Business Segments

9 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

Business Segments

Business Segments

The Company organizes its operations into three reportable operating segments: (1) Consumer and Business Banking; (2) Commercial Banking; and (3) Other. These segments are defined by the type of customers served, and the related products and services provided. The segments reflect how financial information is currently evaluated by management. Operating segment results are based on the Company’s internal management reporting process, which reflects assignments and allocations of certain balance sheet and income statement items. The information presented is not indicative of how the segments would perform if they operated as independent entities due to the interrelationships among the segments.

The Consumer and Business Banking segment primarily provides financial products and services to consumer and commercial customers through the Company’s domestic branch network and digital banking platform. This segment offers consumer and commercial deposits, mortgage and home equity loans, and other products and services. It also originates commercial loans for small- and medium-sized enterprises through the Company’s branch network. Other products and services provided by this segment include wealth management, treasury management and foreign exchange services.

The Commercial Banking segment primarily generates commercial loans and deposits. Commercial loan products include commercial business loans and lines of credit, trade finance loans and letters of credit, CRE loans, construction and land loans, affordable housing loans and letters of credit, asset-based lending and equipment financing. Commercial deposit products and other financial services include treasury management, foreign exchange services and interest rate and commodity risk hedging.

The remaining centralized functions, including the corporate treasury activities of the Company 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, namely the Consumer and Business Banking and the Commercial Banking segments.

The Company utilizes an internal reporting process to measure the performance of the three operating segments within the Company. The internal reporting process derives operating segment results by utilizing allocation methodologies for revenues and expenses. Net interest income of each segment represents the difference between actual interest earned on assets and interest incurred on liabilities of the segment, adjusted for funding charges or credits through the Company’s internal funds transfer pricing (“FTP”) process. Noninterest income and noninterest expense directly attributable to a business segment are assigned to that segment. Indirect costs, including technology-related costs and corporate overhead, are allocated based on a segment’s estimated usage using factors including but not limited to, full-time equivalent employees, net interest income, and loan and deposit volume. Charge-offs are recorded to the segment directly associated with the respective loans charged off, and provision for credit losses is recorded to the segments based on the related loans for which allowances are evaluated. The Company’s internal reporting process utilizes a full-allocation methodology. Under this methodology, corporate and indirect expenses incurred by the Other segment are allocated to the Consumer and Business Banking and the Commercial Banking segments, except certain corporate treasury-related expenses and insignificant unallocated expenses.

The corporate treasury function within the Other segment is responsible for the Company’s liquidity and interest rate management. The Company’s internal FTP process is also managed by the corporate treasury function within the Other segment. The 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 its business segments’ net interest margins and profitability. The FTP process charges a cost to fund loans (“FTP charges for loans”) and allocates credits for funds provided from deposits (“FTP credits for deposits”) using internal FTP rates. FTP charges for loans are determined based on a matched cost of funds, which is tied to the pricing and term characteristics of the loans. FTP credits for deposits are based on matched funding credit rates, which are tied to the implied or stated maturity of the deposits. FTP credits for deposits reflect the long-term value generated by the deposits. The net spread between the total internal FTP charges and credits is recorded as part of net interest income in the Other segment. The FTP process transfers the corporate interest rate risk exposure to the treasury function within the Other segment, where such exposures are centrally managed. The Company’s internal FTP assumptions and methodologies are reviewed at least annually to ensure that the process is reflective of current market conditions.

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, 2021 and 2020:

($ in thousands)	Consumer and Business Banking		Commercial Banking		Other		Total
Three Months Ended September 30, 2021
Net interest income before provision for (reversal of) credit losses	$	176,678	$	189,791	$	29,237	$	395,706
Provision for (reversal of) credit losses	1,293		(11,293)		—		(10,000)
Noninterest income	22,446		42,925		7,738		73,109
Noninterest expense	90,575		66,688		48,121		205,384
Segment income (loss) before income taxes	107,256		177,321		(11,146)		273,431
Segment net income	$	76,825	$	126,767	$	21,857	$	225,449
As of September 30, 2021
Segment assets	$	14,687,023	$	27,861,690	$	18,410,397	$	60,959,110

($ in thousands)	Consumer and Business Banking		Commercial Banking		Other		Total
Three Months Ended September 30, 2020
Net interest income before provision for (reversal of) credit losses	$	120,969	$	162,884	$	40,277	$	324,130
(Reversal of) provision for credit losses	(3,470)		13,470		—		10,000
Noninterest income	17,426		28,984		8,093		54,503
Noninterest expense	81,419		61,863		29,291		172,573
Segment income before income taxes	60,446		116,535		19,079		196,060
Segment net income	$	43,310	$	83,340	$	32,887	$	159,537
As of September 30, 2020
Segment assets	$	12,838,625	$	26,526,173	$	11,006,679	$	50,371,477

($ in thousands)	Consumer and Business Banking		Commercial Banking		Other		Total
Nine Months Ended September 30, 2021
Net interest income before reversal of credit losses	$	500,352	$	559,579	$	65,943	$	1,125,874
(Reversal of) credit losses	(598)		(24,402)		—		(25,000)
Noninterest income	67,728		125,487		21,191		214,406
Noninterest expense	267,511		200,109		118,364		585,984
Segment income (loss) before income taxes	301,167		509,359		(31,230)		779,296
Segment net income	$	215,720	$	364,632	$	74,833	$	655,185
As of September 30, 2021
Segment assets	$	14,687,023	$	27,861,690	$	18,410,397	$	60,959,110

($ in thousands)	Consumer and Business Banking		Commercial Banking		Other		Total
Nine Months Ended September 30, 2020
Net interest income before provision for credit losses	$	398,486	$	530,181	$	101,945	$	1,030,612
Provision for credit losses	9,908		176,405		—		186,313
Noninterest income	47,771		95,327		22,617		165,715
Noninterest expense	248,547		196,889		92,235		537,671
Segment income before income taxes	187,802		252,214		32,327		472,343
Segment net income	$	134,563	$	180,649	$	88,501	$	403,713
As of September 30, 2020
Segment assets	$	12,838,625	$	26,526,173	$	11,006,679	$	50,371,477