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Business Segments and Revenue from Contracts with Customers
 3 Months Ended
Mar. 31, 2021
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 managed by our centralized Corporate Treasury group provides a funds credit for sources of funds, such as deposits generated by our Consumer Banking and Commercial Banking businesses, and a charge for the use of funds by each segment. The allocation is unique to each business segment and acquired business and is based on the composition of assets and liabilities. The funds transfer pricing process considers the interest rate and liquidity risk characteristics of assets and liabilities and off-balance sheet products. Periodically the methodology and assumptions utilized in the funds transfer pricing process are adjusted to reflect economic conditions and other factors, which may impact the allocation of net interest income to the business segments. 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 market rate. 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 “Part II—Item 8. Financial Statements and Supplementary Data—Note 17—Business Segments and Revenue from Contracts with Customers” in our 2022 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 months ended March 31, 2023 and 2022, selected balance sheet data as of March 31, 2023 and 2022, 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 March 31, 2023
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Net interest income (loss)$4,657 $2,360 $648 $(479)$7,186 
Non-interest income1,363 135 212 7 1,717 
Total net revenue (loss)(2)
6,020 2,495 860 (472)8,903 
Provision (benefit) for credit losses2,261 275 259 0 2,795 
Non-interest expense3,038 1,283 530 94 4,945 
Income (loss) from continuing operations before income taxes721 937 71 (566)1,163 
Income tax provision (benefit)172 221 17 (207)203 
Income (loss) from continuing operations, net of tax$549 $716 $54 $(359)$960 
Loans held for investment$137,142 $78,151 $93,543 $0 $308,836 
Deposits0 291,163 38,380 20,284 349,827 
                                                                                                                                                                                                                                                                                                                                                                                                                                            
Three Months Ended March 31, 2022
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Net interest income (loss)$3,839 $2,113 $607 $(162)$6,397 
Non-interest income (loss)1,458 105 277 (64)1,776 
Total net revenue (loss)(2)
5,297 2,218 884 (226)8,173 
Provision (benefit) for credit losses545 130 8 (6)677 
Non-interest expense2,783 1,236 488 44 4,551 
Income (loss) from continuing operations before income taxes1,969 852 388 (264)2,945 
Income tax provision (benefit)469 202 92 (221)542 
Income (loss) from continuing operations, net of tax$1,500 $650 $296 $(43)$2,403 
Loans held for investment$113,962 $80,330 $86,174 $0 $280,466 
Deposits0 258,359 45,232 9,838 313,429 
_________
(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 $405 million and $192 million in the first quarters of 2023 and 2022, 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 months ended March 31, 2023 and 2022.
Table 12.2: Revenue from Contracts with Customers and Reconciliation to Segment Results
Three Months Ended March 31, 2023
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Contract revenue:
Interchange fees, net(2)
$1,025 $86 $27 $1 $1,139 
Service charges and other customer-related fees0 21 40 (1)60 
Other55 19 5 0 79 
Total contract revenue (loss)1,080 126 72 0 1,278 
Revenue from other sources283 9 140 7 439 
Total non-interest income$1,363 $135 $212 $7 $1,717 
Three Months Ended March 31, 2022
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Contract revenue:
Interchange fees, net(2)
$937 $71 $24 $1 $1,033 
Service charges and other customer-related fees0 26 65 (1)90 
Other95 17 (2)0 110 
Total contract revenue1,032 114 87 0 1,233 
Revenue (reduction) from other sources426 (9)190 (64)543 
Total non-interest income (loss)$1,458 $105 $277 $(64)$1,776 
__________
(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