Business Segment Information

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Business Segment Information

BUSINESS SEGMENT INFORMATION

BancShares’ segments include General Banking, Commercial Banking, a new segment Silicon Valley Banking that includes the operating results for the SVBB Acquisition, as well as Rail and Corporate. Each of the segments are described below.

General Banking

General Banking delivers products and services to consumers and businesses through an extensive network of branches and various digital channels, including a full suite of deposit products, loans (primarily residential mortgages and business/commercial loans), and various fee-based services. General Banking also provides a variety of wealth management products and services to individuals and institutional clients, including brokerage, investment advisory, and trust services. In addition, General Banking has a dedicated business line that supports deposit, cash management and lending to homeowner associations and property management companies nationwide. Revenue is primarily generated from interest earned on loans and fees for banking and advisory services.

Commercial Banking

Commercial Banking provides a range of lending, leasing, capital markets, asset management and other financial and advisory services primarily to small and middle market companies in a wide range of industries. Loans offered are primarily senior secured loans collateralized by accounts receivable, inventory, machinery and equipment, transportation equipment and/or intangibles, and are often used for working capital, plant expansion, acquisitions or recapitalizations. These loans include revolving lines of credit and term loans and, depending on the nature of the collateral, may be referred to as collateral-backed loans, asset-based loans or cash flow loans. Commercial Banking provides senior secured loans to developers and other commercial real estate professionals, and also provides small business loans and leases, including both capital and operating leases, through a highly automated credit approval, documentation and funding process. Commercial Banking also provides factoring, receivable management, and secured financing to businesses that operate in various industries.

Revenue is primarily generated from interest earned on loans, rents on equipment leased, fees and other revenue from lending and leasing activities and banking services, along with capital markets transactions and commissions earned on factoring and related activities.

Silicon Valley Banking

Silicon Valley Banking offers products and services to commercial clients in key innovation markets, such as healthcare and technology industries, as well as private equity and venture capital firms. The segment provides solutions to the financial needs of commercial clients through credit, treasury management, foreign exchange, trade finance and other services. In addition, the segment offers private banking and wealth management and provides a range of personal financial solutions for consumers. Private banking and wealth management clients consist of private equity/venture capital professionals and executive leaders of the innovation companies they support and premium wine clients. The segment offers a customized suite of private banking services, including mortgages, home equity lines of credit, restricted and private stock loans, capital call lines of credit, other secured and unsecured lending products and vineyard development loans, as well as planning-based financial strategies, wealth management, family office, financial planning, tax planning and trust services.

Revenue is primarily generated from interest earned on loans, and fees and other revenue from lending activities and banking services.

Deposit products include business and analysis checking accounts, money market accounts, multi-currency accounts, bank accounts, sweep accounts and positive pay services. Services are provided through online and mobile banking platforms, as well as branch locations.

Rail

Rail offers customized leasing and financing solutions on a fleet of railcars and locomotives to railroads and shippers throughout North America. Railcar types include covered hopper cars used to ship grain and agricultural products, plastic pellets, sand, and cement, tank cars for energy products and chemicals, gondolas for coal, steel coil and mill service products, open hopper cars for coal and aggregates, boxcars for paper and auto parts, and center beams and flat cars for lumber. Revenue is primarily from operating lease income.

Corporate

Certain items that are not allocated to operating segments are included in the Corporate segment, inclusive of similar items related to Silicon Valley Banking. Some of the more significant and recurring items include interest income on investment securities, a portion of interest expense primarily related to corporate funding costs (including brokered deposits), income on BOLI (other noninterest income), acquisition-related costs, as well as certain unallocated costs and certain intangible asset amortization expense (operating expenses). Corporate also includes certain significant items that are infrequent, such as the Initial Non-PCD Provision for loans and leases and unfunded commitments and gain on acquisition. Corporate also includes certain purchase accounting adjustment accretion, such as the accretion of the fair value adjustment associated with the acquired loans in the SVBB Acquisition.

Segment Net Income (Loss) and Select Period End Balances

The following table presents the condensed income statement by segment:

dollars in millions	Three Months Ended June 30, 2023
	General Banking		Commercial Banking		Silicon Valley Banking		Rail		Corporate		Total BancShares
Net interest income (expense)	$	603	$	258	$	635	$	(33)	$	498	$	1,961
Provision (benefit) for credit losses	29		170		(47)		—		(1)		151
Net interest income (expense) after provision for credit losses	574		88		682		(33)		499		1,810
Noninterest income	119		139		169		178		53		658
Noninterest expense	393		188		592		121		278		1,572
Income before income taxes	300		39		259		24		274		896
Income tax expense	73		11		70		6		54		214
Net income	$	227	$	28	$	189	$	18	$	220	$	682
Select Period End Balances
Loans and leases	$	44,719	$	29,433	$	58,799	$	64	$	—	$	133,015
Deposits	95,323		3,064		40,860		11		1,906		141,164
Operating lease equipment, net	—		741		—		7,790		—		8,531
	Three Months Ended June 30, 2022
	General Banking		Commercial Banking		Silicon Valley Banking		Rail		Corporate		Total BancShares
Net interest income (expense)	$	467	$	204	$	—	$	(18)	$	47	$	700
Provision for credit losses	7		35		—		—		—		42
Net interest income (expense) after provision for credit losses	460		169		—		(18)		47		658
Noninterest income	125		130		—		160		9		424
Noninterest expense	390		180		—		111		64		745
Income (loss) before income taxes	195		119		—		31		(8)		337
Income tax expense	40		24		—		7		11		82
Net income (loss)	$	155	$	95	$	—	$	24	$	(19)	$	255
Select Period End Balances
Loans and leases	$	40,159	$	27,505	$	—	$	71	$	—	$	67,735
Deposits	83,518		4,466		—		11		1,334		89,329
Operating lease equipment, net	—		724		—		7,247		—		7,971

	Six Months Ended June 30, 2023
	General Banking		Commercial Banking		Silicon Valley Banking		Rail		Corporate		Total BancShares
Net interest income (expense)	$	1,163	$	498	$	700	$	(61)	$	511	$	2,811
Provision (benefit) for credit losses	43		219		(47)		—		719		934
Net interest income (expense) after provision for credit losses	1,120		279		747		(61)		(208)		1,877
Noninterest income	235		282		183		355		9,862		10,917
Noninterest expense	788		399		625		241		374		2,427
Income before income taxes	567		162		305		53		9,280		10,367
Income tax expense (benefit)	138		40		81		13		(105)		167
Net income	$	429	$	122	$	224	$	40	$	9,385	$	10,200
	Six Months Ended June 30, 2022
	General Banking		Commercial Banking		Silicon Valley Banking		Rail		Corporate		Total BancShares
Net interest income (expense)	$	904	$	411	$	—	$	(37)	$	71	$	1,349
(Benefit) provision for credit losses	(8)		1		—		—		513		506
Net interest income (expense) after provision for credit losses	912		410		—		(37)		(442)		843
Noninterest income	248		242		—		322		462		1,274
Noninterest expense	799		371		—		211		174		1,555
Income (loss) before income taxes	361		281		—		74		(154)		562
Income tax expense (benefit)	80		65		—		18		(127)		36
Net income (loss)	$	281	$	216	$	—	$	56	$	(27)	$	526