Segment Reporting

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

Segment Reporting

NOTE 15: 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 Commercial Banking, Consumer Banking, and Risk Management and Shared Services,with no segment representing more than half of the assets, liabilities or Tier 1common equity of the Corporation as a whole.

The financial information of the Corporation's segments has been compiled utilizing the accounting policies described inthe Corporation's 2012 annual report on Form 10-K with certain exceptions. The more significant of these exceptions are described herein. The Corporation allocates interest income or interest expense using a funds transfer pricing methodology that charges users of funds (assets) interest expense and credits providers of funds (liabilities, primarily deposits) with income 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 chargeoff rates attributable to the credit risk of loans managed by the segment during the period. In contrast, the level of the consolidated provision for loan losses is determined using the methodologies described in the Corporation's 2012 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 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 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 previously reported segment financial data. During 2013, certain organization and methodology changes were made and, accordingly, 2012 results have been restated and presented on a comparable basis.

A description of each business segment is presented below.

Commercial Banking– The Commercial Banking segment serves a wide range of customers including, businesses, non-profits,municipalities, and financial institutions. Business customers in this segment include companies with a sales size from $10million to over $500million and delivery of services is provided through our regional and middle market units, our commercial real estate unit, as well as our specialized industries and commercial financial services area. The financial solutions provided to our customers include but are not limited to: (1) Lending solutions, such as business loans and lines of credit, business credit cards, commercial real estate financing, construction loans, letters of credit, leasing, and asset based lending. For our largest clients we also offer syndications to meet their lending needs (2) Deposit and cash management solutions such as business checking and interest-bearing deposit products, safe deposit and night depository services, liquidity solutions, payables and receivables solutions, and information services (3) Specialized financial services such as insurance and benefits related products and services, risk management, and international banking solutions. In serving the commercial banking 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.

Consumer Banking – The Consumer Banking segment serves individuals and small businesses (up to $10million in sales size) through our various Retail Banking and Private Client offices, and provides companies of varying sizes with fiduciary services such as administration of pension, profit-sharing and other employee benefit plans, fiduciary and corporate agency services, and institutional asset management. The services provided to our individual and small business customers include but are not limited to: (1) Transactional solutions such as checking, debit and pre-paid cards, online banking and bill pay, and money transfer services (2) Lending solutions such as residential mortgages, home equity loans and lines of credit, business loans and lines, and personal and installment loans (3) Investable funds solutions such as savings, money market deposit accounts, IRA accounts, certificates of deposit, market linked certificates of deposit, fixed and variable annuities, full-service, discount and on-line investment brokerage; as well as trust and investment management accounts. In serving the consumer banking 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.

Risk Management and Shared Services – The Risk Management and Shared Services segment includes Corporate Risk Management, Finance, Treasury, Operations and Technology functions, 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 (funds transfer pricing 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 as well as any remaining unallocated capital.

Information about the Corporation's segments is presented below.

