Quarterly report pursuant to Section 13 or 15(d)

Business Segment Information

 v2.3.0.11
Business Segment Information
 6 Months Ended
Jun. 30, 2011
Business Segment Information [Abstract]  
Business Segment Information
NOTE 20 – Business Segment Information
     The Corporation reports the results of its operations through six business segments: Deposits, Global Card Services, Consumer Real Estate Services, Global Commercial Banking, Global Banking & Markets and Global Wealth & Investment Management , with the remaining operations recorded in All Other. For more information on each business segment, see Note 26 — Business Segment Information to the Consolidated Financial Statements of the Corporation’s 2010 Annual Report on Form 10-K.
 
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 a fully taxable-equivalent (FTE) basis and noninterest income. The adjustment of net interest income to a 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. For presentation purposes, 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 the Corporation’s ALM activities.
     The Corporation’s ALM activities include an overall interest rate risk management strategy that incorporates the use of interest rate contracts to manage fluctuations in earnings 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 net interest income. The Corporation’s ALM activities are allocated to the business segments and fluctuate based on performance. 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 most significant of these expenses include data and item processing costs and certain centralized or shared functions. Data processing costs are allocated to the segments based on equipment usage. Item processing costs are allocated to the segments based on the volume of items processed for each segment. The costs of certain centralized or shared functions are allocated based on methodologies that reflect utilization.
     The following tables present total revenue, net of interest expense, on a FTE basis and net income (loss) for the three and six months ended June 30, 2011 and 2010, and total assets at June 30, 2011 and 2010 for each business segment, as well as All Other.
                                                 
  Business Segments
  Three Months Ended June 30
    Total Corporation (1)     Deposits     Global Card Services  
  (Dollars in millions)   2011   2010   2011   2010   2011   2010
 
Net interest income (2)
  $ 11,493     $ 13,197     $ 2,281     $ 2,144     $ 3,611     $ 4,442  
Noninterest income
    1,990       16,253       1,020       1,551       1,925       2,506  
 
Total revenue, net of interest expense
    13,483       29,450       3,301       3,695       5,536       6,948  
Provision for credit losses
    3,255       8,105       31       61       481       3,796  
Amortization of intangibles
    382       439       39       49       183       203  
Other noninterest expense
    22,474       16,814       2,560       2,523       1,699       1,649  
 
Income (loss) before income taxes
    (12,628 )     4,092       671       1,062       3,173       1,300  
Income tax expense (benefit) (2)
    (3,802 )     969       241       388       1,138       474  
 
Net income (loss)
  $ (8,826 )   $ 3,123     $ 430     $ 674     $ 2,035     $ 826  
 
Period-end total assets
  $ 2,261,319     $ 2,368,384     $ 449,123     $ 439,770     $ 161,756     $ 184,213  
 
 
    Consumer Real     Global Commercial     Global Banking &  
    Estate Services     Banking     Markets  
    2011   2010   2011   2010   2011   2010
 
Net interest income (2)
  $ 579     $ 992     $ 1,827     $ 2,097     $ 1,791     $ 2,002  
Noninterest income (loss)
    (11,894 )     1,712       983       786       5,005       3,902  
 
Total revenue, net of interest expense
    (11,315 )     2,704       2,810       2,883       6,796       5,904  
Provision for credit losses
    1,507       2,390       (417 )     623       (82 )     (133 )
Amortization of intangibles
    4       13       15       18       29       37  
Other noninterest expense
    8,643       2,725       1,053       956       4,684       4,698  
 
Income (loss) before income taxes
    (21,469 )     (2,424 )     2,159       1,286       2,165       1,302  
Income tax expense (benefit) (2)
    (6,949 )     (882 )     778       471       607       404  
 
Net income (loss)
  $ (14,520 )   $ (1,542 )   $ 1,381     $ 815     $ 1,558     $ 898  
 
Period-end total assets
  $ 185,398     $ 223,998     $ 280,289     $ 306,234     $ 691,249     $ 718,563  
 
 
    Global Wealth &        
    Investment Management     All Other  
    2011   2010   2011   2010
 
Net interest income (2)
  $ 1,571     $ 1,443     $ (167 )   $ 77  
Noninterest income
    2,919       2,746       2,032       3,050  
 
Total revenue, net of interest expense
    4,490       4,189       1,865       3,127  
Provision for credit losses
    72       122       1,663       1,246  
Amortization of intangibles
    112       117       -       2  
Other noninterest expense
    3,519       3,152       316       1,111  
 
Income (loss) before income taxes
    787       798       (114 )     768  
Income tax expense (benefit) (2)
    281       469       102       (355 )
 
Net income (loss)
  $ 506     $ 329     $ (216 )   $ 1,123  
 
Period-end total assets
  $ 284,294     $ 252,507     $ 209,210     $ 243,099  
 
 
(1)  
There were no material intersegment revenues.
 
