XML 77 R20.htm IDEA: XBRL DOCUMENT v3.19.3
Business Segment Information
 9 Months Ended
Sep. 30, 2019
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. From time to time, the Corporation may make reclassifications among the segments to more appropriately reflect management's current view of the segments, and 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 unit structure and methodologies in effect at September 30, 2019.
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 small and 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 a full range of personal financial services, consisting of consumer lending, consumer deposit gathering and mortgage loan origination. 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 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 23 to the consolidated financial statements in the Corporation's 2018 Annual Report.
Business segment financial results are as follows:
 
Business
Bank
 
Retail
Bank
 
Wealth Management
 
Finance
 
Other
 
Total
(dollar amounts in millions)
 
 
 
 
 
Three Months Ended September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense)
$
420

 
$
142

 
$
47

 
$
(38
)
 
$
15

 
$
586

Provision for credit losses
39

 
(2
)
 
(3
)
 
—

 
1

 
35

Noninterest income
140

 
31

 
69

 
12

 
4

 
256

Noninterest expenses
199

 
149

 
69

 
(1
)
 
19

 
435

Provision (benefit) for income taxes
74

 
5

 
12

 
(8
)
 
(3
)
(a)
80

Net income (loss)
$
248

 
$
21

 
$
38

 
$
(17
)
 
$
2

 
$
292

Net credit-related charge-offs (recoveries)
$
43

 
$
1

 
$
(2
)
 
$
—

 
$
—

 
$
42

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
45,459

 
$
2,871

 
$
5,032

 
$
14,392

 
$
3,982

 
$
71,736

Loans
43,889

 
2,114

 
4,884

 
—

 
—

 
50,887

Deposits
28,917

 
20,761

 
3,775

 
2,049

 
214

 
55,716

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (b)
2.17
%
 
0.39
%
 
3.01
%
 
n/m

 
n/m

 
1.61
%
Efficiency ratio (c)
35.62

 
84.54

 
59.79

 
n/m

 
n/m

 
51.54

 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense)
$
414

 
$
140

 
$
46

 
$
(16
)
 
$
15

 
$
599

Provision for credit losses
—

 
1

 
1

 
—

 
(2
)
 
—

Noninterest income
137

 
35

 
66

 
(7
)
 
3

 
234

Noninterest expenses
211

 
153

 
72

 
(1
)
 
17

 
452

Provision (benefit) for income taxes
76

 
5

 
10

 
(8
)
 
(20
)
(a)
63

Net income (loss)
$
264

 
$
16

 
$
29

 
$
(14
)
 
$
23

 
$
318

Net credit-related charge-offs
$
14

 
$
—

 
$
1

 
$
—

 
$
—

 
$
15

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
43,165

 
$
2,621

 
$
5,068

 
$
13,696

 
$
6,660

 
$
71,210

Loans
41,591

 
2,057

 
4,936

 
—

 
—

 
48,584

Deposits
30,286

 
20,765

 
3,988

 
929

 
125

 
56,093

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (b)
2.43
%
 
0.31
%
 
2.28
%
 
n/m

 
n/m

 
1.77
%
Efficiency ratio (c)
38.24

 
86.96

 
63.93

 
n/m

 
n/m

 
52.93

(a)
Included discrete tax benefits of $5 million and $23 million for the three months ended September 30, 2019 and 2018, respectively.
(b)
Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(c)
Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities and a derivative contract tied to the conversion rate of Visa Class B shares.
n/m – not meaningful
(dollar amounts in millions)
Business
Bank
 
Retail
Bank
 
Wealth Management
 
Finance
 
Other
 
Total
Nine Months Ended September 30, 2019
 
 
 
 
 
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense)
$
1,252

 
$
434

 
$
140

 
$
(77
)
 
$
46

 
$
1,795

Provision for credit losses
85

 
(5
)
 
(13
)
 
—

 
(1
)
 
66

Noninterest income
412

 
95

 
201

 
30

 
6

 
744

Noninterest expenses
592

 
441

 
208

 
(1
)
 
52

 
1,292

Provision (benefit) for income taxes
227

 
21

 
35

 
(16
)
 
