NOTE 20—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.


•	Credit Card: Consists of our domestic consumer and small business card lending, and the international card lending businesses in Canada and the United Kingdom.


•	Consumer Banking: Consists of our branch-based lending and deposit gathering activities for consumers and small businesses, national deposit gathering, national auto lending and consumer home loan lending and servicing activities.


•	Commercial Banking: Consists of our lending, deposit gathering and treasury management services to commercial real estate and commercial and industrial customers. Our commercial and industrial customers typically include companies with annual revenues between $10 million to $1 billion.

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Other category: Includes the residual impact of the allocation of our centralized Corporate Treasury group activities, such as management of our corporate investment portfolio and asset/liability management, to our business segments. Accordingly, net gains and losses on our investment securities portfolio and certain trading activities are included in the Other category. Other category also includes foreign exchange-rate fluctuations on foreign currency-denominated transactions; unallocated corporate expenses that do not directly support the operations of the business segments or for which the business segments are not considered financially accountable in evaluating their performance, such as acquisition and restructuring charges; certain provisions for representation and warranty reserves related to continuing operations; certain material items that are non-recurring in nature; and offsets related to certain line-item reclassifications.

Basis of Presentation

We report the results of each of our business segments on a continuing operations basis. See “Note 3—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.

The following is additional information on the principles and methodologies used in preparing our business segment results.

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Net interest income: Interest income from loans held for investment and interest expense from deposits and other interest-bearing liabilities are reflected within each applicable business segment. Because funding and asset/liability management are managed centrally by our Corporate Treasury Group, net interest income for our business segments also includes the results of a funds transfer pricing process that is intended to allocate a cost of funds used or credit for funds provided to all business segment assets and liabilities, respectively, using a matched funding concept. Also, the taxable-equivalent benefit of tax-exempt products is allocated to each business unit with a corresponding increase in income tax expense.


•	Non-interest income: Non-interest fees and other revenue associated with loans or customers managed by each business segment and other direct revenues are accounted for within each business segment.


•	Provision for credit losses: The provision for credit losses is directly attributable to the business segment in which the loans are managed.

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Non-interest expense: Non-interest expenses directly managed and incurred by a business segment are accounted for within each business segment. We allocate certain non-interest expenses indirectly incurred by business segments, such as corporate support functions, to each business segment based on various factors, including the actual cost of the services from the service providers, the utilization of the services, the number of employees or other relevant factors.


•	Goodwill and intangible assets: Goodwill and intangible assets that are not directly attributable to business segments are assigned to business segments based on the relative fair value of each segment. Intangible amortization is included in the results of the applicable segment.


•	Income taxes: Income taxes are assessed for each business segment based on a standard tax rate with the residual tax expense or benefit to arrive at the consolidated effective tax rate included in the Other category.


•	Loans held for investment: Loans are reported within each business segment based on product or customer type.


•	Deposits: Deposits are reported within each business segment based on product or customer type.

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 years ended December 31, 2015, 2014 and 2013, selected balance sheet data as of 2015, 2014 and 2013, and a reconciliation of our total business segment results to our reported consolidated income from continuing operations, assets and deposits.

Table 20.1: Segment Results and Reconciliation



	Year Ended December 31, 2015
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking		Other			Consolidated Total
Net interest income	$	11,161	$	5,755	$	1,865	$	53		$	18,834
Non-interest income	3,421		710		487		(39		)	4,579
Total net revenue	14,582		6,465		2,352		14			23,413
Provision (benefit) for credit losses	3,417		819		302		(2		)	4,536
Non-interest expense:
Amortization of intangibles:
PCCR intangible amortization	316		0		0		0			316
Core deposit intangible amortization	0		79		15		0			94
Total PCCR and core deposit intangible amortization	316		79		15		0			410
Other non-interest expense	7,186		3,947		1,141		312			12,586
Total non-interest expense	7,502		4,026		1,156		312			12,996
Income (loss) from continuing operations before income taxes	3,663		1,620		894		(296		)	5,881
Income tax provision (benefit)	1,309		586		324		(350		)	1,869
Income from continuing operations, net of tax	$	2,354	$	1,034	$	570	$	54		$	4,012
Loans held for investment	$	96,125	$	70,372	$	63,266	$	88		$	229,851
Deposits	0		172,702		34,257		10,762			217,721



	Year Ended December 31, 2014
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking			Other			Consolidated Total
Net interest income	$	10,310	$	5,748	$	1,751		$	9		$	17,818
Non-interest income	3,311		684		450			27			4,472
Total net revenue	13,621		6,432		2,201			36			22,290
Provision (benefit) for credit losses	2,750		703		93			(5		)	3,541
Non-interest expense:
Amortization of intangibles:
PCCR intangible amortization	369		0		0			0			369
Core deposit intangible amortization	0		108		21			0			129
Total PCCR and core deposit intangible amortization	369		108		21			0			498
Other non-interest expense	6,694		3,761		1,062			165			11,682
Total non-interest expense	7,063		3,869		1,083			165			12,180
Income (loss) from continuing operations before income taxes	3,808		1,860		1,025			(124		)	6,569
Income tax provision (benefit)	1,329		665		366			(214		)	2,146
Income from continuing operations, net of tax	$	2,479	$	1,195	$	659		$	90		$	4,423
Loans held for investment	$	85,876	$	71,439	$	50,890		$	111		$	208,316
Deposits	0		168,078		31,954			5,516			205,548

	Year Ended December 31, 2013
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking			Other			Consolidated Total
Net interest income (expense)	$	10,967	$	5,905	$	1,674		$	(440	)	$	18,106
Non-interest income	3,320		749		395			(186		)	4,278
Total net revenue (loss)	14,287		6,654		2,069			(626		)	22,384
Provision (benefit) for credit losses	2,824		656		(24		)	(3		)	3,453
Non-interest expense:
Amortization of intangibles:
PCCR intangible amortization	434		0		0			0			434
Core deposit intangible amortization	0		138		27			0			165
Total PCCR and core deposit intangible amortization	434		138		27			0			599
Other non-interest expense	7,005		3,607		931			211			11,754
Total non-interest expense	7,439		3,745		958			211			12,353
Income (loss) from continuing operations before income taxes	4,024		2,253		1,135			(834		)	6,578
Income tax provision (benefit)	1,409		802		404			(391		)	2,224
Income (loss) from continuing operations, net of tax	$	2,615	$	1,451	$	731		$	(443	)	$	4,354
Loans held for investment	$	81,305	$	70,762	$	45,011		$	121		$	197,199
Deposits	0		167,652		30,567			6,304			204,523