XML 33 R21.htm IDEA: XBRL DOCUMENT v3.19.1
Business Segments and Revenue from Contracts with Customers Business Segments and Revenue from Contracts with Customers (Notes)
 3 Months Ended
Mar. 31, 2019
Segment Reporting [Abstract]  
Segment Reporting Disclosure
NOTE 13—BUSINESS SEGMENTS AND REVENUE FROM CONTRACTS WITH CUSTOMERS
Our principal operations are organized into three major business segments, which are defined primarily 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, asset/liability management by our centralized Corporate Treasury group and residual tax expense or benefit to arrive at the consolidated effective tax rate that is not assessed to our primary business segments, are included in the Other category.
Basis of Presentation
We report the results of each of our business segments on a continuing operations basis. 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 and Revenue from Contracts with Customers” in our 2018 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. In the first quarter of 2019, we made a change in how revenue is measured in our Commercial Banking business by revising the allocation of tax benefits on certain tax-advantaged investments. As such, prior period results have been recast to conform with the current period presentation. The result of this measurement change reduced the previously reported total net revenue in our Commercial Banking business by $30 million for the three months ended March 31, 2018, with an offsetting increase in the Other category. This change in measurement of our Commercial Banking revenue did not have any impact to the consolidated financial statements.
The following tables present our business segment results for the three months ended March 31, 2019 and 2018, selected balance sheet data as of March 31, 2019 and 2018, 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 March 31, 2019
(Dollars in millions)
 
Credit
Card
 
Consumer
Banking
 
Commercial
Banking(1)(2)
 
Other(1)(2)
 
Consolidated
Total
Net interest income
 
$
3,590

 
$
1,679

 
$
489

 
$
33

 
$
5,791

Non-interest income (loss)
 
950

 
160

 
187

 
(5
)
 
1,292

Total net revenue
 
4,540

 
1,839

 
676

 
28

 
7,083

Provision for credit losses
 
1,389

 
235

 
69

 
0

 
1,693

Non-interest expense
 
2,171

 
994

 
417

 
89

 
3,671

Income (loss) from continuing operations before income taxes
 
980

 
610

 
190

 
(61
)
 
1,719

Income tax provision (benefit)
 
229

 
142

 
44

 
(106
)
 
309

Income from continuing operations, net of tax
 
$
751

 
$
468

 
$
146

 
$
45

 
$
1,410

Loans held for investment
 
$
109,836

 
$
59,248

 
$
71,189

 
$
0

 
$
240,273

Deposits
 
0

 
205,439

 
31,248

 
18,420

 
255,107

 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2018
(Dollars in millions)
 
Credit
Card
 
Consumer
Banking
 
Commercial
Banking(1)(2)
 
Other(1)(2)
 
Consolidated
Total
Net interest income
 
$
3,558

 
$
1,615

 
$
506

 
$
39

 
$
5,718

Non-interest income (loss)
 
857

 
174

 
187

 
(27
)
 
1,191

Total net revenue
 
4,415

 
1,789

 
693

 
12

 
6,909

Provision (benefit) for credit losses
 
1,456

 
233

 
(14
)
 
(1
)
 
1,674

Non-interest expense
 
2,039

 
1,000

 
403

 
131

 
3,573

Income (loss) from continuing operations before income taxes
 
920

 
556

 
304

 
(118
)
 
1,662

Income tax provision (benefit)
 
213

 
130

 
71

 
(95
)
 
319

Income (loss) from continuing operations, net of tax
 
$
707

 
$
426

 
$
233

 
$
(23
)
 
$
1,343

Loans held for investment
 
$
107,576

 
$
74,674

 
$
65,953

 
$
53

 
$
248,256

Deposits
 
0

 
193,073

 
34,449

 
23,325

 
250,847

__________    
(1) 
Some of our commercial investments generate tax-exempt income, tax credits or other tax benefits. Accordingly, we present our Commercial Banking revenue and yields on a taxable-equivalent basis, calculated using the federal statutory tax rate of 21% and state taxes where applicable, with offsetting reductions to the Other category.
(2) 
In the first quarter of 2019, we made a change in how revenue is measured in our Commercial Banking business by revising the allocation of tax benefits on certain tax-advantaged investments. As such, prior period results have been recast to conform with the current period presentation. The result of this measurement change reduced the previously reported total net revenue in our Commercial Banking business by $30 million for the three months ended March 31, 2018, with an offsetting increase in the Other category.
 
 
 
 
 
 
 
 
 
 
 

Revenue from Contracts with Customers
The majority of our revenue from contracts with customers consists of interchange fees in our Credit Card business, service charges and other customer-related fees, and other contract revenue in our Consumer Banking and Commercial Banking businesses. Interchange fees are primarily from our Credit Card business and are recognized upon settlement with the interchange networks, net of rewards earned by customers. Service charges and other customer-related fees within our Consumer Banking business are primarily related to fees earned on consumer deposit accounts for account maintenance and various transaction-based services such as overdrafts and ATM usage. Service charges and other customer-related fees within our Commercial Banking business are mostly related to fees earned on treasury management and capital markets services. Other contract revenue consists primarily of
revenue earned on certain marketing and promotional events from our auto dealers within our Consumer Banking business. Revenue from contracts with customers is included in non-interest income in our consolidated statements of income.
The following tables present revenue from contracts with customers and a reconciliation to non-interest income by business segment for the three months ended March 31, 2019 and 2018.
Table 13.2: Revenue from Contracts with Customers and Reconciliation to Segments Results
 
 
Three Months Ended March 31, 2019
(Dollars in millions)
 
Credit
Card
 
Consumer
Banking
 
Commercial
Banking(1)
 
Other(1)
 
Consolidated
Total
Contract revenue:
 
 
 
 
 
 
 
 
 
 
Interchange fees, net(2)
 
$
702

 
$
46

 
$
11

 
$
(1
)
 
$
758

Service charges and other customer-related fees
 
0

 
75

 
25

 
0

 
100

Other
 
12

 
24

 
0

 
0

 
36

Total contract revenue
 
714

 
145

 
36

 
(1
)
 
894

Revenue from other sources
 
236

 
15

 
151

 
(4
)
 
398

Total non-interest income
 
$
950

 
$
160

 
$
187

 
$
(5
)
 
$
1,292

 
 
Three Months Ended March 31, 2018
(Dollars in millions)
 
Credit
Card
 
Consumer
Banking
 
Commercial
Banking(1)
 
Other(1)
 
Consolidated
Total
Contract revenue:
 
 
 
 
 
 
 
 
 
 
Interchange fees, net(2)
 
$
594

 
$
42

 
$
7

 
$
0

 
$
643

Service charges and other customer-related fees
 
0

 
98

 
32

 
0

 
130

Other
 
2

 
29

 
0

 
0

 
31

Total contract revenue
 
596

 
169

 
39

 
0

 
804

Revenue from other sources
 
261

 
5

 
148

 
(27
)
 
387

Total non-interest income
 
$
857

 
$
174

 
$
187

 
$
(27
)
 
$
1,191

__________
(1) 
Some of our commercial investments generate tax-exempt income, tax credits or other tax benefits. Accordingly, we present our Commercial Banking revenue and yields on a taxable-equivalent basis, calculated using the federal statutory tax rate of 21% and state taxes where applicable, with offsetting reclassifications to the Other category.
(2) 
Interchange fees are presented net of customer reward expenses.