| Changes in the Allowance for Credit Losses |
The table below summarizes the changes in the allowance for credit losses by portfolio segment for 2017, 2016 and 2015.
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Consumer
Real Estate (1)
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Credit Card and Other Consumer |
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Commercial |
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Total
Allowance
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(Dollars in millions) |
2017 |
Allowance for loan and lease losses, January 1 |
$ |
2,750 |
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|
$ |
3,229 |
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$ |
5,258 |
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|
$ |
11,237 |
|
Loans and leases charged off |
(770 |
) |
|
(3,774 |
) |
|
(1,075 |
) |
|
(5,619 |
) |
Recoveries of loans and leases previously charged off |
657 |
|
|
809 |
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|
174 |
|
|
1,640 |
|
Net charge-offs (2)
|
(113 |
) |
|
(2,965 |
) |
|
(901 |
) |
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(3,979 |
) |
Write-offs of PCI loans (3)
|
(207 |
) |
|
— |
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— |
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(207 |
) |
Provision for loan and lease losses (4)
|
(710 |
) |
|
3,437 |
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|
654 |
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|
3,381 |
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Other (5)
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— |
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(38 |
) |
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(1 |
) |
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(39 |
) |
Allowance for loan and lease losses, December 31
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1,720 |
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3,663 |
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|
5,010 |
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|
10,393 |
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Reserve for unfunded lending commitments, January 1 |
— |
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— |
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762 |
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|
762 |
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Provision for unfunded lending commitments |
— |
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— |
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|
15 |
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|
15 |
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Reserve for unfunded lending commitments, December 31 |
— |
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— |
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|
777 |
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|
777 |
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Allowance for credit losses, December 31
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$ |
1,720 |
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$ |
3,663 |
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$ |
5,787 |
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$ |
11,170 |
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2016 |
Allowance for loan and lease losses, January 1 |
$ |
3,914 |
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$ |
3,471 |
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$ |
4,849 |
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$ |
12,234 |
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Loans and leases charged off |
(1,155 |
) |
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(3,553 |
) |
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(740 |
) |
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(5,448 |
) |
Recoveries of loans and leases previously charged off |
619 |
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|
770 |
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|
238 |
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|
1,627 |
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Net charge-offs (2)
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(536 |
) |
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(2,783 |
) |
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(502 |
) |
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(3,821 |
) |
Write-offs of PCI loans (3)
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(340 |
) |
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— |
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— |
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(340 |
) |
Provision for loan and lease losses (4)
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(258 |
) |
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2,826 |
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1,013 |
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3,581 |
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Other (5)
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(30 |
) |
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(42 |
) |
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(102 |
) |
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(174 |
) |
Total 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 (6)
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— |
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(243 |
) |
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— |
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(243 |
) |
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 (5)
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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 (3)
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(808 |
) |
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— |
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— |
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(808 |
) |
Provision for loan and lease losses (4)
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(70 |
) |
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2,278 |
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|
835 |
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3,043 |
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Other (5)
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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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(1) |
Includes valuation allowance associated with the PCI loan portfolio. |
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(2) |
Includes net charge-offs 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. In 2017, the Corporation sold its non-U.S. consumer credit card business. |
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(3) |
Includes write-offs of $87 million, $60 million and $234 million associated with the sale of PCI loans in 2017, 2016 and 2015, respectively.
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(4) |
Includes provision expense of $76 million and a benefit of $45 million and $40 million associated with the PCI loan portfolio in 2017, 2016 and 2015, respectively.
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(5) |
Primarily represents the net impact of portfolio sales, consolidations and deconsolidations, foreign currency translation adjustments, transfers to held-for-sale and certain other reclassifications. |
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(6) |
Represents allowance for loan and lease losses related to the non-U.S. credit card loan portfolio, which was sold in 2017. |
The table below presents the allowance and the carrying value of outstanding loans and leases by portfolio segment at December 31, 2017 and 2016.
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Allowance and Carrying Value by Portfolio Segment |
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Consumer
Real Estate |
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Credit Card and Other Consumer |
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Commercial |
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Total |
(Dollars in millions) |
December 31, 2017 |
Impaired loans and troubled debt restructurings (1)
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Allowance for loan and lease losses (2)
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$ |
348 |
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$ |
125 |
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$ |
190 |
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$ |
663 |
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Carrying value (3)
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12,554 |
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|
490 |
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2,407 |
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15,451 |
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Allowance as a percentage of carrying value |
2.77 |
% |
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25.51 |
% |
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7.89 |
% |
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4.29 |
% |
Loans collectively evaluated for impairment |
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Allowance for loan and lease losses |
$ |
1,083 |
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$ |
3,538 |
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$ |
4,820 |
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$ |
9,441 |
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Carrying value (3, 4)
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238,284 |
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192,303 |
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474,284 |
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904,871 |
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Allowance as a percentage of carrying value (4)
|
0.45 |
% |
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1.84 |
% |
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1.02 |
% |
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1.04 |
% |
Purchased credit-impaired loans |
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Valuation allowance |
$ |
289 |
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n/a |
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n/a |
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$ |
289 |
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Carrying value gross of valuation allowance |
10,717 |
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n/a |
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n/a |
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10,717 |
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Valuation allowance as a percentage of carrying value |
2.70 |
% |
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n/a |
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n/a |
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2.70 |
% |
Total |
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Allowance for loan and lease losses |
$ |
1,720 |
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$ |
3,663 |
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$ |
5,010 |
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$ |
10,393 |
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Carrying value (3, 4)
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261,555 |
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192,793 |
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476,691 |
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931,039 |
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Allowance as a percentage of carrying value (4)
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0.66 |
% |
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1.90 |
% |
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1.05 |
% |
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1.12 |
% |
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December 31, 2016 |
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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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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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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(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 related to impaired U.S. small business commercial at both December 31, 2017 and 2016.
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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 $5.7 billion and $7.1 billion at December 31, 2017 and 2016.
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(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. In 2017, the Corporation sold its non-U.S. consumer credit card business.
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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 at December 31, 2016.
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n/a = not applicable
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