Quarterly report pursuant to Section 13 or 15(d)

Allowance for Credit Losses

v3.7.0.1
Allowance for Credit Losses
3 Months Ended
Mar. 31, 2017
Receivables [Abstract]  
Allowance for Credit Losses
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, 2017 and 2016.
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2017
(Dollars in millions)
Consumer Real Estate
 
Credit Card
and Other
Consumer
 
Commercial
 
Total
Allowance
Allowance for loan and lease losses, January 1 (1)
$
2,750

 
$
3,229

 
$
5,258

 
$
11,237

Loans and leases charged off
(204
)
 
(946
)
 
(160
)
 
(1,310
)
Recoveries of loans and leases previously charged off
123

 
200

 
53

 
376

Net charge-offs (2)
(81
)
 
(746
)
 
(107
)
 
(934
)
Write-offs of PCI loans
(33
)
 

 

 
(33
)
Provision for loan and lease losses
(71
)
 
843

 
68

 
840

Other (3)

 
2

 
(1
)
 
1

Allowance for loan and lease losses, March 31
2,565

 
3,328

 
5,218

 
11,111

Less: Change in allowance included in assets of business held for sale (4)

 
1

 

 
1

Total allowance for loan and lease losses, March 31 (1)
2,565

 
3,329

 
5,218

 
11,112

Reserve for unfunded lending commitments, January 1

 

 
762

 
762

Provision for unfunded lending commitments

 

 
(5
)
 
(5
)
Reserve for unfunded lending commitments, March 31

 

 
757

 
757

Allowance for credit losses, March 31 (1)
$
2,565

 
$
3,329

 
$
5,975

 
$
11,869

 
Three Months Ended March 31, 2016
Allowance for loan and lease losses, January 1
$
3,914

 
$
3,471

 
$
4,849

 
$
12,234

Loans and leases charged off
(378
)
 
(912
)
 
(206
)
 
(1,496
)
Recoveries of loans and leases previously charged off
175

 
198

 
55

 
428

Net charge-offs
(203
)
 
(714
)
 
(151
)
 
(1,068
)
Write-offs of PCI loans
(105
)
 

 

 
(105
)
Provision for loan and lease losses
(150
)
 
552

 
614

 
1,016

Other (3)

 
(7
)
 
(1
)
 
(8
)
Allowance for loan and lease losses, March 31
3,456

 
3,302

 
5,311

 
12,069

Reserve for unfunded lending commitments, January 1

 

 
646

 
646

Provision for unfunded lending commitments

 

 
(19
)
 
(19
)
Reserve for unfunded lending commitments, March 31

 

 
627

 
627

Allowance for credit losses, March 31
$
3,456

 
$
3,302

 
$
5,938

 
$
12,696

(1) 
Excludes $242 million and $243 million of allowance for loan and lease losses related to non-U.S. credit card loans, which is included in assets of business held for sale on the Consolidated Balance Sheet at March 31, 2017 and December 31, 2016.
(2) 
Includes net charge-offs of $44 million on non-U.S. credit card loans, which are included in assets of business held for sale on the Consolidated Balance Sheet at March 31, 2017.
(3) 
Primarily represents the net impact of portfolio sales, consolidations and deconsolidations, foreign currency translation adjustments and certain other reclassifications.
(4) 
Represents the change in the allowance for loan and lease losses related to the non-U.S. credit card loan portfolio, which is included in assets of business held for sale on the Consolidated Balance Sheet at March 31, 2017.
During the three months ended March 31, 2017, for the PCI loan portfolio, the Corporation recorded a provision expense of $68 million compared to a provision benefit of $77 million for the same period in 2016. Write-offs in the PCI loan portfolio totaled $33 million during the three months ended March 31, 2017 compared to $105 million for the same period in 2016. The valuation allowance associated with the PCI loan portfolio was $454 million and $419 million at March 31, 2017 and December 31, 2016.

 
 
 
 
 
 
 
 
The table below presents the allowance and the carrying value of outstanding loans and leases by portfolio segment at March 31, 2017 and December 31, 2016.
 