(2)  
FTE basis
                                                 
  Business Segments
  Six Months Ended June 30
    Total Corporation (1)     Deposits     Global Card Services  
  (Dollars in millions)   2011   2010   2011   2010   2011   2010
 
Net interest income (2)
  $ 23,890     $ 27,267     $ 4,486     $ 4,319     $ 7,358     $ 9,262  
Noninterest income
    16,688       34,473       2,004       3,094       3,865       4,576  
 
Total revenue, net of interest expense
    40,578       61,740       6,490       7,413       11,223       13,838  
Provision for credit losses
    7,069       17,910       64       98       1,442       7,331  
Amortization of intangibles
    767       885       78       98       367       407  
Other noninterest expense
    42,372       34,143       5,113       5,041       3,484       3,257  
 
Income (loss) before income taxes
    (9,630 )     8,802       1,235       2,176       5,930       2,843  
Income tax expense (benefit) (2)
    (2,853 )     2,497       450       804       2,160       1,049  
 
Net income (loss)
  $ (6,777 )   $ 6,305     $ 785     $ 1,372     $ 3,770     $ 1,794  
 
Period-end total assets
  $ 2,261,319     $ 2,368,384     $ 449,123     $ 439,770     $ 161,756     $ 184,213  
 
                                                 
    Consumer Real     Global Commercial     Global Banking &  
    Estate Services     Banking     Markets  
    2011   2010   2011   2010   2011   2010
 
Net interest income (2)
  $ 1,475     $ 2,199     $ 3,677     $ 4,290     $ 3,828     $ 4,172  
Noninterest income (loss)
    (10,727 )     4,038       1,784       1,685       10,854       11,425  
 
Total revenue, net of interest expense
    (9,252 )     6,237       5,461       5,975       14,682       15,597  
Provision for credit losses
    2,605       5,990       (338 )     1,559       (284 )     103  
Amortization of intangibles
    11       25       29       37       59       73  
Other noninterest expense
    13,437       5,960       2,145       1,968       9,376       8,951  
 
Income (loss) before income taxes
    (25,305 )     (5,738 )     3,625       2,411       5,531       6,470  
Income tax expense (benefit) (2)
    (8,370 )     (2,119 )     1,321       891       1,839       2,333  
 
Net income (loss)
  $ (16,935 )   $ (3,619 )   $ 2,304     $ 1,520     $ 3,692     $ 4,137  
 
Period-end total assets
  $ 185,398     $ 223,998     $ 280,289     $ 306,234     $ 691,249     $ 718,563  
 
 
                                 
    Global Wealth &        
    Investment Management     All Other  
    2011   2010   2011   2010
 
Net interest income (2)
  $ 3,140     $ 2,907     $ (74 )   $ 118  
Noninterest income
    5,842       5,323       3,066       4,332  
 
Total revenue, net of interest expense
    8,982       8,230       2,992       4,450  
Provision for credit losses
    118       363       3,462       2,466  
Amortization of intangibles
    223       233       -       12  
Other noninterest expense
    7,007       6,135       1,810       2,831  
 
Income (loss) before income taxes
    1,634       1,499       (2,280 )     (859 )
Income tax expense (benefit) (2)
    595       731       (848 )     (1,192 )
 
Net income (loss)
  $ 1,039     $ 768     $ (1,432 )   $ 333  
 
Period-end total assets
  $ 284,294     $ 252,507     $ 209,210     $ 243,099  
 
 
 
(1)  
There were no material intersegment revenues.
 
(2)  
FTE basis
     The tables below present a reconciliation of the six business segments’ total revenue, net of interest expense, on a FTE basis, and net income to the Consolidated Statement of Income, and total assets to the Consolidated Balance Sheet. The adjustments presented in the tables below include consolidated income, expense and asset amounts not specifically allocated to individual business segments.
                                 
    Three Months Ended June 30   Six Months Ended June 30
  (Dollars in millions)   2011   2010   2011   2010
 
Segments’ total revenue, net of interest expense (1)
  $ 11,618     $ 26,323     $ 37,586     $ 57,290  
Adjustments:
                               
ALM activities
    1,145       976       910       1,726  
Equity investment income
    1,139       2,253       2,547       2,765  
Liquidating businesses
    62       444       112       1,048  
FTE basis adjustment
    (247 )     (297 )     (465 )     (618 )
Other
    (481 )     (546 )     (577 )     (1,089 )
 
Consolidated revenue, net of interest expense
  $ 13,236     $ 29,153     $ 40,113     $ 61,122  
 
 
Segments’ net income (loss)
  $ (8,610 )   $ 2,000     $ (5,345 )   $ 5,972  
Adjustments, net-of-tax:
                               
ALM activities
    (535 )     (452 )     (1,945 )     (479 )
Equity investment income
    718       1,419       1,605       1,742  
Liquidating businesses
    (9 )     103       (44 )     272  
Merger and restructuring charges
    101       320       228       648  
Other
    (491 )     (267 )     (1,276 )     (1,850 )
 
Consolidated net income (loss)
  $ (8,826 )   $ 3,123     $ (6,777 )   $ 6,305  
 
(1)  
FTE basis
                 
    June 30
  (Dollars in millions)   2011   2010
 
Segments’ total assets
  $ 2,052,109     $ 2,125,285  
Adjustments:
               
ALM activities, including securities portfolio
    639,220       586,609  
Equity investments
    30,995       35,450  
Liquidating businesses
    10,078       33,026  
Elimination of segment excess asset allocations to match liabilities
    (629,621 )     (603,543 )
Other
    158,538       191,557  
 
Consolidated total assets
  $ 2,261,319     $ 2,368,384