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Business Segment Reporting
 6 Months Ended
Jun. 30, 2018
Segment Reporting [Abstract]  
Business Segment Reporting
NOTE 18 - BUSINESS SEGMENT REPORTING
The Company operates and measures business activity across two segments: Consumer and Wholesale, with functional activities included in Corporate Other. The Company's business segment structure is based on the manner in which financial information is evaluated by management as well as the products and services provided or the type of client served. In the second quarter of 2018, certain business banking clients within Commercial Banking were transferred from the Wholesale segment to the Consumer segment to create greater consistency in delivering tailored solutions to business banking clients through the alignment of client coverage and client service in branches. Prior period business segment results were revised to conform with this updated business segment structure. Additionally, the transfer resulted in a reallocation of goodwill from Wholesale to Consumer, as disclosed in Note 8, "Goodwill and Other Intangible Assets."
The following is a description of the segments and their primary businesses at June 30, 2018.

The Consumer segment is made up of four primary businesses:
•
Consumer Banking provides services to individual consumers, small business, and business banking 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, and various fee-based services. Consumer Banking also serves as an entry point for clients and provides services for other businesses.
•
Consumer Lending offers an array of lending products to individual consumers and small business clients via the Company's Consumer Banking and PWM 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 individual consumers and institutional clients, including loans, deposits, brokerage, professional investment advisory, 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. Investment advisory products and services are offered to clients by STAS, an SEC registered investment advisor. PWM also includes GFO, which provides family office solutions to clients and their families to help them manage and sustain wealth across multiple generations, including family meeting facilitation, consolidated reporting, expense management, specialty asset management, and business transition advice, as well as other wealth management disciplines.
•
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.
◦
The Company plans to merge its STM and Bank legal entities in the third quarter of 2018. The Company has received approval for the merger from the appropriate regulatory authorities. These entities are both part of the Company's Consumer segment, and the merged entity along with its financial results will remain within Consumer. Subsequent to the merger, mortgage operations will continue under the Bank’s name and charter. The Company does not expect any material financial impacts associated with the merger, other than a change in its valuation allowance as described in Note 12, “Income Taxes.”
The Wholesale segment is made up of three primary businesses and the Treasury & Payment Solutions product group:
•
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 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, technology, financial services, healthcare, industrials, and 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 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 $5 million and $250 million), not-for-profit organizations, and governmental entities, as well as auto dealer financing (floor plan inventory financing).
•
Commercial Real Estate provides a full range of financial solutions for commercial real estate developers, owners, and operators, including construction, mini-perm, and permanent real estate financing, as well as tailored financing and equity investment solutions via STRH. Commercial Real Estate also provides multi-family agency lending and servicing, as well as loan administration, advisory, and commercial mortgage brokerage services via its Agency Lending and Investor Services Group. The Institutional Property Group business targets relationships with REITs, pension fund advisors, private funds, homebuilders, and insurance companies and the Regional business focuses on private 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 Wholesale 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.

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. Corporate Other also includes the Company's functional activities such as marketing, SunTrust online, human resources, finance, ER, legal and compliance, communications, procurement, enterprise information services, corporate real estate, and executive management. Additionally, the results of PAC were reported previously in the Wholesale segment and were reclassified to Corporate Other for enhanced comparability of the Wholesale segment results excluding PAC. See Note 2, "Acquisitions/Dispositions," in the Company's 2017 Annual Report on Form 10-K for additional information related to the sale of PAC in December 2017.
Because business segment results are presented based on management accounting practices, the transition to the consolidated results 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 grossed-up 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 for credit losses – represents net charge-offs by segment combined with an allocation to the segments for the provision attributable to each segment's quarterly change in the ALLL and unfunded commitments reserve balances.
•
Noninterest income – includes federal and state tax credits that are grossed-up on a pre-tax equivalent basis, related primarily to certain community development investments.
•
Provision for income taxes-FTE – is calculated using a blended income tax rate for each segment and includes reversals of the tax adjustments and credits described above. 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 an 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.
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 revised, when practicable.

