Annual report pursuant to Section 13 and 15(d)

Allowance for Credit Losses

v3.6.0.2
Allowance for Credit Losses
12 Months Ended
Dec. 31, 2016
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 2016, 2015 and 2014.
 
 
 
 
 
 
 
 
 
2016
(Dollars in millions)
Consumer Real Estate
 
Credit Card
and Other
Consumer
 
Commercial
 
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
)
 

 

 
(340
)
Provision for loan and lease losses
(258
)
 
2,826

 
1,013

 
3,581

Other (1)
(30
)
 
(42
)
 
(102
)
 
(174
)
Allowance for loan and lease losses, December 31
2,750

 
3,472

 
5,258

 
11,480

Less: Allowance included in assets of business held for sale (2)

 
(243
)
 

 
(243
)
Total allowance for loan and lease losses, December 31
2,750

 
3,229

 
5,258

 
11,237

Reserve for unfunded lending commitments, January 1

 

 
646

 
646

Provision for unfunded lending commitments

 

 
16

 
16

Other (1)

 

 
100

 
100

Reserve for unfunded lending commitments, December 31

 

 
762

 
762

Allowance for credit losses, December 31
$
2,750

 
$
3,229

 
$
6,020

 
$
11,999

 
2015
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


(1) 
Primarily represents the net impact of portfolio sales, consolidations and deconsolidations, foreign currency translation adjustments and certain other reclassifications.
(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.
 
 
 
 
 
 
 
 
Allowance and Carrying Value by Portfolio Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
(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)
$
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
 

 
 

 
 

 
 

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

Total allowance as a percentage of carrying value (4)
1.06
%
 
1.71
%
 
1.16
%
 
1.25
%
 
December 31, 2015
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

 
433,379

 
849,155

Allowance as a percentage of carrying value (4)
1.10
%
 
1.70
%
 
1.07
%
 
1.22
%
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

 
435,747

 
890,045

Allowance as a percentage of carrying value (4)
1.48
%
 
1.82
%
 
1.11
%
 
1.37
%
(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 and $35 million related to impaired U.S. small business commercial at December 31, 2016 and 2015.
(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 $7.1 billion and $6.9 billion at December 31, 2016 and 2015.
(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.
(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.
n/a = not applicable