| 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 and nine months ended September 30, 2016 and 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2016 |
(Dollars in millions) |
Consumer Real Estate |
|
Credit Card
and Other
Consumer |
|
Commercial |
|
Total
Allowance
|
Allowance for loan and lease losses, July 1 |
$ |
3,209 |
|
|
$ |
3,334 |
|
|
$ |
5,294 |
|
|
$ |
11,837 |
|
Loans and leases charged off |
(246 |
) |
|
(868 |
) |
|
(163 |
) |
|
(1,277 |
) |
Recoveries of loans and leases previously charged off |
145 |
|
|
191 |
|
|
53 |
|
|
389 |
|
Net charge-offs |
(101 |
) |
|
(677 |
) |
|
(110 |
) |
|
(888 |
) |
Write-offs of PCI loans |
(83 |
) |
|
— |
|
|
— |
|
|
(83 |
) |
Provision for loan and lease losses |
(36 |
) |
|
741 |
|
|
129 |
|
|
834 |
|
Other (1)
|
— |
|
|
(8 |
) |
|
— |
|
|
(8 |
) |
Allowance for loan and lease losses, September 30 |
2,989 |
|
|
3,390 |
|
|
5,313 |
|
|
11,692 |
|
Reserve for unfunded lending commitments, July 1 |
— |
|
|
— |
|
|
750 |
|
|
750 |
|
Provision for unfunded lending commitments |
— |
|
|
— |
|
|
16 |
|
|
16 |
|
Other (1)
|
— |
|
|
— |
|
|
1 |
|
|
1 |
|
Reserve for unfunded lending commitments, September 30 |
— |
|
|
— |
|
|
767 |
|
|
767 |
|
Allowance for credit losses, September 30 |
$ |
2,989 |
|
|
$ |
3,390 |
|
|
$ |
6,080 |
|
|
$ |
12,459 |
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2015 |
Allowance for loan and lease losses, July 1 |
$ |
4,741 |
|
|
$ |
3,702 |
|
|
$ |
4,625 |
|
|
$ |
13,068 |
|
Loans and leases charged off |
(345 |
) |
|
(873 |
) |
|
(157 |
) |
|
(1,375 |
) |
Recoveries of loans and leases previously charged off |
199 |
|
|
198 |
|
|
46 |
|
|
443 |
|
Net charge-offs |
(146 |
) |
|
(675 |
) |
|
(111 |
) |
|
(932 |
) |
Write-offs of PCI loans |
(148 |
) |
|
— |
|
|
— |
|
|
(148 |
) |
Provision for loan and lease losses |
(12 |
) |
|
554 |
|
|
191 |
|
|
733 |
|
Other (1)
|
(35 |
) |
|
(29 |
) |
|
— |
|
|
(64 |
) |
Allowance for loan and lease losses, September 30 |
4,400 |
|
|
3,552 |
|
|
4,705 |
|
|
12,657 |
|
Reserve for unfunded lending commitments, July 1 |
— |
|
|
— |
|
|
588 |
|
|
588 |
|
Provision for unfunded lending commitments |
— |
|
|
— |
|
|
73 |
|
|
73 |
|
Reserve for unfunded lending commitments, September 30 |
— |
|
|
— |
|
|
661 |
|
|
661 |
|
Allowance for credit losses, September 30 |
$ |
4,400 |
|
|
$ |
3,552 |
|
|
$ |
5,366 |
|
|
$ |
13,318 |
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2016 |
Allowance for loan and lease losses, January 1 |
$ |
3,914 |
|
|
$ |
3,471 |
|
|
$ |
4,849 |
|
|
$ |
12,234 |
|
Loans and leases charged off |
(928 |
) |
|
(2,664 |
) |
|
(559 |
) |
|
(4,151 |
) |
Recoveries of loans and leases previously charged off |
464 |
|
|
584 |
|
|
162 |
|
|
1,210 |
|
Net charge-offs |
(464 |
) |
|
(2,080 |
) |
|
(397 |
) |
|
(2,941 |
) |
Write-offs of PCI loans |
(270 |
) |
|
— |
|
|
— |
|
|
(270 |
) |
Provision for loan and lease losses |
(191 |
) |
|
2,031 |
|
|
962 |
|
|
2,802 |
|
Other (1)
|
— |
|
|
(32 |
) |
|
(101 |
) |
|
(133 |
) |
Allowance for loan and lease losses, September 30 |
2,989 |
|
|
3,390 |
|
|
5,313 |
|
|
11,692 |
|
Reserve for unfunded lending commitments, January 1 |
— |
|
|
— |
|
|
646 |
|
|
646 |
|
Provision for unfunded lending commitments |
— |
|
|
— |
|
|
21 |
|
|
21 |
|
Other (1)
|
— |
|
|
— |
|
|
100 |
|
|
100 |
|
Reserve for unfunded lending commitments, September 30 |
— |
|
|
— |
|
|
767 |
|
|
767 |
|
Allowance for credit losses, September 30 |
$ |
2,989 |
|
|
$ |
3,390 |
|
|
$ |
6,080 |
|
|
$ |
12,459 |
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2015 |
Allowance for loan and lease losses, January 1 |
$ |
5,935 |
|
|
$ |
4,047 |
|
|
$ |
4,437 |
|
|
$ |
14,419 |
|
Loans and leases charged off |
