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Business Segments and Revenue from Contracts with Customers | 9 Months Ended
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Sep. 30, 2022
Segment Reporting [Abstract] |
Business Segments and Revenue from Contracts with Customers |
NOTE 12—BUSINESS SEGMENTS AND REVENUE FROM CONTRACTS WITH CUSTOMERS
Our principal operations are organized into three major business segments, which are defined primarily based on the products and services provided or the types of customers served: Credit Card, Consumer Banking and Commercial Banking. The operations of acquired businesses have been integrated into or managed as a part of our existing business segments. Certain activities that are not part of a segment, such as management of our corporate investment portfolio, asset/liability management by our centralized Corporate Treasury group and residual tax expense or benefit to arrive at the consolidated effective tax rate that is not assessed to our primary business segments, are included in the Other category. Basis of Presentation We report the results of each of our business segments on a continuing operations basis. The results of our individual businesses reflect the manner in which management evaluates performance and makes decisions about funding our operations and allocating resources. Business Segment Reporting Methodology The results of our business segments are intended to present each segment as if it were a stand-alone business. Our internal management and reporting process used to derive our segment results employs various allocation methodologies, including funds transfer pricing, to assign certain balance sheet assets, deposits and other liabilities and their related revenue and expenses directly or indirectly attributable to each business segment. Our funds transfer pricing process provides a funds credit for sources of funds, such as deposits generated by our Consumer Banking and Commercial Banking businesses, and a funds charge for the use of funds by each segment. Due to the integrated nature of our business segments, estimates and judgments have been made in allocating certain revenue and expense items. Transactions between segments are based on specific criteria or approximate third-party rates. We regularly assess the assumptions, methodologies and reporting classifications used for segment reporting, which may result in the implementation of refinements or changes in future periods. We provide additional information on the allocation methodologies used to derive our business segment results in “Note 17—Business Segments and Revenue from Contracts with Customers” in our 2021 Form 10-K. Segment Results and Reconciliation We may periodically change our business segments or reclassify business segment results based on modifications to our management reporting methodologies or changes in organizational alignment. The following table presents our business segment results for the three and nine months ended September 30, 2022 and 2021, selected balance sheet data as of September 30, 2022 and 2021, and a reconciliation of our total business segment results to our reported consolidated income from continuing operations, loans held for investment and deposits. Table 12.1: Segment Results and Reconciliation
|  | Three Months Ended September 30, 2022
(Dollars in millions) |  | Credit Card |  | Consumer Banking |  | Commercial Banking(1) |  | Other(1) |  | Consolidated Total
