| 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 nine months ended September 30, 2017 and 2016.
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Three Months Ended September 30, 2017 |
(Dollars in millions) |
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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Allowance for loan and lease losses, July 1 |
$ |
2,309 |
|
|
$ |
3,386 |
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$ |
5,180 |
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$ |
10,875 |
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Loans and leases charged off |
(231 |
) |
|
(919 |
) |
|
(212 |
) |
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(1,362 |
) |
Recoveries of loans and leases previously charged off |
230 |
|
|
189 |
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|
43 |
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|
462 |
|
Net charge-offs |
(1 |
) |
|
(730 |
) |
|
(169 |
) |
|
(900 |
) |
Write-offs of PCI loans (2)
|
(73 |
) |
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— |
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— |
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(73 |
) |
Provision for loan and lease losses (3)
|
(204 |
) |
|
934 |
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|
99 |
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|
829 |
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Other (4)
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1 |
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(40 |
) |
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1 |
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(38 |
) |
Allowance for loan and lease losses, September 30
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2,032 |
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3,550 |
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5,111 |
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10,693 |
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Reserve for unfunded lending commitments, July 1 |
— |
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— |
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757 |
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757 |
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Provision for unfunded lending commitments |
— |
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— |
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5 |
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5 |
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Reserve for unfunded lending commitments, September 30 |
— |
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— |
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|
762 |
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|
762 |
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Allowance for credit losses, September 30
|
$ |
2,032 |
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$ |
3,550 |
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$ |
5,873 |
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$ |
11,455 |
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Three Months Ended September 30, 2016 |
Allowance for loan and lease losses, July 1 |
$ |
3,209 |
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$ |
3,334 |
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$ |
5,294 |
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$ |
11,837 |
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Loans and leases charged off |
(246 |
) |
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(868 |
) |
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(163 |
) |
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(1,277 |
) |
Recoveries of loans and leases previously charged off |
145 |
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|
191 |
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53 |
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|
389 |
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Net charge-offs |
(101 |
) |
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(677 |
) |
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(110 |
) |
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(888 |
) |
Write-offs of PCI loans (2)
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(83 |
) |
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— |
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— |
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(83 |
) |
Provision for loan and lease losses (3)
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(36 |
) |
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741 |
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129 |
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834 |
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Other (4)
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— |
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(8 |
) |
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— |
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(8 |
) |
Allowance for loan and lease losses, September 30 |
2,989 |
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3,390 |
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5,313 |
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11,692 |
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Reserve for unfunded lending commitments, July 1 |
— |
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— |
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750 |
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750 |
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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 (4)
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— |
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— |
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1 |
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1 |
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Reserve for unfunded lending commitments, September 30 |
— |
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— |
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767 |
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|
767 |
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Allowance for credit losses, September 30 |
$ |
2,989 |
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$ |
3,390 |
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$ |
6,080 |
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$ |
12,459 |
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Nine Months Ended September 30, 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 |
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Loans and leases charged off |
(633 |
) |
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(2,819 |
) |
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(570 |
) |
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(4,022 |
) |
Recoveries of loans and leases previously charged off |
520 |
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|
623 |
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|
137 |
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1,280 |
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Net charge-offs (5)
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(113 |
) |
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(2,196 |
) |
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(433 |
) |
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(2,742 |
) |
Write-offs of PCI loans (2)
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(161 |
) |
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— |
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— |
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(161 |
) |
Provision for loan and lease losses (3)
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(445 |
) |
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2,553 |
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287 |
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2,395 |
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Other (4)
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1 |
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(36 |
) |
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(1 |
) |
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(36 |
) |
Allowance for loan and lease losses, September 30 |
2,032 |
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3,550 |
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5,111 |
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10,693 |
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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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— |
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— |
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Reserve for unfunded lending commitments, September 30 |
— |
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— |
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762 |
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762 |
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Allowance for credit losses, September 30 |
$ |
2,032 |
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$ |
3,550 |
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$ |
5,873 |
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$ |
11,455 |
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Nine Months Ended September 30, 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 |
(928 |
) |
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(2,664 |
) |
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(559 |
) |
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(4,151 |
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Recoveries of loans and leases previously charged off |
464 |
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584 |
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162 |
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1,210 |
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Net charge-offs |
(464 |
) |
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(2,080 |
) |
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(397 |
) |
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(2,941 |
) |
Write-offs of PCI loans (2)
|
(270 |
) |
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— |
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— |
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(270 |
) |
Provision for loan and lease losses (3)
|
(191 |
) |
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2,031 |
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962 |
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2,802 |
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Other (4)
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— |
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(32 |
) |
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(101 |
) |
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(133 |
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Allowance for loan and lease losses, September 30 |
2,989 |
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3,390 |
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5,313 |
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11,692 |
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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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21 |
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21 |
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Other (4)
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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, September 30 |
— |
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— |
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767 |
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767 |
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Allowance for credit losses, September 30 |
$ |
2,989 |
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$ |
3,390 |
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$ |
6,080 |
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$ |
12,459 |
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(1) |
Includes valuation allowance associated with the PCI loan portfolio. |
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(2) |
Write-offs included $45 million and $80 million associated with the sale of PCI loans during the three and nine months ended September 30, 2017 compared to $11 million and $50 million for the same periods in 2016.
