Segment information

12 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

Segment information

22.    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 1 with certain exceptions. The more significant of these exceptions are described herein. The Company allocates interest income or interest expense using a methodology that charges users of funds (assets) interest expense and credits providers of funds (liabilities) with income based on the maturity, prepayment and/or repricing characteristics of the assets and liabilities. A provision for credit losses is allocated to segments in an amount based largely on actual net charge-offs incurred by the segment during the period plus or minus an amount necessary to adjust the segment’s allowance for credit losses due to changes in loan balances. In contrast, the level of the consolidated provision for credit losses is determined using the methodologies described in notes 1 and 4. The net effects of these allocations are recorded in the “All Other” category. Indirect fixed and variable expenses incurred by certain centralized support areas are allocated to segments based on actual usage (for example, volume measurements) and other criteria. Certain types of administrative expenses and bankwide expense accruals (including amortization of core deposit and other intangible assets associated with acquisitions of financial institutions) are generally not allocated to segments. Income taxes are allocated to segments based on the Company’s marginal statutory tax rate adjusted for any tax-exempt income or non-deductible expenses. Equity is allocated to the segments based on regulatory capital requirements and in proportion to an assessment of the inherent risks associated with the business of the segment (including interest, credit and operating risk).

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.     

Information about the Company’s segments is presented in the accompanying table. Income statement amounts are in thousands of dollars. Balance sheet amounts are in millions of dollars.

	For the Years Ended December 31, 2019, 2018 and 2017
	Business Banking							Commercial Banking						Commercial Real Estate									Discretionary Portfolio
	2019		2018			2017		2019		2018		2017		2019			2018			2017			2019		2018			2017
Net interest income(a)	$	451,307	$	434,579		$	393,948	$	828,888	$	821,812	$	809,301	$	692,526		$	665,220		$	649,378		$	209,807	$	228,051		$	277,095
Noninterest income		113,855		111,600			112,512		289,558		288,908		283,447		214,970			183,955			169,966			26,919		(9,690	)		23,851
		565,162		546,179			506,460		1,118,446		1,110,720		1,092,748		907,496			849,175			819,344			236,726		218,361			300,946
Provision for credit losses		16,501		10,916			15,598		25,580		8,976		11,876		1,537			3,159			(7,524	)		3,608		6,683			31,119
Amortization of core deposit    and other intangible assets		—		—			—		—		—		—		1,060			1,060			1,060			—		—			—
Depreciation and other    amortization		412		382			393		554		496		509		25,560			25,852			24,410			263		187			279
Other noninterest expense		319,136		305,340			294,493		384,013		364,102		339,936		240,736			217,387			207,493			52,901		65,393			76,021
Income (loss) before taxes		229,113		229,541			195,976		708,299		737,146		740,427		638,603			601,717			593,905			179,954		146,098			193,527
Income tax expense (benefit)		60,617		61,279			80,043		187,835		198,229		303,556		152,977			148,807			229,770			36,342		29,872			58,559
Net income (loss)	$	168,496	$	168,262		$	115,933	$	520,464	$	538,917	$	436,871	$	485,626		$	452,910		$	364,135		$	143,612	$	116,226		$	134,968
Average total assets    (in millions)	$	5,793	$	5,631		$	5,602	$	28,142	$	26,626	$	26,573	$	23,921		$	22,885		$	22,741		$	29,081	$	32,123		$	37,203
Capital expenditures    (in millions)	$	1	$	—		$	—	$	2	$	—	$	—	$	—		$	—		$	1		$	—	$	1		$	—
	For the Years Ended December 31, 2019, 2018 and 2017
	Residential Mortgage Banking							Retail Banking						All Other									Total
	2019		2018			2017		2019		2018		2017		2019			2018			2017			2019		2018			2017
Net interest income(a)	$	20,008	$	13,933		$	30,328	$	1,389,788	$	1,351,165	$	1,210,066	$	537,940		$	557,542		$	410,928		$	4,130,264	$	4,072,302		$	3,781,044
Noninterest income		393,372		305,560			321,589		327,562		324,228		329,833		695,443			651,439			609,945			2,061,679		1,856,000			1,851,143
		413,380		319,493			351,917		1,717,350		1,675,393		1,539,899		1,233,383			1,208,981			1,020,873			6,191,943		5,928,302			5,632,187
Provision for credit losses		382		(2,178	)		1,254		122,135		112,572		107,412		6,257			(8,128	)		8,265			176,000		132,000			168,000
Amortization of core deposit    and other intangible assets		—		—			—		—		—		—		18,430			23,462			30,306			19,490		24,522			31,366
Depreciation and other    amortization		46,901		24,288			32,011		38,394		35,274		38,234		68,840			68,004			69,923			180,924		154,483			165,759
Other noninterest expense		274,414		241,624			247,639		839,636		789,783		758,153		1,157,432			1,125,428			1,019,465			3,268,268		3,109,057			2,943,200
Income (loss) before taxes		91,683		55,759			71,013		717,185		737,764		636,100		(17,576	)		215			(107,086	)		2,547,261		2,508,240			2,323,862
Income tax expense (benefit)		19,355		10,272			25,446		189,611		196,467		258,934		(28,625	)		(54,766	)		(40,752	)		618,112		590,160			915,556
Net income (loss)	$	72,328	$	45,487		$	45,567	$	527,574	$	541,297	$	377,166	$	11,049		$	54,981		$	(66,334	)	$	1,929,149	$	1,918,080		$	1,408,306
Average total assets    (in millions)	$	2,611	$	2,161		$	2,355	$	15,083	$	13,656	$	12,702	$	14,953		$	13,877		$	13,684		$	119,584	$	116,959		$	120,860
Capital expenditures    (in millions)	$	1	$	1		$	—	$	76	$	31	$	34	$	98		$	65		$	44		$	178	$	98		$	79

