NOTE 16 - BUSINESS SEGMENT REPORTING

The Company measures business activity across three segments: Consumer Banking and Private Wealth Management, Wholesale Banking, and Mortgage Banking, with functional activities included in Corporate Other. Business segments are determined based on the products and services provided or the type of client served, and they reflect the manner in which financial information is evaluated by management. The following is a description of the segments and their primary businesses.

The Consumer Banking and Private Wealth Management segment is made up of three primary businesses:

•

Consumer Banking provides services to consumers and branch-managed small business clients through an extensive network of traditional and in-store branches, ATMs, the internet (www.suntrust.com), mobile banking, and by telephone (1-800-SUNTRUST). Financial products and services offered to consumers and small business clients include deposits and payments, loans, brokerage, and various fee-based services. Discount/online and full-service brokerage products are offered to individual clients through STIS. Consumer Banking also serves as an entry point for clients and provides services for other lines of business.

•

Consumer Lending offers an array of lending products to consumers and small business clients via the Company's Consumer Banking and Private Wealth Management businesses, through the internet (www.suntrust.com and www.lightstream.com), as well as through various national offices and partnerships. Products offered include home equity lines, personal credit lines and loans, direct auto, indirect auto, student lending, credit cards, and other lending products.

•

PWM provides a full array of wealth management products and professional services to both individual and institutional clients including loans, deposits, brokerage, professional investment management, and trust services to clients seeking active management of their financial resources. Institutional clients are served by the Institutional Investment Solutions business. Discount/online and full-service brokerage products are offered to individual clients through STIS. PWM also includes GenSpring, which provides family office solutions to ultra-high net worth individuals and their families. Utilizing teams of multi-disciplinary specialists with expertise in investments, tax, accounting, estate planning, and other wealth management disciplines, GenSpring helps families manage and sustain wealth across multiple generations.

The Wholesale Banking segment is made up of four primary businesses:

•

CIB delivers comprehensive capital markets solutions, including advisory, capital raising, and financial risk management, with the goal of serving the needs of both public and private companies in the Wholesale Banking segment and PWM business. Investment Banking and Corporate Banking teams within CIB serve clients across the nation, offering a full suite of traditional banking and investment banking products and services to companies with annual revenues typically greater than $150 million. Investment Banking serves select industry segments including consumer and retail, energy, financial services, healthcare, industrials, and technology, media and communications. Corporate Banking serves clients across diversified industry sectors based on size, complexity, and frequency of capital markets issuance. Also managed within CIB is the Equipment Finance Group, which provides lease financing solutions (through SunTrust Equipment Finance & Leasing).

•

Commercial & Business Banking offers an array of traditional banking products, including lending, cash management and investment banking solutions via STRH to commercial clients (generally clients with revenues between $1 million and $150 million), not-for-profit organizations, and governmental entities, as well as auto dealer financing (floor plan inventory financing). Also managed within Commercial & Business Banking is the Premium Assignment Corporation, which provides corporate insurance premium financing solutions.

•

Commercial Real Estate provides a full range of financial solutions for commercial real estate developers, owners, and investors, including construction, mini-perm, and permanent real estate financing, as well as tailored financing and equity investment solutions via STRH. The institutional real estate team targets relationships with institutional advisors, private funds, and insurance companies and the regional team focuses on real estate owners and developers through a regional delivery structure. Commercial Real Estate also offers tailored financing and equity investment solutions for community development and affordable housing projects through STCC, with particular expertise in Low Income Housing Tax Credits and New Market Tax Credits.

•

Treasury & Payment Solutions provides all SunTrust business clients with services required to manage their payments and receipts, combined with the ability to manage and optimize their deposits across all aspects of their business. Treasury & Payment Solutions operates all electronic and paper payment types, including card, wire transfer, ACH, check, and cash. It also provides clients the means to manage their accounts electronically online, both domestically and internationally.

Mortgage Banking offers residential mortgage products nationally through its retail and correspondent channels, the internet (www.suntrust.com), and by telephone (1-800-SUNTRUST). These products are either sold in the secondary market, primarily with servicing rights retained, or held in the Company’s loan portfolio. Mortgage Banking also services loans for other investors, in addition to loans held in the Company’s loan portfolio.

Corporate Other includes management of the Company’s investment securities portfolio, long-term debt, end user derivative instruments, short-term liquidity and funding activities, balance sheet risk management, and most real estate assets. Additionally, Corporate Other includes the Company's functional activities such as marketing, SunTrust online, human resources, finance, Enterprise Risk, legal and compliance, communications, procurement, enterprise information services, corporate real estate, and executive management.