Net interest income (loss) |  | $ | 4,313 |  |  | $ | 2,311 |  |  | $ | 699 |  |  | $ | (320) |  |  | $ | 7,003 |
Non-interest income (loss) |  | 1,454 |  |  | 129 |  |  | 319 |  |  | (100) |  |  | 1,802 |
Total net revenue (loss)(2) |  | 5,767 |  |  | 2,440 |  |  | 1,018 |  |  | (420) |  |  | 8,805 |
Provision (benefit) for credit losses |  | 1,261 |  |  | 285 |  |  | 123 |  |  | 0 |  |  | 1,669 |
Non-interest expense |  | 3,004 |  |  | 1,340 |  |  | 542 |  |  | 63 |  |  | 4,949 |
Income (loss) from continuing operations before income taxes |  | 1,502 |  |  | 815 |  |  | 353 |  |  | (483) |  |  | 2,187 |
Income tax provision (benefit) |  | 356 |  |  | 193 |  |  | 83 |  |  | (139) |  |  | 493 |
Income (loss) from continuing operations, net of tax |  | $ | 1,146 |  |  | $ | 622 |  |  | $ | 270 |  |  | $ | (344) |  |  | $ | 1,694 |
Loans held for investment |  | $ | 126,913 |  |  | $ | 81,199 |  |  | $ | 95,831 |  |  | $ | 0 |  |  | $ | 303,943 |
Deposits |  | 0 |  |  | 256,661 |  |  | 41,058 |  |  | 19,474 |  |  | 317,193 |
|  | Nine Months Ended September 30, 2022
(Dollars in millions) |  | Credit Card |  | Consumer Banking |  | Commercial Banking(1) |  | Other(1) |  | Consolidated Total
Net interest income (loss) |  | $ | 12,051 |  |  | $ | 6,571 |  |  | $ | 1,941 |  |  | $ | (646) |  |  | $ | 19,917 |
Non-interest income (loss) |  | 4,322 |  |  | 330 |  |  | 868 |  |  | (227) |  |  | 5,293 |
Total net revenue (loss)(2) |  | 16,373 |  |  | 6,901 |  |  | 2,809 |  |  | (873) |  |  | 25,210 |
Provision (benefit) for credit losses |  | 2,387 |  |  | 696 |  |  | 353 |  |  | (5) |  |  | 3,431 |
Non-interest expense |  | 8,558 |  |  | 3,862 |  |  | 1,515 |  |  | 148 |  |  | 14,083 |
Income (loss) from continuing operations before income taxes |  | 5,428 |  |  | 2,343 |  |  | 941 |  |  | (1,016) |  |  | 7,696 |
Income tax provision (benefit) |  | 1,291 |  |  | 555 |  |  | 223 |  |  | (501) |  |  | 1,568 |
Income (loss) from continuing operations, net of tax |  | $ | 4,137 |  |  | $ | 1,788 |  |  | $ | 718 |  |  | $ | (515) |  |  | $ | 6,128 |
Loans held for investment |  | $ | 126,913 |  |  | $ | 81,199 |  |  | $ | 95,831 |  |  | $ | 0 |  |  | $ | 303,943 |
Deposits |  | 0 |  |  | 256,661 |  |  | 41,058 |  |  | 19,474 |  |  | 317,193 |
|  | Three Months Ended September 30, 2021
(Dollars in millions) |  | Credit Card |  | Consumer Banking |  | Commercial Banking(1) |  | Other(1) |  | Consolidated Total
Net interest income (loss) |  | $ | 3,620 |  |  | $ | 2,159 |  |  | $ | 578 |  |  | $ | (201) |  |  | $ | 6,156 |
Non-interest income (loss) |  | 1,263 |  |  | 127 |  |  | 306 |  |  | (22) |  |  | 1,674 |
Total net revenue (loss)(2) |  | 4,883 |  |  | 2,286 |  |  | 884 |  |  | (223) |  |  | 7,830 |
Provision (benefit) for credit losses |  | (198) |  |  | (91) |  |  | (53) |  |  | 0 |  |  | (342) |
Non-interest expense |  | 2,424 |  |  | 1,186 |  |  | 459 |  |  | 117 |  |  | 4,186 |
Income (loss) from continuing operations before income taxes |  | 2,657 |  |  | 1,191 |  |  | 478 |  |  | (340) |  |  | 3,986 |
Income tax provision (benefit) |  | 627 |  |  | 282 |  |  | 113 |  |  | (140) |  |  | 882 |
Income (loss) from continuing operations, net of tax |  | $ | 2,030 |  |  | $ | 909 |  |  | $ | 365 |  |  | $ | (200) |  |  | $ | 3,104 |
Loans held for investment |  | $ | 105,030 |  |  | $ | 77,112 |  |  | $ | 79,248 |  |  | $ | 0 |  |  | $ | 261,390 |
Deposits |  | 0 |  |  | 252,387 |  |  | 43,347 |  |  | 10,204 |  |  | 305,938 |
|  | Nine Months Ended September 30, 2021
