Business Developments

12 Months Ended

Dec. 31, 2019

Mergers, Acquisitions, Restructuring and Dispositions Disclosures [Abstract]

NOTE 21—BUSINESS DEVELOPMENTS

Business Developments

We regularly explore and evaluate opportunities to acquire financial services and products as well as financial assets, including credit card and other loan portfolios, and enter into strategic partnerships as part of our growth strategy. In addition, we regularly consider the potential disposition of certain of our assets, branches, partnership agreements or lines of business.

On September 24, 2019, we launched a new credit card issuance program with Walmart Inc. (“Walmart”) and are now the exclusive issuer of Walmart’s cobrand and private label credit card program in the U.S. On October 11, 2019, we completed the acquisition of the existing portfolio of Walmart’s cobrand and private label credit card receivables. The acquisition was accounted for as an asset acquisition and total cash consideration for the acquisition was $8.2 billion. On the date of acquisition, we recognized approximately $8.2 billion in assets, primarily consisting of $8.1 billion in credit card receivables and $81 million of accrued interest. We recorded an initial allowance build of $84 million on the acquired loans. During 2019, we also recognized approximately $211 million of launch and integration expense related to the Walmart partnership. Results of the acquisition and partnership program are included within our Credit Card segment.

In the second quarter of 2019, we made the decision to exit several small partnership portfolios in our Credit Card business. We sold approximately $900 million of receivables and transferred approximately $100 million to loans held for sale as of June 30, 2019, which resulted in a gain on sale of $49 million recognized in other non-interest income and an allowance release of $68 million.

We also periodically initiate restructuring activities to support business strategies and enhance our overall operational efficiency. These restructuring activities have primarily consisted of exiting certain business locations and activities as well as the realignment of resources supporting various businesses. The charges incurred as a result of these restructuring activities have primarily consisted of severance and related benefits pursuant to our ongoing benefit programs, which are included in salaries and associate benefits within non-interest expense in our consolidated statements of income, as well as impairment of certain assets related to business locations and activities being exited, which are generally included in occupancy and equipment within non-interest expense. For the year ended December 31, 2019 and 2018, we recognized restructuring charges of $28 million and $34 million, respectively, which are reflected in the Other category of our business segment results.