(1,430 |
) |
|
(2,733 |
) |
|
(410 |
) |
|
(4,573 |
) |
Recoveries of loans and leases previously charged off |
587 |
|
|
618 |
|
|
174 |
|
|
1,379 |
|
Net charge-offs |
(843 |
) |
|
(2,115 |
) |
|
(236 |
) |
|
(3,194 |
) |
Write-offs of PCI loans |
(726 |
) |
|
— |
|
|
— |
|
|
(726 |
) |
Provision for loan and lease losses |
68 |
|
|
1,646 |
|
|
504 |
|
|
2,218 |
|
Other (1)
|
(34 |
) |
|
(26 |
) |
|
— |
|
|
(60 |
) |
Allowance for loan and lease losses, September 30 |
4,400 |
|
|
3,552 |
|
|
4,705 |
|
|
12,657 |
|
Reserve for unfunded lending commitments, January 1 |
— |
|
|
— |
|
|
528 |
|
|
528 |
|
Provision for unfunded lending commitments |
— |
|
|
— |
|
|
133 |
|
|
133 |
|
Reserve for unfunded lending commitments, September 30 |
— |
|
|
— |
|
|
661 |
|
|
661 |
|
Allowance for credit losses, September 30 |
$ |
4,400 |
|
|
$ |
3,552 |
|
|
$ |
5,366 |
|
|
$ |
13,318 |
|
|
|
(1) |
Primarily represents the net impact of portfolio sales, consolidations and deconsolidations, foreign currency translation adjustments and certain other reclassifications. |
During the three and nine months ended September 30, 2016, for the PCI loan portfolio, the Corporation recorded provision expense of $8 million and a benefit of $81 million compared to a benefit of $68 million and $40 million for the same periods in 2015. Write-offs in the PCI loan portfolio totaled $83 million and $270 million during the three and nine months ended September 30, 2016 compared to $148 million and $726 million for the same periods in 2015. Write-offs included $11 million and $50 million associated with the sale of PCI loans during the three and nine months ended September 30, 2016 compared to $38 million and $213 million for the same periods in 2015. The valuation allowance associated with the PCI loan portfolio was $453 million and $804 million at September 30, 2016 and December 31, 2015.
The table below presents the allowance and the carrying value of outstanding loans and leases by portfolio segment at September 30, 2016 and December 31, 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance and Carrying Value by Portfolio Segment |
|
|
|
|
|
|
|
|
September 30, 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)
|
$ |
384 |
|
|
$ |
186 |
|
|
$ |
258 |
|
|
$ |
828 |
|
Carrying value (3)
|
16,507 |
|
|
637 |
|
|
3,490 |
|
|
20,634 |
|
Allowance as a percentage of carrying value |
2.33 |
% |
|
29.20 |
% |
|
7.39 |
% |
|
4.01 |
% |
Loans collectively evaluated for impairment |
|
|
|
|
|
|
|
Allowance for loan and lease losses |
$ |
2,152 |
|
|
$ |
3,204 |
|
|
$ |
5,055 |
|
|
$ |
10,411 |
|
Carrying value (3, 4)
|
225,990 |
|
|
193,093 |
|
|
442,715 |
|
|
861,798 |
|
Allowance as a percentage of carrying value (4)
|
0.95 |
% |
|
1.66 |
% |
|
1.14 |
% |
|
1.21 |
% |
Purchased credit-impaired loans |
|
|
|
|
|
|
|
Valuation allowance |
$ |
453 |
|
|
n/a |
|
|
n/a |
|
|
$ |
453 |
|
Carrying value gross of valuation allowance |
14,468 |
|
|
n/a |
|
|
n/a |
|
|
14,468 |
|
Valuation allowance as a percentage of carrying value |
3.13 |
% |
|
n/a |
|
|
n/a |
|
|
3.13 |
% |
Total |
|
|
|
|
|
|
|
Allowance for loan and lease losses |
$ |
2,989 |
|
|
$ |
3,390 |
|
|
$ |
5,313 |
|
|
$ |
11,692 |
|
Carrying value (3, 4)
|
256,965 |
|
|
193,730 |
|
|
446,205 |
|
|
896,900 |
|
Allowance as a percentage of carrying value (4)
|
1.16 |
% |
|
1.75 |
% |
|
1.19 |
% |
|
1.30 |
% |
|
|
|
|
|
|
|
|
|
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 $30 million and $35 million related to impaired U.S. small business commercial at September 30, 2016 and December 31, 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 $8.1 billion and $6.9 billion at September 30, 2016 and December 31, 2015.
|
n/a = not applicable
|