Business Segments

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Business Segments

NOTE 13—BUSINESS SEGMENTS

Our principal operations are currently organized into three major business segments, which are defined based on the products and services provided or the type of customer served: Credit Card, Consumer Banking and Commercial Banking. The operations of acquired businesses have been integrated into our existing business segments. Certain activities that are not part of a segment, such as management of our corporate investment portfolio and asset/liability management by our centralized Corporate Treasury group, are included in the Other category.

Basis of Presentation

We report the results of each of our business segments on a continuing operations basis. See “Note 2—Discontinued Operations” for a discussion of discontinued operations. The results of our individual businesses reflect the manner in which management evaluates performance and makes decisions about funding our operations and allocating resources.

Business Segment Reporting Methodology

The results of our business segments are intended to reflect each segment as if it were a stand-alone business. Our internal management and reporting process used to derive our segment results employs various allocation methodologies, including funds transfer pricing, to assign certain balance sheet assets, deposits and other liabilities and their related revenue and expenses directly or indirectly attributable to each business segment. Our funds transfer pricing process provides a funds credit for sources of funds, such as deposits generated by our Consumer Banking and Commercial Banking businesses, and a funds charge for the use of funds by each segment. Due to the integrated nature of our business segments, estimates and judgments have been made in allocating certain revenue and expense items. Transactions between segments are based on specific criteria or approximate third-party rates. We regularly assess the assumptions, methodologies and reporting classifications used for segment reporting, which may result in the implementation of refinements or changes in future periods. We provide additional information on the allocation methodologies used to derive our business segment results in “Note 19—Business Segments” in our 2013 Form 10-K.

Segment Results and Reconciliation

We may periodically change our business segments or reclassify business segment results based on modifications to our management reporting methodologies and changes in organizational alignment.

The following tables present our business segment results for the three and nine months ended September 30, 2014 and 2013, selected balance sheet data as of September 30, 2014 and 2013, and a reconciliation of our total business segment results to our reported consolidated income from continuing operations, assets and deposits. Prior period amounts have been recast to conform to the current period.

Table 13.1: Segment Results and Reconciliation

	Three Months Ended September 30, 2014
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking(1)		Other(1)			Consolidated Total(1)
Net interest income	$	2,627	$	1,425	$	439	$	6		$	4,497
Non-interest income	846		179		122		(5		)	1,142
Total net revenue	3,473		1,604		561		1			5,639
Provision (benefit) for credit losses	787		198		9		(1		)	993
Non-interest expense:
Amortization of intangibles:
PCCR intangible amortization	90		0		0		0			90
Core deposit intangible amortization	0		26		5		0			31
Total PCCR and core deposit intangible amortization	90		26		5		0			121
Other non-interest expense	1,640		930		263		31			2,864
Total non-interest expense	1,730		956		268		31			2,985
Income (loss) from continuing operations before income taxes	956		450		284		(29		)	1,661
Income tax provision (benefit)	332		161		102		(59		)	536
Income from continuing operations, net of tax	$	624	$	289	$	182	$	30		$	1,125
Period-end total loans held for investment	$	80,631	$	71,061	$	49,788	$	112		$	201,592
Period-end total deposits	0		167,624		31,918		4,722			204,264
	Three Months Ended September 30, 2013
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking(1)		Other(1)			Consolidated Total(1)
Net interest income (expense)	$	2,757	$	1,481	$	424	$	(102	)	$	4,560
Non-interest income	834		184		87		(14		)	1,091
Total net revenue (loss)	3,591		1,665		511		(116		)	5,651
Provision (benefit) for credit losses	617		202		31		(1		)	849
Non-interest expense:
Amortization of intangibles:
PCCR intangible amortization	106		0		0		0			106
Core deposit intangible amortization	0		34		6		0			40
Total PCCR and core deposit intangible amortization	106		34		6		0			146
Other non-interest expense	1,798		893		222		50			2,963
Total non-interest expense	1,904		927		228		50			3,109
Income (loss) from continuing operations before income taxes	1,070		536		252		(165		)	1,693
Income tax provision (benefit)	376		191		90		(82		)	575
Income (loss) from continuing operations, net of tax	$	694	$	345	$	162	$	(83	)	$	1,118
Period-end total loans held for investment	$	77,967	$	71,285	$	42,399	$	163		$	191,814
Period-end total deposits	0		168,437		30,592		7,805			206,834

	Nine Months Ended September 30, 2014
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking(1)			Other(1)			Consolidated Total(1)
Net interest income (expense)	$	7,613	$	4,289	$	1,296		$	(36	)	$	13,162
Non-interest income	2,470		499		318			28			3,315
Total net revenue (loss)	10,083		4,788		1,614			(8		)	16,477
Provision (benefit) for credit losses	1,894		481		61			(4		)	2,432
Non-interest expense:
Amortization of intangibles:
PCCR intangible amortization	282		0		0			0			282
Core deposit intangible amortization	0		84		16			0			100
Total PCCR and core deposit intangible amortization	282		84		16			0			382
Other non-interest expense	4,893		2,740		774			107			8,514
Total non-interest expense	5,175		2,824		790			107			8,896
Income (loss) from continuing operations before income taxes	3,014		1,483		763			(111		)	5,149
Income tax provision (benefit)	1,054		530		273			(161		)	1,696
Income from continuing operations, net of tax	$	1,960	$	953	$	490		$	50		$	3,453
Period-end total loans held for investment	$	80,631	$	71,061	$	49,788		$	112		$	201,592
Period-end total deposits	0		167,624		31,918			4,722			204,264
	Nine Months Ended September 30, 2013
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking(1)			Other(1)			Consolidated Total(1)
Net interest income (expense)	$	8,391	$	4,437	$	1,227		$	(372	)	$	13,683
Non-interest income	2,487		554		264			(148		)	3,157
Total net revenue (loss)	10,878		4,991		1,491			(520		)	16,840
Provision (benefit) for credit losses	2,073		444		(18		)	(3		)	2,496
Non-interest expense:
Amortization of intangibles:
PCCR intangible amortization	332		0		0			0			332
Core deposit intangible amortization	0		106		21			0			127
Total PCCR and core deposit intangible amortization	332		106		21			0			459
Other non-interest expense	5,239		2,621		656			143			8,659
Total non-interest expense	5,571		2,727		677			143			9,118
Income (loss) from continuing operations before income taxes	3,234		1,820		832			(660		)	5,226
Income tax provision (benefit)	1,135		648		296			(332		)	1,747
Income (loss) from continuing operations, net of tax	$	2,099	$	1,172	$	536		$	(328	)	$	3,479
Period-end total loans held for investment	$	77,967	$	71,285	$	42,399		$	163		$	191,814
Period-end total deposits	0		168,437		30,592			7,805			206,834

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⁽¹⁾   In the first quarter of 2014, we adopted the proportional amortization method of accounting for Investments in Qualified Affordable Housing Projects. See “Note 1—Summary of Significant Accounting Policies” for expanded discussion. Prior periods have been recast to conform to this presentation.