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Strategic Lines of Business and Markets
 12 Months Ended
Dec. 31, 2020
Segment Reporting [Abstract]  
Business Segment Information STRATEGIC LINES OF BUSINESS AND MARKETS
The Corporation has strategically aligned its operations into three major business segments: the Commercial 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 December 31, 2020.
Net interest income for each segment reflects the interest income generated by earning assets less interest expense on interest-bearing liabilities plus the net impact from associated internal funds transfer pricing (FTP) funding credits and charges. The FTP methodology allocates credits to each business segment for deposits and other funds provided as well as charges for loans and other assets being funded. This credit or charge is based on matching stated or implied maturities for these assets and liabilities. The FTP crediting rates on deposits and other funds provided reflect the long-term value of deposits and other funding sources based on their implied maturity. Due to the longer-term nature of implied maturities, FTP crediting rates are generally less volatile than changes in interest rates observed in the market. FTP charge rates for funding loans and other assets reflect a matched cost of funds based on the pricing and duration characteristics of the assets. As a result of applying matched funding, interest revenue for each segment resulting from loans and other assets is generally not impacted by changes in interest rates. Therefore, net interest income for each segment primarily reflects the volume of loans and other earning assets at the spread over the matched cost of funds, as well as the volume of deposits at the associated FTP crediting rates. For acquired loans and deposits, matched maturity funding is determined based on origination date. Accordingly, the FTP process reflects the transfer of interest rate risk exposures to the Corporate Treasury department within the Finance segment, where such exposures are centrally managed. Effective January 1, 2019, the Corporation prospectively discontinued allocating an additional FTP charge for the cost of maintaining liquid assets to support potential draws on unfunded loan commitments. The allowance for credit losses is allocated to the business segments based on the methodology used to estimate the consolidated allowance for credit losses described in Note 1. The related provision for credit losses is assigned based on the amount necessary to maintain an allowance for credit losses appropriate for each business segment. Noninterest income and expenses directly attributable to a line of business are assigned to that business segment. Direct expenses incurred by areas whose services support the overall Corporation are allocated to the business segments as follows: product processing expenditures are allocated based on standard unit costs applied to actual volume measurements; administrative expenses are allocated based on estimated time expended; and corporate overhead is assigned 50 percent based on the ratio of the business segment’s noninterest expenses to total noninterest expenses incurred by all business segments and 50 percent based on the ratio of the business segment’s attributed equity to total attributed equity of all business segments. Equity is attributed based on credit, operational and interest rate risks. Most of the
equity attributed relates to credit risk, which is determined based on the credit score and expected remaining life of each loan, letter of credit and unused commitment recorded in the business segments. Operational risk is allocated based on loans and letters of credit, deposit balances, non-earning assets, trust assets under management, certain noninterest income items, and the nature and extent of expenses incurred by business units. Virtually all interest rate risk is assigned to Finance, as are the Corporation’s hedging activities.
The following discussion provides information about the activities of each business segment. A discussion of the financial results and the factors impacting 2020 performance can be found in "Business Segments" in the "Strategic Lines of Business and Markets" section of the financial review.
The Commercial 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. In addition,
this business segment offers a subset of commercial products and services to micro-businesses whose primary contact is through the branch network.
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.
Business segment financial results are as follows:
(dollar amounts in millions)Commercial
Bank		Retail
Bank		Wealth ManagementFinanceOtherTotal
Year Ended December 31, 2020
Earnings summary:
Net interest income (expense)$1,608 $502 $167 $(384)$18 $1,911 
Provision for credit losses495 7 35 — — 537 
Noninterest income555 110 263 55 18 1,001 
Noninterest expenses826 619 301 2 36 1,784 