 
Three Months Ended June 30, 2018
(Dollars in millions)
Consumer
 
Wholesale
 
Corporate Other
 
Reconciling
Items
 
Consolidated
Balance Sheets:
 
 
 
 
 
 
 
 
 
Average LHFI

$75,450

 

$68,615

 

$94

 

($3
)
 

$144,156

Average consumer and commercial deposits
111,555

 
47,431

 
206

 
(235
)
 
158,957

Average total assets
85,309

 
82,133

 
35,400

 
1,706

 
204,548

Average total liabilities
112,438

 
53,481

 
14,738

 
(204
)
 
180,453

Average total equity
—

 
—

 
—

 
24,095

 
24,095

Statements of Income:
 
 
 
 
 
 
 
 
 
Net interest income

$1,058

 

$534

 

($42
)
 

($62
)
 

$1,488

FTE adjustment
—

 
22

 
1

 
(1
)
 
22

Net interest income-FTE 1
1,058

 
556

 
(41
)
 
(63
)
 
1,510

Provision for credit losses 2
7

 
24

 
—

 
1

 
32

Net interest income after provision for credit losses-FTE
1,051

 
532

 
(41
)
 
(64
)
 
1,478

Total noninterest income
453

 
388

 
26

 
(38
)
 
829

Total noninterest expense
995

 
424

 
(25
)
 
(4
)
 
1,390

Income before provision for income taxes-FTE
509

 
496

 
10

 
(98
)
 
917

Provision for income taxes-FTE 3
115

 
118

 
13

 
(53
)
 
193

Net income including income attributable to noncontrolling interest
394

 
378

 
(3
)
 
(45
)
 
724

Net income attributable to noncontrolling interest
—

 
—

 
2

 
—

 
2

Net income

$394

 

$378

 

($5
)
 

($45
)
 

$722

1 Presented on a matched maturity funds transfer price basis for the segments.
2 Provision for credit losses represents net charge-offs by segment combined with an allocation to the segments for the provision attributable to quarterly changes in the ALLL and unfunded commitment reserve balances.
3 Includes regular provision for income taxes as well as FTE income and tax credit adjustment reversals.


 
 Three Months Ended June 30, 2017 1, 2
(Dollars in millions)
Consumer
 
Wholesale
 
Corporate Other
 
Reconciling
Items
 
Consolidated
Balance Sheets:
 
 
 
 
 
 
 
 
 
Average LHFI

$73,680

 

$69,365

 

$1,400

 

($5
)
 

$144,440

Average consumer and commercial deposits
109,580

 
49,381

 
151

 
24

 
159,136

Average total assets
83,230

 
82,801

 
35,991

 
2,472

 
204,494

Average total liabilities
110,555

 
55,006

 
14,744

 
50

 
180,355

Average total equity
—

 
—

 
—

 
24,139

 
24,139

Statements of Income:
 
 
 
 
 
 
 
 
 
Net interest income

$975

 

$493

 

$9

 

($74
)
 

$1,403

FTE adjustment
—

 
35

 
1

 
—

 
36

Net interest income-FTE 3
975

 
528

 
10

 
(74
)
 
1,439

Provision for credit losses 4
84

 
6

 
1

 
(1
)
 
90

Net interest income after provision for credit losses-FTE
891

 
522

 
9

 
(73
)
 
1,349

Total noninterest income
473

 
378

 
17

 
(41
)
 
827

Total noninterest expense
983

 
421

 
(11
)
 
(5
)
 
1,388

Income before provision for income taxes-FTE
381

 
479

 
37

 
(109
)
 
788

Provision for income taxes-FTE 5
137

 
178

 
14

 
(71
)
 
258

Net income including income attributable to noncontrolling interest
244

 
301

 
23

 
(38
)
 
530

Net income attributable to noncontrolling interest
—

 
—

 
2

 
—

 
2

Net income

$244

 

$301

 

$21

 

($38
)
 

$528

1 
During the second quarter of 2018, certain of the Company's business banking clients were transferred from the Wholesale business segment to the Consumer business segment. For all periods prior to the second quarter of 2018, the corresponding financial results have been transferred to the Consumer business segment for comparability purposes.
2 
During the fourth quarter of 2017, the Company sold PAC, the results of which were previously reported within the Wholesale business segment. For all periods prior to January 1, 2018, PAC's financial results, including the gain on sale, have been transferred to Corporate Other for enhanced comparability of the Wholesale business segment excluding PAC.
3 
Presented on a matched maturity funds transfer price basis for the segments.
4 
Provision for credit losses represents net charge-offs by segment combined with an allocation to the segments for the provision attributable to quarterly changes in the ALLL and unfunded commitment reserve balances.
5 
Includes regular provision for income taxes as well as FTE income and tax credit adjustment reversals.

