Operating Segments

3 Months Ended

Mar. 31, 2024

Segment Reporting [Abstract]

Operating Segments

Note 17:  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 with our Chief Executive Officer and relevant senior management. The management reporting process is based on U.S. GAAP and includes specific adjustments, such as funds transfer pricing for asset/liability management, shared revenue 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 venture capital and private equity investments. 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. We periodically assess and update our revenue and expense allocation methodologies.

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 affordable 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 17.1 presents our results by operating segment.

Table 17.1: 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, 2024
Net interest income (2)	$	7,110	2,278	2,027	869	32	(89)	12,227
Noninterest income	1,981		874	2,955	2,873	291	(338)	8,636
Total revenue	9,091		3,152	4,982	3,742	323	(427)	20,863
Provision for credit losses	788		143	5	3	(1)	—	938
Noninterest expense	6,024		1,679	2,330	3,230	1,075	—	14,338
Income (loss) before income tax expense (benefit)	2,279		1,330	2,647	509	(751)	(427)	5,587
Income tax expense (benefit)	573		341	666	128	(317)	(427)	964
Net income (loss) before noncontrolling interests	1,706		989	1,981	381	(434)	—	4,623
Less: Net income from noncontrolling interests	—		3	—	—	1	—	4
Net income (loss)	$	1,706	986	1,981	381	(435)	—	4,619
Quarter ended March 31, 2023
Net interest income (2)	$	7,433	2,489	2,461	1,044	16	(107)	13,336
Noninterest income	1,931		818	2,441	2,637	5	(439)	7,393
Total revenue	9,364		3,307	4,902	3,681	21	(546)	20,729
Provision for credit losses	867		(43)	252	11	120	—	1,207
Noninterest expense	6,038		1,752	2,217	3,061	608	—	13,676
Income (loss) before income tax expense (benefit)	2,459		1,598	2,433	609	(707)	(546)	5,846
Income tax expense (benefit)	618		399	615	152	(272)	(546)	966
Net income (loss) before noncontrolling interests	1,841		1,199	1,818	457	(435)	—	4,880
Less: Net income (loss) from noncontrolling interests	—		3	—	—	(114)	—	(111)
Net income (loss)	$	1,841	1,196	1,818	457	(321)	—	4,991
Quarter ended March 31, 2024
Loans (average)	$	329,729	223,921	283,243	82,483	8,699	—	928,075
Assets (average)	366,381		246,242	550,933	89,935	663,483	—	1,916,974
Deposits (average)	773,248		164,027	183,273	101,474	119,606	—	1,341,628
Loans (period-end)	328,007		227,660	275,597	82,999	8,521	—	922,784
Assets (period-end)	366,036		249,963	553,105	90,648	699,401	—	1,959,153
Deposits (period-end)	794,160		168,547	195,969	102,478	121,993	—	1,383,147
Quarter ended March 31, 2023
Loans (average)	$	338,308	222,826	294,742	83,621	9,154	—	948,651
Assets (average)	381,757		246,101	548,808	90,923	596,087	—	1,863,676
Deposits (average)	841,265		170,467	157,551	126,604	60,807	—	1,356,694
Loans (period-end)	337,511		226,599	291,817	82,817	9,247	—	947,991
Assets (period-end)	381,487		252,914	542,168	89,590	620,241	—	1,886,400
Deposits (period-end)	851,304		169,827	158,564	117,252	65,682	—	1,362,629

(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 affordable 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