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BUSINESS SEGMENTS | 6 Months Ended
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Jun. 30, 2015
BUSINESS SEGMENTS |
BUSINESS SEGMENTS | NOTE 14 — BUSINESS SEGMENTS The Company utilizes an internal reporting system to measure the performance of various operating segments within the Bank and the Company. The Company has identified three operating segments for purposes of management reporting: (1) Retail Banking; (2) Commercial Banking; and (3) Other. These three business divisions meet the criteria of an operating segment: the segment engages in business activities from which it earns revenues and incurs expenses, its operating results are regularly reviewed by the Company’s chief operating decision-maker to render decisions about resources to be allocated to the segment and assess its performance, and discrete financial information is available. The Retail Banking segment focuses primarily on retail operations through the Bank’s branch network. The Commercial Banking segment, which includes CRE, primarily generates commercial loans through the commercial lending offices located in the Bank’s production offices. Furthermore, the Company’s Commercial Banking segment offers a wide variety of international finance and trade services and products. The remaining centralized functions, including treasury activities and eliminations of inter-segment amounts, have been aggregated and included in the “Other” segment, which provides broad administrative support to the two core segments. The Company’s funds transfer pricing assumptions are intended to promote core deposit growth and to reflect the current risk profiles of various loan categories within the credit portfolio. Transfer pricing assumptions and methodologies are reviewed at least annually to ensure that the Company’s process is reflective of current market conditions. The transfer pricing process is formulated with the goal of incenting loan and deposit growth that is consistent with the Company’s overall growth objectives as well as to provide a reasonable and consistent basis for the measurement of the Company’s business segments and product net interest margins. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Operating segment results are based on the Company’s internal management reporting process, which reflects assignments and allocations of certain operating and administrative costs and the provision for loan losses. Net interest income is based on the Company’s internal funds transfer pricing system which assigns a cost of funds or a credit for funds to assets or liabilities based on their type, maturity or repricing characteristics. Noninterest income and noninterest expense, including depreciation and amortization, directly attributable to a segment are assigned to that business segment. Indirect costs, including overhead expense, are allocated to the segments based on several factors, including, but not limited to, full-time equivalent employees, loan volume and deposit volume. The provision for credit losses is allocated based on actual charge-offs for the period as well as average loan balances for each segment during the period. The Company evaluates overall performance based on profit or loss from operations before income taxes excluding nonrecurring gains and losses. Changes in the Company’s management structure or reporting methodologies may result in changes in the measurement of operating segment results. Results for prior periods are generally restated for comparability for changes in management structure or reporting methodologies unless it is not deemed practicable to do so. The following tables present the operating results and other key financial measures for the individual operating segments for the three and six months ended June 30, 2015 and 2014:
|  | Three Months Ended June 30, 2015
($ in thousands) |  | Retail Banking |  | Commercial Banking |  | Other |  | Total
Interest income |  | $ | 82,729 |  |  | $ | 157,337 |  |  | $ | 15,379 |  |  | $ | 255,445 |
Charge for funds used |  | (21,357 | ) |  | (38,328 | ) |  | (13,723 | ) |  | (73,408 | )
Interest spread on funds used |  | 61,372 |  |  | 119,009 |  |  | 1,656 |  |  | 182,037 |
Interest expense |  | (12,996 | ) |  | (4,710 | ) |  | (10,247 | ) |  | (27,953 | )
Credit on funds provided |  | 60,950 |  |  | 7,995 |  |  | 4,463 |  |  | 73,408 |
Interest spread on funds provided |  | 47,954 |  |  | 3,285 |  |  | (5,784 | ) |  | 45,455 |
Net interest income (loss) |  | $ | 109,326 |  |  | $ | 122,294 |  |  | $ | (4,128 | ) |  | $ | 227,492 |
(Reversal of) provision for loan losses |  | $ | (3,454 | ) |  | $ | 6,948 |  |  | $ | — |  |  | $ | 3,494 |
Depreciation, amortization and accretion (1) |  | $ | 3,235 |  |  | $ | (6,054 | ) |  | $ | 8,938 |  |  | $ | 6,119 |
Goodwill |  | $ | 357,207 |  |  | $ | 112,226 |  |  | $ | — |  |  | $ | 469,433 |
Segment pre-tax profit (loss) |  | $ | 55,349 |  |  | $ | 97,269 |  |  | $ | (8,197 | ) |  | $ | 144,421 |
Segment assets |  | $ | 7,373,641 |  |  | $ | 16,141,368 |  |  | $ | 6,549,063 |  |  | $ | 30,064,072 |
|  | Three Months Ended June 30, 2014
($ in thousands) |  | Retail Banking |  | Commercial Banking |  | Other |  | Total
Interest income |  | $ | 99,792 |  |  | $ | 181,880 |  |  | $ | 12,770 |  |  | $ | 294,442 |
Charge for funds used |  | (23,854 | ) |  | (34,281 | ) |  | (9,929 | ) |  | (68,064 | )
Interest spread on funds used |  | 75,938 |  |  | 147,599 |  |  | 2,841 |  |  | 226,378 |
Interest expense |  | (11,950 | ) |  | (3,421 | ) |  | (12,621 | ) |  | (27,992 | )
Credit on funds provided |  | 54,139 |  |  | 8,983 |  |  | 4,942 |  |  | 68,064 |
Interest spread on funds provided |  | 42,189 |  |  | 5,562 |  |  | (7,679 | ) |  | 40,072 |
Net interest income (loss) |  | $ | 118,127 |  |  | $ | 153,161 |  |  | $ | (4,838 | ) |  | $ | 266,450 |
(Reversal of) provision for loan losses |  | $ | (440 | ) |  | $ | 8,440 |  |  | $ | — |  |  | $ | 8,000 |
Depreciation, amortization and accretion (1) (2) |  | $ | 4,096 |  |  | $ | (1,286 | ) |  | $ | 12,148 |  |  | $ | 14,958 |
Goodwill |  | $ | 354,163 |  |  | $ | 104,304 |  |  | $ | — |  |  | $ | 458,467 |
Segment pre-tax profit (loss) (2) |  | $ | 48,939 |  |  | $ | 77,844 |  |  | $ | (3,817 | ) |  | $ | 122,966 |
Segment assets (2) |  | $ | 7,822,020 |  |  | $ | 14,177,634 |  |  | $ | 5,557,346 |  |  | $ | 27,557,000 |
(1) | Includes amortization and accretion related to the FDIC indemnification asset.
