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Business Segment Information
 9 Months Ended
Sep. 30, 2015
Segment Reporting [Abstract]  
Business Segment Information
BUSINESS SEGMENT INFORMATION
The Corporation has strategically aligned its operations into three major business segments: the Business Bank, the Retail Bank and Wealth Management. These business segments are differentiated based on the type of customer and the related products and services provided. In addition to the three major business segments, the Finance Division is also reported as a segment. Business segment results are produced by the Corporation’s internal management accounting system. This system measures financial results based on the internal business unit structure of the Corporation. The performance of the business segments is not comparable with the Corporation's consolidated results and is not necessarily comparable with similar information for any other financial institution. Additionally, because of the interrelationships of the various segments, the information presented is not indicative of how the segments would perform if they operated as independent entities. The management accounting system assigns balance sheet and income statement items to each business segment using certain methodologies, which are regularly reviewed and refined. These methodologies may be modified as the management accounting system is enhanced and changes occur in the organizational structure and/or product lines. For comparability purposes, amounts in all periods are based on business segments and methodologies in effect at September 30, 2015.
In the second quarter 2014, the Corporation enhanced the approach used to determine the standard reserve factors used in estimating the allowance for credit losses, which had the effect of capturing certain elements in the standard reserve component that had formerly been included in the qualitative assessment. The impact of the change was largely neutral to the total allowance for loan losses at June 30, 2014. However, because standard reserves are allocated to the segments at the loan level, while qualitative reserves are allocated at the portfolio level, the impact of the methodology change on the allowance of each segment reflected the characteristics of the individual loans within each segment's portfolio, causing segment reserves to increase or decrease accordingly. As a result, the current year provision for credit losses within each segment is not comparable to prior period amounts.
The following discussion provides information about the activities of each business segment. A discussion of the financial results and the factors impacting performance can be found in the section entitled "Business Segments" in the financial review.
The Business Bank meets the needs of middle market businesses, multinational corporations and governmental entities by offering various products and services, including commercial loans and lines of credit, deposits, cash management, capital market products, international trade finance, letters of credit, foreign exchange management services and loan syndication services.
The Retail Bank includes small business banking and personal financial services, consisting of consumer lending, consumer deposit gathering and mortgage loan origination. In addition to a full range of financial services provided to small business customers, this business segment offers a variety of consumer products, including deposit accounts, installment loans, credit cards, student loans, home equity lines of credit and residential mortgage loans.
Wealth Management offers products and services consisting of fiduciary services, private banking, retirement services, investment management and advisory services, investment banking and brokerage services. This business segment also offers the sale of annuity products, as well as life, disability and long-term care insurance products.
The Finance segment includes the Corporation’s securities portfolio and asset and liability management activities. This segment is responsible for managing the Corporation’s funding, liquidity and capital needs, performing interest sensitivity analysis and executing various strategies to manage the Corporation’s exposure to liquidity, interest rate risk and foreign exchange risk.
The Other category includes discontinued operations, the income and expense impact of equity and cash, tax benefits not assigned to specific business segments, charges of an unusual or infrequent nature that are not reflective of the normal operations of the business segments and miscellaneous other expenses of a corporate nature.
For further information on the methodologies which form the basis for these results refer to Note 22 to the consolidated financial statements in the Corporation's 2014 Annual Report.
Business segment financial results are as follows:
(dollar amounts in millions)
Business
Bank
 
Retail
Bank
 
Wealth Management
 
Finance
 
Other
 
Total
Three Months Ended September 30, 2015
 
 
 
 
 
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense) (FTE)
$
380

 
$
158

 
$
45

 
$
(162
)
 
$
2

 
$
423

Provision for credit losses
30

 
2

 
(3
)
 
—

 
(3
)
 
26

Noninterest income
145

 
49

 
59

 
15

 
(4
)
 
264

Noninterest expenses
202

 
185

 
74

 
2

 
(2
)
 
461

Provision (benefit) for income taxes (FTE)
99

 
7

 
12

 
(56
)
 
