Operating Segments

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

Operating Segments

Note 22:  Operating Segments

Our management reporting is organized into four reportable operating segments: Consumer Banking and Lending; Commercial Banking; Corporate and Investment Banking; and Wealth and Investment Management. All other business activities that are not included in the reportable operating segments have been included in Corporate. We define our reportable operating segments by type of product and customer segment, and their results are based on our management reporting process. The management reporting process measures the performance of the reportable operating segments based on the Company’s management structure, and the results are regularly reviewed by our Chief Executive Officer and Operating Committee. The management reporting process is based on U.S. GAAP and includes specific adjustments, such as funds transfer pricing for asset/liability management, shared revenues and expenses, and taxable-equivalent adjustments to consistently reflect income from taxable and tax-exempt sources, which allows management to assess performance consistently across the operating segments.

Consumer Banking and Lending offers diversified financial products and services for consumers and small businesses with annual sales generally up to $10 million. These financial products and services include checking and savings accounts, credit and debit cards, as well as home, auto, personal, and small business lending.

Commercial Banking provides financial solutions to private, family owned and certain public companies. Products and services include banking and credit products across multiple industry sectors and municipalities, secured lending and lease products, and treasury management.

Corporate and Investment Banking delivers a suite of capital markets, banking, and financial products and services to corporate, commercial real estate, government and institutional clients globally. Products and services include corporate banking, investment banking, treasury management, commercial real estate lending and servicing, equity and fixed income solutions, as well as sales, trading, and research capabilities.

Wealth and Investment Management provides personalized wealth management, brokerage, financial planning, lending, private banking, trust and fiduciary products and services to affluent, high-net worth and ultra-high-net worth clients. We operate through financial advisors in our brokerage and wealth offices, consumer bank branches, independent offices, and digitally through WellsTrade® and Intuitive Investor®.

Corporate includes corporate treasury and enterprise functions, net of allocations (including funds transfer pricing, capital, liquidity and certain expenses), in support of the reportable operating segments, as well as our investment portfolio and affiliated venture capital and private equity businesses. In addition, Corporate includes all restructuring charges related to our efficiency initiatives. See Note 19 (Restructuring Charges) for additional information on restructuring charges. Corporate also includes certain lines of business that management has determined are no longer consistent with the long-term strategic goals of the Company, as well as results for previously divested businesses.

Basis of Presentation

FUNDS TRANSFER PRICING Corporate treasury manages a funds transfer pricing methodology that considers interest rate risk, liquidity risk, and other product characteristics. Operating segments pay a funding charge for their assets and receive a funding credit for their deposits, both of which are included in net interest income. The net impact of the funding charges or credits is recognized in corporate treasury.

REVENUE AND EXPENSE SHARING When lines of business jointly serve customers, the line of business that is responsible for providing the product or service recognizes revenue or expense with a referral fee paid or an allocation of cost to the other line of business based on established internal revenue-sharing agreements.

When a line of business uses a service provided by another line of business or enterprise function (included in Corporate), expense is generally allocated based on the cost and use of the service provided.

TAXABLE-EQUIVALENT ADJUSTMENTS Taxable-equivalent adjustments related to tax-exempt income on certain loans and debt securities are included in net interest income, while taxable-equivalent adjustments related to income tax credits for low-income housing and renewable energy investments are included in noninterest income, in each case with corresponding impacts to income tax expense (benefit). Adjustments are included in Corporate, Commercial Banking, and Corporate and Investment Banking and are eliminated to reconcile to the Company’s consolidated financial results.

Table 22.1 presents our results by operating segment.

Table 22.1: Operating Segments

(in millions)	Consumer Banking and Lending		Commercial Banking	Corporate and Investment Banking	Wealth and Investment Management	Corporate	Reconciling Items (1)	Consolidated Company
Quarter ended March 31, 2022
Net interest income (2)	$	5,996	1,361	1,990	799	(818)	(107)	9,221
Noninterest income	2,567		966	1,480	2,958	806	(406)	8,371
Total revenue	8,563		2,327	3,470	3,757	(12)	(513)	17,592
Provision for credit losses	(190)		(344)	(196)	(37)	(20)	—	(787)
Noninterest expense	6,395		1,531	1,983	3,175	786	—	13,870
Income (loss) before income tax expense (benefit)	2,358		1,140	1,683	619	(778)	(513)	4,509
Income tax expense (benefit)	588		280	425	154	(227)	(513)	707
Net income (loss) before noncontrolling interests	1,770		860	1,258	465	(551)	—	3,802
Less: Net income from noncontrolling interests	—		3	—	—	128	—	131
Net income (loss)	$	1,770	857	1,258	465	(679)	—	3,671
Quarter ended March 31, 2021
Net interest income (2)	$	5,615	1,254	1,779	657	(390)	(107)	8,808
Noninterest income	3,039		827	1,825	2,887	1,417	(271)	9,724
Total revenue	8,654		2,081	3,604	3,544	1,027	(378)	18,532
Provision for credit losses	(419)		(399)	(284)	(43)	97	—	(1,048)
Noninterest expense	6,267		1,630	1,833	3,028	1,231	—	13,989
Income (loss) before income tax expense (benefit)	2,806		850	2,055	559	(301)	(378)	5,591
Income tax expense (benefit)	702		212	500	140	(275)	(378)	901
Net income (loss) before noncontrolling interests	2,104		638	1,555	419	(26)	—	4,690
Less: Net income from noncontrolling interests	—		1	—	—	53	—	54
Net income (loss)	$	2,104	637	1,555	419	(79)	—	4,636
Quarter ended March 31, 2022 (3)
Loans (average)	$	325,055	194,395	284,498	84,765	9,292	—	898,005
Assets (average)	374,869		214,937	551,404	90,841	687,341	—	1,919,392
Deposits (average)	881,339		200,699	169,181	185,814	27,039	—	1,464,072
Loans (period-end)	328,558		198,833	290,627	84,688	9,101	—	911,807
Assets (period-end)	379,115		221,886	564,976	90,820	682,912	—	1,939,709
Deposits (period-end)	909,896		195,549	168,467	183,727	23,715	—	1,481,354
Quarter ended March 31, 2021
Loans (average)	$	353,081	183,143	246,148	80,839	10,228	—	873,439
Assets (average)	408,553		199,361	511,528	87,355	727,628	—	1,934,425
Deposits (average)	789,439		189,364	194,501	173,678	46,490	—	1,393,472
Loans (period-end)	340,549		180,688	248,644	81,175	10,516	—	861,572
Assets (period-end)	405,597		198,684	512,045	87,039	753,899	—	1,957,264
Deposits (period-end)	837,765		191,948	188,920	175,999	42,487	—	1,437,119

(1)Taxable-equivalent adjustments related to tax-exempt income on certain loans and debt securities are included in net interest income, while taxable-equivalent adjustments related to income tax credits for low-income housing and renewable energy investments are included in noninterest income, in each case with corresponding impacts to income tax expense (benefit). Adjustments are included in Corporate, Commercial Banking, and Corporate and Investment Banking and are eliminated to reconcile to the Company’s consolidated financial results.

(2)Net interest income is interest earned on assets minus the interest paid on liabilities to fund those assets. Segment interest earned includes actual interest income on segment assets as well as a funding credit for their deposits. Segment interest paid on liabilities includes actual interest expense on segment liabilities as well as a funding charge for their assets.

(3)In first quarter 2022, we prospectively transferred certain customer accounts from the Commercial Banking operating segment to Small Business Banking in the Consumer Banking and Lending operating segment.