Lines of businesses

We have an internal information system that produces performance data along product and services lines for our two principal businesses and the Other segment.

Business accounting principles

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

Business results are subject to reclassification when organizational changes are made or whenever improvements are made in the measurement principles.

Results for the three and nine months ended Sept. 30, 2013 have been restated to reflect the impact of the retrospective application of adopting new accounting guidance in the first quarter of 2014 related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 2 of the Notes to Consolidated Financial Statements for additional information.

The accounting policies of the businesses are the same as those described in Note 1 of the Notes to Consolidated Financial Statements in our 2013 Annual Report.

The primary types of revenue for our two principal businesses and the Other segment are presented below:



Business	Primary types of revenue
Investment Management	Ÿ Investment management and performance fees from: Mutual funds Institutional clients Private clients High-net-worth individuals and families, endowments and foundations and related entities Ÿ Distribution and servicing fees
Investment Services	Ÿ Asset servicing fees, including institutional trust and custody fees, broker-dealer services, global collateral services and securities lending Ÿ Issuer services fees, including Corporate Trust and Depositary Receipts Ÿ Clearing services fees, including broker-dealer services, registered investment advisor services and prime brokerage services Ÿ Treasury services fees, including global payment services and working capital solutions Ÿ Foreign exchange
Other segment	Ÿ Credit-related activities Ÿ Leasing operations Ÿ Corporate treasury activities Ÿ Global markets and institutional banking services Ÿ Business exits

The results of our businesses are presented and analyzed on an internal management reporting basis:


•	Revenue amounts reflect fee and other revenue generated by each business. Fee and other revenue transferred between businesses under revenue transfer agreements is included within other revenue in each business.


•	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 allocated to Investment Services.


•	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.


•	Incentive expense related to restricted stock and certain corporate overhead charges are allocated to the businesses.


•	Support and other indirect expenses are allocated to businesses based on internally-developed methodologies.


•	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 investment 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 included in the Other segment.


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


•	M&I expense is a corporate level item and is recorded in the Other segment.


•	Restructuring charges recorded in the second and third quarters of 2014 relate to corporate-level initiatives and were therefore recorded in the Other segment. In the fourth quarter of 2013, restructuring charges were recorded in the businesses. Prior to the fourth quarter of 2013, restructuring charges were reported in the Other segment.


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


•	Goodwill and intangible assets are reflected within individual businesses.

The following consolidating schedules show the contribution of our businesses to our overall profitability.



For the quarter ended Sept. 30, 2014 (dollar amounts in millions)	Investment Management				Investment Services			Other			Consolidated
Fee and other revenue	$	934		(a)	$	2,005		$	928		$	3,867		(a)
Net interest revenue	69				583			69			721
Total revenue	1,003			(a)	2,588			997			4,588			(a)
Provision for credit losses	—				—			(19		)	(19		)
Noninterest expense	758				1,879			331			2,968
Income before taxes	$	245		(a)	$	709		$	685		$	1,639		(a)
Pre-tax operating margin (b)	24		%		27		%	N/M			36		%
Average assets	$	36,670			$	266,455		$	77,284		$	380,409


(a)	Both total fee and other revenue and total revenue include income from consolidated investment management funds of $39 million, net of noncontrolling interests of $23 million, for a net impact of $16 million. Income before taxes is net of noncontrolling interests of $23 million.


(b)	Income before taxes divided by total revenue.

N/M - Not meaningful.



For the quarter ended June 30, 2014 (dollar amounts in millions)	Investment Management				Investment Services			Other			Consolidated
Fee and other revenue	$	970		(a)	$	1,920		$	119		$	3,009		(a)
Net interest revenue	66				593			60			719
Total revenue	1,036			(a)	2,513			179			3,728			(a)
Provision for credit losses	—				—			(12		)	(12		)
Noninterest expense	865				1,868			213			2,946
Income (loss) before taxes	$	171		(a)	$	645		$	(22	)	$	794		(a)
Pre-tax operating margin (b)	16		%		26		%	N/M			21		%
Average assets	$	37,750			$	264,221		$	67,241		$	369,212


(a)	Both total fee and other revenue and total revenue include income from consolidated investment management funds of $46 million, net of noncontrolling interests of $17 million, for a net impact of $29 million. Income before taxes is net of noncontrolling interests of $17 million.


