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Management Discussion

• Net income for the three months ended March 31, 2021 was $350 million compared to a net loss of $59 million for the three months ended March 31, 2020, which was driven by lower provision for credit losses resulting from an improved economic outlook and strong credit performance. Results for the three months ended March 31, 2021 were also impacted by lower net interest income, reflecting a decline in short-term interest rates, as well as an increase in noninterest expenses, partially offset by higher noninterest income. The provision for income taxes increased $117 million to $98 million due to the increase in pre-tax income.
• Net income per diluted common share for the three months ended March 31, 2021 was $2.43 compared to a net loss per diluted common share of $0.42 for the same period in the prior year.
• Effective January 1, 2021, the Corporation elected to change the accounting methodology for determining market-related value of plan assets (MRVA) to a more preferable method for certain classes of assets in the qualified defined benefit pension plan. The classes of assets impacted by the new accounting methodology are fixed income securities and private placement assets held in the portfolio, which are primarily designed to match the duration and interest rate exposure of the Corporation's long-term pension commitments to mitigate against the volatility of interest rates. Under the previous policy, MRVA was calculated based on a five-year average fair value. The new accounting policy recognizes changes in fair value in the year they occur and better aligns the timing of recognition of interest rate impacts to pension assets and liabilities, reducing earnings volatility.