Annual report pursuant to Section 13 and 15(d)

Allowance for Credit Losses

v3.3.1.900
Allowance for Credit Losses
12 Months Ended
Dec. 31, 2015
Loans and Leases Receivable, Allowance [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 2015, 2014 and 2013.
 
 
 
 
 
 
 
 
 
2015
(Dollars in millions)
Consumer Real Estate
 
Credit Card
and Other
Consumer
 
Commercial
 
Total
Allowance
Allowance for loan and lease losses, January 1
$
5,935

 
$
4,047

 
$
4,437

 
$
14,419

Loans and leases charged off
(1,841
)
 
(3,620
)
 
(644
)
 
(6,105
)
Recoveries of loans and leases previously charged off
732

 
813

 
222

 
1,767

Net charge-offs
(1,109
)
 
(2,807
)
 
(422
)
 
(4,338
)
Write-offs of PCI loans
(808
)
 

 

 
(808
)
Provision for loan and lease losses
(70
)
 
2,278

 
835

 
3,043

Other (1)
(34
)
 
(47
)
 
(1
)
 
(82
)
Allowance for loan and lease losses, December 31
3,914

 
3,471

 
4,849

 
12,234

Reserve for unfunded lending commitments, January 1

 

 
528

 
528

Provision for unfunded lending commitments

 

 
118

 
118

Reserve for unfunded lending commitments, December 31

 

 
646

 
646

Allowance for credit losses, December 31
$
3,914

 
$
3,471

 
$
5,495

 
$
12,880

 
2014
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

 
2,231

Other (1)
(4
)
 
(38
)
 
(5
)
 
(47
)
Allowance for loan and lease losses, December 31
5,935

 
4,047

 
4,437

 
14,419

Reserve for unfunded lending commitments, January 1

 

 
484

 
484

Provision for unfunded lending commitments

 

 
44

 
44

Reserve for unfunded lending commitments, December 31

 

 
528

 
528

Allowance for credit losses, December 31
$
5,935

 
$
4,047

 
$
4,965

 
$
14,947


 
2013
Allowance for loan and lease losses, January 1
$
14,933

 
$
6,140

 
$
3,106

 
$
24,179

Loans and leases charged off
(3,766
)
 
(5,495
)
 
(1,108
)
 
(10,369
)
Recoveries of loans and leases previously charged off
879

 
1,141

 
452

 
2,472

Net charge-offs
(2,887
)
 
(4,354
)
 
(656
)
 
(7,897
)
Write-offs of PCI loans
(2,336
)
 

 

 
(2,336
)
Provision for loan and lease losses
(1,124
)
 
3,139

 
1,559

 
3,574

Other (1)
(68
)
 
(20
)
 
(4
)
 
(92
)
Allowance for loan and lease losses, December 31
8,518

 
4,905

 
4,005

 
17,428

Reserve for unfunded lending commitments, January 1

 

 
513

 
513

Provision for unfunded lending commitments

 

 
(18
)
 
(18
)
Other

 

 
(11
)
 
(11
)
Reserve for unfunded lending commitments, December 31

 

 
484

 
484

Allowance for credit losses, December 31
$
8,518

 
$
4,905

 
$
4,489

 
$
17,912


(1) 
Primarily represents the net impact of portfolio sales, consolidations and deconsolidations, and foreign currency translation adjustments.
In 2015, 2014 and 2013, for the PCI loan portfolio, the Corporation recorded a provision benefit of $40 million, $31 million and $707 million, respectively. Write-offs in the PCI loan portfolio totaled $808 million, $810 million and $2.3 billion during 2015, 2014 and 2013, respectively. Write-offs included $234 million, $317 million and $414 million associated with the sale of PCI loans during 2015, 2014 and 2013, respectively. Write-offs in 2013 also 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. The valuation allowance associated with the PCI loan portfolio was $804 million, $1.7 billion and $2.5 billion at December 31, 2015, 2014 and 2013, respectively.

The table below presents the allowance and the carrying value of outstanding loans and leases by portfolio segment at December 31, 2015 and 2014.
 
 
 
 
 
 
 
 
Allowance and Carrying Value by Portfolio Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 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)
$
634

 
$
250

 
$
217

 
$
1,101

Carrying value (3)
21,058

 
779

 
2,368

 
24,205

Allowance as a percentage of carrying value
3.01
%
 
32.09
%
 
9.16
%
 
4.55
%
Loans collectively evaluated for impairment
 

 
 

 
 

 
 

Allowance for loan and lease losses
$
2,476

 
$
3,221

 
$
4,632

 
$
10,329

Carrying value (3, 4)
226,116

 
189,660

 
439,397

 
855,173

Allowance as a percentage of carrying value (4)
1.10
%
 
1.70
%
 
1.05
%
 
1.21
%
Purchased credit-impaired loans
 

 
 
 
 

 
 

Valuation allowance
$
804

 
n/a

 
n/a

 
$
804

Carrying value gross of valuation allowance
16,685

 
n/a

 
n/a

 
16,685

Valuation allowance as a percentage of carrying value
4.82
%
 
n/a

 
n/a

 
4.82
%
Total
 

 
 

 
 

 
 

Allowance for loan and lease losses
$
3,914

 
$
3,471

 
$
4,849

 
$
12,234

Carrying value (3, 4)
263,859

 
190,439

 
441,765

 
896,063

Allowance as a percentage of carrying value (4)
1.48
%
 
1.82
%
 
1.10
%
 
1.37
%
 
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 December 31, 2015 and 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 $6.9 billion and $8.7 billion at December 31, 2015 and 2014.
n/a = not applicable