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Business Segments and Revenue from Contracts with Customers
 12 Months Ended
Dec. 31, 2024
Segment Reporting [Abstract]  
Business Segments and Revenue from Contracts with Customers
NOTE 18—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.
•Credit Card: Consists of our domestic consumer and small business card lending, and international card businesses in the U.K. and Canada.
•Consumer Banking: Consists of our deposit gathering and lending activities for consumers and small businesses, and national auto lending.
•Commercial Banking: Consists of our lending, deposit gathering, capital markets and treasury management services to commercial real estate and commercial and industrial customers. Our customers typically include companies with annual revenues between $20 million and $2 billion.
•Other category: Includes the residual impact of the allocation of our centralized Corporate Treasury group activities, such as management of our corporate investment portfolio, asset/liability management and oversight of our funds transfer pricing process, to our business segments. Accordingly, net gains and losses on our investment securities portfolio and certain trading activities are included in the Other category. 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 Transaction.
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. The Chief Operating Decision Maker (“CODM”) for each of our segments is the Chief Executive Officer. The CODM uses the segments’ income (loss) from continuing operations after tax to assess segment performance and decide how to allocate 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 business 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.
The following is additional information on the principles and methodologies used in preparing our business segment results.
•Net interest income: Interest income from loans and interest expense from deposits and other interest-bearing liabilities are reflected within each applicable business segment. Because funding and asset/liability management are managed
centrally by our Corporate Treasury group, net interest income for our business segments also includes the results of a funds transfer pricing process that is intended to allocate a cost of funds used or credit for funds provided to all business segment assets and liabilities, respectively, using a matched funding concept. The taxable-equivalent benefit of tax-exempt products is also allocated to each business unit with a corresponding increase in income tax expense.
•Non-interest income: Non-interest fees and other revenue associated with loans or customers managed by each business segment and other direct revenues are accounted for within each business segment.
•Provision for credit losses: The provision for credit losses is directly attributable to the business segment in accordance with the loans each business segment manages.
•Non-interest expense: Non-interest expenses directly managed and incurred by a business segment are accounted for within each business segment. We allocate certain non-interest expenses indirectly incurred by business segments, such as corporate support functions, to each business segment based on various factors, including the actual cost of the services from the service providers, the utilization of the services, the number of employees or other relevant factors. Marketing expenses are included within non-interest expense and can be directly incurred by a business segment or indirectly incurred and allocated. Total marketing expense was $4.6 billion for the year ended December 31, 2024 and $4.0 billion for both the years ended December 31, 2023 and 2022. Credit Card marketing expense was $3.9 billion for the year ended December 31, 2024 and $3.4 billion for both the years ended December 31, 2023 and 2022.
•Goodwill and other intangible assets: Goodwill and other intangible assets are assigned to one or more segments at acquisition. Intangible amortization is included in the results of the applicable segment.
•Income taxes: Income taxes are assessed for each business segment based on a standard tax rate with the residual tax expense or benefit to arrive at the consolidated effective tax rate included in the Other category.
•Loans held for investment: Loans are reported within each business segment in accordance with the loans each business segment manages.
•Deposits: Deposits are reported within each business segment based on product or customer type served by that business segment.
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 years ended December 31, 2024, 2023 and 2022, selected balance sheet data as of December 31, 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 18.1: Segment Results and Reconciliation
Year Ended December 31, 2024
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Net interest income (loss)$22,088 $8,023 $2,391 $(1,294)$31,208 
Non-interest income (loss)6,076 695 1,210 (77)7,904 
Total net revenue (loss)(2)
28,164 8,718 3,601 (1,371)39,112 
Provision for credit losses
10,272 1,435 8 1 11,716 
Non-interest expense13,576 5,372 2,011 527 21,486 
Income (loss) from continuing operations before income taxes4,316 1,911 1,582 (1,899)5,910 
Income tax provision (benefit)1,024 451 373 (685)1,163 
Income (loss) from continuing operations, net of tax$3,292 $1,460 $1,209 $(1,214)$4,747 
Loans held for investment$162,508 $78,092 $87,175 $0 $327,775 
Deposits0 318,329 31,691 12,687 362,707 
                                                                                                                                                                                                                                                                                                                                                                                                                                    
Year Ended December 31, 2023
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Net interest income (loss)$19,729 $8,713 $2,518 $(1,719)$29,241 
Non-interest income5,940 589 1,002 15 7,546 
Total net revenue (loss)(2)
25,669 9,302 3,520 (1,704)36,787 
Provision for credit losses8,651 1,169 605 1 10,426 
Non-interest expense12,490 5,178 2,011 637 20,316 
Income (loss) from continuing operations before income taxes4,528 2,955 904 (2,342)6,045 
Income tax provision (benefit)1,071 697 213 (823)1,158 
Income (loss) from continuing operations, net of tax$3,457 $2,258 $691 $(1,519)$4,887 
Loans held for investment$154,547 $75,437 $90,488 $0 $320,472 
Deposits0 296,171 32,712 19,530 348,413 
Year Ended December 31, 2022
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Net interest income (loss)$16,584 $8,965 $2,461 $(896)$27,114 
Non-interest income (loss)5,771 469 1,129 (233)7,136 
Total net revenue (loss)(2)
22,355 9,434 3,590 (1,129)34,250 
Provision (benefit) for credit losses4,265 1,173 415 (6)5,847 
Non-interest expense11,627 5,312 2,070 154 19,163 
Income (loss) from continuing operations before income taxes6,463 2,949 1,105 (1,277)9,240 
Income tax provision (benefit)1,536 699 262 (617)1,880 
Income (loss) from continuing operations, net of tax$4,927 $2,250 $843 $(660)$7,360 
Loans held for investment$137,730 $79,925 $94,676 $0 $312,331 
Deposits0 270,592 40,808 21,592 332,992 
_________
(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 $2.6 billion, $1.9 billion and $946 million for the years ended December 31, 2024, 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 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 years ended December 31, 2024, 2023 and 2022.
Table 18.2: Revenue from Contracts with Customers and Reconciliation to Segment Results
Year Ended December 31, 2024
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Contract revenue:
Interchange fees, net(2)
$4,340 $434 $106 $2 $4,882 
Service charges and other customer-related fees0 88 372 0 460 
Other413 142 18 0 573 
Total contract revenue
4,753 664 496 2 5,915 
Revenue (reduction) from other sources1,323 31 714 (79)1,989 
Total non-interest income (loss)$6,076 $695 $1,210 $(77)$7,904 
Year Ended December 31, 2023
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Contract revenue:
Interchange fees, net(2)
$4,333 $367 $91 $2 $4,793 
Service charges and other customer-related fees0 86 222 (2)306 
Other413 102 31 0 546 
Total contract revenue (loss)4,746 555 344 0 5,645 
Revenue from other sources1,194 34 658 15 1,901 
Total non-interest income$5,940 $589 $1,002 $15 $7,546 
Year Ended December 31, 2022
(Dollars in millions)Credit CardConsumer Banking
Commercial Banking(1)
Other(1)
Consolidated Total
Contract revenue:
Interchange fees, net(2)
$4,178 $320 $109 $(1)$4,606 
Service charges and other customer-related fees0 91 236 0 327 
Other395 74 16 (1)484 
Total contract revenue (loss)4,573 485 361 (2)5,417 
Revenue (reduction) from other sources1,198 (16)768 (231)1,719 
Total non-interest income (loss)$5,771 $469 $1,129 $(233)$7,136 
__________
(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 of $9.0 billion, $8.2 billion and $7.6 billion for the years ended December 31, 2024, 2023 and 2022, respectively.