Annual report pursuant to Section 13 and 15(d)

Business Segment Information

v3.19.3.a.u2
Business Segment Information
 12 Months Ended
Dec. 31, 2019
Segment Reporting [Abstract]  
Business Segment Information Business Segment Information
The Corporation reports its results of operations through the following four business segments: Consumer Banking, GWIM, Global Banking and Global Markets, with the remaining operations recorded in All Other.
Consumer Banking
Consumer Banking offers a diversified range of credit, banking and investment products and services to consumers and small businesses. Consumer Banking product offerings include traditional savings accounts, money market savings accounts, CDs and IRAs, checking accounts, and investment accounts and products, as well as credit and debit cards, residential mortgages and home equity loans, and direct and indirect loans to consumers and small businesses in the U.S. Consumer Banking includes the impact of servicing residential mortgages and home equity loans in the core portfolio.
Global Wealth & Investment Management
GWIM provides a high-touch client experience through a network of financial advisors focused on clients with over $250,000 in total investable assets, including tailored solutions to meet clients’ needs through a full set of investment management, brokerage, banking and retirement products. GWIM also provides comprehensive wealth management solutions targeted to high net worth and ultra high net worth clients, as well as customized solutions to meet clients’ wealth structuring, investment management, trust and banking needs, including specialty asset management services.
Global Banking
Global Banking provides a wide range of lending-related products and services, integrated working capital management and treasury solutions, and underwriting and advisory services through the Corporation’s network of offices and client relationship teams. Global Banking also provides investment banking products to clients. The economics of certain investment banking and underwriting activities are shared primarily between Global Banking and Global Markets under an internal revenue-sharing arrangement. Global Banking clients generally include middle-market companies, commercial real estate firms, not-for-profit companies, large global corporations, financial institutions, leasing clients, and mid-sized U.S.-based businesses requiring customized and integrated financial advice and solutions.
Global Markets
Global Markets offers sales and trading services and research services to institutional clients across fixed-income, credit, currency, commodity and equity businesses. Global Markets provides market-making, financing, securities clearing, settlement and custody services globally to institutional investor clients in support of their investing and trading activities. Global Markets product coverage includes securities and derivative products in both the primary and secondary markets. Global Markets also works with commercial and corporate clients to provide risk management products. As a result of market-making activities, Global Markets may be required to manage risk in a broad range of financial products. In addition, the economics of certain investment banking and underwriting activities are shared primarily between Global Markets and Global Banking under an internal revenue-sharing arrangement.
All Other
All Other consists of ALM activities, equity investments, non-core mortgage loans and servicing activities, liquidating businesses and certain expenses not otherwise allocated to business segments. ALM activities encompass certain residential mortgages, debt securities, interest rate and foreign currency risk management activities. Substantially all of the results of ALM activities are allocated to the business segments. Equity investments include the merchant services joint venture as well as a portfolio of equity, real estate and other alternative investments.
Basis of Presentation
The management accounting and reporting process derives segment and business results by utilizing allocation methodologies for revenue and expense. The net income derived for the businesses is dependent upon revenue and cost allocations using an activity-based costing model, funds transfer pricing, and other methodologies and assumptions management believes are appropriate to reflect the results of the business.
Total revenue, net of interest expense, includes net interest income on an FTE basis and noninterest income. The adjustment of net interest income to an FTE basis results in a corresponding increase in income tax expense. The segment results also reflect certain revenue and expense methodologies that are utilized to determine net income. The net interest income of the businesses includes the results of a funds transfer pricing process that matches assets and liabilities with similar interest rate sensitivity
and maturity characteristics. In segments where the total of liabilities and equity exceeds assets, which are generally deposit-taking segments, the Corporation allocates assets to match liabilities. Net interest income of the business segments also includes an allocation of net interest income generated by certain of the Corporation’s ALM activities.
The Corporation’s ALM activities include an overall interest rate risk management strategy that incorporates the use of various derivatives and cash instruments to manage fluctuations in earnings and capital that are caused by interest rate volatility. The Corporation’s goal is to manage interest rate sensitivity so that movements in interest rates do not significantly adversely affect earnings and capital. The results of substantially all of the Corporation’s ALM activities are allocated to the business segments and fluctuate based on the performance of the ALM activities. ALM activities include external product pricing decisions including deposit pricing strategies, the effects of the Corporation’s internal funds transfer pricing process and the net effects of other ALM activities.
Certain expenses not directly attributable to a specific business segment are allocated to the segments. The costs of certain centralized or shared functions are allocated based on methodologies that reflect utilization.
The following table presents net income (loss) and the components thereto (with net interest income on an FTE basis for the business segments, All Other and the total Corporation) for 2019, 2018 and 2017, and total assets at December 31, 2019 and 2018 for each business segment, as well as All Other.
 
