Quarterly report pursuant to Section 13 or 15(d)

Allowance for Credit Losses

v3.7.0.1
Allowance for Credit Losses
6 Months Ended
Jun. 30, 2017
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 the three and six months ended June 30, 2017 and 2016.
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2017
(Dollars in millions)
Consumer
Real Estate
 
Credit Card and Other Consumer
 
Commercial
 
Total
Allowance
Allowance for loan and lease losses, April 1
$
2,565

 
$
3,329

 
$
5,218

 
$
11,112

Loans and leases charged off
(198
)
 
(954
)
 
(198
)
 
(1,350
)
Recoveries of loans and leases previously charged off
167

 
234

 
41

 
442

Net charge-offs
(31
)
 
(720
)
 
(157
)
 
(908
)
Write-offs of PCI loans
(55
)
 

 

 
(55
)
Provision for loan and lease losses
(170
)
 
776

 
120

 
726

Other (1)

 
1

 
(1
)
 

Allowance for loan and lease losses, June 30 
2,309

 
3,386

 
5,180

 
10,875

Reserve for unfunded lending commitments, April 1

 

 
757

 
757

Provision for unfunded lending commitments

 

 

 

Reserve for unfunded lending commitments, June 30

 

 
757

 
757

Allowance for credit losses, June 30 
$
2,309

 
$
3,386

 
$
5,937

 
$
11,632

 
Three Months Ended June 30, 2016
Allowance for loan and lease losses, April 1
$
3,456

 
$
3,302

 
$
5,311

 
$
12,069

Loans and leases charged off
(304
)
 
(884
)
 
(190
)
 
(1,378
)
Recoveries of loans and leases previously charged off
144

 
195

 
54

 
393

Net charge-offs
(160
)
 
(689
)
 
(136
)
 
(985
)
Write-offs of PCI loans
(82
)
 

 

 
(82
)
Provision for loan and lease losses
(5
)
 
738

 
219

 
952

Other (1)

 
(17
)
 
(100
)
 
(117
)
Allowance for loan and lease losses, June 30
3,209

 
3,334

 
5,294

 
11,837

Reserve for unfunded lending commitments, April 1

 

 
627

 
627

Provision for unfunded lending commitments

 

 
24

 
24

Other (1)

 

 
99

 
99

Reserve for unfunded lending commitments, June 30

 

 
750

 
750

Allowance for credit losses, June 30
$
3,209

 
$
3,334

 
$
6,044

 
$
12,587

 
Six Months Ended June 30, 2017
Allowance for loan and lease losses, January 1
$
2,750

 
$
3,229

 
$
5,258

 
$
11,237

Loans and leases charged off
(402
)
 
(1,900
)
 
(358
)
 
(2,660
)
Recoveries of loans and leases previously charged off
290

 
434

 
94

 
818

Net charge-offs (2)
(112
)
 
(1,466
)
 
(264
)
 
(1,842
)
Write-offs of PCI loans
(88
)
 

 

 
(88
)
Provision for loan and lease losses
(241
)
 
1,619

 
188

 
1,566

Other (1)

 
4

 
(2
)
 
2

Allowance for loan and lease losses, June 30
2,309

 
3,386

 
5,180

 
10,875

Reserve for unfunded lending commitments, January 1

 

 
762

 
762

Provision for unfunded lending commitments

 

 
(5
)
 
(5
)
Reserve for unfunded lending commitments, June 30

 

 
757

 
757

Allowance for credit losses, June 30
$
2,309

 
$
3,386

 
$
5,937

 
$
11,632

 
Six Months Ended June 30, 2016
Allowance for loan and lease losses, January 1
$
3,914

 
$
3,471

 
$
4,849

 
$
12,234

Loans and leases charged off
(682
)
 
(1,796
)
 
(396
)
 
(2,874
)
Recoveries of loans and leases previously charged off
319

 
393

 
109

 
821

Net charge-offs
(363
)
 
