| Allowance for Credit Losses |
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, 2017 and 2016.
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Three Months Ended March 31, 2017 |
(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
Allowance
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Allowance for loan and lease losses, January 1 (1)
|
$ |
2,750 |
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|
$ |
3,229 |
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$ |
5,258 |
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$ |
11,237 |
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Loans and leases charged off |
(204 |
) |
|
(946 |
) |
|
(160 |
) |
|
(1,310 |
) |
Recoveries of loans and leases previously charged off |
123 |
|
|
200 |
|
|
53 |
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|
376 |
|
Net charge-offs (2)
|
(81 |
) |
|
(746 |
) |
|
(107 |
) |
|
(934 |
) |
Write-offs of PCI loans |
(33 |
) |
|
— |
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— |
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(33 |
) |
Provision for loan and lease losses |
(71 |
) |
|
843 |
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|
68 |
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|
840 |
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Other (3)
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— |
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2 |
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(1 |
) |
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1 |
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Allowance for loan and lease losses, March 31 |
2,565 |
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3,328 |
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5,218 |
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|
11,111 |
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Less: Change in allowance included in assets of business held for sale (4)
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— |
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1 |
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— |
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1 |
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Total allowance for loan and lease losses, March 31 (1)
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2,565 |
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3,329 |
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5,218 |
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|
11,112 |
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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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(5 |
) |
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(5 |
) |
Reserve for unfunded lending commitments, March 31 |
— |
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— |
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|
757 |
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|
757 |
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Allowance for credit losses, March 31 (1)
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$ |
2,565 |
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$ |
3,329 |
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$ |
5,975 |
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$ |
11,869 |
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Three Months Ended March 31, 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 |
|
Loans and leases charged off |
(378 |
) |
|
(912 |
) |
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(206 |
) |
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(1,496 |
) |
Recoveries of loans and leases previously charged off |
175 |
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|
198 |
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|
55 |
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|
428 |
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Net charge-offs |
(203 |
) |
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(714 |
) |
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(151 |
) |
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(1,068 |
) |
Write-offs of PCI loans |
(105 |
) |
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— |
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— |
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(105 |
) |
Provision for loan and lease losses |
(150 |
) |
|
552 |
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|
614 |
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|
1,016 |
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Other (3)
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— |
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(7 |
) |
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(1 |
) |
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(8 |
) |
Allowance for loan and lease losses, March 31 |
3,456 |
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|
3,302 |
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|
5,311 |
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|
12,069 |
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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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(19 |
) |
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(19 |
) |
Reserve for unfunded lending commitments, March 31 |
— |
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|
— |
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|
627 |
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|
627 |
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Allowance for credit losses, March 31 |
$ |
3,456 |
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$ |
3,302 |
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$ |
5,938 |
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$ |
12,696 |
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(1) |
Excludes $242 million and $243 million of allowance for loan and lease losses related to non-U.S. credit card loans, which is included in assets of business held for sale on the Consolidated Balance Sheet at March 31, 2017 and December 31, 2016.
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(2) |
Includes net charge-offs of $44 million on non-U.S. credit card loans, which are included in assets of business held for sale on the Consolidated Balance Sheet at March 31, 2017.
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(3) |
Primarily represents the net impact of portfolio sales, consolidations and deconsolidations, foreign currency translation adjustments and certain other reclassifications. |
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(4) |
Represents the change in the 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 March 31, 2017.
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During the three months ended March 31, 2017, for the PCI loan portfolio, the Corporation recorded a provision expense of $68 million compared to a provision benefit of $77 million for the same period in 2016. Write-offs in the PCI loan portfolio totaled $33 million during the three months ended March 31, 2017 compared to $105 million for the same period in 2016. The valuation allowance associated with the PCI loan portfolio was $454 million and $419 million at March 31, 2017 and December 31, 2016.
The table below presents the allowance and the carrying value of outstanding loans and leases by portfolio segment at March 31, 2017 and December 31, 2016.
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Allowance and Carrying Value by Portfolio Segment |
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March 31, 2017 |
(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)
|
$ |
410 |
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$ |
195 |
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$ |
274 |
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$ |
879 |
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Carrying value (3)
|
14,722 |
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|
594 |
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|
3,016 |
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|
18,332 |
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Allowance as a percentage of carrying value |
2.78 |
% |
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32.83 |
% |
|
9.08 |
% |
|
4.79 |
% |
Loans collectively evaluated for impairment |
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Allowance for loan and lease losses |
$ |
1,701 |
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$ |
3,376 |
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$ |
4,944 |
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$ |
10,021 |
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Carrying value (3, 4)
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229,809 |
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|
192,796 |
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|
454,055 |
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|
876,660 |
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Allowance as a percentage of carrying value (4)
|
0.74 |
% |
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1.75 |
% |
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1.09 |
% |
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1.14 |
% |
Purchased credit-impaired loans |
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Valuation allowance |
$ |
454 |
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n/a |
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n/a |
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$ |
454 |
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Carrying value gross of valuation allowance |
13,227 |
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n/a |
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n/a |
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13,227 |
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Valuation allowance as a percentage of carrying value |
3.43 |
% |
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n/a |
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n/a |
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3.43 |
% |
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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$ |
(242 |
) |
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n/a |
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$ |
(242 |
) |
Carrying value (3)
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n/a |
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(9,505 |
) |
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n/a |
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(9,505 |
) |
Total |
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Total allowance for loan and lease losses |
$ |
2,565 |
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$ |
3,329 |
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$ |
5,218 |
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$ |
11,112 |
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Carrying value (3, 4)
|
257,758 |
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|
183,885 |
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|
457,071 |
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|
898,714 |
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Total allowance as a percentage of carrying value (4)
|
1.00 |
% |
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1.81 |
% |
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1.14 |
% |
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1.24 |
% |
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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)
|
$ |
356 |
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$ |
189 |
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$ |
273 |
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$ |
818 |
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Carrying value (3)
|
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)
|
0.86 |
% |
|
1.66 |
% |
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1.11 |
% |
|
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 $28 million and $27 million related to impaired U.S. small business commercial at March 31, 2017 and December 31, 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 $7.5 billion and $7.1 billion at March 31, 2017 and December 31, 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 is included in assets of business held for sale on the Consolidated Balance Sheet at March 31, 2017 and December 31, 2016.
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(6) |
Includes $65 million and $61 million of allowance for loan and lease losses related to impaired loans and TDRs and $177 million and $182 million related to loans collectively evaluated for impairment at March 31, 2017 and December 31, 2016.
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n/a = not applicable
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