XML 32 R21.htm IDEA: XBRL DOCUMENT v3.24.3
Business Segments and Revenue from Contracts with Customers
 9 Months Ended
Sep. 30, 2024
Segment Reporting [Abstract]  
Business Segments and Revenue from Contracts with Customers
NOTE 13—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 business segment are included in the Other category, such as the management of our corporate investment portfolio and asset/liability positions performed by our centralized Corporate Treasury group and any residual tax expense or benefit beyond what is assessed to our business segments in order to arrive at the consolidated effective tax rate. The Other category also includes unallocated corporate expenses that do not directly support the operations of the business segments or for which the business segments are not considered financially accountable in evaluating their performance, such as certain restructuring charges and integration expenses related to the agreement to acquire Discover.
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 revenues 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 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 “Part II—Item 8. Financial Statements and Supplementary Data—Note 17—Business Segments and Revenue from Contracts with Customers” in our 2023 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, 2024 and 2023, selected balance sheet data as of September 30, 2024 and 2023, and a reconciliation of our total business segment results to our reported consolidated income from continuing operations, loans held for investment and deposits.
Table 13.1: Segment Results and Reconciliation
Three Months Ended September 30, 2024
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Net interest income (loss)$5,743 $2,028 $596 $(291)$8,076 
Non-interest income (loss)1,509 182 292 (45)1,938 
Total net revenue (loss)(2)
7,252 2,210 888 (336)10,014 
Provision (benefit) for credit losses2,084 351 48 (1)2,482 
Non-interest expense3,367 1,331 495 121 5,314 
Income (loss) from continuing operations before income taxes1,801 528 345 (456)2,218 
Income tax provision (benefit)427 125 82 (193)441 
Income (loss) from continuing operations, net of tax$1,374 $403 $263 $(263)$1,777 
Loans held for investment$156,651 $76,758 $86,834 $0 $320,243 
Deposits0 309,569 30,598 13,464 353,631 
Nine Months Ended September 30, 2024
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Net interest income (loss)$16,309 $6,064 $1,804 $(1,067)$23,110 
Non-interest income (loss)4,491 513 844 (36)5,812 
Total net revenue (loss)(2)
20,800 6,577 2,648 (1,103)28,922 
Provision (benefit) for credit losses7,888 1,107 80 (1)9,074 
Non-interest expense9,730 3,827 1,493 347 15,397 
Income (loss) from continuing operations before income taxes3,182 1,643 1,075 (1,449)4,451 
Income tax provision (benefit)756 388 254 (601)797 
Income (loss) from continuing operations, net of tax$2,426 $1,255 $821 $(848)$3,654 
Loans held for investment$156,651 $76,758 $86,834 $0 $320,243 
Deposits0 309,569 30,598 13,464 353,631 
Three Months Ended September 30, 2023
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Net interest income (loss)$5,114 $2,133 $621 $(445)$7,423 
Non-interest income1,513 142 288 0 1,943 
Total net revenue (loss)(2)
6,627 2,275 909 (445)9,366 
Provision for credit losses1,953 213 116 2 2,284 
Non-interest expense3,015 1,262 512 71 4,860 
Income (loss) from continuing operations before income taxes1,659 800 281 (518)2,222 
Income tax provision (benefit)393 189 67 (217)432 
Income (loss) from continuing operations, net of tax$1,266 $611 $214 $(301)$1,790 
Loans held for investment$146,783 $76,844 $91,153 $0 $314,780 
Deposits0 290,789 36,035 19,187 346,011 
                                                                                                                                                                                                                                                                                                                                                                                                                                    
Nine Months Ended September 30, 2023
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Net interest income (loss)$14,498 $6,762 $1,901 $(1,439)$21,722 
Non-interest income4,375 426 757 1 5,559 
Total net revenue (loss)(2)
18,873 7,188 2,658 (1,438)27,281 
Provision for credit losses6,298 747 521 3 7,569 
Non-interest expense9,073 3,776 1,524 226 14,599 
Income (loss) from continuing operations before income taxes3,502 2,665 613 (1,667)5,113 
Income tax provision (benefit)830 629 145 (672)932 
Income (loss) from continuing operations, net of tax$2,672 $2,036 $468 $(995)$4,181 
Loans held for investment$146,783 $76,844 $91,153 $0 $314,780 
Deposits0 290,789 36,035 19,187 346,011 
_________
(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 $624 million and $1.9 billion in the three and nine months ended September 30, 2024, respectively, and $449 million and $1.3 billion in the three and nine months ended September 30, 2023, 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 from services provided to auto industry participants. 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, 2024 and 2023.
Table 13.2: Revenue from Contracts with Customers and Reconciliation to Segment Results
Three Months Ended September 30, 2024
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Contract revenue:
Interchange fees, net(2)
$1,086 $113 $28 $1 $1,228 
Service charges and other customer-related fees0 23 92 0 115 
Other67 36 1 0 104 
Total contract revenue
1,153 172 121 1 1,447 
Revenue (reduction) from other sources356 10 171 (46)491 
Total non-interest income (loss)$1,509 $182 $292 $(45)$1,938 
Nine Months Ended September 30, 2024
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Contract revenue:
Interchange fees, net(2)
$3,222 $318 $81 $1 $3,622 
Service charges and other customer-related fees0 66 239 0 305 
Other271 101 6 0 378 
Total contract revenue
3,493 485 326 1 4,305 
Revenue (reduction) from other sources998 28 518 (37)1,507 
Total non-interest income (loss)$4,491 $513 $844 $(36)$5,812 
Three Months Ended September 30, 2023
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Contract revenue:
Interchange fees, net(2)
$1,115 $92 $27 $0 $1,234 
Service charges and other customer-related fees0 21 78 0 99 
Other111 28 3 0 142 
Total contract revenue1,226 141 108 0 1,475 
Revenue from other sources287 1 180 0 468 
Total non-interest income$1,513 $142 $288 $0 $1,943 
Nine Months Ended September 30, 2023
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Contract revenue:
Interchange fees, net(2)
$3,251 $270 $64 $1 $3,586 
Service charges and other customer-related fees0 64 173 (1)236 
Other257 74 16 0 347 
Total contract revenue
3,508 408 253 0 4,169 
Revenue from other sources867 18 504 1 1,390 
Total non-interest income$4,375 $426 $757 $1 $5,559 
__________
(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.