 
Six Months Ended June 30, 2018
(Dollars in millions)
Consumer
 
Wholesale
 
Corporate Other
 
Reconciling
Items
 
Consolidated
Balance Sheets:
 
 
 
 
 
 
 
 
 
Average LHFI

$75,564

 

$67,889

 

$92

 

($3
)
 

$143,542

Average consumer and commercial deposits
110,432

 
48,638

 
202

 
(209
)
 
159,063

Average total assets
85,210

 
81,514

 
35,538

 
2,079

 
204,341

Average total liabilities
111,309

 
54,568

 
14,306

 
(191
)
 
179,992

Average total equity
—

 
—

 
—

 
24,349

 
24,349

Statements of Income:
 
 
 
 
 
 
 
 
 
Net interest income

$2,073

 

$1,046

 

($70
)
 

($121
)
 

$2,928

FTE adjustment
—

 
42

 
1

 
—

 
43

Net interest income-FTE 1
2,073

 
1,088

 
(69
)
 
(121
)
 
2,971

Provision/(benefit) for credit losses 2
65

 
(6
)
 
—

 
1

 
60

Net interest income after provision/(benefit) for credit losses-FTE
2,008

 
1,094

 
(69
)
 
(122
)
 
2,911

Total noninterest income
904

 
751

 
40

 
(69
)
 
1,626

Total noninterest expense
2,004

 
876

 
(62
)
 
(11
)
 
2,807

Income before provision for income taxes-FTE
908

 
969

 
33

 
(180
)
 
1,730

Provision for income taxes-FTE 3
202

 
229

 
24

 
(94
)
 
361

Net income including income attributable to noncontrolling interest
706

 
740

 
9

 
(86
)
 
1,369

Less: Net income attributable to noncontrolling interest
—

 
—

 
5

 
(1
)
 
4

Net income

$706

 

$740

 

$4

 

($85
)
 

$1,365

1 Presented on a matched maturity funds transfer price basis for the segments.
2 Provision/(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.
3 Includes regular provision for income taxes as well as FTE income and tax credit adjustment reversals.


 
 Six Months Ended June 30, 2017 1, 2
(Dollars in millions)
Consumer
 
Wholesale
 
Corporate Other
 
Reconciling
Items
 
Consolidated
Balance Sheets:
 
 
 
 
 
 
 
 
 
Average LHFI

$73,247

 

$69,469

 

$1,344

 

($2
)
 

$144,058

Average consumer and commercial deposits
108,818

 
50,070

 
131

 
(13
)
 
159,006

Average total assets
82,991

 
82,883

 
35,709

 
2,791

 
204,374

Average total liabilities
109,792

 
55,700

 
14,962

 
14

 
180,468

Average total equity
—

 
—

 
—

 
23,906

 
23,906

Statements of Income:
 
 
 
 
 
 
 
 
 
Net interest income

$1,917

 

$971

 

$34

 

($153
)
 

$2,769

FTE adjustment
—

 
69

 
1

 
—

 
70

Net interest income-FTE 3
1,917

 
1,040

 
35

 
(153
)
 
2,839

Provision for credit losses 4
171

 
38

 
—

 
—

 
209

Net interest income after provision for credit losses-FTE
1,746

 
1,002

 
35

 
(153
)
 
2,630

Total noninterest income
945

 
771

 
41

 
(83
)
 
1,674

Total noninterest expense
2,010

 
867

 
(16
)
 
(8
)
 
2,853

Income before provision for income taxes-FTE
681

 
906

 
92

 
(228
)
 
1,451

Provision for income taxes-FTE 5
245

 
337

 
8

 
(139
)
 
451

Net income including income attributable to noncontrolling interest
436

 
569

 
84

 
(89
)
 
1,000

Less: Net income attributable to noncontrolling interest
—

 
—

 
5

 
—

 
5

Net income

$436

 

$569

 

$79

 

($89
)
 

$995


1 
During the second quarter of 2018, certain of the Company's business banking clients were transferred from the Wholesale business segment to the Consumer business segment. For all periods prior to the second quarter of 2018, the corresponding financial results have been transferred to the Consumer business segment for comparability purposes.
2 
During the fourth quarter of 2017, the Company sold PAC, the results of which were previously reported within the Wholesale business segment. For all periods prior to January 1, 2018, PAC's financial results, including the gain on sale, have been transferred to Corporate Other for enhanced comparability of the Wholesale business segment excluding PAC.
3 
Presented on a matched maturity funds transfer price basis for the segments.
4 
Provision for credit losses represents net charge-offs by segment combined with an allocation to the segments for the provision attributable to quarterly changes in the ALLL and unfunded commitment reserve balances.
5 
Includes regular provision for income taxes as well as FTE income and tax credit adjustment reversals.