Business segments

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Business segments

Business segments

We have an internal information system that produces performance data along product and service lines for our three principal business segments and the Other segment. The primary products and services and types of revenue for our principal businesses and a description of the Other segment are presented in Note 24 of the Notes to Consolidated Financial Statements in our 2021 Annual Report.

Business accounting principles

Our business data has been determined on an internal management basis of accounting, rather than GAAP which is used for consolidated financial reporting. These measurement principles are designed so that reported results of the businesses will track their economic performance.

Business segment results are subject to reclassification when organizational changes are made, or for refinements in revenue and expense allocation methodologies. Refinements are typically reflected on a prospective basis. There were no reclassification or organization changes in the second quarter of 2022.

The accounting policies of the businesses are the same as those described in Note 1 of the Notes to Consolidated Financial Statements in our 2021 Annual Report.

The results of our business segments are presented and analyzed on an internal management reporting basis.

•Revenue amounts reflect fee and other revenue generated by each business and include revenue for services provided between the segments that are also provided to third parties. Fee and other revenue transferred between businesses under revenue transfer agreements is included within other fees in each segment.

•Revenues and expenses associated with specific client bases are included in those businesses. For example, foreign exchange activity associated with clients using custody products is included in the Securities Services segment.

•Net interest revenue is allocated to businesses based on the yields on the assets and liabilities generated by each business. We employ a funds transfer pricing system that matches funds with the specific assets and liabilities of each business based on their interest sensitivity and maturity characteristics.

•The provision for credit losses associated with the respective credit portfolios is reflected in each segment.

•Incentives expense related to restricted stock and RSUs is allocated to the segments.

•Support and other indirect expenses, including services provided between segments that are not provided to third parties or not subject to a revenue transfer agreement, are allocated to the businesses based on internally developed methodologies and reflected in noninterest expense.

•Recurring FDIC expense is allocated to the businesses based on average deposits generated within each business.

•Litigation expense is generally recorded in the business in which the charge occurs.

•Management of the securities portfolio is a shared service contained in the Other segment. As a result, gains and losses associated with the valuation of the securities portfolio are generally included in the Other segment.

•Client deposits serve as the primary funding source for our securities portfolio. We typically allocate all interest revenue to the businesses generating the deposits. Accordingly, accretion related to the portion of the securities portfolio restructured in 2009 has been included in the results of the businesses.

•Balance sheet assets and liabilities and their related income or expense are specifically assigned to each business. Segments with a net liability position have been allocated assets.

•Goodwill and intangible assets are reflected within individual businesses.

The following consolidating schedules present the contribution of our segments to our overall profitability.

For the quarter ended June 30, 2022	Securities Services			Market and Wealth Services			Investment and Wealth Management				Other		Consolidated
(dollars in millions)
Total fee and other revenue	$	1,549		$	974		$	837		(a)	$	75	$	3,435		(a)
Net interest revenue (expense)	457			340			62				(35)		824
Total revenue	2,006			1,314			899			(a)	40		4,259			(a)
Provision for credit losses	13			4			—				30		47
Noninterest expense	1,656			702			691				63		3,112
Income (loss) before income taxes	$	337		$	608		$	208		(a)	$	(53)	$	1,100		(a)
Pre-tax operating margin (b)	17		%	46		%	23		%		N/M		26		%
Average assets	$	219,797		$	141,952		$	33,668			$	42,206	$	437,623

(a)    Total fee and other revenue, total revenue and income before taxes are net of loss attributable to noncontrolling interests related to consolidated investment management funds of $5 million.

(b)    Income before income taxes divided by total revenue.

N/M – Not meaningful.