(15
)
(a)
252

Net income (loss)
$
760

 
$
72

 
$
111

 
$
(30
)
 
$
16

 
$
929

Net credit-related charge-offs (recoveries)
$
90

 
$
1

 
$
(5
)
 
$
—

 
$
—

 
$
86

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
44,902

 
$
2,841

 
$
5,092

 
$
14,184

 
$
3,908

 
$
70,927

Loans
43,456

 
2,108

 
4,950

 
—

 
—

 
50,514

Deposits
28,545

 
20,628

 
3,772

 
1,788

 
176

 
54,909

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (b)
2.26
%
 
0.46
%
 
2.92
%
 
n/m

 
n/m

 
1.75
%
Efficiency ratio (c)
35.61

 
82.70

 
61.04

 
n/m

 
n/m

 
50.66

 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense)
$
1,200

 
$
402

 
$
133

 
$
(37
)
 
$
40

 
$
1,738

Provision for credit losses
(9
)
 
(2
)
 
(2
)
 
—

 
(4
)
 
(17
)
Noninterest income
403

 
100

 
201

 
16

 
6

 
726

Noninterest expenses
635

 
450

 
218

 
(3
)
 
46

 
1,346

Provision (benefit) for income taxes
222

 
12

 
29

 
(13
)
 
(40
)
(a)
210

Net income (loss)
$
755

 
$
42

 
$
89

 
$
(5
)
 
$
44

 
$
925

Net credit-related charge-offs
$
40

 
$
—

 
$
—

 
$
—

 
$
—

 
$
40

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
43,205

 
$
2,629

 
$
5,233

 
$
13,736

 
$
5,886

 
$
70,689

Loans
41,580

 
2,062

 
5,102

 
—

 
—

 
48,744

Deposits
30,168

 
20,888

 
3,879

 
949

 
120

 
56,004

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (b)
2.34
%
 
0.26
%
 
2.26
%
 
n/m

 
n/m

 
1.75
%
Efficiency ratio (c)
39.59

 
89.03

 
65.51

 
n/m

 
n/m

 
54.12

(a)
Included discrete tax benefits of $16 million and $48 million for the nine months ended September 30, 2019 and 2018, respectively.
(b)
Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(c)
Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding gains (losses) from securities and a derivative contract tied to the conversion rate of Visa Class B shares.
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, 2019.
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:
 
Michigan
 
California
 
Texas
 
Other
Markets
 
Finance
& Other
 
Total
(dollar amounts in millions)
 
 
 
 
 
Three Months Ended September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense)
$
185

 
$
203

 
$
125

 
$
96

 
$
(23
)
 
$
586

Provision for credit losses
(1
)
 
(6
)
 
50

 
(9
)
 
1

 
35

Noninterest income
74

 
41

 
31

 
94

 
16

 
256

Noninterest expenses
139

 
102

 
86

 
90

 
18

 
435

Provision (benefit) for income taxes
27

 
37

 
5

 
22

 
(11
)
(a)
80

Net income (loss)
$
94

 
$
111

 
$
15

 
$
87

 
$
(15
)
 
$
292

Net credit-related charge-offs (recoveries)
$
6

 
$
5

 
$
34

 
$
(3
)
 
$
—

 
$
42

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
13,213

 
$
18,726

 
$
11,462

 
$
9,961

 
$
18,374

 
$
71,736

Loans
12,554

 
18,393

 
10,805

 
9,135

 
—

 
50,887

Deposits
20,164

 
16,725

 
8,705

 
7,859

 
2,263

 
55,716

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (b)
1.78
%
 
2.37
%
 
0.48
%
 
3.47
%
 
n/m

 
1.61
%
Efficiency ratio (c)
53.31

 
41.64

 
55.57

 
47.19

 
n/m

 
51.54

 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense)
$
185

 
$
200

 
$
120

 
$
95

 
$
(1
)
 
$
599

Provision for credit losses
4

 
3

 
(9
)
 
4

 
(2
)
 
—

Noninterest income
76

 
43

 
33

 
86

 
(4
)
 