2

 
64

Net income (loss)
$
194

 
$
13

 
$
21

 
$
(93
)
 
$
1

 
$
136

Net loan charge-offs (recoveries)
$
23

 
$
1

 
$
(1
)
 
$
—

 
$
—

 
$
23

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
39,210

 
$
6,518

 
$
5,228

 
$
12,177

 
$
8,200

 
$
71,333

Loans
38,113

 
5,835

 
5,024

 
—

 
—

 
48,972

Deposits
31,397

 
23,079

 
4,188

 
212

 
264

 
59,140

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (a)
1.98
%
 
0.23
%
 
1.62
%
 
N/M

 
N/M

 
0.76
%
Efficiency ratio (b)
38.41

 
89.33

 
71.11

 
N/M

 
N/M

 
67.08

(dollar amounts in millions)
Business
Bank
 
Retail
Bank
 
Wealth Management
 
Finance
 
Other
 
Total
Three Months Ended September 30, 2014
 
 
 
 
 
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense) (FTE)
$
376

 
$
153

 
$
45

 
$
(166
)
 
$
7

 
$
415

Provision for credit losses
(4
)
 
—

 
7

 
—

 
2

 
5

Noninterest income
97

 
42

 
59

 
15

 
2

 
215

Noninterest expenses
152

 
185

 
78

 
(29
)
 
11

 
397

Provision (benefit) for income taxes (FTE)
114

 
3

 
7

 
(49
)
 
(1
)
 
74

Net income (loss)
$
211

 
$
7

 
$
12

 
$
(73
)
 
$
(3
)
 
$
154

Net loan charge-offs (recoveries)
$
(2
)
 
$
—

 
$
5

 
$
—

 
$
—

 
$
3

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
37,751

 
$
6,273

 
$
4,998

 
$
11,023

 
$
6,353

 
$
66,398

Loans
36,746

 
5,605

 
4,808

 
—

 
—

 
47,159

Deposits
28,815

 
22,042

 
3,924

 
128

 
254

 
55,163

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (a)
2.24
%
 
0.12
%
 
0.98
%
 
N/M

 
N/M

 
0.93
%
Efficiency ratio b)
32.12

 
94.64

 
75.00

 
N/M

 
N/M

 
62.87

(a)
Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(b)    Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains.
FTE – Fully Taxable Equivalent
N/M – not meaningful
(dollar amounts in millions)
Business
Bank
 
Retail
Bank
 
Wealth Management
 
Finance
 
Other
 
Total
Nine Months Ended September 30, 2015
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense) (FTE)
$
1,123

 
$
466

 
$
133

 
$
(470
)
 
$
7

 
$
1,259

Provision for credit losses
115

 
(14
)
 
(12
)
 
—

 
(2
)
 
87

Noninterest income
427

 
137

 
177

 
42

 
(3
)
 
780

Noninterest expenses
578

 
542

 
225

 
7

 
4

 
1,356

Provision (benefit) for income taxes (FTE)
292

 
26

 
34

 
(162
)
 
1

 
191

Net income (loss)
$
565

 
$
49

 
$
63

 
$
(273
)
 
$
1

 
$
405

Net loan charge-offs (recoveries)
$
54

 
$
3

 
$
(8
)
 
$
—

 
$
—

 
$
49

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
39,002

 
$
6,449

 
$
5,137

 
$
12,013

 
$
7,087

 
$
69,688

Loans
37,950

 
5,767

 
4,938

 
—

 
—

 
48,655

Deposits
30,594

 
22,746

 
4,082

 
159

 
270

 
57,851

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (a)
1.93
%
 
0.28
%
 
1.64
%
 
N/M

 
N/M

 
0.78
%
Efficiency ratio (b)
37.27

 
89.91

 
71.97

 
N/M

 
N/M

 
66.41

(dollar amounts in millions)
Business
Bank
 
Retail
Bank
 
Wealth Management
 
Finance
 
Other
 
Total
Nine Months Ended September 30, 2014
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense) (FTE)
$
1,120

