| Allowance for Credit Losses |
Allowance for Credit Losses
The table below summarizes the changes in the allowance for credit losses by portfolio segment for 2016, 2015 and 2014.
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2016 |
(Dollars in millions) |
Consumer Real Estate |
|
Credit Card
and Other
Consumer
|
|
Commercial |
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Total
Allowance
|
Allowance for loan and lease losses, January 1 |
$ |
3,914 |
|
|
$ |
3,471 |
|
|
$ |
4,849 |
|
|
$ |
12,234 |
|
Loans and leases charged off |
(1,155 |
) |
|
(3,553 |
) |
|
(740 |
) |
|
(5,448 |
) |
Recoveries of loans and leases previously charged off |
619 |
|
|
770 |
|
|
238 |
|
|
1,627 |
|
Net charge-offs |
(536 |
) |
|
(2,783 |
) |
|
(502 |
) |
|
(3,821 |
) |
Write-offs of PCI loans |
(340 |
) |
|
— |
|
|
— |
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|
(340 |
) |
Provision for loan and lease losses |
(258 |
) |
|
2,826 |
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|
1,013 |
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|
3,581 |
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Other (1)
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(30 |
) |
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(42 |
) |
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(102 |
) |
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(174 |
) |
Allowance for loan and lease losses, December 31 |
2,750 |
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3,472 |
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5,258 |
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|
11,480 |
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Less: Allowance included in assets of business held for sale (2)
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— |
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(243 |
) |
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— |
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(243 |
) |
Total allowance for loan and lease losses, December 31 |
2,750 |
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|
3,229 |
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|
5,258 |
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|
11,237 |
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Reserve for unfunded lending commitments, January 1 |
— |
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— |
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|
646 |
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|
646 |
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Provision for unfunded lending commitments |
— |
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|
— |
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|
16 |
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16 |
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Other (1)
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— |
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— |
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|
100 |
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|
100 |
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Reserve for unfunded lending commitments, December 31 |
— |
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— |
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|
762 |
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|
762 |
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Allowance for credit losses, December 31 |
$ |
2,750 |
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$ |
3,229 |
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$ |
6,020 |
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$ |
11,999 |
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2015 |
Allowance for loan and lease losses, January 1 |
$ |
5,935 |
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$ |
4,047 |
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$ |
4,437 |
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$ |
14,419 |
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Loans and leases charged off |
(1,841 |
) |
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(3,620 |
) |
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(644 |
) |
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(6,105 |
) |
Recoveries of loans and leases previously charged off |
732 |
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|
813 |
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|
222 |
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|
1,767 |
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Net charge-offs |
(1,109 |
) |
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(2,807 |
) |
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(422 |
) |
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(4,338 |
) |
Write-offs of PCI loans |
(808 |
) |
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— |
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— |
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(808 |
) |
Provision for loan and lease losses |
(70 |
) |
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2,278 |
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|
835 |
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3,043 |
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Other (1)
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(34 |
) |
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(47 |
) |
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(1 |
) |
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(82 |
) |
Allowance for loan and lease losses, December 31 |
3,914 |
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3,471 |
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4,849 |
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12,234 |
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Reserve for unfunded lending commitments, January 1 |
— |
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— |
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528 |
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|
528 |
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Provision for unfunded lending commitments |
— |
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— |
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|
118 |
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|
118 |
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Reserve for unfunded lending commitments, December 31 |
— |
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— |
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|
646 |
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|
646 |
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Allowance for credit losses, December 31 |
$ |
3,914 |
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$ |
3,471 |
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$ |
5,495 |
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$ |
12,880 |
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2014 |
Allowance for loan and lease losses, January 1 |
$ |
8,518 |
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$ |
4,905 |
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$ |
4,005 |
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$ |
17,428 |
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Loans and leases charged off |
(2,219 |
) |
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(4,149 |
) |
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(658 |
) |
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(7,026 |
) |
Recoveries of loans and leases previously charged off |
1,426 |
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|
871 |
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|
346 |
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|
2,643 |
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Net charge-offs |
(793 |
) |
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(3,278 |
) |
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(312 |
) |
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(4,383 |
) |
Write-offs of PCI loans |
(810 |
) |
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— |
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— |
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(810 |
) |
Provision for loan and lease losses |
(976 |
) |
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2,458 |
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749 |
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2,231 |
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Other (1)
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(4 |
) |
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(38 |
) |
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(5 |
) |
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(47 |
) |
Allowance for loan and lease losses, December 31 |
5,935 |
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4,047 |
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4,437 |
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14,419 |
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Reserve for unfunded lending commitments, January 1 |
— |
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— |
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|
484 |
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|
484 |
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Provision for unfunded lending commitments |
— |
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— |
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44 |
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44 |
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Reserve for unfunded lending commitments, December 31 |
— |
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— |
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|
528 |
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|
528 |
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Allowance for credit losses, December 31 |
$ |
5,935 |
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$ |
4,047 |
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$ |
4,965 |
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$ |
14,947 |
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(1) |
Primarily represents the net impact of portfolio sales, consolidations and deconsolidations, foreign currency translation adjustments and certain other reclassifications. |
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(2) |
Represents 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 December 31, 2016. |
In 2016, 2015 and 2014, for the PCI loan portfolio, the Corporation recorded a provision benefit of $45 million, $40 million and $31 million, respectively. Write-offs in the PCI loan portfolio totaled $340 million, $808 million and $810 million during 2016, 2015 and 2014, respectively. Write-offs included $60 million, $234 million and $317 million associated with the sale of PCI loans during 2016, 2015 and 2014, respectively. The valuation allowance associated with the PCI loan portfolio was $419 million, $804 million and $1.7 billion at December 31, 2016, 2015 and 2014, respectively.
