Segment Reporting

6 Months Ended

Jun. 30, 2019

SEGMENT REPORTING

We have four reportable business segments:


•	Retail Banking


•	Corporate & Institutional Banking


•	Asset Management Group


•	BlackRock

Results of individual businesses are presented based on our internal management reporting practices. There is no comprehensive, authoritative body of guidance for management accounting equivalent to GAAP; therefore, the financial results of our individual businesses are not necessarily comparable with similar information for any other company. We periodically refine our internal methodologies as management reporting practices are enhanced. To the extent significant and practicable, retrospective application of new methodologies is made to prior period reportable business segment results and disclosures to create comparability with the current period.

Total business segment financial results differ from total consolidated net income. These differences are reflected in the “Other” category in the business segment tables. “Other” includes residual activities that do not meet the criteria for disclosure as a separate reportable business, such as asset and liability management activities including net securities gains or losses, other-than-temporary impairment of investment securities, certain trading activities, certain runoff consumer loan portfolios, private equity investments, intercompany eliminations, certain corporate overhead, tax adjustments that are not allocated to business segments, gains or losses related to BlackRock transactions, exited businesses and differences between business segment performance reporting and financial statement reporting (GAAP), including the presentation of net income attributable to noncontrolling interests as the segments’ results exclude their portion of net income attributable to noncontrolling interests.

Financial results are presented, to the extent practicable, as if each business operated on a stand-alone basis. Additionally, we have aggregated the results for corporate support functions within “Other” for financial reporting purposes.

Net interest income in business segment results reflects our internal funds transfer pricing methodology. Assets receive a funding charge and liabilities and capital receive a funding credit based on a transfer pricing methodology that incorporates product repricing characteristics, tenor and other factors.

A portion of capital is intended to cover unexpected losses and is assigned to our business segments using our risk-based economic capital model, including consideration of the goodwill at those business segments, as well as the diversification of risk among the business segments, ultimately reflecting our portfolio risk adjusted capital allocation.

We have allocated the allowances for loan and lease losses and for unfunded loan commitments and letters of credit based on the loan exposures within each business segment’s portfolio. Key reserve assumptions and estimation processes react to and are influenced by observed changes in loan portfolio performance experience, the financial strength of the borrower and economic conditions. Key reserve assumptions are periodically updated.

Business Segment Results

Table 71: Results of Businesses



Three months ended June 30 In millions	Retail Banking		Corporate & Institutional Banking		Asset Management Group			BlackRock		Other			Consolidated (a)
2019
Income Statement
Net interest income	$	1,376	$	897	$	68				$	157		$	2,498
Noninterest income	657		661		286			$	224	113			1,941
Total revenue	2,033		1,558		354			224		270			4,439
Provision for credit losses (benefit)	81		100							(1		)	180
Depreciation and amortization	59		50		28					120			257
Other noninterest expense	1,468		648		221					17			2,354
Income before income taxes and noncontrolling interests	425		760		105			224		134			1,648
Income taxes (benefit)	100		158		25			35		(44		)	274
Net income	$	325	$	602	$	80		$	189	$	178		$	1,374
Average Assets (b)	$	92,350	$	163,897	$	7,150		$	8,184	$	125,381		$	396,962
2018
Income Statement
Net interest income	$	1,277	$	877	$	72				$	187		$	2,413
Noninterest income	678		635		222			$	232	144			1,911
Total revenue	1,955		1,512		294			232		331			4,324
Provision for credit losses (benefit)	72		15		7					(14		)	80
Depreciation and amortization	47		45		13					132			237
Other noninterest expense	1,474		623		218					32			2,347
Income before income taxes and noncontrolling interests	362		829		56			232		181			1,660
Income taxes (benefit)	88		177		13			37		(11		)	304
Net income	$	274	$	652	$	43		$	195	$	192		$	1,356
Average Assets (b)	$	89,021	$	153,619	$	7,469		$	7,811	$	117,707		$	375,627