 
 
 
 
 
 
 
 
 
 
 
 
Results of Business Segments and All Other
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At and for the year ended December 31
 
Total Corporation (1)
 
Consumer Banking
(Dollars in millions)
 
2019
 
2018
 
2017
 
2019
 
2018
 
2017
Net interest income
 
$
49,486

 
$
48,772

 
$
46,164

 
$
28,158

 
$
27,025

 
$
24,203

Noninterest income
 
42,353

 
42,858

 
41,887

 
10,429

 
10,593

 
10,101

Total revenue, net of interest expense
 
91,839

 
91,630

 
88,051

 
38,587

 
37,618

 
34,304

Provision for credit losses
 
3,590

 
3,282

 
3,396

 
3,772

 
3,664

 
3,525

Noninterest expense
 
54,900

 
53,154

 
54,517

 
17,618

 
17,672

 
17,847

Income before income taxes
 
33,349

 
35,194

 
30,138

 
17,197

 
16,282

 
12,932

Income tax expense
 
5,919

 
7,047

 
11,906

 
4,213

 
4,150

 
4,897

Net income
 
$
27,430

 
$
28,147

 
$
18,232

 
$
12,984

 
$
12,132

 
$
8,035

Period-end total assets
 
$
2,434,079

 
$
2,354,507

 
 
 
$
804,019

 
$
768,881

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Global Wealth &
Investment Management
 
Global Banking
 
 
2019
 
2018
 
2017
 
2019
 
2018
 
2017
Net interest income
 
$
6,504

 
$
6,265

 
$
6,152

 
$
10,675

 
$
10,993

 
$
10,615

Noninterest income
 
13,033

 
13,188

 
12,447

 
9,808

 
9,008

 
9,510

Total revenue, net of interest expense
 
19,537

 
19,453

 
18,599

 
20,483

 
20,001

 
20,125

Provision for credit losses
 
82

 
86

 
56

 
414

 
8

 
212

Noninterest expense
 
13,823

 
14,015

 
13,770

 
9,017

 
8,745

 
8,811

Income before income taxes
 
5,632

 
5,352

 
4,773

 
11,052

 
11,248

 
11,102

Income tax expense
 
1,380

 
1,364

 
1,807

 
2,984

 
2,923

 
4,204

Net income
 
$
4,252

 
$
3,988

 
$
2,966

 
$
8,068

 
$
8,325

 
$
6,898

Period-end total assets
 
$
299,756

 
$
305,907

 
 

 
$
464,032

 
$
442,330

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Global Markets
 
All Other
 
 
2019
 
2018
 
2017
 
2019
 
2018
 
2017
Net interest income
 
$
3,915

 
$
3,857

 
$
4,264

 
$
234


$
632


$
930

Noninterest income
 
11,699

 
12,326

 
11,698

 
(2,616
)

(2,257
)

(1,869
)
Total revenue, net of interest expense
 
15,614

 
16,183

 
15,962

 
(2,382
)
 
(1,625
)
 
(939
)
Provision for credit losses
 
(9
)
 
—

 
164

 
(669
)
 
(476
)
 
(561
)
Noninterest expense
 
10,722

 
10,835

 
10,997

 
3,720

 
1,887

 
3,092

Income (loss) before income taxes
 
4,901

 
5,348

 
4,801

 
(5,433
)
 
(3,036
)
 
(3,470
)
Income tax expense (benefit)
 
1,397

 
1,390

 
1,666

 
(4,055
)
 
(2,780
)
 
(668
)
Net income (loss)
 
$
3,504

 
$
3,958

 
$
3,135

 
$
(1,378
)
 
$
(256
)
 
$
(2,802
)
Period-end total assets
 
$
641,806

 
$
641,923

 
 
 
$
224,466

 
$
195,466

 
 

(1) 
There were no material intersegment revenues.
The table below presents noninterest income and the components thereto for 2019, 2018 and 2017 for each business segment, All Other and the total Corporation. For more information, see Note 2 – Net Interest Income and Noninterest Income.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest Income by Business Segment and All Other
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Corporation
 
Consumer Banking
 
Global Wealth &
Investment Management
(Dollars in millions)
2019
 
2018
 
2017
 
2019
 
2018
 
2017
 
2019
 
2018
 
2017
Fees and commissions:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Card income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interchange fees
$
3,834

 
$
3,866

 
$
3,777

 
$
3,174

 
$
3,196

 
$
3,038

 
$
60

 
$
81

 
$
109

Other card income
1,963

 
1,958

 
1,899

 
1,910


1,906


1,846


41


46


44

Total card income
5,797


5,824

 
5,676

 
5,084

 
5,102

 
4,884

 
101

 
127

 
153

Service charges
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposit-related fees
6,588

 
6,667

 
6,708

 
4,219

 
4,300

 
4,266

 
68

 
73

 
77

Lending-related fees
1,086

 
1,100

 
1,110

 
—


—


—


—


—


—

Total service charges
7,674


7,767

 
7,818

 
4,219

 
4,300

 
4,266

 
68

 
73

 
77

Investment and brokerage services
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset management fees
10,241

 
10,189

 
9,310

 
144

 
147

 
133

 
10,130

 
10,042

 
9,177

Brokerage fees
3,661

 
3,971

 
4,526

 
149


172


184


1,740


1,917


2,217

Total investment and brokerage services
13,902


14,160

 
13,836

 
293

 
319

 
317

 
11,870

 
11,959

 
11,394

Investment banking fees
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Underwriting income
2,998