(b)	Income before taxes divided by total revenue.

N/M - Not meaningful.



For the quarter ended Sept. 30, 2013 (dollar amounts in millions)	Investment Management				Investment Services			Other		Consolidated
Fee and other revenue (a)	$	882		(b)	$	1,949		$	172	$	3,003		(b)
Net interest revenue	67				619			86		772
Total revenue (a)	949			(b)	2,568			258		3,775			(b)
Provision for credit losses	—				—			2		2
Noninterest expense	724				1,811			244		2,779
Income before taxes (a)	$	225		(b)	$	757		$	12	$	994		(b)
Pre-tax operating margin (a)(c)	24		%		29		%	N/M		26		%
Average assets	$	38,690			$	246,252		$	56,808	$	341,750


(a)	Consolidated results and Other segment results have been restated to reflect the retrospective application of adopting new accounting guidance in the first quarter of 2014 related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 2 of the Notes to Consolidated Financial Statements for additional information.


(b)	Both total fee and other revenue and total revenue include income from consolidated investment management funds of $32 million, net of noncontrolling interests of $8 million, for a net impact of $24 million. Income before taxes is net of noncontrolling interests of $8 million.


(c)	Income before taxes divided by total revenue.

N/M - Not meaningful.



For the nine months ended Sept. 30, 2014 (dollar amounts in millions)	Investment Management				Investment Services			Other			Consolidated
Fee and other revenue	$	2,804		(a)	$	5,812		$	1,159		$	9,775		(a)
Net interest revenue	205				1,766			197			2,168
Total revenue	3,009			(a)	7,578			1,356			11,943			(a)
Provision for credit losses	—				—			(49		)	(49		)
Noninterest expense	2,347				5,569			737			8,653
Income before taxes	$	662		(a)	$	2,009		$	668		$	3,339		(a)
Pre-tax operating margin (b)	22		%		26		%	N/M			28		%
Average assets	$	37,951			$	263,078		$	67,268		$	368,297


(a)	Both total fee and other revenue and total revenue include income from consolidated investment management funds of $121 million, net of noncontrolling interests of $60 million, for a net impact of $61 million. Income before taxes is net of noncontrolling interests of $60 million.


(b)	Income before taxes divided by total revenue.

N/M - Not meaningful.



For the nine months ended Sept. 30, 2013 (dollar amounts in millions)	Investment Management				Investment Services			Other			Consolidated
Fee and other revenue (a)	$	2,675		(b)	$	5,780		$	671		$	9,126		(b)
Net interest revenue	192				1,905			151			2,248
Total revenue (a)	2,867			(b)	7,685			822			11,374			(b)
Provision for credit losses	—				1			(42		)	(41		)
Noninterest expense	2,165				5,533			731			8,429
Income before taxes (a)	$	702		(b)	$	2,151		$	133		$	2,986		(b)
Pre-tax operating margin (a)(c)	24		%		27		%	N/M			26		%
Average assets	$	38,462			$	243,769		$	55,420		$	337,651


(a)	Consolidated results and Other segment results have been restated to reflect the retrospective application of adopting new accounting guidance in the first quarter of 2014 related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 2 of the Notes to Consolidated Financial Statements for additional information.


(b)	Both total fee and other revenue and total revenue include income from consolidated investment management funds of $147 million, net of noncontrolling interests of $63 million, for a net impact of $84 million. Income before taxes is net of noncontrolling interests of $63 million.


(c)	Income before taxes divided by total revenue.

N/M - Not meaningful.