Quarterly report pursuant to Section 13 or 15(d)

Allowance for Credit Losses

v2.4.1.9
Allowance for Credit Losses
3 Months Ended
Mar. 31, 2015
Loans and Leases Receivable, Allowance [Abstract]  
Allowance for Credit Losses
NOTE 5 – Allowance for Credit Losses

The table below summarizes the changes in the allowance for credit losses by portfolio segment for the three months ended March 31, 2015 and 2014.

 
Three Months Ended March 31, 2015
(Dollars in millions)
Consumer Real Estate
 
Credit Card
and Other
Consumer
 
Commercial
 
Total
Allowance for loan and lease losses, January 1
$
5,935

 
$
4,047

 
$
4,437

 
$
14,419

Loans and leases charged off
(552
)
 
(964
)
 
(129
)
 
(1,645
)
Recoveries of loans and leases previously charged off
183

 
216

 
52

 
451

Net charge-offs
(369
)
 
(748
)
 
(77
)
 
(1,194
)
Write-offs of PCI loans
(288
)
 

 

 
(288
)
Provision for loan and lease losses
(28
)
 
647

 
137

 
756

Other (1)

 
(17
)
 

 
(17
)
Allowance for loan and lease losses, March 31
5,250

 
3,929

 
4,497

 
13,676

Reserve for unfunded lending commitments, January 1

 

 
528

 
528

Provision for unfunded lending commitments

 

 
9

 
9

Reserve for unfunded lending commitments, March 31

 

 
537

 
537

Allowance for credit losses, March 31
$
5,250

 
$
3,929

 
$
5,034

 
$
14,213

 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2014
Allowance for loan and lease losses, January 1
$
8,518

 
$
4,905

 
$
4,005

 
$
17,428

Loans and leases charged off
(596
)
 
(1,128
)
 
(144
)
 
(1,868
)
Recoveries of loans and leases previously charged off
167

 
218

 
95

 
480

Net charge-offs
(429
)
 
(910
)
 
(49
)
 
(1,388
)
Write-offs of PCI loans
(391
)
 

 

 
(391
)
Provision for loan and lease losses
(141
)
 
791

 
334

 
984

Other (1)
(1
)
 
(11
)
 
(3
)
 
(15
)
Allowance for loan and lease losses, March 31
7,556

 
4,775

 
4,287

 
16,618

Reserve for unfunded lending commitments, January 1

 

 
484

 
484

Provision for unfunded lending commitments

 

 
25

 
25

Reserve for unfunded lending commitments, March 31

 

 
509

 
509

Allowance for credit losses, March 31
$
7,556

 
$
4,775

 
$
4,796

 
$
17,127

(1) 
Primarily represents the net impact of portfolio sales, consolidations and deconsolidations, and foreign currency translation adjustments.

During the three months ended March 31, 2015, for the PCI loan portfolio, the Corporation recorded a benefit of $50 million 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. This compared to no provision for credit losses in the same period in 2014. Write-offs in the PCI loan portfolio totaled $288 million with a corresponding decrease in the PCI valuation allowance during the three months ended March 31, 2015 compared to $391 million for the same period in 2014. Write-offs included $110 million associated with the sale of PCI loans during the three months ended March 31, 2015 compared to $158 million for the same period in 2014. The valuation allowance associated with the PCI loan portfolio was $1.3 billion and $1.7 billion at March 31, 2015 and December 31, 2014.

The table below presents the allowance and the carrying value of outstanding loans and leases by portfolio segment at March 31, 2015 and December 31, 2014.

Allowance and Carrying Value by Portfolio Segment
 
 
 
 
 
 
 
 
March 31, 2015
(Dollars in millions)
Consumer Real Estate
 
Credit Card
and Other
Consumer
 
Commercial
 
Total
Impaired loans and troubled debt restructurings (1)
 
 
 
 
 
 
 
Allowance for loan and lease losses (2)
$
727

 
$
314

 
$
155

 
$
1,196

Carrying value (3)
24,991

 
1,020

 
1,995

 
28,006

Allowance as a percentage of carrying value
2.91
%
 
30.78
%
 
7.77
%
 
4.27
%
Loans collectively evaluated for impairment
 
 
 
 
 
 
 
Allowance for loan and lease losses
$
3,209

 
$
3,615

 
$
4,342

 
$
11,166

Carrying value (3, 4)
246,966

 
179,911

 
395,068

 
821,945

Allowance as a percentage of carrying value (4)
1.30
%
 
2.01
%
 
1.10
%
 
1.36
%
Purchased credit-impaired loans
 
 
 
 
 
 
 
Valuation allowance
$
1,314

 
n/a

 
n/a

 
$
1,314

Carrying value gross of valuation allowance
19,539

 
n/a

 
n/a

 
19,539

Valuation allowance as a percentage of carrying value
6.73
%
 
n/a

 
n/a

 
6.73
%
Total
 
 
 
 
 
 
 
Allowance for loan and lease losses
$
5,250

 
$
3,929

 
$
4,497

 
$
13,676

Carrying value (3, 4)
291,496

 
180,931

 
397,063

 
869,490

Allowance as a percentage of carrying value (4)
1.80
%
 
2.17
%
 
1.13
%
 
1.57
%
 
 
 
 
 
 
 
 
 
December 31, 2014
Impaired loans and troubled debt restructurings (1)
 
 
 
 
 
 
 
Allowance for loan and lease losses (2)
$
727

 
$
339

 
$
159

 
$
1,225

Carrying value (3)
25,628

 
1,141

 
2,198

 
28,967

Allowance as a percentage of carrying value
2.84
%
 
29.71
%
 
7.23
%
 
4.23
%
Loans collectively evaluated for impairment
 
 
 
 
 
 
 
Allowance for loan and lease losses
$
3,556

 
$
3,708

 
$
4,278

 
$
11,542

Carrying value (3, 4)
255,525

 
183,430

 
384,019

 
822,974

Allowance as a percentage of carrying value (4)
1.39
%
 
2.02
%
 
1.11
%
 
1.40
%
Purchased credit-impaired loans
 
 
 
 
 
 
 
Valuation allowance
$
1,652

 
n/a

 
n/a

 
$
1,652

Carrying value gross of valuation allowance
20,769

 
n/a

 
n/a

 
20,769

Valuation allowance as a percentage of carrying value
7.95
%
 
n/a

 
n/a

 
7.95
%
Total
 
 
 
 
 
 
 
Allowance for loan and lease losses
$
5,935

 
$
4,047

 
$
4,437

 
$
14,419

Carrying value (3, 4)
301,922

 
184,571

 
386,217

 
872,710

Allowance as a percentage of carrying value (4)
1.97
%
 
2.19
%
 
1.15
%
 
1.65
%
(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.
(2) 
Allowance for loan and lease losses includes $35 million related to impaired U.S. small business commercial at both March 31, 2015 and December 31, 2014.
(3) 
Amounts are presented gross of the allowance for loan and lease losses.
(4) 
Outstanding loan and lease balances and ratios do not include loans accounted for under the fair value option of $8.5 billion and $8.7 billion at March 31, 2015 and December 31, 2014.
n/a = not applicable