(Dollars in millions) |  | Credit Card |  | Consumer Banking |  | Commercial Banking(1) |  | Other(1) |  | Consolidated Total
Net interest income (loss) |  | $ | 10,209 |  |  | $ | 6,290 |  |  | $ | 1,558 |  |  | $ | (336) |  |  | $ | 17,721 |
Non-interest income (loss) |  | 3,545 |  |  | 412 |  |  | 803 |  |  | (164) |  |  | 4,596 |
Total net revenue (loss)(2) |  | 13,754 |  |  | 6,702 |  |  | 2,361 |  |  | (500) |  |  | 22,317 |
Benefit for credit losses |  | (1,325) |  |  | (523) |  |  | (475) |  |  | (2) |  |  | (2,325) |
Non-interest expense |  | 6,822 |  |  | 3,426 |  |  | 1,295 |  |  | 349 |  |  | 11,892 |
Income (loss) from continuing operations before income taxes |  | 8,257 |  |  | 3,799 |  |  | 1,541 |  |  | (847) |  |  | 12,750 |
Income tax provision (benefit) |  | 1,952 |  |  | 897 |  |  | 364 |  |  | (431) |  |  | 2,782 |
Income (loss) from continuing operations, net of tax |  | $ | 6,305 |  |  | $ | 2,902 |  |  | $ | 1,177 |  |  | $ | (416) |  |  | $ | 9,968 |
Loans held for investment |  | $ | 105,030 |  |  | $ | 77,112 |  |  | $ | 79,248 |  |  | $ | 0 |  |  | $ | 261,390 |
Deposits |  | 0 |  |  | 252,387 |  |  | 43,347 |  |  | 10,204 |  |  | 305,938 |
__________ (1)Some of our commercial investments generate tax-exempt income, tax credits or other tax benefits. Accordingly, we present our Commercial Banking revenue and yields on a taxable-equivalent basis, calculated using the federal statutory tax rate of 21% and state taxes where applicable, with offsetting reductions to the Other category. (2)Total net revenue was reduced by $222 million and $625 million in the three and nine months ended September 30, 2022, respectively, and $123 million and $478 million in the three and nine months ended September 30, 2021, respectively, for credit card finance charges and fees charged off as uncollectible. Revenue from Contracts with Customers The majority of our revenue from contracts with customers consists of interchange fees, service charges and other customer-related fees, and other contract revenue. Interchange fees are primarily from our Credit Card business and are recognized upon settlement with the interchange networks, net of rewards earned by customers. Service charges and other customer-related fees within our Consumer Banking business are primarily related to fees earned on consumer deposit accounts for account maintenance and various transaction-based services such as automated teller machine (“ATM”) usage. Service charges and other customer-related fees within our Commercial Banking business are mostly related to fees earned on treasury management and capital markets services. Other contract revenue in our Credit Card business consists primarily of revenue from our partnership arrangements. Other contract revenue in our Consumer Banking business consists primarily of revenue earned on certain marketing and promotional events from our auto dealers. Revenue from contracts with customers is included in non-interest income in our consolidated statements of income. The following table presents revenue from contracts with customers and a reconciliation to non-interest income by business segment for the three and nine months ended September 30, 2022 and 2021. Table 12.2: Revenue from Contracts with Customers and Reconciliation to Segment Results
|  | Three Months Ended September 30, 2022
(Dollars in millions) |  | Credit Card |  | Consumer Banking |  | Commercial Banking(1) |  | Other(1) |  | Consolidated Total
Contract revenue: |  |  |  |  |  |  |  |  |  |