(a) Net interest income is the difference between actual taxable-equivalent interest earned on assets and interest paid on liabilities by a segment and a funding charge (credit) based on the Company’s internal funds transfer pricing 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 $22,863,000 in 2019, $21,897,000 in 2018 and $34,570,000 in 2017 and is eliminated in “All Other” net interest income and income tax expense (benefit).

The Business Banking segment provides deposit, lending, cash management and other financial services to small businesses and professionals through the Company’s banking office network and several other delivery channels, including business banking centers, telephone banking, Internet banking and automated teller machines. The Commercial Banking segment provides a wide range of credit products and banking services to middle-market and large commercial customers, mainly within the markets the Company serves. Among the services provided by this segment are commercial lending and leasing, letters of credit, deposit products and cash management services. The Commercial Real Estate segment provides credit services which are secured by various types of multifamily residential and commercial real estate and deposit services to its customers. Activities of this segment include the origination, sales and servicing of commercial real estate loans. Commercial real estate loans held for sale are included in the Commercial Real Estate Segment. The Discretionary Portfolio segment includes securities; residential real estate loans and other assets; short-term and long-term borrowed funds; brokered deposits; and Cayman Islands branch deposits. This segment also provides foreign exchange services to customers. The Residential Mortgage Banking segment originates and services residential real estate loans for consumers and sells

substantially all originated loans in the secondary market to investors or to the Discretionary Portfolio segment. The segment periodically purchases servicing rights to loans that have been originated by other entities. Residential real estate loans held for sale are included in the Residential Mortgage Banking segment. The Retail Banking segment offers a variety of services to consumers through several delivery channels that include banking offices, automated teller machines, and telephone, mobile and Internet banking. The “All Other” category includes other operating activities of the Company that are not directly attributable to the reported segments; the difference between the provision for credit losses and the calculated provision allocated to the reportable segments; goodwill and core deposit and other intangible assets resulting from acquisitions of financial institutions; merger-related gains and expenses resulting from acquisitions; the net impact of the Company’s internal funds transfer pricing methodology; eliminations of transactions between reportable segments; certain nonrecurring transactions; the residual effects of unallocated support systems and general and administrative expenses; and the impact of interest rate risk management strategies. The amount of intersegment activity eliminated in arriving at consolidated totals was included in the “All Other” category as follows:

	Year Ended December 31
	2019			2018			2017
	(In thousands)
Revenues	$	(48,559	)	$	(41,285	)	$	(43,941	)
Expenses		(18,218	)		(24,660	)		(32,623	)
Income taxes (benefit)		(7,976	)		(4,371	)		(4,606	)
Net income (loss)		(22,365	)		(12,254	)		(6,712	)

The Company conducts substantially all of its operations in the United States. There are no transactions with a single customer that in the aggregate result in revenues that exceed ten percent of consolidated total revenues.