234

Noninterest expenses
144

 
106

 
89

 
97

 
16

 
452

Provision (benefit) for income taxes
25

 
34

 
16

 
16

 
(28
)
(a)
63

Net income
$
88

 
$
100

 
$
57

 
$
64

 
$
9

 
$
318

Net credit-related charge-offs (recoveries)
$
8

 
$
5

 
$
3

 
$
(1
)
 
$
—

 
$
15

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
13,055

 
$
18,349

 
$
10,263

 
$
9,187

 
$
20,356

 
$
71,210

Loans
12,424

 
18,074

 
9,694

 
8,392

 
—

 
48,584

Deposits
20,720

 
16,894

 
8,902

 
8,523

 
1,054

 
56,093

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (b)
1.63
%
 
2.18
%
 
2.18
%
 
2.74
%
 
n/m

 
1.77
%
Efficiency ratio (c)
54.96

 
43.10

 
58.06

 
54.02

 
n/m

 
52.93

(a)
Included discrete tax benefits of $5 million and $23 million for the three months ended September 30, 2019 and 2018, respectively.
(b)
Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(c)
Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities and a derivative contract tied to the conversion rate of Visa Class B shares.
n/m – not meaningful
(dollar amounts in millions)
Michigan
 
California
 
Texas
 
Other
Markets
 
Finance
& Other
 
Total
Nine Months Ended September 30, 2019
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense)
$
557

 
$
616

 
$
372

 
$
281

 
$
(31
)
 
$
1,795

Provision for credit losses
(6
)
 
(11
)
 
88

 
(4
)
 
(1
)
 
66

Noninterest income
218

 
121

 
97

 
272

 
36

 
744

Noninterest expenses
412

 
301

 
255

 
273

 
51

 
1,292

Provision (benefit) for income taxes
83

 
113

 
30

 
57

 
(31
)
(a)
252

Net income (loss)
$
286

 
$
334

 
$
96

 
$
227

 
$
(14
)
 
$
929

Net credit-related charge-offs (recoveries)
$
10

 
$
9

 
$
73

 
$
(6
)
 
$
—

 
$
86

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
13,176

 
$
19,000

 
$
11,240

 
$
9,419

 
$
18,092

 
$
70,927

Loans
12,605

 
18,695

 
10,586

 
8,628

 
—

 
50,514

Deposits
19,959

 
16,433

 
8,690

 
7,863

 
1,964

 
54,909

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (b)
1.85
%
 
2.36
%
 
1.13
%
 
3.23
%
 
n/m

 
1.75
%
Efficiency ratio (c)
53.00

 
40.82

 
54.35

 
49.33

 
n/m

 
50.66

 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
540

 
$
582

 
$
353

 
$
260

 
$
3

 
$
1,738

Provision for credit losses
38

 
(8
)
 
(37
)
 
(6
)
 
(4
)
 
(17
)
Noninterest income
222

 
124

 
94

 
264

 
22

 
726

Noninterest expenses
432

 
316

 
273

 
282

 
43

 
1,346

Provision (benefit) for income taxes
67

 
101

 
48

 
47

 
(53
)
(a)
210

Net income
$
225

 
$
297

 
$
163

 
$
201

 
$
39

 
$
925

Net credit-related charge-offs
$
7

 
$
18

 
$
11

 
$
4

 
$
—

 
$
40

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
13,291

 
$
18,542

 
$
10,352

 
$
8,882

 
$
19,622

 
$
70,689

Loans
12,556

 
18,284

 
9,789

 
8,115

 
—

 
48,744

Deposits
20,947

 
16,875

 
9,016

 
8,097

 
1,069

 
56,004

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (b)
1.39
%
 
2.14
%
 
2.10
%
 
3.03
%
 
n/m

 
1.75
%
Efficiency ratio (c)
56.50

 
44.76

 
60.92

 
53.91

 
n/m

 
54.12

(a)
Included discrete tax benefits of $16 million and $48 million for the nine months ended September 30, 2019 and 2018, respectively.
(b)
Return on average assets is calculated based on the greater of average assets or average liabilities and attributed equity.
(c)
Noninterest expenses as a percentage of the sum of net interest income and noninterest income excluding gains (losses) from securities and a derivative contract tied to the conversion rate of Visa Class B shares.
n/m – not meaningful