| Allowance for Credit Losses |
Allowance for Credit Losses
The table below summarizes the changes in the allowance for credit losses by portfolio segment for 2014, 2013 and 2012.
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2014 |
(Dollars in millions) |
Home
Loans
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Credit Card
and Other
Consumer
|
|
Commercial |
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Total
Allowance
|
Allowance for loan and lease losses, January 1 |
$ |
8,518 |
|
|
$ |
4,905 |
|
|
$ |
4,005 |
|
|
$ |
17,428 |
|
Loans and leases charged off |
(2,219 |
) |
|
(4,149 |
) |
|
(658 |
) |
|
(7,026 |
) |
Recoveries of loans and leases previously charged off |
1,426 |
|
|
871 |
|
|
346 |
|
|
2,643 |
|
Net charge-offs |
(793 |
) |
|
(3,278 |
) |
|
(312 |
) |
|
(4,383 |
) |
Write-offs of PCI loans |
(810 |
) |
|
— |
|
|
— |
|
|
(810 |
) |
Provision for loan and lease losses |
(976 |
) |
|
2,458 |
|
|
749 |
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|
2,231 |
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Other (1)
|
(4 |
) |
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(38 |
) |
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(5 |
) |
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(47 |
) |
Allowance for loan and lease losses, December 31 |
5,935 |
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|
4,047 |
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|
4,437 |
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|
14,419 |
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Reserve for unfunded lending commitments, January 1 |
— |
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— |
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|
484 |
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|
484 |
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Provision for unfunded lending commitments |
— |
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— |
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44 |
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|
44 |
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Reserve for unfunded lending commitments, December 31 |
— |
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— |
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|
528 |
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|
528 |
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Allowance for credit losses, December 31 |
$ |
5,935 |
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$ |
4,047 |
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$ |
4,965 |
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$ |
14,947 |
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2013 |
Allowance for loan and lease losses, January 1 |
$ |
14,933 |
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$ |
6,140 |
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$ |
3,106 |
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$ |
24,179 |
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Loans and leases charged off |
(3,766 |
) |
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(5,495 |
) |
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(1,108 |
) |
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(10,369 |
) |
Recoveries of loans and leases previously charged off |
879 |
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|
1,141 |
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|
452 |
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|
2,472 |
|
Net charge-offs |
(2,887 |
) |
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(4,354 |
) |
|
(656 |
) |
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(7,897 |
) |
Write-offs of PCI loans |
(2,336 |
) |
|
— |
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— |
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(2,336 |
) |
Provision for loan and lease losses |
(1,124 |
) |
|
3,139 |
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|
1,559 |
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3,574 |
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Other (1)
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(68 |
) |
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(20 |
) |
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(4 |
) |
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(92 |
) |
Allowance for loan and lease losses, December 31 |
8,518 |
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4,905 |
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|
4,005 |
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17,428 |
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Reserve for unfunded lending commitments, January 1 |
— |
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— |
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|
513 |
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513 |
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Provision for unfunded lending commitments |
— |
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— |
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(18 |
) |
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(18 |
) |
Other |
— |
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— |
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(11 |
) |
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(11 |
) |
Reserve for unfunded lending commitments, December 31 |
— |
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— |
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|
484 |
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|
484 |
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Allowance for credit losses, December 31 |
$ |
8,518 |
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$ |
4,905 |
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$ |
4,489 |
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$ |
17,912 |
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2012 |
Allowance for loan and lease losses, January 1 |
$ |
21,079 |
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$ |
8,569 |
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$ |
4,135 |
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$ |
33,783 |
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Loans and leases charged off |
(7,849 |
) |
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(7,727 |
) |
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(2,096 |
) |
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(17,672 |
) |
Recoveries of loans and leases previously charged off |
496 |
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|
1,519 |
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|
749 |
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|
2,764 |
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Net charge-offs |
(7,353 |
) |
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(6,208 |
) |
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(1,347 |
) |
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(14,908 |
) |
Write-offs of PCI loans |
(2,820 |
) |
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— |
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— |
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(2,820 |
) |
Provision for loan and lease losses |
4,073 |
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|
3,899 |
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|
338 |
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|
8,310 |
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Other (1)
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(46 |
) |
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(120 |
) |
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(20 |
) |
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(186 |
) |
Allowance for loan and lease losses, December 31 |
14,933 |
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6,140 |
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3,106 |
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24,179 |
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Reserve for unfunded lending commitments, January 1 |
— |
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— |
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|
714 |
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|
714 |
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Provision for unfunded lending commitments |
— |
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— |
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(141 |
) |
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(141 |
) |
Other |
— |
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— |
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(60 |
) |
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(60 |
) |
Reserve for unfunded lending commitments, December 31 |
— |
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— |
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|
513 |
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|
513 |
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Allowance for credit losses, December 31 |
$ |
14,933 |
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$ |
6,140 |
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$ |
3,619 |
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$ |
24,692 |
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(1) |
Primarily represents the net impact of portfolio sales, consolidations and deconsolidations, and foreign currency translation adjustments. |
In 2014, 2013 and 2012, for the PCI loan portfolio, the Corporation recorded a benefit of $31 million, $707 million and $103 million, respectively in the provision for credit losses with a corresponding decrease in the valuation allowance included as part of the allowance for loan and lease losses. Write-offs in the PCI loan portfolio totaled $810 million, $2.3 billion and $2.8 billion with a corresponding decrease in the PCI valuation allowance during 2014, 2013 and 2012, respectively. Write-offs in 2013 included certain PCI loans that were ineligible for the National Mortgage Settlement, but had characteristics similar to the eligible loans and the expectation of future cash proceeds was considered remote. Write-offs of PCI loans in 2012 primarily related to the National Mortgage Settlement. The valuation allowance associated with the PCI loan portfolio was $1.7 billion, $2.5 billion and $5.5 billion at December 31, 2014, 2013 and 2012, respectively.
