Business Segments

6 Months Ended

Jun. 30, 2012

Business Segments

20.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.

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 U.S. 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 Bancorp adjusts the FTP charge and credit rates as dictated by changes in interest rates for various interest-earning assets and liabilities and by the review of the estimated durations for the indeterminate-lived deposits. The credit rate provided for DDAs is reviewed annually based upon the account type, its estimated duration and the corresponding fed funds, U.S. swap curve or swap rate. The credit rates for several deposit products were reset January 1, 2012 to reflect the current market rates and updated market assumptions. These rates were lower than those in place during 2011, thus net interest income for deposit providing businesses was negatively impacted during 2012.

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.

		Commercial	Branch	Consumer	Investment	General
($ in millions)		Banking	Banking	Lending	Advisors	Corporate	Eliminations	Total
Three months ended June 30, 2012
Net interest income	$	348	342	77	29	99	-	895
Provision for loan and lease losses		61	69	49	2	(110)	-	71
Net interest income after provision for loan
and lease losses		287	273	28	27	209	-	824
Noninterest income:
Mortgage banking net revenue		-	4	179	-	-	-	183
Service charges on deposits		54	75	-	1	-	-	130
Corporate banking revenue		97	4	-	1	-	-	102
Investment advisory revenue		2	32	-	91	-	(32)(a)	93
Card and processing revenue		12	70	-	1	(19)	-	64
Other noninterest income		12	20	10	4	57	-	103
Securities gains, net		-	-	-	-	3	-	3
Securities gains, net - non-qualifying hedges on
mortgage servicing rights		-	-	-	-	-	-	-
Total noninterest income		177	205	189	98	41	(32)	678
Noninterest expense:
Salaries, wages and incentives		56	113	47	35	142	-	393
Employee benefits		9	30	9	6	30	-	84
Net occupancy expense		5	47	2	3	17	-	74
Technology and communications		2	1	-	-	45	-	48
Card and processing expense		1	29	-	-	-	-	30
Equipment expense		-	13	-	-	14	-	27
Other noninterest expense		196	168	108	68	(227)	(32)	281
Total noninterest expense		269	401	166	112	21	(32)	937
Income before income taxes		195	77	51	13	229	-	565
Applicable income tax expense		32	27	18	5	98	-	180
Net income		163	50	33	8	131	-	385
Less: Net income attributable to noncontrolling interest		-	-	-	-	-	-	-
Net income attributable to Bancorp		163	50	33	8	131	-	385
Dividends on preferred stock		-	-	-	-	9	-	9
Net income available to common shareholders	$	163	50	33	8	122	-	376
Total goodwill	$	613	1,656	-	148	-	-	2,417
Total assets	$	46,691	48,156	23,538	7,721	(8,563)	-	117,543

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

		Commercial	Branch	Consumer	Investment	General
($ in millions)		Banking	Banking	Lending	Advisors	Corporate	Eliminations	Total
Three months ended June 30, 2011
Net interest income	$	334	359	81	28	62	-	864
Provision for loan and lease losses		147	98	55	4	(191)	-	113
Net interest income after provision for loan
and lease losses		187	261	26	24	253	-	751
Noninterest income:
Mortgage banking net revenue		-	2	160	-	-	-	162
Service charges on deposits		52	73	-	1	-	-	126
Corporate banking revenue		90	4	-	1	-	-	95
Investment advisory revenue		3	29	-	92	-	(29)(a)	95
Card and processing revenue		10	86	-	1	(8)	-	89
Other noninterest income		8	19	7	-	49	-	83
Securities gains, net		-	-	-	-	6	-	6
Securities gains, net - non-qualifying hedges on
mortgage servicing rights		-	-	-	-	-	-	-
Total noninterest income		163	213	167	95	47	(29)	656
Noninterest expense:
Salaries, wages and incentives		50	115	31	36	133	-	365
Employee benefits		10	33	8	6	22	-	79
Net occupancy expense		5	46	2	3	19	-	75
Technology and communications		3	1	1	-	43	-	48
Card and processing expense		1	28	-	-	-	-	29
Equipment expense		1	13	-	-	14		28
Other noninterest expense		206	155	105	59	(219)	(29)	277
Total noninterest expense		276	391	147	104	12	(29)	901
Income before income taxes		74	83	46	15	288	-	506
Applicable income tax (benefit) expense		(14)	29	16	5	133	-	169
Net income		88	54	30	10	155	-	337
Less: Net income attributable to noncontrolling interest		-	-	-	-	-	-	-
Net income attributable to Bancorp		88	54	30	10	155	-	337
Dividends on preferred stock		-	-	-	-	9	-	9
Net income available to common shareholders	$	88	54	30	10	146	-	328
Total goodwill	$	613	1,656	-	148	-	-	2,417
Total assets	$	43,571	46,961	22,044	6,833	(8,604)	-	110,805

(a)     Revenue sharing agreements between Investment Advisors and Branch Banking are eliminated in theCondensed Consolidated Statements of Income.

