Segment Information

The Company’s operating segments are based on the Company’s organizational structure. Each segment reflects the manner in which financial information is evaluated by management. The operating segment results include certain overhead allocations and intercompany transactions. All intercompany transactions have been eliminated to determine the consolidated balances. The Company operates primarily in the United States, and, accordingly, revenue and assets outside the United States are not material. There are no individual customers whose attributable revenues exceed 10% of consolidated revenue.

The following tables present the segment information for the Company’s existing segments.



	Three Months Ended June 30, 2020
	Commercial Banking and Wealth			Retail Banking			Corporate and Investment Banking		Treasury		Corporate Support and Other			Consolidated
	(In Thousands)
Net interest income	$	223,884		$	230,551		$	25,412	$	40,411	$	91,759		$	612,017
Allocated provision for credit losses	170,749			178,355			14,457		1,958		173,940			539,459
Noninterest income	59,137			114,247			70,177		6,191		22,602			272,354
Noninterest expense	175,329			296,430			40,436		5,655		61,600			579,450
Net (loss) income before income tax expense (benefit)	(63,057		)	(129,987		)	40,696		38,989		(121,179		)	(234,538		)
Income tax (benefit) expense	(13,242		)	(27,297		)	8,546		8,187		(86,295		)	(110,101		)
Net (loss) income	(49,815		)	(102,690		)	32,150		30,802		(34,884		)	(124,437		)
Less: net income (loss) attributable to noncontrolling interests	(55		)	—			—		394		133			472
Net (loss) income attributable to BBVA USA Bancshares, Inc.	$	(49,760	)	$	(102,690	)	$	32,150	$	30,408	$	(35,017	)	$	(124,909	)
Average assets	$	44,982,771		$	18,588,273		$	10,420,105	$	24,538,397	$	5,674,516		$	104,204,062



	Three Months Ended June 30, 2019
	Commercial Banking and Wealth		Retail Banking		Corporate and Investment Banking			Treasury			Corporate Support and Other			Consolidated
	(In Thousands)
Net interest income (expense)	$	292,655	$	326,298	$	32,430		$	(18,782	)	$	27,148		$	659,749
Allocated provision (credit) for loan losses	78,678		56,272		(675		)	(1,012		)	21,755			155,018
Noninterest income	63,148		121,905		39,711			2,659			56,858			284,281
Noninterest expense	158,652		306,413		39,183			4,416			89,650			598,314
Net income (loss) before income tax expense (benefit)	118,473		85,518		33,633			(19,527		)	(27,399		)	190,698
Income tax expense (benefit)	24,879		17,959		7,063			(4,101		)	(15,288		)	30,512
Net income (loss)	93,594		67,559		26,570			(15,426		)	(12,111		)	160,186
Less: net income attributable to noncontrolling interests	166		—		—			402			31			599
Net income (loss) attributable to BBVA USA Bancshares, Inc.	$	93,428	$	67,559	$	26,570		$	(15,828	)	$	(12,142	)	$	159,587
Average assets	$	39,950,464	$	18,866,251	$	7,245,328		$	18,997,865		$	8,392,931		$	93,452,839



	Six Months Ended June 30, 2020
	Commercial Banking and Wealth		Retail Banking			Corporate and Investment Banking			Treasury		Corporate Support and Other			Consolidated
	(In Thousands)
Net interest income	$	490,722	$	525,560		$	56,191		$	3,984	$	125,015		$	1,201,472
Allocated provision for credit losses	212,933		245,084			107,428			1,721		329,284			896,450
Noninterest income	127,672		244,951			110,312			32,392		91,269			606,596
Noninterest expense	349,430		601,687			101,831			9,701		2,325,861			3,388,510
Net income (loss) before income tax expense (benefit)	56,031		(76,260		)	(42,756		)	24,954		(2,438,861		)	(2,476,892		)
Income tax expense (benefit)	11,545		(15,803		)	(8,979		)	5,240		(107,173		)	(115,170		)
Net income (loss)	44,486		(60,457		)	(33,777		)	19,714		(2,331,688		)	(2,361,722		)
Less: net income attributable to noncontrolling interests	61		—			—			789		123			973
Net income (loss) attributable to BBVA USA Bancshares, Inc.	$	44,425	$	(60,457	)	$	(33,777	)	$	18,925	$	(2,331,811	)	$	(2,362,695	)
Average assets	$	43,080,319	$	18,642,753		$	9,351,070		$	22,396,303	$	6,809,642		$	100,280,087



	Six Months Ended June 30, 2019
	Commercial Banking and Wealth		Retail Banking		Corporate and Investment Banking		Treasury			Corporate Support and Other			Consolidated
	(In Thousands)
Net interest income (expense)	$	607,990	$	675,674	$	66,248	$	(38,806	)	$	31,732		$	1,342,838
Allocated provision (credit) for loan losses	136,117		159,676		25,255		(638		)	16,900			337,310
Noninterest income	120,522		233,823		76,228		15,145			96,323			542,041
Noninterest expense	326,115		604,336		79,062		10,004			160,770			1,180,287
Net income (loss) before income tax expense (benefit)	266,280		145,485		38,159		(33,027		)	(49,615		)	367,282
Income tax expense (benefit)	55,919		30,552		8,013		(6,936		)	(21,433		)	66,115
Net income (loss)	210,361		114,933		30,146		(26,091		)	(28,182		)	301,167
Less: net income attributable to noncontrolling interests	262		—		—		807			86			1,155
Net income (loss) attributable to BBVA USA Bancshares, Inc.	$	210,099	$	114,933	$	30,146	$	(26,898	)	$	(28,268	)	$	300,012
Average assets	$	40,170,674	$	18,899,297	$	7,727,096	$	18,110,961		$	8,312,620		$	93,220,648

The financial information presented was derived from the internal profitability reporting system used by management to monitor and manage the financial performance of the Company. This information is based on internal management accounting policies that have been developed to reflect the underlying economics of the businesses. These policies address the methodologies applied and include policies related to funds transfer pricing, cost allocations and capital allocations.

Funds transfer pricing was used in the determination of net interest income earned primarily on loans and deposits. The method employed for funds transfer pricing is a matched funding concept whereby lines of business which are fund providers are credited and those that are fund users are charged based on maturity, prepayment and/or repricing characteristics applied on an instrument level. Provision for loan losses is allocated to each segment based on internal management accounting policies for the allowance for loan losses and the related provision which differs from the policies for consolidated purposes. The difference between the consolidated provision for credit losses and the segments' provision for credit losses is reflected in Corporate Support and Other and reflects a current year revision in policy. Costs for centrally managed operations are generally allocated to the lines of business based on the utilization of services provided or other appropriate indicators. Revenue is recorded in the business segment responsible for the related product or service. Fee sharing is recorded to allocate portions of such revenue to other business segments involved in selling to, or providing services to, customers. Results of operations for the business segments reflect these fee sharing allocations. Capital is allocated to the lines of business based upon the underlying risks in each business considering economic and regulatory capital standards.

The development and application of these methodologies is a dynamic process. Accordingly, prior period financial results have been revised to reflect management accounting enhancements and changes in the Company's organizational structure. The 2019 segment information has been revised to conform to the 2020 presentation. In addition, unlike financial accounting, there is no authoritative literature for management accounting similar to U.S. GAAP. Consequently, reported results are not necessarily comparable with those presented by other financial institutions.