Business Segments

6 Months Ended

Jun. 30, 2017

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 our 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 present 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 18—Business Segments” in our 2016 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 or changes in organizational alignment. The following tables present our business segment results for the three and six months ended June 30, 2017 and 2016, selected balance sheet data as of June 30, 2017 and 2016, and a reconciliation of our total business segment results to our reported consolidated income from continuing operations, loans held for investment and deposits. 

Table 13.1: Segment Results and Reconciliation

	Three Months Ended June 30, 2017
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking(1)		Other(1)			Consolidated Total
Net interest income	$	3,294	$	1,578	$	569	$	32		$	5,473
Non-interest income	875		183		183		(10		)	1,231
Total net revenue	4,169		1,761		752		22			6,704
Provision (benefit) for credit losses	1,397		268		140		(5		)	1,800
Non-interest expense	1,918		1,059		381		56			3,414
Income (loss) from continuing operations before income taxes	854		434		231		(29		)	1,490
Income tax provision (benefit)	301		158		85		(101		)	443
Income from continuing operations, net of tax	$	553	$	276	$	146	$	72		$	1,047
Loans held for investment	$	101,590	$	74,973	$	67,672	$	67		$	244,302
Deposits	0		186,607		33,153		20,003			239,763
	Three Months Ended June 30, 2016
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking(1)		Other(1)			Consolidated Total
Net interest income	$	3,045	$	1,439	$	559	$	50		$	5,093
Non-interest income	859		175		129		(2		)	1,161
Total net revenue	3,904		1,614		688		48			6,254
Provision (benefit) for credit losses	1,261		204		128		(1		)	1,592
Non-interest expense	1,883		1,006		343		63			3,295
Income (loss) from continuing operations before income taxes	760		404		217		(14		)	1,367
Income tax provision (benefit)	276		147		79		(78		)	424
Income from continuing operations, net of tax	$	484	$	257	$	138	$	64		$	943
Loans held for investment	$	96,904	$	71,415	$	66,202	$	82		$	234,603
Deposits	0		176,340		34,281		10,438			221,059

	Six Months Ended June 30, 2017
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking(1)		Other(1)			Consolidated Total
Net interest income	$	6,640	$	3,095	$	1,135	$	77		$	10,947
Non-interest income	1,613		378		341		(40		)	2,292
Total net revenue	8,253		3,473		1,476		37			13,239
Provision (benefit) for credit losses	3,114		547		138		(7		)	3,792
Non-interest expense	3,847		2,101		772		128			6,848
Income (loss) from continuing operations before income taxes	1,292		825		566		(84		)	2,599
Income tax provision (benefit)	468		301		207		(219		)	757
Income from continuing operations, net of tax	$	824	$	524	$	359	$	135		$	1,842
Loans held for investment	$	101,590	$	74,973	$	67,672	$	67		$	244,302
Deposits	0		186,607		33,153		20,003			239,763
	Six Months Ended June 30, 2016
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking(1)		Other(1)			Consolidated Total
Net interest income	$	6,078	$	2,859	$	1,096	$	116		$	10,149
Non-interest income	1,706		366		247		6			2,325
Total net revenue	7,784		3,225		1,343		122			12,474
Provision (benefit) for credit losses	2,332		434		356		(3		)	3,119
Non-interest expense	3,746		1,996		665		111			6,518
Income (loss) from continuing operations before income taxes	1,706		795		322		14			2,837
Income tax provision (benefit)	613		289		117		(143		)	876
Income from continuing operations, net of tax	$	1,093	$	506	$	205	$	157		$	1,961
Loans held for investment	$	96,904	$	71,415	$	66,202	$	82		$	234,603
Deposits	0		176,340		34,281		10,438			221,059

__________    

⁽¹⁾  Some of our tax-related commercial investments generate tax-exempt income or tax credits. Accordingly, we make certain reclassifications within our Commercial Banking business results to present revenues and yields on a taxable-equivalent basis, calculated assuming an effective tax rate approximately equal to our federal statutory tax rate of 35% with offsetting reclassifications to the Other category.