Business Segments

12 Months Ended

Dec. 31, 2011

Business Segments

The Bancorp reports on four business segments: Commercial Banking, Branch Banking, Consumer Lending and Investment Advisors. Results of the Bancorp's business segments are presented based on its management structure and management accounting practices. The structure and accounting practices are specific to the Bancorp; therefore, the financial results of the Bancorp's business segments are not necessarily comparable with similar information for other financial institutions. The Bancorp refines its methodologies from time to time as management's accounting practices are improved and businesses change.

On June 30, 2009, the Bancorp completed the sale of the processing business which represented the sale of a majority interest in the Bancorp's merchant acquiring and financial institutions processing businesses. Financial data for the merchant acquiring and financial institutions processing businesses was originally reported in the former Processing Solutions segment through June 30, 2009. As a result of the sale, the Bancorp no longer presents Processing Solutions as a segment and therefore, historical financial information for the merchant acquiring and financial institutions processing businesses has been reclassified under General Corporate and Other for all periods presented. Interchange revenue previously recorded in the Processing Solutions segment and associated with cards currently included in Branch Banking is now included in the Branch Banking segment for all periods presented. Additionally, the Bancorp retained its retail credit card and commercial multi-card service businesses, which were also originally reported in the former Processing Solutions segment through June 30, 2009, and areincluded in the Branch Bankingand Commercial Banking segments, respectively, for all periods presented. Revenue from the remaining ownership interest in the Processing Business is recorded in General Corporate and Other as noninterest income.

The Bancorp manages interest rate risk centrally at the corporate level by employing a FTP methodology. This methodology insulates the business segments from interest rate volatility, enabling them to focus on serving customers through loan originations and deposit taking. The FTP system assigns charge rates and credit rates to classes of assets and liabilities, respectively, based on expected duration and the LIBOR swap curve. Matching duration allocates interest income and interest expense to each segment so its resulting net interest income is insulated from interest rate risk. In a rising rate environment, the Bancorp benefits from the widening spread between deposit costs and wholesale funding costs. However, the Bancorp's FTP system credits this benefit to deposit-providing businesses, such as Branch Banking and Investment Advisors, on a duration-adjusted basis. The net impact of the FTP methodology is captured in General Corporate and Other.

The business segments are charged provision expense based on the actual net charge-offs experienced by the loans owned by each segment. Provision expense attributable to loan growth and changes in factors in the ALLL are captured in General Corporate and Other. The financial results of the business segments include allocations for shared services and headquarters expenses. Even with these allocations, the financial results are not necessarily indicative of the business segments' financial condition and results of operations as if they existed as independent entities. Additionally, the business segments form synergies by taking advantage of cross-sell opportunities and when funding operations, by accessing the capital markets as a collective unit.

Results of operations and assets by segment for each of the three years ended December 31 are:

		Commercial	Branch	Consumer	Investment	General
2011 ($ in millions)		Banking	Banking	Lending	Advisors	Corporate	Eliminations	Total
Net interest income	$	1,357	1,423	343	113	321	-	3,557
Provision for loan and lease losses		490	393	261	27	(748)	-	423
Net interest income after provision for loan
and lease losses		867	1,030	82	86	1,069	-	3,134
Noninterest income:
Mortgage banking net revenue		-	11	585	1	-	-	597
Service charges on deposits		207	309	-	4	-	-	520
Investment advisory revenue		12	117	-	364	(1)	(117)(a)	375
Corporate banking revenue		332	14	-	3	1		350
Card and processing revenue		38	305	-	4	(39)	-	308
Other noninterest income		52	81	36	(3)	84	-	250
Securities gains, net		-	-	-	-	46	-	46
Securities gains, net - non-qualifying hedges on
mortgage servicing rights		-	-	9	-	-	-	9
Total noninterest income		641	837	630	373	91	(117)	2,455
Noninterest expense:
Salaries, wages and incentives		203	456	149	138	532	-	1,478
Employee benefits		37	127	34	26	106	-	330
Net occupancy expense		20	184	8	11	82	-	305
Technology and communications		11	5	1	1	170	-	188
Card and processing expense		5	114	-	-	1	-	120
Equipment expense		2	51	1	1	58	-	113
Other noninterest expense		795	642	433	244	(773)	(117)	1,224
Total noninterest expense		1,073	1,579	626	421	176	(117)	3,758
Income before income taxes		435	288	86	38	984	-	1,831
Applicable income tax expense		(6)	102	30	14	393	-	533
Net income		441	186	56	24	591	-	1,298
Less: Net income attributable to noncontrolling interests		-	-	-	-	1	-	1
Net income attributable to Bancorp		441	186	56	24	590	-	1,297
Dividends on preferred stock		-	-	-	-	203	-	203
Net income available to common shareholders	$	441	186	56	24	387	-	1,094
Total goodwill	$	613	1,656	-	148	-	-	2,417
Total assets	$	45,864	46,703	24,325	7,670	(7,595)	-	116,967

Revenue sharing agreements between Investment Advisors and Branch Banking are eliminated in the Consolidated Statements of Income.