The table below presents the allowance and the carrying value of outstanding loans and leases by portfolio segment at December 31, 2014 and 2013.
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Allowance and Carrying Value by Portfolio Segment |
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December 31, 2014 |
(Dollars in millions) |
Home
Loans
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Credit Card
and Other
Consumer
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Commercial |
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Total |
Impaired loans and troubled debt restructurings (1)
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Allowance for loan and lease losses (2)
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$ |
727 |
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$ |
339 |
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$ |
159 |
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$ |
1,225 |
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Carrying value (3)
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25,628 |
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1,141 |
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2,198 |
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28,967 |
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Allowance as a percentage of carrying value |
2.84 |
% |
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29.71 |
% |
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7.23 |
% |
|
4.23 |
% |
Loans collectively evaluated for impairment |
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Allowance for loan and lease losses |
$ |
3,556 |
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$ |
3,708 |
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$ |
4,278 |
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$ |
11,542 |
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Carrying value (3, 4)
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255,525 |
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183,430 |
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384,019 |
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822,974 |
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Allowance as a percentage of carrying value (4)
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1.39 |
% |
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2.02 |
% |
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1.11 |
% |
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1.40 |
% |
Purchased credit-impaired loans |
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Valuation allowance |
$ |
1,652 |
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n/a |
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n/a |
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$ |
1,652 |
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Carrying value gross of valuation allowance |
20,769 |
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n/a |
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n/a |
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20,769 |
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Valuation allowance as a percentage of carrying value |
7.95 |
% |
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n/a |
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n/a |
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7.95 |
% |
Total |
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Allowance for loan and lease losses |
$ |
5,935 |
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$ |
4,047 |
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$ |
4,437 |
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$ |
14,419 |
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Carrying value (3, 4)
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301,922 |
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184,571 |
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386,217 |
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872,710 |
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Allowance as a percentage of carrying value (4)
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1.97 |
% |
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2.19 |
% |
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1.15 |
% |
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1.65 |
% |
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December 31, 2013 |
Impaired loans and troubled debt restructurings (1)
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Allowance for loan and lease losses (2)
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$ |
1,231 |
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$ |
579 |
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$ |
277 |
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$ |
2,087 |
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Carrying value (3)
|
31,458 |
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|
2,079 |
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3,048 |
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|
36,585 |
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Allowance as a percentage of carrying value |
3.91 |
% |
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27.85 |
% |
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9.09 |
% |
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5.70 |
% |
Loans collectively evaluated for impairment |
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Allowance for loan and lease losses |
$ |
4,794 |
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$ |
4,326 |
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$ |
3,728 |
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$ |
12,848 |
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Carrying value (3, 4)
|
285,015 |
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|
185,969 |
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385,357 |
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|
856,341 |
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Allowance as a percentage of carrying value (4)
|
1.68 |
% |
|
2.33 |
% |
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0.97 |
% |
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1.50 |
% |
Purchased credit-impaired loans |
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Valuation allowance |
$ |
2,493 |
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n/a |
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n/a |
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$ |
2,493 |
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Carrying value gross of valuation allowance |
25,265 |
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n/a |
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n/a |
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25,265 |
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Valuation allowance as a percentage of carrying value |
9.87 |
% |
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n/a |
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n/a |
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9.87 |
% |
Total |
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Allowance for loan and lease losses |
$ |
8,518 |
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$ |
4,905 |
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$ |
4,005 |
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$ |
17,428 |
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Carrying value (3, 4)
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341,738 |
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|
188,048 |
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|
388,405 |
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|
918,191 |
|
Allowance as a percentage of carrying value (4)
|
2.49 |
% |
|
2.61 |
% |
|
1.03 |
% |
|
1.90 |
% |
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(1) |
Impaired loans include nonperforming commercial loans and all TDRs, including both commercial and consumer TDRs. Impaired loans exclude nonperforming consumer loans unless they are TDRs, and all consumer and commercial loans accounted for under the fair value option. |
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(2) |
Allowance for loan and lease losses includes $35 million and $36 million related to impaired U.S. small business commercial at December 31, 2014 and 2013.
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(3) |
Amounts are presented gross of the allowance for loan and lease losses. |
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(4) |
Outstanding loan and lease balances and ratios do not include loans accounted for under the fair value option of $8.7 billion and $10.0 billion at December 31, 2014 and 2013.
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n/a = not applicable
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