Quarterly report pursuant to Section 13 or 15(d)

Allowance for Credit Losses

v2.4.0.8
Allowance for Credit Losses
3 Months Ended
Mar. 31, 2014
Receivables [Abstract]  
Allowance for Credit Losses
NOTE 5 – Allowance for Credit Losses

The table below summarizes the changes in the allowance for credit losses by portfolio segment for the three months ended March 31, 2014 and 2013.

 
Three Months Ended March 31, 2014
(Dollars in millions)
Home Loans
 
Credit Card
and Other
Consumer
 
Commercial
 
Total
Allowance for loan and lease losses, January 1
$
8,518

 
$
4,905

 
$
4,005

 
$
17,428

Loans and leases charged off
(596
)
 
(1,128
)
 
(144
)
 
(1,868
)
Recoveries of loans and leases previously charged off
167

 
218

 
95

 
480

Net charge-offs
(429
)
 
(910
)
 
(49
)
 
(1,388
)
Write-offs of PCI loans
(391
)
 

 

 
(391
)
Provision for loan and lease losses
(141
)
 
791

 
334

 
984

Other (1)
(1
)
 
(11
)
 
(3
)
 
(15
)
Allowance for loan and lease losses, March 31
7,556

 
4,775

 
4,287

 
16,618

Reserve for unfunded lending commitments, January 1

 

 
484

 
484

Provision for unfunded lending commitments

 

 
25

 
25

Reserve for unfunded lending commitments, March 31

 

 
509

 
509

Allowance for credit losses, March 31
$
7,556

 
$
4,775

 
$
4,796

 
$
17,127

 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2013
Allowance for loan and lease losses, January 1
$
14,933

 
$
6,140

 
$
3,106

 
$
24,179

Loans and leases charged off
(1,193
)
 
(1,553
)
 
(316
)
 
(3,062
)
Recoveries of loans and leases previously charged off
126

 
318

 
101

 
545

Net charge-offs
(1,067
)
 
(1,235
)
 
(215
)
 
(2,517
)
Write-offs of PCI loans
(839
)
 

 

 
(839
)
Provision for loan and lease losses
484

 
1,007

 
240

 
1,731

Other (1)
(73
)
 
(38
)
 
(2
)
 
(113
)
Allowance for loan and lease losses, March 31
13,438

 
5,874

 
3,129

 
22,441

Reserve for unfunded lending commitments, January 1

 

 
513

 
513

Provision for unfunded lending commitments

 

 
(18
)
 
(18
)
Other

 

 
(9
)
 
(9
)
Reserve for unfunded lending commitments, March 31

 

 
486

 
486

Allowance for credit losses, March 31
$
13,438

 
$
5,874

 
$
3,615

 
$
22,927

(1) 
Primarily represents the net impact of portfolio sales, consolidations and deconsolidations, and foreign currency translation adjustments.

During the three months ended March 31, 2014, for the PCI loan portfolio, the Corporation recorded no provision for credit losses and, for three months ended March 31, 2013, recorded a benefit of $207 million with a corresponding decrease in the valuation allowance included as part of the allowance for loan and lease losses. Write-offs in the PCI loan portfolio totaled $391 million and $839 million with a corresponding decrease in the PCI valuation allowance during the three months ended March 31, 2014 and 2013. The valuation allowance associated with the PCI loan portfolio was $2.1 billion and $2.5 billion at March 31, 2014 and December 31, 2013.

The table below presents the allowance and the carrying value of outstanding loans and leases by portfolio segment at March 31, 2014 and December 31, 2013.

Allowance and Carrying Value by Portfolio Segment
 
 
 
 
 
 
 
 
March 31, 2014
(Dollars in millions)
Home Loans
 
Credit Card
and Other
Consumer
 
Commercial
 
Total
Impaired loans and troubled debt restructurings (1)
 
 
 
 
 
 
 
Allowance for loan and lease losses (2)
$
1,132

 
$
494

 
$
277

 
$
1,903

Carrying value (3)
30,230

 
1,779

 
2,996

 
35,005

Allowance as a percentage of carrying value
3.74
%
 
27.77
%
 
9.25
%
 
5.44
%
Loans collectively evaluated for impairment
 
 
 
 
 
 
 
Allowance for loan and lease losses
$
4,322

 
$
4,281

 
$
4,010

 
$
12,613

Carrying value (3, 4)
280,102

 
181,008

 
384,918

 
846,028

Allowance as a percentage of carrying value (4)
1.54
%
 
2.37
%
 
1.04
%
 
1.49
%
Purchased credit-impaired loans
 
 
 
 
 
 
 
Valuation allowance
$
2,102

 
n/a

 
n/a

 
$
2,102

Carrying value gross of valuation allowance
24,121

 
n/a

 
n/a

 
24,121

Valuation allowance as a percentage of carrying value
8.71
%
 
n/a

 
n/a

 
8.71
%
Total
 
 
 
 
 
 
 
Allowance for loan and lease losses
$
7,556

 
$
4,775

 
$
4,287

 
$
16,618

Carrying value (3, 4)
334,453

 
182,787

 
387,914

 
905,154

Allowance as a percentage of carrying value (4)
2.26
%
 
2.61
%
 
1.11
%
 
1.84
%
 
 
 
 
 
 
 
 
 
December 31, 2013
Impaired loans and troubled debt restructurings (1)
 
 
 
 
 
 
 
Allowance for loan and lease losses (2)
$
1,231

 
$
579

 
$
277

 
$
2,087

Carrying value (3)
31,458

 
2,079

 
3,048

 
36,585

Allowance as a percentage of carrying value
3.91
%
 
27.85
%
 
9.09
%
 
5.70
%
Loans collectively evaluated for impairment
 
 
 
 
 
 
 
Allowance for loan and lease losses
$
4,794

 
$
4,326

 
$
3,728

 
$
12,848

Carrying value (3, 4)
285,015

 
185,969

 
385,357

 
856,341

Allowance as a percentage of carrying value (4)
1.68
%
 
2.33
%
 
0.97
%
 
1.50
%
Purchased credit-impaired loans
 
 
 
 
 
 
 
Valuation allowance
$
2,493

 
n/a

 
n/a

 
$
2,493

Carrying value gross of valuation allowance
25,265

 
n/a

 
n/a

 
25,265

Valuation allowance as a percentage of carrying value
9.87
%
 
n/a

 
n/a

 
9.87
%
Total
 
 
 
 
 
 
 
Allowance for loan and lease losses
$
8,518

 
$
4,905

 
$
4,005

 
$
17,428

Carrying value (3, 4)
341,738

 
188,048

 
388,405

 
918,191

Allowance as a percentage of carrying value (4)
2.49
%
 
2.61
%
 
1.03
%
 
1.90
%
(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 $32 million and $36 million related to impaired U.S. small business commercial at March 31, 2014 and December 31, 2013.
(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 $11.1 billion and $10.0 billion at March 31, 2014 and December 31, 2013.
n/a = not applicable