		Commercial	Branch	Consumer	Investment	General
($ in millions)		Banking	Banking	Lending	Advisors	Corporate	Eliminations	Total
Six months ended June 30, 2012
Net interest income	$	696	677	157	57	206	-	1,793
Provision for loan and lease losses		137	155	103	6	(239)	-	162
Net interest income after provision for loan
and lease losses		559	522	54	51	445	-	1,631
Noninterest income:
Mortgage banking net revenue		-	6	380	1	-	-	387
Service charges on deposits		109	149	-	2	-	-	260
Corporate banking revenue		190	7	-	2	-	-	199
Investment advisory revenue		4	64	-	185	1	(64)(a)	190
Card and processing revenue		23	130	-	2	(33)	-	122
Other noninterest income		28	39	20	4	188	-	279
Securities gains, net		-	-	-	-	11	-	11
Securities gains, net - non-qualifying hedges on
mortgage servicing rights		-	-	-	-	-	-	-
Total noninterest income		354	395	400	196	167	(64)	1,448
Noninterest expense:
Salaries, wages and incentives		113	226	91	69	293	-	792
Employee benefits		24	67	21	15	68	-	195
Net occupancy expense		11	93	4	6	37	-	151
Technology and communications		4	2	-	-	89	-	95
Card and processing expense		2	57	-	-	1	-	60
Equipment expense		1	26	-	-	28	-	55
Other noninterest expense		402	324	213	132	(444)	(64)	563
Total noninterest expense		557	795	329	222	72	(64)	1,911
Income before income taxes		356	122	125	25	540	-	1,168
Applicable income tax expense		51	43	44	9	205	-	352
Net income		305	79	81	16	335	-	816
Less: Net income attributable to noncontrolling interest		-	-	-	-	1	-	1
Net income attributable to Bancorp		305	79	81	16	334	-	815
Dividends on preferred stock		-	-	-	-	18	-	18
Net income available to common shareholders	$	305	79	81	16	316	-	797
Total goodwill	$	613	1,656	-	148	-	-	2,417
Total assets	$	46,691	48,156	23,538	7,721	(8,563)	-	117,543

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

		Commercial	Branch	Consumer	Investment	General
($ in millions)		Banking	Banking	Lending	Advisors	Corporate	Eliminations	Total
Six months ended June 30, 2011
Net interest income	$	662	698	171	56	156	-	1,743
Provision for loan and lease losses		299	214	149	9	(390)	-	281
Net interest income after provision for loan
and lease losses		363	484	22	47	546	-	1,462
Noninterest income:
Mortgage banking net revenue		-	4	259	1	-	-	264
Service charges on deposits		101	147	-	2	-	-	250
Corporate banking revenue		172	7	-	1	1	-	181
Investment advisory revenue		6	58	-	187	-	(58)(a)	193
Card and processing revenue		19	163	-	2	(15)	-	169
Other noninterest income		40	38	17	-	69	-	164
Securities gains, net		-	-	-	-	14	-	14
Securities gains, net - non-qualifying hedges on
mortgage servicing rights		-	-	5	-	-	-	5
Total noninterest income		338	417	281	193	69	(58)	1,240
Noninterest expense:
Salaries, wages and incentives		95	229	64	70	258	-	716
Employee benefits		22	68	19	15	52	-	176
Net occupancy expense		10	92	4	5	41	-	152
Technology and communications		6	2	1	1	83	-	93
Card and processing expense		2	55	-	-	1	-	58
Equipment expense		1	25	-	-	31	-	57
Other noninterest expense		408	319	208	121	(431)	(58)	567
Total noninterest expense		544	790	296	212	35	(58)	1,819
Income before income taxes		157	111	7	28	580	-	883
Applicable income tax (benefit) expense		(13)	38	2	10	244	-	281
Net income		170	73	5	18	336	-	602
Less: Net income attributable to noncontrolling interest		-	-	-	-	-	-	-
Net income attributable to Bancorp		170	73	5	18	336	-	602
Dividends on preferred stock		-	-	-	-	185	-	185
Net income available to common shareholders	$	170	73	5	18	151	-	417
Total goodwill	$	613	1,656	-	148	-	-	2,417
Total assets	$	43,571	46,961	22,044	6,833	(8,604)	-	110,805

(a)    Revenue sharing agreements between Investment Advisors and Branch Banking are eliminated in the Condensed Consolidated Statements of Income