Interchange fees, net(2) |  | $ | 1,085 |  |  | $ | 83 |  |  | $ | 27 |  |  | $ | 0 |  |  | $ | 1,195 |
Service charges and other customer-related fees |  | 0 |  |  | 23 |  |  | 62 |  |  | 0 |  |  | 85 |
Other |  | 104 |  |  | 18 |  |  | 13 |  |  | 0 |  |  | 135 |
Total contract revenue |  | 1,189 |  |  | 124 |  |  | 102 |  |  | 0 |  |  | 1,415 |
Revenue (reduction) from other sources |  | 265 |  |  | 5 |  |  | 217 |  |  | (100) |  |  | 387 |
Total non-interest income (loss) |  | $ | 1,454 |  |  | $ | 129 |  |  | $ | 319 |  |  | $ | (100) |  |  | $ | 1,802 |
|  | Nine Months Ended September 30, 2022
(Dollars in millions) |  | Credit Card |  | Consumer Banking |  | Commercial Banking(1) |  | Other(1) |  | Consolidated Total
Contract revenue: |  |  |  |  |  |  |  |  |  |
Interchange fees, net(2) |  | $ | 3,115 |  |  | $ | 234 |  |  | $ | 79 |  |  | $ | 1 |  |  | $ | 3,429 |
Service charges and other customer-related fees |  | 0 |  |  | 70 |  |  | 190 |  |  | (1) |  |  | 259 |
Other |  | 297 |  |  | 56 |  |  | 14 |  |  | 0 |  |  | 367 |
Total contract revenue |  | 3,412 |  |  | 360 |  |  | 283 |  |  | 0 |  |  | 4,055 |
Revenue (reduction) from other sources |  | 910 |  |  | (30) |  |  | 585 |  |  | (227) |  |  | 1,238 |
Total non-interest income (loss) |  | $ | 4,322 |  |  | $ | 330 |  |  | $ | 868 |  |  | $ | (227) |  |  | $ | 5,293 |
|  | Three Months Ended September 30, 2021
(Dollars in millions) |  | Credit Card |  | Consumer Banking |  | Commercial Banking(1) |  | Other(1) |  | Consolidated Total
Contract revenue: |  |  |  |  |  |  |  |  |  |
Interchange fees, net(2) |  | $ | 930 |  |  | $ | 68 |  |  | $ | 24 |  |  | $ | 0 |  |  | $ | 1,022 |
Service charges and other customer-related fees |  | 0 |  |  | 42 |  |  | 71 |  |  | 0 |  |  | 113 |
Other |  | 98 |  |  | 17 |  |  | 1 |  |  | 0 |  |  | 116 |
Total contract revenue |  | 1,028 |  |  | 127 |  |  | 96 |  |  | 0 |  |  | 1,251 |
Revenue (reduction) from other sources |  | 235 |  |  | 0 |  |  | 210 |  |  | (22) |  |  | 423 |
Total non-interest income (loss) |  | $ | 1,263 |  |  | $ | 127 |  |  | $ | 306 |  |  | $ | (22) |  |  | $ | 1,674 |
|  | Nine Months Ended September 30, 2021
(Dollars in millions) |  | Credit Card |  | Consumer Banking |  | Commercial Banking(1) |  | Other(1) |  | Consolidated Total
Contract revenue: |  |  |  |  |  |  |  |  |  |
Interchange fees, net(2) |  | $ | 2,598 |  |  | $ | 192 |  |  | $ | 65 |  |  | $ | 0 |  |  | $ | 2,855 |
Service charges and other customer-related fees |  | 0 |  |  | 131 |  |  | 187 |  |  | 0 |  |  | 318 |
Other |  | 262 |  |  | 55 |  |  | 3 |  |  | 0 |  |  | 320 |
Total contract revenue |  | 2,860 |  |  | 378 |  |  | 255 |  |  | 0 |  |  | 3,493 |
Revenue (reduction) from other sources |  | 685 |  |  | 34 |  |  | 548 |  |  | (164) |  |  | 1,103 |
Total non-interest income (loss) |  | $ | 3,545 |  |  | $ | 412 |  |  | $ | 803 |  |  | $ | (164) |  |  | $ | 4,596 |
__________ (1)Some of our commercial investments generate tax-exempt income, tax credits or other tax benefits. Accordingly, we present our Commercial Banking revenue and yields on a taxable-equivalent basis, calculated using the federal statutory tax rate of 21% and state taxes where applicable, with offsetting reductions to the Other category. (2)Interchange fees are presented net of customer reward expenses.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI https://asc.fasb.org/topic&trid=2134510 + Details
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