Business Segment Information

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

BUSINESS SEGMENT INFORMATION

NOTE 21 — BUSINESS SEGMENT INFORMATION

BancShares’ segments include General Banking, Commercial Banking, Rail, Corporate, and Silicon Valley Banking, which is a new segment that includes the operating results for the SVBB Acquisition, . 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. Net interest income is primarily generated from interest earned on loans and noninterest income is mainly derived from 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 such as capital call lines of credit. 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, 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 preliminary gain on acquisition, day 2 provision for loan and lease losses, and day 2 provision for off-balance sheet credit exposure. 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 September 30, 2023
	General Banking		Commercial Banking		Silicon Valley Banking		Rail		Corporate		Total BancShares
Net interest income (expense)	$	625	$	249	$	635	$	(40)	$	521	$	1,990
Provision (benefit) for credit losses	7		132		56		—		(3)		192
Net interest income (expense) after provision for credit losses	618		117		579		(40)		524		1,798
Noninterest income	125		139		151		194		6		615
Noninterest expense	411		205		514		116		170		1,416
Income before income taxes	332		51		216		38		360		997
Income tax expense	91		14		59		10		71		245
Net income	$	241	$	37	$	157	$	28	$	289	$	752
Select Period End Balances
Loans and leases	$	46,077	$	30,220	$	56,864	$	41	$	—	$	133,202
Deposits	101,021		3,370		39,970		12		1,860		146,233
Operating lease equipment, net	—		739		—		7,922		—		8,661
	Three Months Ended September 30, 2022
	General Banking		Commercial Banking		Silicon Valley Banking		Rail		Corporate		Total BancShares
Net interest income (expense)	$	495	$	230	$	—	$	(20)	$	90	$	795
Provision for credit losses	2		58		—		—		—		60
Net interest income (expense) after provision for credit losses	493		172		—		(20)		90		735
Noninterest income	118		133		—		170		12		433
Noninterest expense	400		186		—		110		64		760
Income (loss) before income taxes	211		119		—		40		38		408
Income tax expense	55		24		—		10		4		93
Net income (loss)	$	156	$	95	$	—	$	30	$	34	$	315
Select Period End Balances
Loans and leases	$	41,693	$	28,023	$	—	$	74	$	—	$	69,790
Deposits	82,731		3,682		—		14		1,126		87,553
Operating lease equipment, net	—		736		—		7,248		—		7,984

	Nine Months Ended September 30, 2023
	General Banking		Commercial Banking		Silicon Valley Banking		Rail		Corporate		Total BancShares
Net interest income (expense)	$	1,790	$	744	$	1,335	$	(101)	$	1,033	$	4,801
Provision for credit losses	48		353		9		—		716		1,126
Net interest income (expense) after provision for credit losses	1,742		391		1,326		(101)		317		3,675
Noninterest income	362		420		334		549		9,867		11,532
Noninterest expense	1,192		615		1,139		357		540		3,843
Income before income taxes	912		196		521		91		9,644		11,364
Income tax expense (benefit)	228		55		140		23		(34)		412
Net income	$	684	$	141	$	381	$	68	$	9,678	$	10,952
	Nine Months Ended September 30, 2022
	General Banking		Commercial Banking		Silicon Valley Banking		Rail		Corporate		Total BancShares
Net interest income (expense)	$	1,400	$	641	$	—	$	(58)	$	161	$	2,144
(Benefit) provision for credit losses	(7)		60		—		—		513		566
Net interest income (expense) after provision for credit losses	1,407		581		—		(58)		(352)		1,578
Noninterest income	371		376		—		493		467		1,707
Noninterest expense	1,192		555		—		320		248		2,315
Income (loss) before income taxes	586		402		—		115		(133)		970
Income tax expense (benefit)	143		90		—		28		(132)		129
Net income (loss)	$	443	$	312	$	—	$	87	$	(1)	$	841