 
 
 
 
 
 
 
Allowance and Carrying Value by Portfolio Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31, 2017
(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)
$
410

 
$
195

 
$
274

 
$
879

Carrying value (3)
14,722

 
594

 
3,016

 
18,332

Allowance as a percentage of carrying value
2.78
%
 
32.83
%
 
9.08
%
 
4.79
%
Loans collectively evaluated for impairment
 

 
 

 
 

 
 

Allowance for loan and lease losses
$
1,701

 
$
3,376

 
$
4,944

 
$
10,021

Carrying value (3, 4)
229,809

 
192,796

 
454,055

 
876,660

Allowance as a percentage of carrying value (4)
0.74
%
 
1.75
%
 
1.09
%
 
1.14
%
Purchased credit-impaired loans
 

 
 
 
 

 
 

Valuation allowance
$
454

 
n/a

 
n/a

 
$
454

Carrying value gross of valuation allowance
13,227

 
n/a

 
n/a

 
13,227

Valuation allowance as a percentage of carrying value
3.43
%
 
n/a

 
n/a

 
3.43
%
Less: Assets of business held for sale (5)
 
 
 
 
 
 
 
Allowance for loan and lease losses (6)
n/a

 
$
(242
)
 
n/a

 
$
(242
)
Carrying value (3)
n/a

 
(9,505
)
 
n/a

 
(9,505
)
Total
 

 
 

 
 

 
 

Total allowance for loan and lease losses
$
2,565

 
$
3,329

 
$
5,218

 
$
11,112

Carrying value (3, 4)
257,758

 
183,885

 
457,071

 
898,714

Total allowance as a percentage of carrying value (4)
1.00
%
 
1.81
%
 
1.14
%
 
1.24
%
 
December 31, 2016
Impaired loans and troubled debt restructurings (1)
 

 
 

 
 

 
 

Allowance for loan and lease losses (2)
$
356

 
$
189

 
$
273

 
$
818

Carrying value (3)
15,408

 
610

 
3,202

 
19,220

Allowance as a percentage of carrying value
2.31
%
 
30.98
%
 
8.53
%
 
4.26
%
Loans collectively evaluated for impairment
 

 
 

 
 

 
 
Allowance for loan and lease losses
$
1,975

 
$
3,283

 
$
4,985

 
$
10,243

Carrying value (3, 4)
229,094

 
197,470

 
449,290

 
875,854

Allowance as a percentage of carrying value (4)
0.86
%
 
1.66
%
 
1.11
%
 
1.17
%
Purchased credit-impaired loans
 

 
 

 
 

 
 
Valuation allowance
$
419

 
n/a

 
n/a

 
$
419

Carrying value gross of valuation allowance
13,738

 
n/a

 
n/a

 
13,738

Valuation allowance as a percentage of carrying value
3.05
%
 
n/a

 
n/a

 
3.05
%
Less: Assets of business held for sale (5)
 
 
 
 
 
 
 
Allowance for loan and lease losses (6)
n/a

 
$
(243
)
 
n/a

 
$
(243
)
Carrying value (3)
n/a

 
(9,214
)
 
n/a

 
(9,214
)
Total
 

 
 

 
 

 
 
Allowance for loan and lease losses
$
2,750

 
$
3,229

 
$
5,258

 
$
11,237

Carrying value (3, 4)
258,240

 
188,866

 
452,492

 
899,598

Allowance as a percentage of carrying value (4)
1.06
%
 
1.71
%
 
1.16
%
 
1.25
%
(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 $28 million and $27 million related to impaired U.S. small business commercial at March 31, 2017 and December 31, 2016.
(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 $7.5 billion and $7.1 billion at March 31, 2017 and December 31, 2016.
(5) 
Represents allowance for loan and lease losses and loans related to the non-U.S. credit card loan portfolio, which is included in assets of business held for sale on the Consolidated Balance Sheet at March 31, 2017 and December 31, 2016.
(6) 
Includes $65 million and $61 million of allowance for loan and lease losses related to impaired loans and TDRs and $177 million and $182 million related to loans collectively evaluated for impairment at March 31, 2017 and December 31, 2016.
n/a = not applicable