 
$
454

 
$
135

 
$
(485
)
 
$
19

 
$
1,243

Provision for credit losses
48

 
(5
)
 
(11
)
 
—

 
(7
)
 
25

Noninterest income
288

 
124

 
181

 
44

 
6

 
643

Noninterest expenses
440

 
533

 
231

 
(24
)
 
27

 
1,207

Provision (benefit) for income taxes (FTE)
314

 
17

 
34

 
(160
)
 
5

 
210

Net income (loss)
$
606

 
$
33

 
$
62

 
$
(257
)
 
$
—

 
$
444

Net loan charge-offs
$
18

 
$
6

 
$
—

 
$
—

 
$
—

 
$
24

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
36,936

 
$
6,241

 
$
4,972

 
$
11,069

 
$
6,117

 
$
65,335

Loans
35,964

 
5,572

 
4,791

 
—

 
—

 
46,327

Deposits
27,727

 
21,854

 
3,708

 
246

 
246

 
53,781

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (a)
2.19
%
 
0.20
%
 
1.65
%
 
N/M

 
N/M

 
0.91
%
Efficiency ratio (b)
31.28

 
92.03

 
73.40

 
N/M

 
N/M

 
63.99

(a)
Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(b)    Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains.
FTE – Fully Taxable Equivalent
N/M – not meaningful
The Corporation operates in three primary markets - Texas, California, and Michigan, as well as in Arizona and Florida, with select businesses operating in several other states, and in Canada and Mexico. The Corporation produces market segment results for the Corporation’s three primary geographic markets as well as Other Markets. Other Markets includes Florida, Arizona, the International Finance division and businesses with a national perspective. The Finance & Other category includes the Finance segment and the Other category as previously described. Market segment results are provided as supplemental information to the business segment results and may not meet all operating segment criteria as set forth in GAAP. For comparability purposes, amounts in all periods are based on market segments and methodologies in effect at September 30, 2015.
A discussion of the financial results and the factors impacting performance can be found in the section entitled "Market Segments" in the financial review.
Market segment financial results are as follows:
(dollar amounts in millions)
Michigan
 
California
 
Texas
 
Other
Markets
 
Finance
& Other
 
Total
Three Months Ended September 30, 2015
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense) (FTE)
$
180

 
$
187

 
$
129

 
$
87

 
$
(160
)
 
$
423

Provision for credit losses
6

 
24

 
10

 
(11
)
 
(3
)
 
26

Noninterest income
85

 
38

 
34

 
96

 
11

 
264

Noninterest expenses
152

 
102

 
97

 
110

 
—

 
461

Provision (benefit) for income taxes (FTE)
36

 
37

 
20

 
25

 
(54
)
 
64

Net income (loss)
$
71

 
$
62

 
$
36

 
$
59

 
$
(92
)
 
$
136

Net loan charge-offs
$
9

 
$
10

 
$
4

 
$
—

 
$
—

 
$
23

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
13,856

 
$
17,060

 
$
11,578

 
$
8,462

 
$
20,377

 
$
71,333

Loans
13,223

 
16,789

 
10,997

 
7,963

 
—

 
48,972

Deposits
21,946

 
18,372

 
10,753

 
7,593

 
476

 
59,140

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (a)
1.23
%
 
1.27
%
 
1.16
%
 
2.82
%
 
N/M

 
0.76
%
Efficiency ratio (b)
57.49

 
45.28

 
59.54

 
59.86

 
N/M

 
67.08

(dollar amounts in millions)
Michigan
 
California
 
Texas
 
Other
Markets
 
Finance
& Other
 
Total
Three Months Ended September 30, 2014
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense) (FTE)
$
179

 
$
182

 
$
130

 
$
83

 
$
(159
)
 
$
415

Provision for credit losses
(8
)
 
14

 
3

 
(6
)
 
2

 
5

Noninterest income
83

 
37

 
36

 
42

 
17

 
215

Noninterest expenses
166

 
102

 
96

 
51

 
(18
)
 
