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Business Segment Information
 3 Months Ended
Mar. 31, 2020
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 March 31, 2020.
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 22 to the consolidated financial statements in the Corporation's 2019 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 March 31, 2020
 
 
 
 
 
 
 
 
 
 
 
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense)
$
380

 
$
125

 
$
41

 
$
(44
)
 
$
11

 
$
513

Provision for credit losses
396

 
3

 
12

 
—

 
—

 
411

Noninterest income
127

 
28

 
70

 
14

 
(2
)
 
237

Noninterest expenses
194

 
149

 
72

 
—

 
10

 
425

(Benefit) provision for income taxes
(20
)
 
—

 
6

 
(8
)
 
1

(a)
(21
)
Net (loss) income
$
(63
)
 
$
1

 
$
21

 
$
(22
)
 
$
(2
)
 
$
(65
)
Net credit-related charge-offs
$
83

 
$
1

 
$
—

 
$
—

 
$
—

 
$
84

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
44,254

 
$
2,864

 
$
5,078

 
$
14,285

 
$
6,784

 
$
73,265

Loans
42,593

 
2,075

 
4,936

 
—

 
—

 
49,604

Deposits
30,230

 
21,195

 
4,025

 
1,136

 
182

 
56,768

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (b)
(0.58
)%
 
0.03
%
 
1.69
%
 
n/m

 
n/m

 
(0.35
)%
Efficiency ratio (c)
38.47

 
96.03

 
64.28

 
n/m

 
n/m

 
56.57

 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2019
 
 
 
 
 
 
 
 
 
 
 
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense)
$
412

 
$
146

 
$
48

 
$
(15
)
 
$
15

 
$
606

Provision for credit losses
(6
)
 
(4
)
 
(5
)
 
—

 
2

 
(13
)
Noninterest income
136

 
31

 
64

 
3

 
4

 
238

Noninterest expenses
198

 
145

 
72

 
—

 
18

 
433

Provision (benefit) for income taxes
82

 
8

 
11

 
(4
)
 
(12
)
(a)
85

Net income (loss)
$
274

 
$
28

 
$
34

 
$
(8
)
 
$
11

 
$
339

Net credit-related charge-offs (recoveries)
$
12

 
$
—

 
$
(1
)
 
$
—

 
$
—

 
$
11

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
43,909

 
$
2,812

 
$
5,174

 
$
13,585

 
$
4,291

 
$
69,771

Loans
42,538

 
2,103

 
5,036

 
—

 
—

 
49,677

Deposits
28,463

 
20,470

 
3,801

 
1,130

 
132

 
53,996

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (b)
2.53
 %
 
0.54
%
 
2.67
%
 
n/m

 
n/m

 
1.97
 %
Efficiency ratio (c)
36.24

 
81.34

 
64.42

 
n/m

 
n/m

 
50.81

(a)
Included discrete tax benefits of $3 million and $11 million for the three months ended March 31, 2020 and 2019, 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 (losses) gains 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 March 31, 2020.
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 March 31, 2020
 
 
 
 
 
 
 
 
 
 
 
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense)
$
163

 
$
182

 
$
115

 
$
86

 
$
(33
)
 
$
513

Provision for credit losses
24

 
51

 
290

 
46

 
—

 
411

Noninterest income
72

 
36

 
30

 
87

 
12

 
237

Noninterest expenses
140

 
98

 
84

 
93

 
10

 
425

Provision (benefit) for income taxes
15

 
17

 
(50
)
 
4

 
(7
)
(a)
(21
)
Net income (loss)
$
56

 
$
52

 
$
(179
)
 
$
30

 
$
(24
)
 
$
(65
)
Net credit-related charge-offs
$
3

 
$
11

 
$
70

 
$
—

 
$
—

 
$
84

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
12,899

 
$
18,377

 
$
11,154

 
$
9,766

 
$
21,069

 
$
73,265

Loans
12,191

 
18,027

 
10,566

 
8,820

 
—

 
49,604

Deposits
20,748

 
17,466

 
9,204

 
8,032

 
1,318

 
56,768

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (b)
1.05
%
 
1.12
%
 
(6.45
)%
 
1.24
%
 
n/m

 
(0.35
)%
Efficiency ratio (c)
58.91

 
44.99

 
58.25

 
53.76

 
n/m

 
56.57

 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2019
 
 
 
 
 
 
 
 
 
 
 
Earnings summary:
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
187

 
$
205

 
$
122

 
$
92

 
$
—

 
$
606

Provision for credit losses
5

 
(1
)
 
(11
)
 
(8
)
 
2

 
(13
)
Noninterest income
72

 
40

 
32

 
87

 
7

 
238

Noninterest expenses
139

 
100

 
84

 
92

 
18

 
433

Provision (benefit) for income taxes
26

 
37

 
19

 
19

 
(16
)
(a)
85

Net income
$
89

 
$
109

 
$
62

 
$
76

 
$
3

 
$
339

Net credit-related charge-offs (recoveries)
$
4

 
$
(3
)
 
$
13

 
$
(3
)
 
$
—

 
$
11

 
 
 
 
 
 
 
 
 
 
 
 
Selected average balances:
 
 
 
 
 
 
 
 
 
 
 
Assets
$
13,075

 
$
18,934

 
$
10,911

 
$
8,975

 
$
17,876

 
$
69,771

Loans
12,557

 
18,652

 
10,262

 
8,206

 
—

 
49,677

Deposits
19,893

 
16,238

 
8,697

 
7,906

 
1,262

 
53,996

 
 
 
 
 
 
 
 
 
 
 
 
Statistical data:
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (b)
1.76
%
 
2.33
%
 
2.31
 %
 
3.41
%
 
n/m

 
1.97
 %
Efficiency ratio (c)
53.66

 
40.91

 
54.62

 
51.28

 
n/m

 
50.81

(a)
Included discrete tax benefits of $3 million and $11 million for the three months ended March 31, 2020 and 2019, 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 (losses) gains from securities and a derivative contract tied to the conversion rate of Visa Class B shares.
n/m – not meaningful