Segment Reporting

The Corporation utilizes a risk-based internal profitability measurement system to provide strategic business unit reporting. The profitability measurement system is based on internal management methodologies designed to produce consistent results and reflect the underlying economics of the units. 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 three reportable segments are Corporate and Commercial Specialty; Community, Consumer, and Business; and Risk Management and Shared Services. The financial information of the Corporation’s segments has been compiled utilizing the accounting policies described in Note 1, with certain exceptions. The more significant of these exceptions are described herein.

The Corporation allocates net interest income using an internal FTP methodology that charges users of funds (assets) and credits providers of funds (liabilities, primarily deposits) based on the maturity, prepayment and / or repricing characteristics of the assets and liabilities. The net effect of this allocation is recorded in the Risk Management and Shared Services segment.

During 2015, the Corporation adopted an enhanced FTP methodology utilizing, new, more granular deposit information which incorporated the additional dimension of vintage (based on time from when the deposit account was opened) for determining the funds credit on non-maturity deposits. The new deposit information demonstrated that deposit accounts with the Corporation for a longer period of time had a lower attrition rate, warranting a higher crediting rate (based on a longer-term segment of the yield curve) to reflect the long-term value such deposits provide to the Corporation. This new methodology resulted in an additional $30 million in allocated net interest income to the Corporate and Commercial Specialty and Community, Consumer, and Business segments for 2015. Prior periods have not been restated for this enhanced FTP methodology due to the impracticability of estimating the impact of the change for prior periods.

A credit provision is allocated to segments based on the expected long-term annual net charge off rates attributable to the credit risk of loans managed by the segment during the period. In contrast, the level of the consolidated provision for credit losses is determined based on an incurred loss model using the methodologies described in Note 1 to assess the overall appropriateness of the allowance for loan losses and the allowance for unfunded commitments. The net effect of the credit provision is recorded in Risk Management and Shared Services. Indirect 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 expense and bank-wide expense accruals (including amortization of core deposit and other intangible assets associated with acquisitions) are generally not allocated to segments. Income taxes are allocated to segments based on the Corporation’s tax rate, with certain segments adjusted for any tax-exempt income or non-deductible expenses, the net tax residual is recorded in Risk Management and Shared Services. 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 U.S. generally accepted accounting principles. As a result, reported segments and the financial information of the reported segments 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 previously reported segment financial data. During 2016, certain presentation changes were made and, accordingly, 2015 and 2014 results have been restated and presented on a comparable basis, except as noted above for the enhanced FTP methodology.

A description of each business segment is presented below.

Corporate and Commercial Specialty — The Corporate and Commercial Specialty segment serves a wide range of customers including larger businesses, developers, not-for-profits, municipalities, and financial institutions. In serving this segment we compete based on an in-depth understanding of our customers’ financial needs, the ability to match market competitive solutions to those needs, and the highest standards of relationship and service excellence in the delivery of these services. Delivery of services is provided through our corporate and commercial units, our commercial real estate unit, as well as our specialized industries and commercial financial services units. Within this segment we provide the following products and services: (1) lending solutions, such as commercial loans and lines of credit, commercial real estate financing, construction loans, letters of credit, leasing, asset based lending, and, for our larger clients, loan syndications; (2) deposit and cash management solutions such as commercial checking and interest-bearing deposit products, cash vault and night depository services, liquidity solutions, payables and receivables solutions, and information services, and (3) specialized financial services such as interest rate risk management, foreign exchange solutions, and commodity hedging.

Community, Consumer, and Business — The Community, Consumer, and Business segment serves individuals, as well as small and mid-sized businesses. In serving this segment we compete based on providing a broad range of solutions to meet the needs of our customers in their entire financial lifecycle, convenient access to our services through multiple channels such as branches, phone based services, online and mobile banking, and a relationship based business model which assists our customers in navigating any changes and challenges in their financial circumstances. Delivery of services is provided through our various consumer banking, community banking, and private client units. Within this segment we provide the following products and services: (1) lending solutions such as residential mortgages, home equity loans and lines of credit, personal and installment loans, real estate financing, business loans, and business lines of credit; (2) deposit and transactional solutions such as checking, credit, debit and pre-paid cards, online banking and bill pay, and money transfer services; (3) investable funds solutions such as savings, money market deposit accounts, IRA accounts, certificates of deposit, fixed and variable annuities, full-service, discount and on-line investment brokerage; investment advisory services; trust and investment management accounts; (4) insurance and benefits related products and services; and (5) fiduciary services such as administration of pension, profit-sharing and other employee benefit plans, fiduciary and corporate agency services, and institutional asset management.

