Segment Reporting

6 Months Ended

Jun. 30, 2017

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 the Corporation’s 2016 Annual Report on Form 10-K, with certain exceptions. The more significant of these exceptions are described herein.

The Corporation allocates net interest income using an internal funds transfer pricing ("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.

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 the Corporation’s 2016 Annual Report on Form 10-K to assess the overall appropriateness of the allowance for loan losses. 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 estimated effective tax rate, with certain segments 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 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.

A brief description of each business segment is presented below. A more in-depth discussion of these segments can be found in the Segment Reporting footnote in the Corporation’s 2016 Annual Report on Form 10-K.

The Corporate and Commercial Specialty segment serves a wide range of customers including larger businesses, developers, not-for-profits, municipalities, and financial institutions. The Community, Consumer, and Business segment serves individuals, as well as small and mid-sized businesses. The Risk Management and Shared Services segment includes key shared operational functions and also includes 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).

Information about the Corporation’s segments is presented below.



Segment Income Statement Data
($ in Thousands)	Corporate and Commercial Specialty			Community, Consumer, and Business			Risk Management and Shared Services			Consolidated Total
Six Months Ended June 30, 2017
Net interest income	$	179,259		$	179,059		$	5,775		$	364,093
Noninterest income	24,490			130,679			7,072			162,241
Total revenue	203,749			309,738			12,847			526,334
Credit provision*	23,050			10,271			(12,321		)	21,000
Noninterest expense	76,897			241,339			31,771			350,007
Income (loss) before income taxes	103,802			58,128			(6,603		)	155,327
Income tax expense (benefit)	34,012			20,345			(13,283		)	41,074
Net income	$	69,790		$	37,783		$	6,680		$	114,253
Return on average allocated capital (ROCET1)**	12.6		%	13.1		%	1.1		%	10.6		%
Six Months Ended June 30, 2016
Net interest income	$	159,233		$	170,574		$	18,897		$	348,704
Noninterest income	22,549			128,880			13,931			165,360
Total revenue	181,782			299,454			32,828			514,064
Credit provision*	27,853			12,388			(6,241		)	34,000
Noninterest expense	71,543			243,260			33,528			348,331
Income (loss) before income taxes	82,386			43,806			5,541			131,733
Income tax expense (benefit)	27,716			15,332			(2,940		)	40,108
Net income	$	54,670		$	28,474		$	8,481		$	91,625
Return on average allocated capital (ROCET1)**	10.5		%	9.1		%	3.7		%	9.2		%



Segment Balance Sheet Data
($ in Thousands)	Corporate and Commercial Specialty		Community, Consumer, and Business		Risk Management and Shared Services		Consolidated Total
Average balances for YTD June 2017
Average earning assets	$	10,807,106	$	9,321,564	$	6,414,384	$	26,543,054
Average loans	10,797,831		9,319,719		181,049		20,298,599
Average deposits	6,433,870		11,456,200		3,604,524		21,494,594
Average allocated capital (CET1)**	$	1,120,082	$	582,706	$	378,104	$	2,080,892
Average balances for YTD June 2016
Average earning assets	$	9,924,378	$	9,222,677	$	6,473,156	$	25,620,211
Average loans	9,913,591		9,221,370		147,447		19,282,408
Average deposits	5,744,533		11,215,704		3,471,729		20,431,966
Average allocated capital (CET1)**	$	1,049,431	$	630,520	$	224,910	$	1,904,861
* The consolidated credit provision is equal to the actual reported provision for credit losses.
** The Federal Reserve establishes capital adequacy requirements for the Corporation, including common equity Tier 1. For segment reporting purposes, the ROCET1 reflects return on average allocated common equity Tier 1. 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.



Segment Income Statement Data
($ in Thousands)	Corporate and Commercial Specialty			Community, Consumer, and Business			Risk Management and Shared Services			Consolidated Total
Three Months Ended June 30, 2017
Net interest income	$	89,871		$	90,131		$	3,817		$	183,819
Noninterest income	12,497			65,809			4,104			82,410
Total revenue	102,368			155,940			7,921			266,229
Credit provision*	11,470			5,764			(5,234		)	12,000
Noninterest expense	39,418			125,242			11,656			176,316
Income (loss) before income taxes	51,480			24,934			1,499			77,913
Income tax expense (benefit)	16,363			8,727			(5,160		)	19,930
Net income	$	35,117		$	16,207		$	6,659		$	57,983
Return on average allocated capital (ROCET1)**	12.5		%	11.0		%	4.5		%	10.6		%
Three Months Ended June 30, 2016
Net interest income	$	80,069		$	84,969		$	11,679		$	176,717
Noninterest income	10,936			65,132			6,100			82,168
Total revenue	91,005			150,101			17,779			258,885
Credit provision*	15,114			6,246			(7,360		)	14,000
Noninterest expense	37,140			121,965			15,255			174,360
Income (loss) before income taxes	38,751			21,890			9,884			70,525
Income tax expense (benefit)	13,137			7,662			635			21,434
Net income	$	25,614		$	14,228		$	9,249		$	49,091
Return on average allocated capital (ROCET1)**	9.7		%	9.0		%	13.4		%	9.9		%



Segment Balance Sheet Data
($ in Thousands)	Corporate and Commercial Specialty		Community, Consumer, and Business		Risk Management and Shared Services		Consolidated Total
Three Months Ended June 30, 2017
Average earning assets	$	10,853,881	$	9,510,571	$	6,380,103	$	26,744,555
Average loans	10,841,858		9,508,683		171,449		20,521,990
Average deposits	6,447,190		11,574,028		3,501,931		21,523,149
Average allocated capital (CET1)**	$	1,125,494	$	588,880	$	385,451	$	2,099,825
Three Months Ended June 30, 2016
Average earning assets	$	10,128,726	$	9,325,036	$	6,514,287	$	25,968,049
Average loans	10,115,959		9,323,720		202,306		19,641,985
Average deposits	5,570,919		11,331,214		3,386,820		20,288,953
Average allocated capital (CET1)**	$	1,067,203	$	633,829	$	212,209	$	1,913,241
* The consolidated credit provision is equal to the actual reported provision for credit losses.
** The Federal Reserve establishes capital adequacy requirements for the Corporation, including common equity Tier 1. For segment reporting purposes, the ROCET1 reflects return on average allocated common equity Tier 1. 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.