Because business segment results are presented based on management accounting practices, the transition to the consolidated results, which are prepared under U.S. GAAP, creates certain differences which are reflected in Reconciling Items. Business segment reporting conventions are described below.

•

Net interest income-FTE – is reconciled from net interest income and is presented on an FTE basis to make income from tax-exempt assets comparable to other taxable products. Segment results reflect matched maturity funds transfer pricing, which ascribes credits or charges based on the economic value or cost created by assets and liabilities of each segment. Differences between these credits and charges are captured as reconciling items. The change in this variance is generally attributable to corporate balance sheet management strategies.


•	Provision/(benefit) for credit losses – represents net charge-offs by segment combined with an allocation to the segments for the provision/(benefit) attributable to each segment's quarterly change in the ALLL and unfunded commitments reserve balances.

•

Provision for income taxes-FTE – is calculated using a blended income tax rate for each segment. This calculation includes the impact of various adjustments, such as the reversal of the FTE gross up on tax-exempt assets, tax adjustments, and credits that are unique to each segment. The difference between the calculated provision for income taxes at the segment level and the consolidated provision for income taxes is reported as reconciling items.

The segment’s financial performance is comprised of direct financial results and allocations for various corporate functions that provide management an enhanced view of the segment’s financial performance. Internal allocations include the following:


•	Operational costs – expenses are charged to segments based on a methodical activity-based costing process, which also allocates residual expenses to the segments. Generally, recoveries of these costs are reported in Corporate Other.


•	Support and overhead costs – expenses not directly attributable to a specific segment are allocated based on various drivers (number of equivalent employees, number of PCs/laptops, net revenue, etc.). Recoveries for these allocations are reported in Corporate Other.


•	Sales and referral credits – segments may compensate another segment for referring or selling certain products. The majority of the revenue resides in the segment where the product is ultimately managed.

The application and development of management reporting methodologies is an active process and undergoes periodic enhancements. The implementation of these enhancements to the internal management reporting methodology may materially affect the results disclosed for each segment, with no impact on consolidated results. If significant changes to management reporting methodologies take place, the impact of these changes is quantified and prior period information is reclassified, when practicable.



	Three Months Ended June 30, 2016
(Dollars in millions)	Consumer Banking and Private Wealth Management		Wholesale Banking		Mortgage Banking			Corporate Other			Reconciling Items			Consolidated
Balance Sheets:
Average loans		$42,513		$72,066		$26,590			$72			($3	)		$141,238
Average consumer and commercial deposits	97,052		54,105		2,997			80			(68		)	154,166
Average total assets	48,181		86,058		30,117			31,499			2,450			198,305
Average total liabilities	97,626		59,804		3,387			13,468			2			174,287
Average total equity	—		—		—			—			24,018			24,018

Statements of Income:
Net interest income		$705		$448		$111			$27			($3	)		$1,288
FTE adjustment	—		34		—			1			—			35
Net interest income - FTE ¹	705		482		111			28			(3		)	1,323
Provision/(benefit) for credit losses ²	49		103		(6		)	—			—			146
Net interest income after provision/(benefit) for credit losses - FTE	656		379		117			28			(3		)	1,177
Total noninterest income	366		301		165			70			(4		)	898
Total noninterest expense	758		414		178			(1		)	(4		)	1,345
Income before provision for income taxes - FTE	264		266		104			99			(3		)	730
Provision for income taxes - FTE ³	98		81		40			26			(9		)	236
Net income including income attributable to noncontrolling interest	166		185		64			73			6			494
Net income attributable to noncontrolling interest	—		—		—			2			—			2
Net income		$166		$185		$64			$71			$6			$492



	Three Months Ended June 30, 2015
(Dollars in millions)	Consumer Banking and Private Wealth Management		Wholesale Banking		Mortgage Banking			Corporate Other		Reconciling Items			Consolidated
Balance Sheets:
Average loans		$40,339		$67,643		$24,793			$64		($10	)		$132,829
Average consumer and commercial deposits	91,235		48,639		2,980			80		(83		)	142,851
Average total assets	46,485		81,003		28,555			29,592		2,675			188,310
Average total liabilities	91,854		54,281		3,505			15,549		(118		)	165,071
Average total equity	—		—		—			—		23,239			23,239