For the quarter ended March 31, 2022	Securities Services			Market and Wealth Services			Investment and Wealth Management				Other		Consolidated
(dollars in millions)
Total fee and other revenue	$	1,403		$	906		$	907		(a)	$	20	$	3,236		(a)
Net interest revenue (expense)	377			296			57				(32)		698
Total revenue (loss)	1,780			1,202			964			(a)	(12)		3,934			(a)
Provision for credit losses	(10)			(2)			(3)				17		2
Noninterest expense	1,510			708			755				33		3,006
Income (loss) before income taxes	$	280		$	496		$	212		(a)	$	(62)	$	926		(a)
Pre-tax operating margin (b)	16		%	41		%	22		%		N/M		23		%
Average assets	$	220,889		$	141,183		$	35,629			$	42,501	$	440,202

(a)    Total fee and other revenue, total revenue and income before taxes are net of loss attributable to noncontrolling interests related to consolidated investment management funds of $8 million.

(b)    Income before income taxes divided by total revenue.

N/M – Not meaningful.

For the quarter ended June 30, 2021	Securities Services			Market and Wealth Services			Investment and Wealth Management				Other		Consolidated
(dollars in millions)
Total fee and other revenue	$	1,433		$	903		$	952		(a)	$	22	$	3,310		(a)
Net interest revenue (expense)	354			289			47				(45)		645
Total revenue (loss)	1,787			1,192			999			(a)	(23)		3,955			(a)
Provision for credit losses	(58)			(19)			(4)				(5)		(86)
Noninterest expense	1,400			652			677				49		2,778
Income (loss) before income taxes	$	445		$	559		$	326		(a)	$	(67)	$	1,263		(a)
Pre-tax operating margin (b)	25		%	47		%	33		%		N/M		32		%
Average assets	$	231,152		$	144,297		$	30,370			$	46,510	$	452,329

(a)    Total fee and other revenue, total revenue and income before taxes are net of income attributable to noncontrolling interests related to consolidated investment management funds of $5 million.

(b)    Income before income taxes divided by total revenue.

N/M – Not meaningful.

For the six months ended June 30, 2022	Securities Services			Market and Wealth Services			Investment and Wealth Management				Other		Consolidated
(dollars in millions)
Total fee and other revenue	$	2,952		$	1,880		$	1,744		(a)	$	95	$	6,671		(a)
Net interest revenue (expense)	834			636			119				(67)		1,522
Total revenue	3,786			2,516			1,863			(a)	28		8,193			(a)
Provision for credit losses	3			2			(3)				47		49
Noninterest expense	3,166			1,410			1,446				96		6,118
Income (loss) before income taxes	$	617		$	1,104		$	420		(a)	$	(115)	$	2,026		(a)
Pre-tax operating margin (b)	16		%	44		%	23		%		N/M		25		%
Average assets	$	220,340		$	141,570		$	34,643			$	42,371	$	438,924

(a)    Total fee and other revenue, total revenue and income before taxes are net of loss attributable to noncontrolling interests related to consolidated investment management funds of $13 million.

(b)    Income before income taxes divided by total revenue.

N/M – Not meaningful.

For the six months ended June 30, 2021	Securities Services			Market and Wealth Services			Investment and Wealth Management				Other		Consolidated
(dollars in millions)
Total fee and other revenue (loss)	$	2,864		$	1,817		$	1,895		(a)	$	(5)	$	6,571		(a)
Net interest revenue (expense)	710			578			95				(83)		1,300
Total revenue	3,574			2,395			1,990			(a)	(88)		7,871			(a)
Provision for credit losses	(108)			(48)			—				(13)		(169)
Noninterest expense	2,819			1,334			1,386				90		5,629
Income before income taxes	$	863		$	1,109		$	604		(a)	$	(165)	$	2,411		(a)
Pre-tax operating margin (b)	24		%	46		%	30		%		N/M		31		%
Average assets	$	229,620		$	146,546		$	31,213			$	48,953	$	456,332

(a)    Total fee and other revenue, total revenue and income before taxes are net of income attributable to noncontrolling interests related to consolidated investment management funds of $10 million.

(b)    Income before income taxes divided by total revenue.

N/M – Not meaningful.