Segment information

6 Months Ended

Jun. 30, 2016

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 of Notes to Financial Statements in the 2015 Annual Report. 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, reported segment results are 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. As disclosed in the 2015 Annual Report, 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 three-month and six-month periods ended June 30, 2015 have been reclassified to conform to the current presentation. As a result, total revenues and net income decreased in the Residential Mortgage Banking segment and increased in the Commercial Real Estate segment by $6 million and $3 million, respectively, for the three-month period ended June 30, 2015 and by $12 million and $5 million, respectively, for the six-month period ended June 30, 2015 from that which was previously reported. During the second quarter of 2016, the Company revised its funds transfer pricing allocation related to the residential real estate loans obtained in the acquisition of Hudson City, retroactive to November 1, 2015. Accordingly, financial information for the three-month period ended March 31, 2016 has been reclassified to conform to the current methodology. As a result, total revenues and net income increased in the Discretionary Portfolio segment and decreased in the “All Other” category by $25 million and $15 million, respectively, for the three months ended March 31, 2016 from that which was previously reported.

As also described in note 22 in the 2015 Annual Report, 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 June 30
	2016								2015
	Total revenues(a)		Inter- segment revenues			Net income (loss)			Total revenues(a)		Inter- segment revenues			Net income (loss)
	(in thousands)
Business Banking	$	114,360		1,197			22,747			111,131		1,122			25,354
Commercial Banking		265,481		911			105,392			257,257		1,099			108,081
Commercial Real Estate		192,175		449			84,088			185,410		427			82,598
Discretionary Portfolio		98,460		(14,608	)		46,225			20,477		(5,376	)		10,756
Residential Mortgage Banking		103,882		21,244			19,980			105,568		12,436			24,852
Retail Banking		345,665		3,132			71,497			305,573		3,259			68,806
All Other		192,050		(12,325	)		(13,898	)		194,739		(12,967	)		(33,759	)
Total	$	1,312,073		—			336,031			1,180,155		—			286,688
	Six months ended June 30
	2016								2015
	Total revenues(a)		Inter- segment revenues			Net income (loss)			Total revenues(a)		Inter- segment revenues			Net income (loss)
	(in thousands)
Business Banking	$	228,049		2,188			48,195			219,691		2,167			50,165
Commercial Banking		519,098		1,967			206,719			503,838		2,184			204,504
Commercial Real Estate		369,555		836			164,617			354,431		509			165,189
Discretionary Portfolio		209,804		(28,931	)		100,749			35,951		(10,819	)		16,710
Residential Mortgage Banking		200,817		40,904			37,057			211,325		23,823			54,312
Retail Banking		684,711		6,146			134,785			605,964		6,396			137,694
All Other		392,936		(23,110	)		(57,563	)		348,746		(24,260	)		(100,273	)
Total	$	2,604,970		—			634,559			2,279,946		—			528,301

	Average total assets
	Six months ended June 30					Year ended December 31 2015
	2016		2015
	(in millions)
Business Banking	$	5,440		5,313			5,339
Commercial Banking		25,195		23,997			24,143
Commercial Real Estate		20,116		18,514	(b)		18,827
Discretionary Portfolio		41,900		23,029			26,648
Residential Mortgage Banking		2,587		3,090	(b)		2,918
Retail Banking		11,640		10,830			11,035
All Other		16,601		11,977			12,870
Total	$	123,479		96,750			101,780

(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 $6,522,000 and $6,020,000 for the three-month periods ended June 30, 2016 and 2015, respectively, and $12,854,000 and $11,858,000 for the six-month periods ended June 30, 2016 and 2015, 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 six-month period ended June 30, 2015 differ by approximately $323 million from the previously reported balances reflecting the noted change in the Company’s internal profitability reporting to move a builder and developer lending unit from the Residential Mortgage Banking segment to the Commercial Real Estate segment.