397

Provision (benefit) for income taxes (FTE)
38

 
40

 
25

 
21

 
(50
)
 
74

Net income (loss)
$
66

 
$
63

 
$
42

 
$
59

 
$
(76
)
 
$
154

Net loan charge-offs (recoveries)
$
3

 
$
6

 
$
—

 
$
(6
)
 
$
—

 
$
3

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
13,724

 
$
15,768

 
$
11,835

 
$
7,695

 
$
17,376

 
$
66,398

Loans
13,248

 
15,509

 
11,147

 
7,255

 
—

 
47,159

Deposits
21,214

 
16,350

 
10,633

 
6,584

 
382

 
55,163

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (a)
1.19
%
 
1.47
%
 
1.40
%
 
3.07
%
 
N/M

 
0.93
%
Efficiency ratio (b)
62.91

 
46.49

 
57.91

 
41.46

 
N/M

 
62.87

(a)
Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(b)    Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains.
FTE – Fully Taxable Equivalent
N/M – not meaningful
(dollar amounts in millions)
Michigan
 
California
 
Texas
 
Other
Markets
 
Finance
& Other
 
Total
Nine Months Ended September 30, 2015
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense) (FTE)
$
537

 
$
543

 
$
390

 
$
252

 
$
(463
)
 
$
1,259

Provision for credit losses
(15
)
 
24

 
74

 
6

 
(2
)
 
87

Noninterest income
251

 
112

 
101

 
277

 
39

 
780

Noninterest expenses
436

 
300

 
287

 
322

 
11

 
1,356

Provision (benefit) for income taxes (FTE)
124

 
124

 
48

 
56

 
(161
)
 
191

Net income (loss)
$
243

 
$
207

 
$
82

 
$
145

 
$
(272
)
 
$
405

Net loan charge-offs
$
10

 
$
16

 
$
12

 
$
11

 
$
—

 
$
49

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
13,815

 
$
16,741

 
$
11,881

 
$
8,151

 
$
19,100

 
$
69,688

Loans
13,245

 
16,473

 
11,260

 
7,677

 
—

 
48,655

Deposits
21,788

 
17,500

 
10,907

 
7,227

 
429

 
57,851

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (a)
1.42
%
 
1.48
%
 
0.88
%
 
2.38
%
 
N/M

 
0.78
%
Efficiency ratio (b)
55.27

 
45.88

 
58.38

 
60.61

 
N/M

 
66.41

(dollar amounts in millions)
Michigan
 
California
 
Texas
 
Other
Markets
 
Finance
& Other
 
Total
Nine Months Ended September 30, 2014
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense) (FTE)
$
544

 
$
531

 
$
403

 
$
231

 
$
(466
)
 
$
1,243

Provision for credit losses
(13
)
 
39

 
32

 
(26
)
 
(7
)
 
25

Noninterest income
256

 
110

 
104

 
123

 
50

 
643

Noninterest expenses
486

 
298

 
275

 
145

 
3

 
1,207

Provision (benefit) for income taxes (FTE)
118

 
115

 
72

 
60

 
(155
)
 
210

Net income (loss)
$
209

 
$
189

 
$
128

 
$
175

 
$
(257
)
 
$
444

Net loan charge-offs
$
13

 
$
21

 
$
7

 
$
(17
)
 
$
—

 
$
24

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
13,797

 
$
15,543

 
$
11,525

 
$
7,284

 
$
17,186

 
$
65,335

Loans
13,400

 
15,259

 
10,829

 
6,839

 
—

 
46,327

Deposits
20,853

 
15,506

 
10,743

 
6,187

 
492

 
53,781

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (a)
1.27
%
 
1.53
%
 
1.42
%
 
3.20
%
 
N/M

 
0.91
%
Efficiency ratio (b)
60.67

 
46.57

 
54.13

 
41.16

 
N/M

 
63.99

(a)
Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(b)    Noninterest expenses as a percentage of the sum of net interest income (FTE) and noninterest income excluding net securities gains.
FTE – Fully Taxable Equivalent
N/M – not meaningful