS

BUSINESS SEGMENTS

The Company is managed by its CEO on a segment 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 one or more segment heads who report 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, capital, revenues, provision for credit losses 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. Our Consumer Banking value proposition is based on providing simple, easy to understand product offerings and a convenient banking experience with a more personalized approach.

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, commercial cards, foreign exchange, interest rate risk management, corporate finance and capital markets advisory capabilities. It focuses on middle-market companies, large corporations and institutions and has dedicated teams with industry expertise in government banking, not-for-profit, healthcare, technology, professionals, oil & gas, 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 in the Company’s footprint, some of its specialized industry businesses also operate selectively on a national basis (such as healthcare, asset finance and franchise finance). A key component of Commercial Banking’s growth strategy is to bring ideas to clients that help their businesses thrive, and in doing so, expand the loan portfolio and ancillary product sales.

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 any associated goodwill impairment charges.

	As of and for the Three Months Ended June 30, 2016
(in millions)	Consumer Banking		Commercial Banking			Other			Consolidated
Net interest income		$602		$314			$7			$923
Noninterest income	219		122			14			355
Total revenue	821		436			21			1,278
Noninterest expense	632		186			9			827
Profit before provision for credit losses	189		250			12			451
Provision for credit losses	49		(1		)	42			90
Income (loss) before income tax expense (benefit)	140		251			(30		)	361
Income tax expense (benefit)	50		87			(19		)	118
Net income (loss)		$90		$164			($11	)		$243
Total average assets		$55,660		$47,388			$39,131			$142,179

	As of and for the Three Months Ended June 30, 2015
(in millions)	Consumer Banking		Commercial Banking		Other			Consolidated
Net interest income		$544		$286		$10			$840
Noninterest income	230		108		22			360
Total revenue	774		394		32			1,200
Noninterest expense	613		181		47			841
Profit (loss) before provision for credit losses	161		213		(15		)	359
Provision for credit losses	60		7		10			77
Income (loss) before income tax expense (benefit)	101		206		(25		)	282
Income tax expense (benefit)	35		71		(14		)	92
Net income (loss)		$66		$135		($11	)		$190
Total average assets		$52,489		$42,617		$40,415			$135,521

	As of and for the Six Months Ended June 30, 2016
(in millions)	Consumer Banking		Commercial Banking		Other			Consolidated
Net interest income		$1,183		$614		$30			$1,827
Noninterest income	427		221		37			685
Total revenue	1,610		835		67			2,512
Noninterest expense	1,248		373		17			1,638
Profit before provision for credit losses	362		462		50			874
Provision for credit losses	112		8		61			181
Income (loss) before income tax expense (benefit)	250		454		(11		)	693
Income tax expense (benefit)	89		157		(19		)	227
Net income		$161		$297		$8			$466
Total average assets		$55,388		$46,346		$38,745			$140,479

	As of and for the Six Months Ended June 30, 2015
(in millions)	Consumer Banking		Commercial Banking			Other			Consolidated
Net interest income		$1,077		$562			$37			$1,676
Noninterest income	449		208			50			707
Total revenue	1,526		770			87			2,383
Noninterest expense	1,209		354			88			1,651
Profit (loss) before provision for credit losses	317		416			(1		)	732
Provision for credit losses	123		(14		)	26			135
Income (loss) before income tax expense (benefit)	194		430			(27		)	597
Income tax expense (benefit)	67		148			(17		)	198
Net income (loss)		$127		$282			($10	)		$399
Total average assets		$52,048		$42,114			$40,267			$134,429

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.