(2) | Prior periods were restated to reflect the retrospective application of adopting the new accounting guidance related to the Company’s investments in qualified affordable housing projects ASU 2014-01. See Note 10 of the Notes to Consolidated Financial Statements for additional information.
|  | Six Months Ended June 30, 2015
($ in thousands) |  | Retail Banking |  | Commercial Banking |  | Other |  | Total
Interest income |  | $ | 170,175 |  |  | $ | 316,122 |  |  | $ | 32,409 |  |  | $ | 518,706 |
Charge for funds used |  | (44,656 | ) |  | (75,678 | ) |  | (23,168 | ) |  | (143,502 | )
Interest spread on funds used |  | 125,519 |  |  | 240,444 |  |  | 9,241 |  |  | 375,204 |
Interest expense |  | (25,219 | ) |  | (8,973 | ) |  | (21,305 | ) |  | (55,497 | )
Credit on funds provided |  | 118,618 |  |  | 16,010 |  |  | 8,874 |  |  | 143,502 |
Interest spread on funds provided |  | 93,399 |  |  | 7,037 |  |  | (12,431 | ) |  | 88,005 |
Net interest income (loss) |  | $ | 218,918 |  |  | $ | 247,481 |  |  | $ | (3,190 | ) |  | $ | 463,209 |
(Reversal of) provision for loan losses |  | $ | (2,723 | ) |  | $ | 11,204 |  |  | $ | — |  |  | $ | 8,481 |
Depreciation, amortization and accretion (1) |  | $ | 4,917 |  |  | $ | (16,531 | ) |  | $ | 21,860 |  |  | $ | 10,246 |
Goodwill |  | $ | 357,207 |  |  | $ | 112,226 |  |  | $ | — |  |  | $ | 469,433 |
Segment pre-tax profit (loss) |  | $ | 108,284 |  |  | $ | 190,444 |  |  | $ | (7,481 | ) |  | $ | 291,247 |
Segment assets |  | $ | 7,373,641 |  |  | $ | 16,141,368 |  |  | $ | 6,549,063 |  |  | $ | 30,064,072 |
|  | Six Months Ended June 30, 2014
($ in thousands) |  | Retail Banking |  | Commercial Banking |  | Other |  | Total
Interest income |  | $ | 198,517 |  |  | $ | 350,956 |  |  | $ | 31,142 |  |  | $ | 580,615 |
Charge for funds used |  | (48,150 | ) |  | (66,098 | ) |  | (14,312 | ) |  | (128,560 | )
Interest spread on funds used |  | 150,367 |  |  | 284,858 |  |  | 16,830 |  |  | 452,055 |
Interest expense |  | (23,661 | ) |  | (6,701 | ) |  | (25,837 | ) |  | (56,199 | )
Credit on funds provided |  | 102,332 |  |  | 17,419 |  |  | 8,809 |  |  | 128,560 |
Interest spread on funds provided |  | 78,671 |  |  | 10,718 |  |  | (17,028 | ) |  | 72,361 |
Net interest income (loss) |  | $ | 229,038 |  |  | $ | 295,576 |  |  | $ | (198 | ) |  | $ | 524,416 |
Provision for loan losses |  | $ | 2,212 |  |  | $ | 12,721 |  |  | $ | — |  |  | $ | 14,933 |
Depreciation, amortization and accretion (1) (2) |  | $ | 6,667 |  |  | $ | (4,614 | ) |  | $ | 21,968 |  |  | $ | 24,021 |
Goodwill |  | $ | 354,163 |  |  | $ | 104,304 |  |  | $ | — |  |  | $ | 458,467 |
Segment pre-tax profit (loss) (2) |  | $ | 93,355 |  |  | $ | 154,769 |  |  | $ | (8,995 | ) |  | $ | 239,129 |
Segment assets (2) |  | $ | 7,822,020 |  |  | $ | 14,177,634 |  |  | $ | 5,557,346 |  |  | $ | 27,557,000 |
(1) | Includes amortization and accretion related to the FDIC indemnification asset.
(2) | Prior periods were restated to reflect the retrospective application of adopting the new accounting guidance related to the Company’s investments in qualified affordable housing projects ASU 2014-01. See Note 10 of the Notes to Consolidated Financial Statements for additional information.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8981-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9038-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8971-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8595-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8380-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8984-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9031-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9054-108599 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8538-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8864-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8924-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8906-108599 + Details
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