(1,403
)
 
(287
)
 
(2,053
)
Write-offs of PCI loans
(187
)
 

 

 
(187
)
Provision for loan and lease losses
(155
)
 
1,290

 
833

 
1,968

Other (1)

 
(24
)
 
(101
)
 
(125
)
Allowance for loan and lease losses, June 30
3,209

 
3,334

 
5,294

 
11,837

Reserve for unfunded lending commitments, January 1

 

 
646

 
646

Provision for unfunded lending commitments

 

 
5

 
5

Other (1)

 

 
99

 
99

Reserve for unfunded lending commitments, June 30

 

 
750

 
750

Allowance for credit losses, June 30
$
3,209

 
$
3,334

 
$
6,044

 
$
12,587

(1) 
Primarily represents the net impact of portfolio sales, consolidations and deconsolidations, foreign currency translation adjustments and certain other reclassifications.
(2) 
Includes net charge-offs of non-U.S. credit card loans, which were previously included in assets of business held for sale. On June 1, 2017, the Corporation completed the sale of its non-U.S. consumer credit card business.
During the three and six months ended June 30, 2017, for the PCI loan portfolio, the Corporation recorded a provision benefit of $24 million and an expense of $44 million compared to a provision benefit of $12 million and $89 million for the same periods in 2016. Write-offs in the PCI loan portfolio totaled $55 million and $88 million during the three and six months ended June 30, 2017 compared to $82 million and $187 million for the same periods in 2016. Write-offs included $15 million associated with the sale of PCI loans during the three and six months ended June 30, 2017 compared to $19 million and $39 million for the same periods in 2016. The valuation allowance associated with the PCI loan portfolio was $375 million and $419 million at June 30, 2017 and December 31, 2016.
The table below presents the allowance and the carrying value of outstanding loans and leases by portfolio segment at June 30, 2017 and December 31, 2016.
 
 
 
 
 
 
 
 
Allowance and Carrying Value by Portfolio Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2017
(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)
$
381

 
$
131

 
$
242

 
$
754

Carrying value (3)
13,993

 
478

 
2,712

 
17,183

Allowance as a percentage of carrying value
2.72
%
 
27.41
%
 
8.92
%
 
4.39
%
Loans collectively evaluated for impairment
 

 
 

 
 

 
 

Allowance for loan and lease losses
$
1,553

 
$
3,255

 
$
4,938

 
$
9,746

Carrying value (3, 4)
232,951

 
186,449

 
460,314

 
879,714

Allowance as a percentage of carrying value (4)
0.67
%
 
1.75
%
 
1.07
%
 
1.11
%
Purchased credit-impaired loans
 

 
 
 
 

 
 

Valuation allowance
$
375

 
n/a

 
n/a

 
$
375

Carrying value gross of valuation allowance
12,444

 
n/a

 
n/a

 
12,444

Valuation allowance as a percentage of carrying value
3.01
%
 
n/a

 
n/a

 
3.01
%
Total
 

 
 

 
 

 
 

Total allowance for loan and lease losses
$
2,309

 
$
3,386

 
$
5,180

 
$
10,875

Carrying value (3, 4)
259,388

 
186,927

 
463,026

 
909,341

Total allowance as a percentage of carrying value (4)
0.89
%
 
1.81
%
 
1.12
%
 
1.20
%
 
December 31, 2016
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
 

 
 

 
 

 
 
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

Allowance as a percentage of carrying value (4)
1.06
%
 
1.71
%
 
1.16
%
 
1.25
%
(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 $29 million and $27 million related to impaired U.S. small business commercial at June 30, 2017 and December 31, 2016.
(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 $7.3 billion and $7.1 billion at June 30, 2017 and December 31, 2016.
(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. On June 1, 2017, the Corporation completed the sale of its non-U.S. consumer credit card business.
(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.
n/a = not applicable