Risk Management and Shared Services — The Risk Management and Shared Services segment includes Corporate Risk Management, Credit Administration, Finance, Treasury, Operations and Technology, which are key shared functions. The segment also includes Parent Company activity, intersegment eliminations and residual revenue and expenses, representing the difference between actual amounts incurred and the amounts allocated to operating segments, including interest rate risk residuals (FTP mismatches) and credit risk and provision residuals (long term credit charge mismatches). The earning assets within this segment include the Corporation’s investment portfolio, and capital includes both allocated and any remaining unallocated capital.

Information about the Corporation’s segments is presented below.



Segment Income Statement Data
	Corporate and Commercial Specialty			Community, Consumer, and Business			Risk Management and Shared Services			Consolidated Total
For the Years Ended December 31,	($ in Thousands)
2016
Net interest income	$	328,603		$	350,551		$	28,119		$	707,273
Noninterest income	47,776			277,942			27,165			352,883
Total revenue	376,379			628,493			55,284			1,060,156
Credit provision*	50,397			24,185			(4,582		)	70,000
Noninterest expense	148,493			502,285			51,782			702,560
Income before income taxes	177,489			102,023			8,084			287,596
Income tax expense (benefit)	59,261			35,708			(7,647		)	87,322
Net income	$	118,228		$	66,315		$	15,731		$	200,274
Return on average allocated capital (ROCET1)**	11.0		%	10.5		%	2.8		%	9.9		%
2015
Net interest income	$	310,072		$	349,134		$	17,072		$	676,278
Noninterest income	46,742			265,503			17,112			329,357
Total revenue	356,814			614,637			34,184			1,005,635
Credit provision*	41,913			25,614			(30,027		)	37,500
Noninterest expense	141,912			492,284			64,151			698,347
Income before income taxes	172,989			96,739			60			269,788
Income tax expense (benefit)	59,200			33,859			(11,572		)	81,487
Net income	$	113,789		$	62,880		$	11,632		$	188,301
Return on average allocated capital (ROCET1)**	11.6		%	9.8		%	2.1		%	9.9		%
2014
Net interest income	$	296,717		$	310,444		$	73,806		$	680,967
Noninterest income	49,213			221,430			20,218			290,861
Total revenue	345,930			531,874			94,024			971,828
Credit provision*	46,857			23,934			(54,791		)	16,000
Noninterest expense	148,476			463,235			68,072			679,783
Income before income taxes	150,597			44,705			80,743			276,045
Income tax expense	50,039			15,647			19,850			85,536
Net income	$	100,558		$	29,058		$	60,893		$	190,509
Return on average allocated capital (ROCET1)**	11.1		%	5.1		%	13.9		%	9.9		%



Segment Balance Sheet Data
	Corporate and Commercial Specialty		Community, Consumer, and Business		Risk Management and Shared Services		Consolidated Total
Average Balance for:	($ in Thousands)
2016
Average earning assets	$	10,178,813	$	9,309,028	$	6,538,820	$	26,026,661
Average loans	10,169,300		9,307,723		173,644		19,650,667
Average deposits	5,904,238		11,451,759		3,649,775		21,005,772
Average allocated capital (CET1)**	$	1,070,598	$	629,540	$	240,253	$	1,940,391
2015
Average earning assets	$	9,383,971	$	8,810,015	$	6,377,101	$	24,571,087
Average loans	9,374,191		8,809,673		68,400		18,252,264
Average deposits	5,856,530		10,898,602		3,147,955		19,903,087
Average allocated capital (CET1)**	$	977,406	$	640,181	$	216,010	$	1,833,597
2014
Average earning assets	$	8,927,401	$	7,840,352	$	5,992,375	$	22,760,128
Average loans	8,915,498		7,840,352		83,144		16,838,994
Average deposits	5,148,195		10,061,495		2,437,394		17,647,084
Average allocated capital (CET1)**	$	903,500	$	564,303	$	402,806	$	1,870,609
* The consolidated credit provision is equal to the actual reported provision for credit losses.
** The Federal Reserve establishes capital adequacy requirements for the Corporation. Average allocated capital represents average common equity Tier 1, as defined by the Federal Reserve. For segment reporting purposes, the ROCET1, a non-GAAP financial measure, reflects return on average allocated common equity Tier 1 (“CET1”). The ROCET1 for the Risk Management and Shared Services segment and the Consolidated Total is inclusive of the annualized effect of the preferred stock dividends.