Statements of Income:
Net interest income		$675		$444		$123			$34		($109	)		$1,167
FTE adjustment	—		36		—			1		(1		)	36
Net interest income - FTE ¹	675		480		123			35		(110		)	1,203
Provision/(benefit) for credit losses ²	9		30		(13		)	—		—			26
Net interest income after provision/(benefit) for credit losses - FTE	666		450		136			35		(110		)	1,177
Total noninterest income	389		337		105			47		(4		)	874
Total noninterest expense	730		386		180			35		(3		)	1,328
Income before provision for income taxes - FTE	325		401		61			47		(111		)	723
Provision for income taxes - FTE ³	121		138		3			19		(43		)	238
Net income including income attributable to noncontrolling interest	204		263		58			28		(68		)	485
Net income attributable to noncontrolling interest	—		—		—			2		—			2
Net income		$204		$263		$58			$26		($68	)		$483

¹Presented on a matched maturity funds transfer price basis for the segments.

²Provision/(benefit) for credit losses represents net charge-offs by segment combined with an allocation to the segments for the provision/(benefit) attributable to quarterly changes in the ALLL and unfunded commitment reserve balances.

³Includes regular income tax provision and taxable-equivalent income adjustment reversal.



	Six Months Ended June 30, 2016
(Dollars in millions)	Consumer Banking and Private Wealth Management		Wholesale Banking		Mortgage Banking			Corporate Other			Reconciling Items			Consolidated
Balance Sheets:
Average loans		$42,054		$71,412		$26,268			$72			($1	)		$139,805
Average consumer and commercial deposits	95,171		53,848		2,654			83			(58		)	151,698
Average total assets	47,723		85,218		29,660			31,032			2,027			195,660
Average total liabilities	95,765		59,636		3,037			13,323			(8		)	171,753
Average total equity	—		—		—			—			23,907			23,907

Statements of Income:
Net interest income		$1,404		$902		$224			$57			($18	)		$2,569
FTE adjustment	—		69		—			1			1			71
Net interest income - FTE ¹	1,404		971		224			58			(17		)	2,640
Provision/(benefit) for credit losses ²	77		186		(16		)	—			(1		)	246
Net interest income after provision/(benefit) for credit losses - FTE	1,327		785		240			58			(16		)	2,394
Total noninterest income	721		587		289			92			(9		)	1,680
Total noninterest expense	1,503		822		353			(5		)	(10		)	2,663
Income before provision for income taxes - FTE	545		550		176			155			(15		)	1,411
Provision for income taxes - FTE ³	202		170		67			42			(14		)	467
Net income including income attributable to noncontrolling interest	343		380		109			113			(1		)	944
Net income attributable to noncontrolling interest	—		—		—			5			—			5
Net income		$343		$380		$109			$108			($1	)		$939



	Six Months Ended June 30, 2015
(Dollars in millions)	Consumer Banking and Private Wealth Management		Wholesale Banking		Mortgage Banking			Corporate Other		Reconciling Items			Consolidated
Balance Sheets:
Average loans		$40,730		$67,689		$24,617			$54		($8	)		$133,082
Average consumer and commercial deposits	90,873		48,105		2,671			85		(64		)	141,670
Average total assets	46,804		81,082		28,247			29,305		3,347			188,785
Average total liabilities	91,506		53,987		3,062			17,122		(98		)	165,579
Average total equity	—		—		—			—		23,206			23,206

Statements of Income:
Net interest income		$1,341		$875		$244			$64		($217	)		$2,307
FTE adjustment	—		70		—			1		—			71
Net interest income - FTE ¹	1,341		945		244			65		(217		)	2,378
Provision/(benefit) for credit losses ²	79		26		(23		)	—		—			82
Net interest income after provision/(benefit) for credit losses - FTE	1,262		919		267			65		(217		)	2,296
Total noninterest income	752		622		236			89		(7		)	1,692
Total noninterest expense	1,460		783		357			15		(7		)	2,608
Income before provision for income taxes - FTE	554		758		146			139		(217		)	1,380
Provision for income taxes - FTE ³	206		258		33			50		(83		)	464
Net income including income attributable to noncontrolling interest	348		500		113			89		(134		)	916
Net income attributable to noncontrolling interest	—		—		—			5		(1		)	4
Net income		$348		$500		$113			$84		($133	)		$912

¹Presented on a matched maturity funds transfer price basis for the segments.

³Includes regular income tax provision and taxable-equivalent income adjustment reversal.