Business Segment Information

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Business Segment Information

BUSINESS SEGMENT INFORMATION

BancShares’ segments include General Banking, Commercial Banking, a new segment Silicon Valley Banking that includes the operating results for the SVBB Acquisition, as well as Rail and Corporate. Each of the segments are described below.

General Banking

General Banking delivers products and services to consumers and businesses through an extensive network of branches and various digital channels, including a full suite of deposit products, loans (primarily residential mortgages and business/commercial loans), and various fee-based services. General Banking also provides a variety of wealth management products and services to individuals and institutional clients, including brokerage, investment advisory, and trust services. In addition, General Banking has a dedicated business line that supports deposit, cash management and lending to homeowner associations and property management companies nationwide. Revenue is primarily generated from interest earned on loans and fees for banking and advisory services.

Commercial Banking

Commercial Banking provides a range of lending, leasing, capital markets, asset management and other financial and advisory services primarily to small and middle market companies in a wide range of industries. Loans offered are primarily senior secured loans collateralized by accounts receivable, inventory, machinery and equipment, transportation equipment and/or intangibles, and are often used for working capital, plant expansion, acquisitions or recapitalizations. These loans include revolving lines of credit and term loans and, depending on the nature of the collateral, may be referred to as collateral-backed loans, asset-based loans or cash flow loans. Commercial Banking provides senior secured loans to developers and other commercial real estate professionals, and also provides small business loans and leases, including both capital and operating leases, through a highly automated credit approval, documentation and funding process. Commercial Banking also provides factoring, receivable management, and secured financing to businesses that operate in various industries.

Revenue is primarily generated from interest earned on loans, rents on equipment leased, fees and other revenue from lending and leasing activities and banking services, along with capital markets transactions and commissions earned on factoring and related activities.

Silicon Valley Banking

Silicon Valley Banking offers products and services to commercial clients in key innovation markets, such as healthcare and technology industries, as well as private equity and venture capital firms. The segment provides solutions to the financial needs of commercial clients through credit, treasury management, foreign exchange, trade finance and other services. In addition, the segment offers private banking and wealth management and provides a range of personal financial solutions for consumers. Private banking and wealth management clients consist of private equity/venture capital professionals and executive leaders of the innovation companies they support and premium wine clients. The segment offers a customized suite of private banking services, including mortgages, home equity lines of credit, restricted and private stock loans, capital call lines of credit, other secured and unsecured lending products and vineyard development loans, as well as planning-based financial strategies, wealth management, family office, financial planning, tax planning and trust services.

Revenue is primarily generated from interest earned on loans, and fees and other revenue from lending activities and banking services.

Deposit products include business and analysis checking accounts, money market accounts, multi-currency accounts, bank accounts, sweep accounts and positive pay services. Services are provided through online and mobile banking platforms, as well as branch locations.

Rail

Rail offers customized leasing and financing solutions on a fleet of railcars and locomotives to railroads and shippers throughout North America. Railcar types include covered hopper cars used to ship grain and agricultural products, plastic pellets, sand, and cement, tank cars for energy products and chemicals, gondolas for coal, steel coil and mill service products, open hopper cars for coal and aggregates, boxcars for paper and auto parts, and center beams and flat cars for lumber. Revenue is primarily from operating lease income.

Corporate

Certain items that are not allocated to operating segments are included in the Corporate segment, inclusive of similar items related to Silicon Valley Banking. Some of the more significant and recurring items include interest income on investment securities, a portion of interest expense primarily related to corporate funding costs (including brokered deposits), income on BOLI (other noninterest income), acquisition-related costs, as well as certain unallocated costs and intangible asset amortization expense (operating expenses). Corporate also includes certain significant items that are infrequent, such as the Initial Non-PCD Provision for loans and leases and unfunded commitments and gain on acquisition.

Segment Net Income (Loss) and Select Period End Balances

The following table presents the condensed income statement by segment:

dollars in millions	Three Months Ended March 31, 2023
	General Banking		Commercial Banking		Silicon Valley Banking		Rail		Corporate		Total BancShares
Net interest income (expense)	$	560	$	240	$	65	$	(28)	$	13	$	850
Provision for credit losses	14		49		—		—		720		783
Net interest income (expense) after provision for credit losses	546		191		65		(28)		(707)		67
Noninterest income	116		143		14		177		9,809		10,259
Noninterest expense	395		211		33		120		96		855
Income before income taxes	267		123		46		29		9,006		9,471
Income tax expense (benefit)	65		29		11		7		(159)		(47)
Net income	$	202	$	94	$	35	$	22	$	9,165	$	9,518
Select Period End Balances
Loans and leases	$	43,353	$	28,684	$	66,171	$	80	$	—	$	138,288
Deposits	85,982		3,045		49,259		14		1,750		140,050
Operating lease equipment, net	—		719		—		7,612		—		8,331
	Three Months Ended March 31, 2022
	General Banking		Commercial Banking		Silicon Valley Banking		Rail		Corporate		Total BancShares
Net interest income (expense)	$	437	$	207	$	—	$	(19)	$	24	$	649
(Benefit) provision for credit losses	(15)		(34)		—		—		513		464
Net interest income (expense) after benefit for credit losses	452		241		—		(19)		(489)		185
Noninterest income	123		112		—		162		453		850
Noninterest expense	409		191		—		100		110		810
Income (loss) before income taxes	166		162		—		43		(146)		225
Income tax expense (benefit)	40		41		—		11		(138)		(46)
Net income (loss)	$	126	$	121	$	—	$	32	$	(8)	$	271
Select Period End Balances
Loans and leases	$	38,528	$	26,922	$	—	$	67	$	7	$	65,524
Deposits	85,458		4,698		—		13		1,428		91,597
Operating lease equipment, net	—		721		—		7,251		—		7,972