STI 2018 Annual Report

69 2018, as well as the tax reform-related charitable contribution in the fourth quarter of 2017 to support financial well-being initiatives. Year Ended December 31, 2017 versus 2016 Consumer Consumer reported net income of $934million for the year ended December 31, 2017, a decrease of $80 million, or 8%, compared 2016. The decrease was driven primarily by lower noninterest income, higher provision for credit losses, and higher noninterest expense, offset partially by higher net interest income and lower provision for income taxes. Net interest income was $3.9 billion, an increase of $270 million, or 7%, compared to 2016, driven by improved spreads on deposit balances and growth in LHFI balances. Net interest income related to deposits increased $228million, or 11%, driven by a 14 basis point increase in deposit spreads and a $3.9 billion, or 4%, increase in average deposit balances. Deposit balance growthwas driven primarily by increases in checking andmoney market account balances. Net interest income related to LHFI increased $53 million, or 4%, driven by a $3.1 billion, or 4%, increase in average LHFI balances, offset partially by a two basis point decrease in loan spreads. Average LHFI growth was driven by increases in residential mortgages, consumer direct, indirect, guaranteed student loans, and commercial loans, offset partially by declines in home equity products. Provision for credit losses was $366 million, an increase of $207 million compared to 2016. The increase was driven by higher reserves held for hurricane-related losses in 2017. Total noninterest income was $1.9 billion, a decrease of $162million, or 8%, compared to 2016. The decrease was driven primarily by lower mortgage related income due to reduced refinancing activity and lower service charges on deposits due to the enhanced posting order process instituted during the fourth quarter of 2016. Total noninterest expense was $4.0 billion, an increase of $44 million, or 1%, compared to 2016. The increase was driven by increased investments in technology andmarketing, corporate support costs, and net occupancy expense related to branch network activity, offset partially by favorable developments with certain legal matters in the fourth quarter of 2017. Wholesale Wholesale reported net income of $1.2 billion for the year ended December 31, 2017, an increase of $313 million, or 34%, compared to 2016. The increase was due to higher net interest income, noninterest income, and lower provision for credit losses, offset partially by higher noninterest expense. Net interest income was $2.2 billion, an increase of $223 million, or 11%, compared to 2016, driven primarily by higher average deposit balances and improved loan and deposit spreads. Net interest income related to deposits increased $131 million, or 20%, as a result of higher benchmark interest rates and higher average deposit balances. Average deposit balances increased $1.4 billion, or 3%, driven primarily by a $3.1 billion increase in interest-bearing transaction accounts and a $698 million increase in CD balances, offset largely by a $1.4 billion decrease in money market accounts and a $1.1 billion decrease in non- interest-bearing commercial DDAs.Although averageLHFIwas relatively flat, net interest income growth related to LHFI increased $58 million, or 5%, as a result of improved loan spreads. Provision for credit losses was $39 million, a decrease of $243 million, or 86%, compared to 2016. The decrease was due primarily to lower nonperforming loans and lower energy- related net charge-offs. Total noninterest income was $1.6 billion, an increase of $248 million, or 19%, compared to 2016. The increase was driven primarily by higher investment banking income, which increased $108 million, or 21%, fee income from Pillar of $72 million, higher tax credits, and other loan related fees. These increases were offset partially by declines in trading income and structured real estate gains. Total noninterest expense was $1.7 billion, an increase of $220 million, or 15%, compared to 2016. The increase was due primarily to the acquisition of Pillar in 2016, higher employee compensation expense attributable to improved business performance and ongoing investments in talent, as well as higher amortization expense associated with STCC tax credit investments, partially offset by lower operating losses. Corporate Other Corporate Other net income was $295 million for the year ended December 31, 2017, an increase of $116 million, or 65%, compared to 2016. The increase was due primarily to lower provision for income taxes in 2017 as a result of Form 8-K and tax reform-related items. Net interest income was $17 million, a decrease of $145 million, or 90%, compared to 2016. The decrease was driven primarily by lower commercial loan-related swap income due to higher LIBOR rates. Average long-term debt increased $154 million, or 2%, and average short-term borrowings increased $344 million, or 22%, driven by balance sheet management activities. Total noninterest income was $73 million, a decrease of $64 million, or 47%, compared to 2016. The decrease was due to the $109 million securities AFS portfolio restructuring loss and a gain on the sale-leaseback of one of our office buildings in the second quarter of 2016, partially offset by the $107 million gain on sale of PAC. Total noninterest expense was $74 million, an increase of $36 million, or 95%, compared to 2016, driven primarily by higher severance costs in 2017. SeeNote 22, "Business Segment Reporting," to the Consolidated Financial Statements in this Form 10-K for a description of our business segments, basis of presentation, internal management reporting methodologies, and additional information.