Quarterly report pursuant to Section 13 or 15(d)

Allowance for Credit Losses (Tables)

v3.8.0.1
Allowance for Credit Losses (Tables)
9 Months Ended
Sep. 30, 2017
Receivables [Abstract]  
Changes in the Allowance for Credit Losses
The table below summarizes the changes in the allowance for credit losses by portfolio segment for the three and nine months ended September 30, 2017 and 2016.
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2017
(Dollars in millions)
Consumer
Real Estate (1)
 
Credit Card and Other Consumer
 
Commercial
 
Total
Allowance
Allowance for loan and lease losses, July 1
$
2,309

 
$
3,386

 
$
5,180

 
$
10,875

Loans and leases charged off
(231
)
 
(919
)
 
(212
)
 
(1,362
)
Recoveries of loans and leases previously charged off
230

 
189

 
43

 
462

Net charge-offs
(1
)
 
(730
)
 
(169
)
 
(900
)
Write-offs of PCI loans (2)
(73
)
 

 

 
(73
)
Provision for loan and lease losses (3)
(204
)
 
934

 
99

 
829

Other (4)
1

 
(40
)
 
1

 
(38
)
Allowance for loan and lease losses, September 30 
2,032

 
3,550

 
5,111

 
10,693

Reserve for unfunded lending commitments, July 1

 

 
757

 
757

Provision for unfunded lending commitments

 

 
5

 
5

Reserve for unfunded lending commitments, September 30

 

 
762

 
762

Allowance for credit losses, September 30 
$
2,032

 
$
3,550

 
$
5,873

 
$
11,455

 
Three Months Ended September 30, 2016
Allowance for loan and lease losses, July 1
$
3,209

 
$
3,334

 
$
5,294

 
$
11,837

Loans and leases charged off
(246
)
 
(868
)
 
(163
)
 
(1,277
)
Recoveries of loans and leases previously charged off
145

 
191

 
53

 
389

Net charge-offs
(101
)
 
(677
)
 
(110
)
 
(888
)
Write-offs of PCI loans (2)
(83
)
 

 

 
(83
)
Provision for loan and lease losses (3)
(36
)
 
741

 
129

 
834

Other (4)

 
(8
)
 

 
(8
)
Allowance for loan and lease losses, September 30
2,989

 
3,390

 
5,313

 
11,692

Reserve for unfunded lending commitments, July 1

 

 
750

 
750

Provision for unfunded lending commitments

 

 
16

 
16

Other (4)

 

 
1

 
1

Reserve for unfunded lending commitments, September 30

 

 
767

 
767

Allowance for credit losses, September 30
$
2,989

 
$
3,390

 
$
6,080

 
$
12,459

 
Nine Months Ended September 30, 2017
Allowance for loan and lease losses, January 1
$
2,750

 
$
3,229

 
$
5,258

 
$
11,237

Loans and leases charged off
(633
)
 
(2,819
)
 
(570
)
 
(4,022
)
Recoveries of loans and leases previously charged off
520

 
623

 
137

 
1,280

Net charge-offs (5)
(113
)
 
(2,196
)
 
(433
)
 
(2,742
)
Write-offs of PCI loans (2)
(161
)
 

 

 
(161
)
Provision for loan and lease losses (3)
(445
)
 
2,553

 
287

 
2,395

Other (4)
1

 
(36
)
 
(1
)
 
(36
)
Allowance for loan and lease losses, September 30
2,032

 
3,550

 
5,111

 
10,693

Reserve for unfunded lending commitments, January 1

 

 
762

 
762

Provision for unfunded lending commitments

 

 

 

Reserve for unfunded lending commitments, September 30

 

 
762

 
762

Allowance for credit losses, September 30
$
2,032

 
$
3,550

 
$
5,873

 
$
11,455

 
Nine Months Ended September 30, 2016
Allowance for loan and lease losses, January 1
$
3,914