Six months ended June 30 In millions	Retail Banking		Corporate & Institutional Banking		Asset Management Group			BlackRock		Other			Consolidated (a)
2019
Income Statement
Net interest income	$	2,725	$	1,774	$	138				$	336		$	4,973
Noninterest income	1,252		1,237		503			$	457	303			3,752
Total revenue	3,977		3,011		641			457		639			8,725
Provision for credit losses (benefit)	209		171		(1		)			(10		)	369
Depreciation and amortization	110		100		40					241			491
Other noninterest expense	2,885		1,284		439					90			4,698
Income before income taxes and noncontrolling interests	773		1,456		163			457		318			3,167
Income taxes (benefit)	184		302		38			71		(73		)	522
Net income	$	589	$	1,154	$	125		$	386	$	391		$	2,645
Average Assets (b)	$	91,805	$	160,551	$	7,204		$	8,184	$	123,717		$	391,461
2018
Income Statement
Net interest income	$	2,495	$	1,738	$	146				$	395		$	4,774
Noninterest income	1,313		1,182		448			$	467	251			3,661
Total revenue	3,808		2,920		594			467		646			8,435
Provision for credit losses (benefit)	141		56							(25		)	172
Depreciation and amortization	92		93		25					260			470
Other noninterest expense	2,885		1,228		431					97			4,641
Income before income taxes and noncontrolling interests	690		1,543		138			467		314			3,152
Income taxes (benefit)	167		328		33			75		(46		)	557
Net income	$	523	$	1,215	$	105		$	392	$	360		$	2,595
Average Assets (b)	$	88,879	$	152,769	$	7,484		$	7,811	$	119,006		$	375,949


(a)	There were no material intersegment revenues for the three and six months ended June 30, 2019 and 2018.


(b)	Period-end balances for BlackRock.

Business Segment Products and Services

Retail Banking provides deposit, lending, brokerage, insurance services, investment management and cash management products and services to consumer and small business customers. Our customers are serviced through our branch network, ATMs, call centers, online banking and mobile channels. The branch network is located in markets across the Mid-Atlantic, Midwest and Southeast. In 2018, Retail Banking launched its national retail digital strategy designed to grow customers with digitally-led banking and an ultra-thin branch network in markets outside of our existing retail branch network. Deposit products include checking, savings and money market accounts and certificates of deposit. Lending products include residential mortgages, home equity loans and lines of credit, auto loans, credit cards, education loans and personal and small business loans and lines of credit. The residential mortgage loans are directly originated within our branch network and nationwide, and are typically underwritten to government agency and/or third-party standards, and either sold, servicing retained, or held on our balance sheet. Brokerage, investment management and cash management products and services include managed, education, retirement and trust accounts.

Corporate & Institutional Banking provides lending, treasury management and capital markets-related products and services to mid-sized and large corporations, and government and not-for-profit entities. Lending products include secured and unsecured loans, letters of credit and equipment leases. Treasury management services include cash and investment management, receivables management, disbursement services, funds transfer services, information reporting and global trade services. Capital markets-related products and services include foreign exchange, derivatives, securities underwriting, loan syndications, mergers and acquisitions advisory and equity capital markets advisory related services. We also provide commercial loan servicing and technology solutions for the commercial real estate finance industry. Products and services are provided nationally.

Asset Management Group provides personal wealth management for high net worth and ultra high net worth clients and institutional asset management. The Asset Management group is composed of three distinct operating units:


•	Wealth management provides products and services to individuals and their families including investment and retirement planning, customized investment management, private banking, and trust management and administration for individuals and their families.


•	Our Hawthorn unit provides multi-generational family planning including estate, financial, tax planning, fiduciary, investment management and consulting, private banking, personal administrative services, asset custody and customized performance reporting to ultra high net worth clients.


•	Institutional asset management provides outsourced chief investment officer, custody, private real estate, cash and fixed income client solutions, and fiduciary retirement advisory services to institutional clients including corporations, healthcare systems, insurance companies, unions, municipalities and non-profits.

BlackRock, in which we hold an equity investment, is a leading publicly-traded investment management firm providing a broad range of investment and technology services to institutional and retail clients worldwide. Using a diverse platform of alpha-seeking active, index and cash management investment strategies across asset classes, BlackRock tailors investment outcomes and asset allocation solutions for clients. Product offerings include single- and multi-asset class portfolios investing in equities, fixed income, alternatives and money market instruments. BlackRock also offers technology services, including an investment and risk management technology platform, as well as advisory services and solutions to a broad base of institutional and wealth management clients.

Our equity investment in BlackRock provides us with an additional source of noninterest income and increases our overall revenue diversification. At June 30, 2019, our economic interest in BlackRock was 22%. We received cash dividends from BlackRock of $230 million and $201 million during the first six months of 2019 and 2018, respectively. BlackRock is a publicly-traded company, and additional information regarding its business is available in its filings with the Securities and Exchange Commission (SEC).