		Commercial	Branch	Consumer	Investment	General
2010 ($ in millions)		Banking	Banking	Lending	Advisors	Corporate	Eliminations	Total
Net interest income	$	1,531	1,514	405	138	16	-	3,604
Provision for loan and lease losses		1,159	555	569	44	(789)	-	1,538
Net interest income (loss) after provision for loan
and lease losses		372	959	(164)	94	805	-	2,066
Noninterest income:
Mortgage banking net revenue		-	27	619	2	(1)	-	647
Service charges on deposits		199	369	1	6	(1)	-	574
Corporate banking revenue		346	15	-	3	-	-	364
Investment advisory revenue		15	106	-	346	-	(106)(a)	361
Card and processing revenue		33	298	-	1	(16)	-	316
Other noninterest income		42	70	36	(2)	260	-	406
Securities gains, net		-	-	-	-	47	-	47
Securities gains, net - non-qualifying hedges on
mortgage servicing rights		-	-	14	-	-	-	14
Total noninterest income		635	885	670	356	289	(106)	2,729
Noninterest expense:
Salaries, wages and incentives		182	439	163	131	515	-	1,430
Employee benefits		32	121	31	25	105	-	314
Net occupancy expense		16	174	7	9	92	-	298
Technology and communications		14	16	2	2	155	-	189
Card and processing expense		2	105	-	-	1	-	108
Equipment expense		2	49	1	1	175	(106)	122
Other noninterest expense		723	652	342	237	(560)	-	1,394
Total noninterest expense		971	1,556	546	405	483	(106)	3,855
Income (loss) before income taxes		36	288	(40)	45	611	-	940
Applicable income tax (benefit) expense		(142)	103	(14)	16	224	-	187
Net income (loss)		178	185	(26)	29	387	-	753
Less: Net income attributable to noncontrolling interest		-	-	-	-	-	-	-
Net income (loss) attributable to Bancorp		178	185	(26)	29	387	-	753
Dividends on preferred stock		-	-	-	-	250	-	250
Net income (loss) available to common shareholders	$	178	185	(26)	29	137	-	503
Total goodwill	$	613	1,656	-	148	-	-	2,417
Total assets	$	43,609	46,244	22,604	6,759	(8,209)	-	111,007

Revenue sharing agreements between Investment Advisors and Branch Banking are eliminated in theConsolidated Statements of Income.

		Commercial	Branch	Consumer	Investment	General
2009 ($ in millions)		Banking	Banking	Lending	Advisors	Corporate	Eliminations	Total
Net interest income	$	1,370	1,577	476	157	(226)	-	3,354
Provision for loan and lease losses		1,360	601	558	57	967	-	3,543
Net interest income (loss) after provision for loan
and lease losses		10	976	(82)	100	(1,193)	-	(189)
Noninterest income:
Mortgage banking net revenue		-	26	526	1	-	-	553
Service charges on deposits		196	428	-	8	-	-	632
Investment advisory revenue		11	84	-	315	(1)	(83)(a)	326
Corporate banking revenue		353	10	-	11	(2)	-	372
Card and processing revenue		28	268	-	1	357	(39)(b)	615
Gain on sale of Vantiv Holding, LLC		-	-	-	-	1,758	-	1,758
Other noninterest income		20	86	40	-	333	-	479
Securities gains (losses), net		1	-	-	-	(11)	-	(10)
Securities gains, net - non-qualifying hedges on
mortgage servicing rights		-	-	57	-	-	-	57
Total noninterest income		609	902	623	336	2,434	(122)	4,782
Noninterest expense:
Salaries, wages and incentives		161	401	154	117	506	-	1,339
Employee benefits		31	106	27	23	124	-	311
Net occupancy expense		17	169	7	10	105	-	308
Technology and communications		6	16	2	2	155	-	181
Card and processing expense		1	70	-	-	122	-	193
Equipment expense		3	48	1	1	70	-	123
Other noninterest expense		741	563	318	201	(330)	(122)	1,371
Total noninterest expense		960	1,373	509	354	752	(122)	3,826
Income before income taxes		(341)	505	32	82	489	-	767
Applicable income tax expense (benefit)		(240)	178	11	29	52	-	30
Net income		(101)	327	21	53	437	-	737
Less: Net income attributable to noncontrolling interest		-	-	-	-	-	-	-
Net income attributable to Bancorp		(101)	327	21	53	437	-	737
Dividends on preferred stock		-	-	-	-	226	-	226
Net income available to common shareholders	$	(101)	327	21	53	211	-	511
Total goodwill	$	613	1,656	-	148	-	-	2,417
Total assets	$	43,312	47,839	20,923	6,057	(4,751)	-	113,380

Revenue sharing agreements between Investment Advisors and Branch Banking are eliminated in the Consolidated Statements of Income.

Card and processing revenues provided to the banking segments are eliminated in the Consolidated Statements of Income.