 
$
3,471

 
$
4,849

 
$
12,234

Loans and leases charged off
(928
)
 
(2,664
)
 
(559
)
 
(4,151
)
Recoveries of loans and leases previously charged off
464

 
584

 
162

 
1,210

Net charge-offs
(464
)
 
(2,080
)
 
(397
)
 
(2,941
)
Write-offs of PCI loans (2)
(270
)
 

 

 
(270
)
Provision for loan and lease losses (3)
(191
)
 
2,031

 
962

 
2,802

Other (4)

 
(32
)
 
(101
)
 
(133
)
Allowance for loan and lease losses, September 30
2,989

 
3,390

 
5,313

 
11,692

Reserve for unfunded lending commitments, January 1

 

 
646

 
646

Provision for unfunded lending commitments

 

 
21

 
21

Other (4)

 

 
100

 
100

Reserve for unfunded lending commitments, September 30

 

 
767

 
767

Allowance for credit losses, September 30
$
2,989

 
$
3,390

 
$
6,080

 
$
12,459

(1) 
Includes valuation allowance associated with the PCI loan portfolio.
(2) 
Write-offs included $45 million and $80 million associated with the sale of PCI loans during the three and nine months ended September 30, 2017 compared to $11 million and $50 million for the same periods in 2016.
(3) 
During the three and nine months ended September 30, 2017, for the PCI loan portfolio, the Corporation recorded provision expense of $12 million and $56 million compared to provision expense of $8 million and a benefit of $81 million for the same periods in 2016.
(4) 
Primarily represents the net impact of portfolio sales, consolidations and deconsolidations, foreign currency translation adjustments, transfers to held-for-sale and certain other reclassifications.
(5) 
Includes net charge-offs of non-U.S. credit card loans, which were previously included in assets of business held for sale. During the second quarter of 2017, the Corporation sold its non-U.S. consumer credit card business.
The table below presents the allowance and the carrying value of outstanding loans and leases by portfolio segment at September 30, 2017 and December 31, 2016.
 
 
 
 
 
 
 
 
Allowance and Carrying Value by Portfolio Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 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)
$
369

 
$
125

 
$
232

 
$
726

Carrying value (3)
13,122

 
485

 
2,498

 
16,105

Allowance as a percentage of carrying value
2.81
%
 
25.77
%
 
9.29
%
 
4.51
%
Loans collectively evaluated for impairment
 

 
 

 
 

 
 

Allowance for loan and lease losses
$
1,348

 
$
3,425

 
$
4,879

 
$
9,652

Carrying value (3, 4)
234,764

 
187,932

 
470,719

 
893,415

Allowance as a percentage of carrying value (4)
0.57
%
 
1.82
%
 
1.04
%
 
1.08
%
Purchased credit-impaired loans
 

 
 
 
 

 
 

Valuation allowance
$
315

 
n/a

 
n/a

 
$
315

Carrying value gross of valuation allowance
11,312

 
n/a

 
n/a

 
11,312

Valuation allowance as a percentage of carrying value
2.78
%
 
n/a

 
n/a

 
2.78
%
Total
 

 
 

 
 

 
 

Total allowance for loan and lease losses
$
2,032

 
$
3,550

 
$
5,111

 
$
10,693

Carrying value (3, 4)
259,198

 
188,417

 
473,217

 
920,832

Total allowance as a percentage of carrying value (4)
0.78
%
 
1.88
%
 
1.08
%
 
1.16
%
 
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 $27 million related to impaired U.S. small business commercial at both September 30, 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 $6.3 billion and $7.1 billion at September 30, 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 was included in assets of business held for sale on the Consolidated Balance Sheet at December 31, 2016. During the second quarter of 2017, the Corporation sold its non-U.S. consumer credit card business.
(6) 
Includes $61 million of allowance for loan and lease losses related to impaired loans and TDRs and $182 million related to loans collectively evaluated for impairment at December 31, 2016.
n/a = not applicable