NOTE 3 — ALLOWANCE FOR LOAN LOSSES

The following table presents changes in the allowance for loan losses.

Allowance for Loan Losses and Recorded Investment in Finance Receivables (dollars in millions)


At or for periods ended June 30, (dollars in millions)
	2011							2010
	Corporate Finance	Transportation Finance	Trade Finance	Vendor Finance	Total Commercial	Consumer	Total	Total
Allowance for loan losses:
Quarter ended
Beginning balance	$ 263.8	$ 24.7	$ 29.6	$ 84.4	$ 402.5	$ 0	$ 402.5	$ 213.9
Provision for credit losses	61.3	4.7	4.0	13.8	83.8	0.9	84.7	246.7
Changes relating to sales, foreign currency translation, other	(7.3)	(0.3)	(0.4)	0.5	(7.5)	0	(7.5)	2.6
Gross charge0offs ⁽²⁾	(53.3)	(0.1)	(4.2)	(29.5)	(87.1)	(1.2)	(88.3)	(113.3)
Recoveries	13.4	0.1	6.3	12.5	32.3	0.3	32.6	7.0
Allowance balance - end of period	$ 277.9	$ 29.1	$ 35.3	$ 81.7	$ 424.0	$ 0	$ 424.0	$ 356.9

Six months ended
Beginning balance	$ 303.7	$ 23.7	$ 29.9	$ 58.9	$ 416.2	$ 0	$ 416.2	$ 0
Provision for credit losses	135.8	6.5	7.3	56.7	206.3	1.8	208.1	472.8
Change relating to new accounting pronouncement ⁽¹⁾	0	0	0	0	0	0	0	68.6
Changes relating to sales, foreign currency translation, other	(4.7)	(0.4)	0.3	0.8	(4.0)	0	(4.0)	(0.7)
Gross charge-offs ⁽²⁾	(178.3)	(0.8)	(10.4)	(55.8)	(245.3)	(2.4)	(247.7)	(193.0)
Recoveries	21.4	0.1	8.2	21.1	50.8	0.6	51.4	9.2
Allowance balance - end of period	$ 277.9	$ 29.1	$ 35.3	$ 81.7	$ 424.0	$ 0	$ 424.0	$356.9
Individually evaluated for impairment	$46.8	$12.0	$6.2	$ 0	$65.0	$0	$65.0
Collectively evaluated for impairment	220.5	17.1	29.1	79.0	345.7	0	345.7
Loans acquired with deteriorated credit quality⁽³⁾	10.6	0	0	2.7	13.3	0	13.3
Allowance balance - end of period	$277.9	$ 29.1	$ 35.3	$81.7	$424.0	$ 0	$424.0
Reserve for unfunded lending commitments ⁽⁴⁾	$10.1	$1.2	$ 4.0	$0	$15.3	$ 0	$15.3
Finance receivables:
Individually evaluated for impairment	$272.1	$56.7	$73.3	$29.0	$431.1	$0	$431.1
Collectively evaluated for impairment	6,876.7	1,299.6	2,465.1	3,876.1	14,517.5	7,024.4	21,541.9
Loans acquired with deteriorated credit quality ⁽³⁾	275.1	0	0	35.3	310.4	1.3	311.7
Ending balance	7,423.9	1,356.3	2,538.4	3,940.4	15,259.0	7,025.7	22,284.7
Percent of loans total loans	33.3%	6.1%	11.4%	17.7%	68.5%	31.5%	100.0%
(1) Reflects reserves associated with loans consolidated in accordance with 2010 adoption of accounting guidance on consolidation of variable interest entities.
(2) Gross charge-offs include $40 million that were charged directly to the specific allowance for loan losses for the June 30, 2011 quarter, of which $36 million related to Corporate Finance with the remainder related to Trade Finance. Amounts for the six month period were $115 million, of which $106 million related to Corporate Finance and the remainder primarily to Trade Finance.
(3) Represents loans considered impaired in FSA and are accounted for under the guidance in ASC 310-30 (Loans and Debt Securities Acquired with Deteriorated Credit Quality).
(4) Represents additional credit loss reserves for unfunded lending commitments and letters of credit recorded in Other Liabilities.

The allowance for loan losses balance prior to emergence was eliminated in FSA. The balance reflects estimated amounts for loans originated subsequent to the Emergence Date, loans that were held in VIEs that the Company has consolidated, and incremental amounts required on loans that were on the books at the Emergence Date.