Segment Income Statement Data
	($ in Thousands)		Commercial Banking		Consumer Banking			Risk Management and Shared Services			Consolidated Total
Nine Months Ended September 30, 2013
Net interest income		$	237,071		$	239,338		$	1,935		$	478,344
Noninterest income			70,665			152,746			13,815			237,226
	Total revenue		307,736			392,084			15,750			715,570
Credit provision *			41,105			15,085			(48,190)			8,000
Noninterest expense			139,007			317,595			44,680			501,282
Income before income taxes			127,624			59,404			19,260			206,288
Income tax expense (benefit)			44,668			20,792			(106)			65,354
Net income		$	82,956		$	38,612		$	19,366		$	140,934
Return on average allocated capital (ROT1CE) **			14.4	%		9.6	%		3.7	%		9.8	%
Nine Months Ended September 30, 2012
Net interest income		$	214,298		$	229,955		$	20,284		$	464,537
Noninterest income			62,509			158,597			14,279			235,385
	Total revenue		276,807			388,552			34,563			699,922
Credit provision *			34,298			14,539			(48,837)			―
Noninterest expense			143,856			324,795			36,844			505,495
Income before income taxes			98,653			49,218			46,556			194,427
Income tax expense			34,529			17,226			10,327			62,082
Net income		$	64,124		$	31,992		$	36,229		$	132,345
Return on average allocated capital (ROT1CE) **			11.8	%		7.6	%		8.0	%		9.4	%
Segment Balance Sheet Data
	($ in Thousands)		Commercial Banking		Consumer Banking			Risk Management and Shared Services			Consolidated Total
Average Balances for YTD 3Q 2013
Average earning assets		$	8,411,966		$	7,227,350		$	5,252,541		$	20,891,857
Average loans			8,403,176			7,227,350			3,927			15,634,453
Average deposits			5,376,970			9,637,856			2,273,966			17,288,792
Average allocated capital (T1CE) **		$	770,005		$	539,531		$	566,473		$	1,876,009
Average Balances for YTD 3Q 2012
Average earning assets		$	7,416,060		$	7,175,895		$	4,881,252		$	19,473,207
Average loans			7,409,822			7,175,895			25,348			14,611,065
Average deposits			4,405,655			9,397,577			1,420,573			15,223,805
Average allocated capital (T1CE) **		$	725,564		$	560,405		$	540,301		$	1,826,270
* The consolidated credit provision is equal to the actual reported provision for loan losses.
** ROT1CE reflects return on average allocated Tier 1 common equity ("T1CE"). The ROT1CE 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)		Commercial Banking		Consumer Banking			Risk Management and Shared Services			Consolidated Total
Three Months Ended September 30, 2013
Net interest income		$	80,561		$	80,590		$	(642)		$	160,509
Noninterest income			23,458			43,050			4,408			70,916
	Total revenue		104,019			123,640			3,766			231,425
Credit provision *			14,100			5,038			(19,138)			―
Noninterest expense			47,016			107,026			10,329			164,371
Income before income taxes			42,903			11,576			12,575			67,054
Income tax expense			15,016			4,052			2,328			21,396
Net income		$	27,887		$	7,524		$	10,247		$	45,658
Return on average allocated capital (ROT1CE) **			14.2	%		5.6	%		6.1	%		9.3	%
Three Months Ended September 30, 2012
Net interest income		$	72,939		$	73,171		$	9,492		$	155,602
Noninterest income			23,600			51,398			5,990			80,988
	Total revenue		96,539			124,569			15,482			236,590
Credit provision *			11,946			4,828			(16,774)			―
Noninterest expense			48,531			108,963			12,209			169,703
Income before income taxes			36,062			10,778			20,047			66,887
Income tax expense			12,622			3,772			4,098			20,492
Net income		$	23,440		$	7,006		$	15,949		$	46,395
Return on average allocated capital (ROT1CE) **			12.6	%		5.0	%		10.6	%		9.7	%
Segment Balance Sheet Data
	($ in Thousands)		Commercial Banking		Consumer Banking			Risk Management and Shared Services			Consolidated Total
Average Balances for 3Q 2013
Average earning assets		$	8,561,628		$	7,166,154		$	5,311,685		$	21,039,467
Average loans			8,555,028			7,166,154			3,183			15,724,365
Average deposits			5,547,603			9,643,630			2,418,586			17,609,819
Average allocated capital (T1CE) **		$	778,470		$	530,368		$	581,560		$	1,890,398
Average Balances for 3Q 2012
Average earning assets		$	7,752,013		$	7,152,997		$	4,754,786		$	19,659,796
Average loans			7,742,175			7,152,997			21,621			14,916,793
Average deposits			4,622,499			9,346,068			1,647,289			15,615,856
Average allocated capital (T1CE) **		$	740,400		$	559,226		$	550,984		$	1,850,610
* The consolidated credit provision is equal to the actual reported provision for loan losses.
** ROT1CE reflects return on average allocated Tier 1 common equity ("T1CE"). The ROT1CE for the Risk Management and Shared Services segment and the Consolidated Total is inclusive of the annualized effect of the preferred stock dividends.