Quarterly report pursuant to Section 13 or 15(d)

Allowance for Credit Losses

v2.4.0.6
Allowance for Credit Losses
3 Months Ended
Mar. 31, 2012
Receivables [Abstract]  
Allowance for Credit Losses
NOTE 6 – 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, 2012 and 2011.

 
Three Months Ended March 31, 2012
(Dollars in millions)
Home Loans
 
Credit Card
and Other
Consumer
 
Commercial
 
Total
Allowance for loan and lease losses, January 1
$
21,079

 
$
8,569

 
$
4,135

 
$
33,783

Loans and leases charged off
(2,007
)
 
(2,242
)
 
(531
)
 
(4,780
)
Recoveries of loans and leases previously charged off
136

 
426

 
162

 
724

Net charge-offs
(1,871
)
 
(1,816
)
 
(369
)
 
(4,056
)
Provision for loan and lease losses
1,765

 
879

 
(187
)
 
2,457

Other

 
32

 
(5
)
 
27

Allowance for loan and lease losses, March 31
20,973

 
7,664

 
3,574

 
32,211

Reserve for unfunded lending commitments, January 1

 

 
714

 
714

Provision for unfunded lending commitments

 

 
(39
)
 
(39
)
Other (1)

 

 
(24
)
 
(24
)
Reserve for unfunded lending commitments, March 31

 

 
651

 
651

Allowance for credit losses, March 31
$
20,973

 
$
7,664

 
$
4,225

 
$
32,862

 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2011
Allowance for loan and lease losses, January 1
$
19,252

 
$
15,463

 
$
7,170

 
$
41,885

Loans and leases charged off
(2,289
)
 
(3,731
)
 
(906
)
 
(6,926
)
Recoveries of loans and leases previously charged off
185

 
490

 
223

 
898

Net charge-offs
(2,104
)
 
(3,241
)
 
(683
)
 
(6,028
)
Provision for loan and lease losses
2,948

 
979

 
(11
)
 
3,916

Other
1

 
70

 
(1
)
 
70

Allowance for loan and lease losses, March 31
20,097

 
13,271

 
6,475

 
39,843

Reserve for unfunded lending commitments, January 1

 

 
1,188

 
1,188

Provision for unfunded lending commitments

 

 
(102
)
 
(102
)
Other (1)

 

 
(125
)
 
(125
)
Reserve for unfunded lending commitments, March 31

 

 
961

 
961

Allowance for credit losses, March 31
$
20,097

 
$
13,271

 
$
7,436

 
$
40,804

(1) 
Represents primarily accretion of the Merrill Lynch purchase accounting adjustment and the impact of funding previously unfunded positions.

During the three months ended March 31, 2012 and 2011, for the PCI loan portfolio, the Corporation recorded $487 million and $1.6 billion in provision for credit losses with a corresponding increase in the valuation allowance included as part of the allowance for loan and lease losses. The valuation allowance associated with the PCI loan portfolio was $8.9 billion and $8.5 billion at March 31, 2012 and December 31, 2011.

The table below presents the allowance and the carrying value of outstanding loans and leases by portfolio segment at March 31, 2012 and December 31, 2011.

Allowance and Carrying Value by Portfolio Segment
 
 
 
 
 
 
 
 
March 31, 2012
(Dollars in millions)
Home Loans
 
Credit Card
and Other
Consumer
 
Commercial
 
Total
Impaired loans and troubled debt restructurings (1)
 
 
 
 
 
 
 
Allowance for loan and lease losses (2)
$
1,898

 
$
2,113

 
$
465

 
$
4,476

Carrying value (3)
21,777

 
6,178

 
7,552

 
35,507

Allowance as a percentage of carrying value
8.72
%
 
34.20
%
 
6.16
%
 
12.61
%
Collectively evaluated for impairment
 
 
 
 
 
 
 
Allowance for loan and lease losses
$
10,129

 
$
5,551

 
$
3,109

 
$
18,789

Carrying value (3, 4)
335,506

 
192,904

 
298,338

 
826,748

Allowance as a percentage of carrying value (4)
3.02
%
 
2.88
%
 
1.04
%
 
2.27
%
Purchased credit-impaired loans
 
 
 
 
 
 
 
Valuation allowance
$
8,946

 
n/a

 
n/a

 
$
8,946

Carrying value gross of valuation allowance
30,847

 
n/a

 
n/a

 
30,847

Valuation allowance as a percentage of carrying value
29.00
%
 
n/a

 
n/a

 
29.00
%
Total
 
 
 
 
 
 
 
Allowance for loan and lease losses
$
20,973

 
$
7,664

 
$
3,574

 
$
32,211

Carrying value (3, 4)
388,130

 
199,082

 
305,890

 
893,102

Allowance as a percentage of carrying value (4)
5.40
%
 
3.85
%
 
1.17
%
 
3.61
%
 
 
 
 
 
 
 
 
 
December 31, 2011
Impaired loans and troubled debt restructurings (1)
 
 
 
 
 
 
 
Allowance for loan and lease losses (2)
$
1,946

 
$
2,410

 
$
545

 
$
4,901

Carrying value (3)
21,462

 
7,100

 
8,113

 
36,675

Allowance as a percentage of carrying value
9.07
%
 
33.94
%
 
6.71
%
 
13.36
%
Collectively evaluated for impairment
 
 
 
 
 
 
 
Allowance for loan and lease losses
$
10,674

 
$
6,159

 
$
3,590

 
$
20,423

Carrying value (3, 4)
344,821

 
202,010

 
302,089

 
848,920

Allowance as a percentage of carrying value (4)
3.10
%
 
3.05
%
 
1.19
%
 
2.41
%
Purchased credit-impaired loans
 
 
 
 
 
 
 
Valuation allowance
$
8,459

 
n/a

 
n/a

 
$
8,459

Carrying value gross of valuation allowance
31,801

 
n/a

 
n/a

 
31,801

Valuation allowance as a percentage of carrying value
26.60
%
 
n/a

 
n/a

 
26.60
%
Total
 
 
 
 
 
 
 
Allowance for loan and lease losses
$
21,079

 
$
8,569

 
$
4,135

 
$
33,783

Carrying value (3, 4)
398,084

 
209,110

 
310,202

 
917,396

Allowance as a percentage of carrying value (4)
5.30
%
 
4.10
%
 
1.33
%
 
3.68
%
(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) 
Commercial impaired allowance for loan and lease losses includes $134 million and $172 million at March 31, 2012 and December 31, 2011 related to U.S. small business commercial renegotiated TDR loans.
(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 $9.2 billion and $8.8 billion at March 31, 2012 and December 31, 2011.
n/a = not applicable