The table below presents the allowance and the carrying value of outstanding loans and leases by portfolio segment at December 31, 2016 and 2015.
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Allowance and Carrying Value by Portfolio Segment |
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December 31, 2016 |
(Dollars in millions) |
Consumer Real Estate |
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Credit Card
and Other
Consumer
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Commercial |
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Total |
Impaired loans and troubled debt restructurings (1)
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Allowance for loan and lease losses (2)
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$ |
356 |
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$ |
189 |
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$ |
273 |
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$ |
818 |
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Carrying value (3)
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15,408 |
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|
610 |
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3,202 |
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19,220 |
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Allowance as a percentage of carrying value |
2.31 |
% |
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30.98 |
% |
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8.53 |
% |
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4.26 |
% |
Loans collectively evaluated for impairment |
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Allowance for loan and lease losses |
$ |
1,975 |
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$ |
3,283 |
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$ |
4,985 |
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$ |
10,243 |
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Carrying value (3, 4)
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229,094 |
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|
197,470 |
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449,290 |
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|
875,854 |
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Allowance as a percentage of carrying value (4)
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0.86 |
% |
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1.66 |
% |
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1.11 |
% |
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1.17 |
% |
Purchased credit-impaired loans |
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Valuation allowance |
$ |
419 |
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n/a |
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n/a |
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$ |
419 |
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Carrying value gross of valuation allowance |
13,738 |
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n/a |
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n/a |
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13,738 |
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Valuation allowance as a percentage of carrying value |
3.05 |
% |
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n/a |
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n/a |
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3.05 |
% |
Less: Assets of business held for sale (5)
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Allowance for loan and lease losses (6)
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n/a |
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$ |
(243 |
) |
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n/a |
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$ |
(243 |
) |
Carrying value (3)
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n/a |
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(9,214 |
) |
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n/a |
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(9,214 |
) |
Total |
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Total allowance for loan and lease losses |
$ |
2,750 |
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$ |
3,229 |
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$ |
5,258 |
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$ |
11,237 |
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Carrying value (3, 4)
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258,240 |
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188,866 |
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452,492 |
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|
899,598 |
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Total allowance as a percentage of carrying value (4)
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1.06 |
% |
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1.71 |
% |
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1.16 |
% |
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1.25 |
% |
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December 31, 2015 |
Impaired loans and troubled debt restructurings (1)
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Allowance for loan and lease losses (2)
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$ |
634 |
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$ |
250 |
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$ |
217 |
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$ |
1,101 |
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Carrying value (3)
|
21,058 |
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|
779 |
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|
2,368 |
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|
24,205 |
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Allowance as a percentage of carrying value |
3.01 |
% |
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32.09 |
% |
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9.16 |
% |
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4.55 |
% |
Loans collectively evaluated for impairment |
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Allowance for loan and lease losses |
$ |
2,476 |
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$ |
3,221 |
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$ |
4,632 |
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$ |
10,329 |
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Carrying value (3, 4)
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226,116 |
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189,660 |
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433,379 |
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849,155 |
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Allowance as a percentage of carrying value (4)
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1.10 |
% |
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1.70 |
% |
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1.07 |
% |
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1.22 |
% |
Purchased credit-impaired loans |
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Valuation allowance |
$ |
804 |
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n/a |
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n/a |
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$ |
804 |
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Carrying value gross of valuation allowance |
16,685 |
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n/a |
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n/a |
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16,685 |
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Valuation allowance as a percentage of carrying value |
4.82 |
% |
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n/a |
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n/a |
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|
4.82 |
% |
Total |
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Allowance for loan and lease losses |
$ |
3,914 |
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$ |
3,471 |
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$ |
4,849 |
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$ |
12,234 |
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Carrying value (3, 4)
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263,859 |
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|
190,439 |
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435,747 |
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|
890,045 |
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Allowance as a percentage of carrying value (4)
|
1.48 |
% |
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1.82 |
% |
|
1.11 |
% |
|
1.37 |
% |
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(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. |
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(2) |
Allowance for loan and lease losses includes $27 million and $35 million related to impaired U.S. small business commercial at December 31, 2016 and 2015.
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(3) |
Amounts are presented gross of the allowance for loan and lease losses. |
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(4) |
Outstanding loan and lease balances and ratios do not include loans accounted for under the fair value option of $7.1 billion and $6.9 billion at December 31, 2016 and 2015.
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(5) |
Represents allowance for loan and lease losses and loans related to the non-U.S. credit card portfolio, which is included in assets of business held for sale on the Consolidated Balance Sheet at December 31, 2016. |
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(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.
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n/a = not applicable
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