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(3) |
During the three and nine months ended September 30, 2017, for the PCI loan portfolio, the Corporation recorded provision expense of $12 million and $56 million compared to provision expense of $8 million and a benefit of $81 million for the same periods in 2016.
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(4) |
Primarily represents the net impact of portfolio sales, consolidations and deconsolidations, foreign currency translation adjustments, transfers to held-for-sale and certain other reclassifications. |
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(5) |
Includes net charge-offs of non-U.S. credit card loans, which were previously included in assets of business held for sale. During the second quarter of 2017, the Corporation sold its non-U.S. consumer credit card business. |
The table below presents the allowance and the carrying value of outstanding loans and leases by portfolio segment at September 30, 2017 and December 31, 2016.
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Allowance and Carrying Value by Portfolio Segment |
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September 30, 2017 |
(Dollars in millions) |
Consumer
Real Estate
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Credit Card and Other Consumer |
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Commercial |
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Total |
Impaired loans and troubled debt restructurings (1)
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Allowance for loan and lease losses (2)
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$ |
369 |
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$ |
125 |
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$ |
232 |
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$ |
726 |
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Carrying value (3)
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13,122 |
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|
485 |
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2,498 |
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16,105 |
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Allowance as a percentage of carrying value |
2.81 |
% |
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25.77 |
% |
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9.29 |
% |
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4.51 |
% |
Loans collectively evaluated for impairment |
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Allowance for loan and lease losses |
$ |
1,348 |
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$ |
3,425 |
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$ |
4,879 |
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$ |
9,652 |
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Carrying value (3, 4)
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234,764 |
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187,932 |
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470,719 |
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893,415 |
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Allowance as a percentage of carrying value (4)
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0.57 |
% |
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1.82 |
% |
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1.04 |
% |
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1.08 |
% |
Purchased credit-impaired loans |
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Valuation allowance |
$ |
315 |
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n/a |
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n/a |
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$ |
315 |
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Carrying value gross of valuation allowance |
11,312 |
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n/a |
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n/a |
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11,312 |
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Valuation allowance as a percentage of carrying value |
2.78 |
% |
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n/a |
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n/a |
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2.78 |
% |
Total |
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Total allowance for loan and lease losses |
$ |
2,032 |
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$ |
3,550 |
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$ |
5,111 |
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$ |
10,693 |
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Carrying value (3, 4)
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259,198 |
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188,417 |
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473,217 |
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920,832 |
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Total allowance as a percentage of carrying value (4)
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0.78 |
% |
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1.88 |
% |
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1.08 |
% |
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1.16 |
% |
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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)
|
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)
|
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)
|
1.06 |
% |
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1.71 |
% |
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1.16 |
% |
|
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 September 30, 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 $6.3 billion and $7.1 billion at September 30, 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 was included in assets of business held for sale on the Consolidated Balance Sheet at December 31, 2016. During the second quarter of 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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