Business Segments

3 Months Ended

Mar. 31, 2013

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 an 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 interest-bearing liabilities and by the review of the estimated durations for the indeterminate-lived deposits. The credit rate provided for demand deposit accounts 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, 2013to reflect the current market rates and updated market assumptions. These rates weregenerally higher than those in place during 2012, thus net interest income for deposit providing businesses waspositively impacted during 2013.

The business segments are charged provision expense based on the actual net charge-offs experienced by the loans and leases owned by each segment. Provision expense attributable to loan and leases growth and changes in ALLL factors 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 the three months ended March 31, 2013 and 2012 are:

						General
		Commercial	Branch	Consumer	Investment	Corporate
($ in millions)		Banking	Banking	Lending	Advisors	and Other	Eliminations	Total
Three months ended March 31, 2013
Net interest income	$	360	347	85	36	60	-	888
Provision for loan and lease losses		43	58	29	1	(69)	-	62
Net interest income after provision for loan
and lease losses		317	289	56	35	129	-	826
Noninterest income:
Mortgage banking net revenue		-	4	216	-	-	-	220
Service charges on deposits		59	71	-	1	-	-	131
Corporate banking revenue		95	3	-	1	-	-	99
Investment advisory revenue		1	37	-	98	-	(36)(a)	100
Card and processing revenue		13	68	-	1	(17)	-	65
Other noninterest income		16	22	11	7	53	-	109
Securities gains, net		-	-	-	-	17	-	17
Securities gains, net - non-qualifying hedges on
mortgage servicing rights		-	-	2	-	-	-	2
Total noninterest income		184	205	229	108	53	(36)	743
Noninterest expense:
Salaries, wages and incentives		63	116	50	33	137	-	399
Employee benefits		17	39	13	9	36	-	114
Net occupancy expense		6	46	2	3	22	-	79
Technology and communications		3	1	-	-	45	-	49
Card and processing expense		1	29	-	-	1	-	31
Equipment expense		1	14	-	-	13	-	28
Other noninterest expense		186	178	112	70	(232)	(36)	278
Total noninterest expense		277	423	177	115	22	(36)	978
Income before income taxes		224	71	108	28	160	-	591
Applicable income tax expense		39	26	38	10	66	-	179
Net income		185	45	70	18	94	-	412
Less: Net income attributable to noncontrolling interests		-	-	-	-	(10)	-	(10)
Net income attributable to Bancorp		185	45	70	18	104	-	422
Dividends on preferred stock		-	-	-	-	9	-	9
Net income available to common shareholders	$	185	45	70	18	95	-	413
Total goodwill	$	613	1,655	-	148	-	-	2,416
Total assets	$	49,428	50,174	24,026	9,114	(11,360)	-	121,382

						General
		Commercial	Branch	Consumer	Investment	Corporate
($ in millions)		Banking	Banking	Lending	Advisors	and Other	Eliminations	Total
Three months ended March 31, 2012
Net interest income	$	348	335	80	27	108	-	898
Provision for loan and lease losses		76	86	54	3	(128)	-	91
Net interest income after provision for loan
and lease losses		272	249	26	24	236	-	807
Noninterest income:
Mortgage banking net revenue		-	3	201	-	-	-	204
Service charges on deposits		54	74	-	1	-	-	129
Corporate banking revenue		93	3	-	1	-	-	97
Investment advisory revenue		2	31	-	94	-	(31)(a)	96
Card and processing revenue		12	60	-	1	(14)	-	59
Other noninterest income		16	19	10	-	130	-	175
Securities gains, net		-	-	-	-	9	-	9
Securities gains, net - non-qualifying hedges on
mortgage servicing rights		-	-	-	-	-	-	-
Total noninterest income		177	190	211	97	125	(31)	769
Noninterest expense:
Salaries, wages and incentives		58	112	44	35	150	-	399
Employee benefits		16	37	12	9	38	-	112
Net occupancy expense		5	47	2	3	20	-	77
Technology and communications		2	1	-	-	44	-	47
Card and processing expense		1	28	-	-	1	-	30
Equipment expense		1	13	-	-	13	-	27
Other noninterest expense		205	156	104	63	(216)	(31)	281
Total noninterest expense		288	394	162	110	50	(31)	973
Income before income taxes		161	45	75	11	311	-	603
Applicable income tax expense		19	16	27	4	107	-	173
Net income		142	29	48	7	204	-	430
Less: Net income attributable to noncontrolling interest		-	-	-	-	-	-	-
Net income attributable to Bancorp		142	29	48	7	204	-	430
Dividends on preferred stock		-	-	-	-	9	-	9
Net income available to common shareholders	$	142	29	48	7	195	-	421
Total goodwill	$	613	1,656	-	148	-	-	2,417
Total assets	$	46,388	48,544	23,155	7,684	(9,024)	-	116,747

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