Segment information

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Segment information

14. Segment information

Reportable segments have been determined based upon the Company’s internal profitability reporting system, which is organized by strategic business unit. Certain strategic business units have been combined for segment information reporting purposes where the nature of the products and services, the type of customer and the distribution of those products and services are similar. The reportable segments are Business Banking, Commercial Banking, Commercial Real Estate, Discretionary Portfolio, Residential Mortgage Banking and Retail Banking.

The financial information of the Company’s segments was compiled utilizing the accounting policies described in note 22 to the Company’s consolidated financial statements as of and for the year ended December 31, 2014. The management accounting policies and processes utilized in compiling segment financial information are highly subjective and, unlike financial accounting, are not based on authoritative guidance similar to GAAP. As a result, the financial information of the reported segments is not necessarily comparable with similar information reported by other financial institutions. Furthermore, changes in management structure or allocation methodologies and procedures may result in changes in reported segment financial data. Effective January 1, 2015, the Company made certain changes to its methodology for measuring segment profit and loss. Those changes in the measurement of segment profitability were largely the result of updated funds transfer pricing and various cost allocation reviews. The most significant changes to the funds transfer pricing resulted from ascribing a longer duration to non-maturity deposits, which significantly benefitted the Retail Banking segment. The cost allocation review having the largest impact related to a branch cost study. That study consisted of transaction reviews and time studies which resulted in a higher cost allocation from the Retail Banking segment to the Business Banking segment. In addition, effective July 1, 2015, the Company changed its internal profitability reporting to move a builder and developer lending unit from the Residential Mortgage Banking segment to the Commercial Real Estate segment. Accordingly, financial information presented herein for the periods prior to July 1, 2015 has been reclassified to conform to the current presentation. Total revenues and net income decreased in the Residential Banking segment and increased in the Commercial Real Estate segment for the three months ended September 30, 2014 by $5 million and $2 million, respectively, and for the nine months ended September 30, 2014 by $13 million and $5 million, respectively. The impact of the change to total revenues and net income for the second quarter of 2015 was $6 million and $3 million, respectively, and for the first half of 2015 was $12 million and $5 million, respectively. Prior period financial information has been restated to reflect the changes noted to provide segment information on a comparable basis, as noted in the following tables.

	Three months ended September 30, 2014
	Net income (loss) as previously reported			Impact of changes			Net income (loss) as restated
	(in thousands)
Business Banking	$	30,905			(5,867	)		25,038
Commercial Banking		101,740			(1,035	)		100,705
Commercial Real Estate		78,581			95			78,676
Discretionary Portfolio		8,279			4,216			12,495
Residential Mortgage Banking		25,021			(2,272	)		22,749
Retail Banking		32,901			39,156			72,057
All Other		(2,083	)		(34,293	)		(36,376	)
Total	$	275,344			—			275,344
	Nine months ended September 30, 2014
	Net income (loss) as previously reported			Impact of changes			Net income (loss) as restated
	(in thousands)
Business Banking	$	87,263			(13,500	)		73,763
Commercial Banking		306,863			(3,226	)		303,637
Commercial Real Estate		230,668			(414	)		230,254
Discretionary Portfolio		34,538			4,360			38,898
Residential Mortgage Banking		72,144			(7,464	)		64,680
Retail Banking		94,646			119,418			214,064
All Other		(37,425	)		(99,174	)		(136,599	)
Total	$	788,697			—			788,697

As also described in note 22 to the Company’s 2014 consolidated financial statements, neither goodwill nor core deposit and other intangible assets (and the amortization charges associated with such assets) resulting from acquisitions of financial institutions have been allocated to the Company’s reportable segments, but are included in the “All Other” category. The Company does, however, assign such intangible assets to business units for purposes of testing for impairment.

Information about the Company’s segments is presented in the following table:

	Three months ended September 30
	2015								2014
	Total revenues (a)		Inter- segment revenues			Net income (loss)			Total revenues (a)		Inter- segment revenues			Net income (loss)
	(in thousands)
Business Banking	$	112,650		1,167			23,995		$	113,425		1,082			25,038
Commercial Banking		270,554		1,097			108,422			247,282		1,281			100,705
Commercial Real Estate		181,478		469			85,312			170,772		442			78,676
Discretionary Portfolio		13,773		(5,365	)		5,113			24,835		(5,478	)		12,495
Residential Mortgage Banking		99,518		12,918			21,150			104,092		12,875			22,749
Retail Banking		308,520		3,292			64,721			316,052		3,735			72,057
All Other		146,033		(13,578	)		(28,312	)		143,712		(13,937	)		(36,376	)
Total	$	1,132,526		—			280,401		$	1,120,170		—			275,344
	Nine months ended September 30
	2015								2014
	Total revenues (a)		Inter- segment revenues			Net income (loss)			Total revenues (a)		Inter- segment revenues			Net income (loss)
	(in thousands)
Business Banking	$	332,341		3,334			74,160			337,929		3,359			73,763
Commercial Banking		774,392		3,281			312,926			748,978		3,834			303,637
Commercial Real Estate		535,909		978			250,501			500,814		1,315			230,254
Discretionary Portfolio		49,724		(16,184	)		21,823			79,404		(15,799	)		38,898
Residential Mortgage Banking		310,843		36,741			75,462			299,237		34,395			64,680
Retail Banking		914,484		9,688			202,415			934,386		11,137			214,064
All Other		494,779		(37,838	)		(128,585	)		421,488		(38,241	)		(136,599	)
Total	$	3,412,472		—			808,702			3,322,236		—			788,697

	Average total assets (b)
	Nine months ended September 30				Year ended December 31
	2015		2014		2014
	(in millions)
Business Banking	$	5,321		5,287		5,281
Commercial Banking		24,041		22,805		22,892
Commercial Real Estate		18,632		17,187		17,370
Discretionary Portfolio		23,153		20,306		20,798
Residential Mortgage Banking		3,007		3,016		3,076
Retail Banking		10,912		10,348		10,449
All Other		12,279		11,003		12,277
Total	$	97,345		89,952		92,143

(a) Total revenues are comprised of net interest income and other income. Net interest income is the difference between taxable-equivalent interest earned on assets and interest paid on liabilities owed by a segment and a funding charge (credit) based on the Company’s internal funds transfer pricing and allocation methodology. Segments are charged a cost to fund any assets (e.g. loans) and are paid a funding credit for any funds provided (e.g. deposits). The taxable-equivalent adjustment aggregated $6,248,000 and $5,841,000 for the three-month periods ended September 30, 2015 and 2014, respectively, and $18,106,000 and $17,635,000 for the nine-month periods ended September 30, 2015 and 2014, respectively, and is eliminated in “All Other” total revenues. Intersegment revenues are included in total revenues of the reportable segments. The elimination of intersegment revenues is included in the determination of “All Other” total revenues.

(b) Average assets of the Commercial Real Estate and Residential Mortgage Banking segments for the nine months ended September 30, 2014 and the year ended December 31, 2014 differ by $246 million and $257 million, respectively, from the previously reported balances reflecting the change in the Company’s internal profitability reporting for a builder and developer lending unit which moved assets held by that unit from the Residential Mortgage Banking Segment to the Commercial Real Estate Segment.