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 bank cards. 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 tax planning, advisory and discretionary investment management, and brokerage services, and includes the Private Banking product portfolio.

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 policies, which have been developed to reflect the underlying economics of the businesses. The policies address the methodologies 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, 2014:
Net interest income	$	270,081		$	287,244		$	40,128		$	597,453		$	22,751		$	620,204
Provision for loan losses	(35,209		)	559			372			(34,278		)	4,747			(29,531		)
Non-interest income	113,245			190,594			128,203			432,042			3,936			435,978
Investment securities gains, net	—			—			—			—			14,124			14,124
Non-interest expense	(267,931		)	(250,964		)	(98,589		)	(617,484		)	(40,291		)	(657,775		)
Income before income taxes	$	80,186		$	227,433		$	70,114		$	377,733		$	5,267		$	383,000
Year ended December 31, 2013:
Net interest income	$	268,221		$	280,128		$	40,185		$	588,534		$	30,838		$	619,372
Provision for loan losses	(34,277		)	3,772			(688		)	(31,193		)	10,840			(20,353		)
Non-interest income	112,819			186,446			117,323			416,588			1,798			418,386
Investment securities losses, net	—			—			—			—			(4,425		)	(4,425		)
Non-interest expense	(270,209		)	(235,396		)	(96,530		)	(602,135		)	(27,498		)	(629,633		)
Income before income taxes	$	76,554		$	234,950		$	60,290		$	371,794		$	11,553		$	383,347
Year ended December 31, 2012:
Net interest income	$	274,844		$	290,968		$	39,498		$	605,310		$	34,596		$	639,906
Provision for loan losses	(35,496		)	(2,824		)	(695		)	(39,015		)	11,728			(27,287		)
Non-interest income	114,003			179,824			108,776			402,603			(2,973		)	399,630
Investment securities gains, net	—			—			—			—			4,828			4,828
Non-interest expense	(266,740		)	(226,935		)	(90,659		)	(584,334		)	(34,135		)	(618,469		)
Income before income taxes	$	86,611		$	241,033		$	56,920		$	384,564		$	14,044		$	398,608

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 2014:
Assets	$	2,806,028	$	6,966,520	$	931,397	$	10,703,945	$	11,968,978	$	22,672,923
Loans, including held for sale	2,718,634		6,783,471		922,120		10,424,225		836,008		11,260,233
Goodwill and other intangible assets	76,786		69,733		746		147,265		—		147,265
Deposits	9,537,686		7,288,884		1,911,391		18,737,961		57,715		18,795,676
Average balances for 2013:
Assets	$	2,674,136	$	6,321,153	$	855,721	$	9,851,010	$	12,022,974	$	21,873,984
Loans, including held for sale	2,589,179		6,124,902		845,918		9,559,999		756,143		10,316,142
Goodwill and other intangible assets	73,340		61,925		746		136,011		—		136,011
Deposits	9,317,525		6,809,265		1,885,807		18,012,597		48,554		18,061,151

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.