 
2,722

 
2,821

 
—

 
(1
)
 
—

 
401

 
335

 
316

Syndication fees
1,184

 
1,347

 
1,499

 
—

 
—

 
—

 
—

 
—

 
—

Financial advisory services
1,460

 
1,258

 
1,691

 
—


—

 
—


—


2

 
2

Total investment banking fees
5,642


5,327

 
6,011


—


(1
)

—


401


337


318

Total fees and commissions
33,015


33,078


33,341


9,596


9,720


9,467


12,440


12,496


11,942

Market making and similar activities
9,034

 
9,008

 
7,102

 
6

 
8

 
3

 
113

 
112

 
144

Other income
304

 
772

 
1,444

 
827

 
865

 
631

 
480

 
580

 
361

Total noninterest income
$
42,353


$
42,858


$
41,887


$
10,429


$
10,593


$
10,101


$
13,033


$
13,188

 
$
12,447

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Global Banking
 
Global Markets
 
All Other (1)
 
2019
 
2018
 
2017
 
2019
 
2018
 
2017
 
2019
 
2018
 
2017
Fees and commissions:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Card income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interchange fees
$
519

 
$
503

 
$
478

 
$
81

 
$
86

 
$
86

 
$
—

 
$
—


$
66

Other card income
13


8


12


(1
)

(2
)

(2
)

—

 
—

 
(1
)
Total card income
532

 
511

 
490

 
80

 
84

 
84

 
—

 
—

 
65

Service charges
 
 
 
 
 
 
 
 
 
 
 
 


 


 


Deposit-related fees
2,121

 
2,111

 
2,197

 
156

 
161

 
147

 
24

 
22

 
21

Lending-related fees
894


916


928


192


184


182


—

 
—

 
—

Total service charges
3,015

 
3,027

 
3,125

 
348

 
345

 
329

 
24

 
22

 
21

Investment and brokerage services
 
 
 
 
 
 
 
 
 
 
 
 


 


 


Asset management fees
—

 
—

 
—

 
—

 
—

 
—

 
(33
)
 
—

 
—

Brokerage fees
34


94


97


1,738


1,780


2,049


—

 
8

 
(21
)
Total investment and brokerage services
34

 
94

 
97

 
1,738

 
1,780

 
2,049

 
(33
)
 
8

 
(21
)
Investment banking fees
 
 
 
 
 
 
 
 
 
 
 
 


 


 


Underwriting income
1,227

 
1,090

 
1,172

 
1,555

 
1,495

 
1,588

 
(185
)
 
(197
)
 
(255
)
Syndication fees
574

 
648

 
742

 
610

 
698

 
756

 
—

 
1

 
1

Financial advisory services
1,336


1,153


1,557


123


103


133


1

 
—

 
(1
)
Total investment banking fees
3,137

 
2,891

 
3,471

 
2,288

 
2,296

 
2,477

 
(184
)
 
(196
)
 
(255
)
Total fees and commissions
6,718


6,523


7,183


4,454


4,505


4,939


(193
)
 
(166
)
 
(190
)
Market making and similar activities
235

 
260

 
134

 
7,065

 
7,260

 
6,203

 
1,615

 
1,368

 
618

Other income
2,855

 
2,225

 
2,193

 
180

 
561

 
556

 
(4,038
)
 
(3,459
)
 
(2,297
)
Total noninterest income
$
9,808


$
9,008


$
9,510


$
11,699


$
12,326


$
11,698


$
(2,616
)
 
$
(2,257
)
 
$
(1,869
)
(1) 
All Other includes eliminations of intercompany transactions.
 
 
 
 
 
 
Business Segment Reconciliations
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
2019
 
2018
 
2017
Segments’ total revenue, net of interest expense
$
94,221

 
$
93,255

 
$
88,990

Adjustments (1):
 

 
 

 
 

ALM activities
241

 
(325
)
 
161

Liquidating businesses, eliminations and other
(2,623
)
 
(1,300
)
 
(1,100
)
FTE basis adjustment
(595
)
 
(610
)
 
(925
)
Consolidated revenue, net of interest expense
$
91,244

 
$
91,020

 
$
87,126

Segments’ total net income
28,808

 
28,403

 
21,034

Adjustments, net-of-tax (1):
 
 
 

 
 

ALM activities
202

 
(222
)
 
154

Liquidating businesses, eliminations and other
(1,580
)
 
(34
)
 
(2,956
)
Consolidated net income
$
27,430

 
$
28,147

 
$
18,232

 
 
 
 
 
 
 
 
 
December 31
 
 
 
2019
 
2018
Segments’ total assets
 
 
$
2,209,613

 
$
2,159,041

Adjustments (1):
 
 
 

 
 

ALM activities, including securities portfolio
 
 
721,806

 
669,204

Elimination of segment asset allocations to match liabilities
 
 
(565,346
)
 
(540,798
)
Other
 
 
68,006

 
67,060

Consolidated total assets
 
 
$
2,434,079

 
$
2,354,507


(1) 
Adjustments include consolidated income, expense and asset amounts not specifically allocated to individual business segments.