Provision (benefit) for income taxes182 (5)20 (79)(1)117 
Net income (loss)$660 $(9)$74 $(252)$1 $474 
Net credit-related charge-offs$192 $1 $3 $— $— $196 
Selected average balances:
Assets$45,603 $3,281 $5,162 $15,418 $11,682 $81,146 
Loans44,123 2,468 5,045 — (5)51,631 
Deposits36,603 22,832 4,402 1,026 175 65,038 
Statistical data:
Return on average assets (a)1.45 %(0.04)%1.41 %n/mn/m0.58 %
Efficiency ratio (b)38.19 100.48 70.13 n/mn/m61.15 
Year Ended December 31, 2019
Earnings summary:
Net interest income (expense)$1,655 $568 $183 $(123)$56 $2,339
Provision for credit losses88 (4)(14)— 4 74
Noninterest income555 132 270 41 12 1,010
Noninterest expenses795 597 283 1 67 1,743
Provision (benefit) for income taxes306 24 44 (26)(14)334
Net income (loss)$1,021 $83 $140 $(57)$11 $1,198
Net credit-related charge-offs (recoveries)$111 $1 $(5)$— $— $107
Selected average balances:
Assets$44,946 $2,852 $5,083 $13,903 $4,704 $71,488
Loans43,477 2,104 4,935 — (5)50,511
Deposits29,047 20,743 3,833 1,673 185 55,481
Statistical data:
Return on average assets (a)2.27 %0.39 %2.76 %n/mn/m1.68 %
Efficiency ratio (b)35.96 84.49 62.45 n/mn/m51.82 
(Table continues on following page)
(dollar amounts in millions)Commercial BankRetail
Bank		Wealth ManagementFinanceOtherTotal
Year Ended December 31, 2018
Earnings summary:
Net interest income (expense)$1,613 $548 $181 $(41)$51 $2,352 
Provision for credit losses6 (1)(3)— (3)(1)
Noninterest income547 136 266 27 — 976 
Noninterest expenses847 602 293 1 51 1,794 
Provision (benefit) for income taxes283 18 36 (14)(23)300 
Net income (loss)$1,024 $65 $121 $(1)$26 $1,235 
Net credit-related charge-offs (recoveries)$52 $— $(1)$— $— $51 
Selected average balances:
Assets$43,207 $2,633 $5,214 $13,548 $6,122 $70,724 
Loans41,629 2,067 5,081 — (11)48,766 
Deposits30,116 20,812 3,941 941 125 55,935 
Statistical data:
Return on average assets (a)2.37 %0.31 %2.32 %n/mn/m1.75 %
Efficiency ratio (b)39.22 87.59 65.60 n/mn/m53.56 
(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 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
The Corporation operates in three primary markets - Michigan, California and Texas, 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 December 31, 2020.
A discussion of the financial results and the factors impacting 2020 performance can be found in "Market Segments" in the "Strategic Lines of Business and Markets" section of the financial review.
Market segment financial results are as follows:
(dollar amounts in millions)MichiganCaliforniaTexasOther
Markets		Finance
& Other		Total
Year Ended December 31, 2020
Earnings summary:
Net interest income (expense)$660 $723 $465 $429 $(366)$1,911 
Provision for credit losses95 134 270 38 — 537 
Noninterest income273 147 120 388 73 1,001 
Noninterest expenses559 414 359 414 38 1,784 
Provision (benefit) for income taxes54 75 (11)79 (80)117 
Net income (loss)$225 $247 $(33)$286 $(251)$474 
Net credit-related charge-offs$14 $31 $151 $— $— $196 
Selected average balances:
Assets$13,179 $18,562 $11,287 $11,020 $27,098 $81,146 
Loans12,509 18,265 10,813 10,052 (8)51,631 
Deposits23,500 19,386 10,209 10,742 1,201 65,038 
Statistical data:
Return on average assets (a)0.92 %1.21 %(0.28)%2.45 %n/m0.58 %
Efficiency ratio (b)59.76 47.58 61.28 50.66 n/m61.15 
(Table continues on following page)
(dollar amounts in millions)MichiganCaliforniaTexasOther
Markets		Finance
& Other		Total
Year Ended December 31, 2019
Earnings summary:
Net interest income (expense)$729 $808 $493 $376 $(67)$2,339 
Provision for credit losses(11)(33)119 (5)474 
Noninterest income291 173 128 365 531,010 
Noninterest expenses554 406 345 370 681,743 
Provision (benefit) for income taxes108 154 38 74 (40)334 
Net income (loss)$369 $454 $119 $302 $(46)$1,198 
Net credit-related charge-offs (recoveries)$11 $8 $93 $(5)$—$107 
Selected average balances:
Assets$13,149 $18,731 $11,269 $9,732 $18,607 $71,488 
Loans12,553 18,413 10,616 8,934 (5)50,511 
Deposits20,081 16,846 8,780 7,916 1,858 55,481 
Statistical data:
Return on average assets (a)1.77 %2.42 %1.06 %3.10 %n/m1.68 %
Efficiency ratio (b)54.01 41.28 55.59 49.90 n/m51.82 
Year Ended December 31, 2018
Earnings summary:
Net interest income$727 $786 $474 $355 $10 $2,352 
Provision for credit losses30 26 (53)(1)(3)(1)
Noninterest income296 164 130 359 27 976 
Noninterest expenses577 424 365 376 52 1,794 
Provision (benefit) for income taxes90 123 64 60 (37)300 
Net income$326 $377 $228 $279 $25 $1,235 
Net credit-related charge-offs$7 $27 $12 $5 $— $51 
Selected average balances:
Assets$13,202 $18,422 $10,380 $9,049 $19,671 $70,724 
Loans12,531 18,161 9,812 8,273 (11)48,766 
Deposits20,770 16,951 8,991 8,157 1,066 55,935 
Statistical data:
Return on average assets (a)1.52 %2.05 %2.20 %3.08 %n/m1.75 %
Efficiency ratio (b)56.21 44.64 60.30 52.82 n/m53.56 
(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 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