SunTrust 2012 Annual Report Download - page 209

Notes to Consolidated Financial Statements (Continued)
193
Mortgage Banking offers residential mortgage products nationally through its retail, broker, and correspondent channels, as
well as via 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 services
loans for itself and for other investors and includes ValuTree Real Estate Services, LLC, a tax service subsidiary.
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.
Additionally, it includes Enterprise Information Services, which is the primary information technology and operations group;
Corporate Real Estate, Marketing, SunTrust Online, Human Resources, Finance, Corporate Risk Management, Legal and
Compliance, Branch Operations, Communications, Procurement, and Executive Management.
Because the business segment results are presented based on management accounting practices, the transition to the
consolidated results, which are prepared under U.S. GAAP, creates certain differences which are reflected in Reconciling
Items.
For business segment reporting purposes, the basis of presentation in the accompanying discussion includes the following:
• Net interest income – All net interest income is presented on a FTE basis to make tax-exempt assets comparable
to other taxable products. The segments have also been matched maturity funds transfer priced, generating credits
or charges based on the economic value or cost created by the assets and liabilities of each segment. The mismatch
between funds credits and funds charges at the segment level resides in Reconciling Items. The change in the
matched maturity funds mismatch is generally attributable to corporate balance sheet management strategies.
• Provision for credit losses - Represents net charge-offs by segment. The difference between the segment net
charge-offs and the consolidated provision for credit losses is reported in Reconciling Items.
• Provision/(benefit) for income taxes - Calculated using a nominal income tax rate for each segment. This
calculation includes the impact of various income adjustments, such as the reversal of the FTE gross up on tax-
exempt assets, tax adjustments, and credits that are unique to each segment. The difference between the calculated
provision/(benefit) for income taxes at the segment level and the consolidated provision/(benefit) for income taxes
is reported in Reconciling Items.
The segment’s financial performance is comprised of direct financial results as well as various allocations that for internal
management reporting purposes provide an enhanced view of analyzing the segment’s financial performance. The internal
allocations include the following:
• Operational Costs – Expenses are charged to the segments based on various statistical volumes multiplied by
activity based cost rates. As a result of the activity based costing process, planned residual expenses are also
allocated to the segments. The recoveries for the majority of these costs are in Corporate Other.
• Support and Overhead Costs – Expenses not directly attributable to a specific segment are allocated based on
various drivers (e.g., number of full-time equivalent employees and volume of loans and deposits). The recoveries
for these allocations are in Corporate Other.
• Sales and Referral Credits – Segments may compensate another segment for referring or selling certain products.
The majority of the revenue resides in the segment where the product is ultimately managed.
The application and development of management reporting methodologies is a dynamic process and is subject to 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. Whenever significant changes to
management reporting methodologies take place, the impact of these changes is quantified and prior period information is
reclassified wherever practicable.