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Allowance for Credit Losses
 9 Months Ended
Sep. 30, 2022
Receivables [Abstract]  
Allowance for Credit Losses ALLOWANCE FOR CREDIT LOSSES
The ACL for loans and leases is reported in the allowance for credit losses on the Consolidated Balance Sheets, while the ACL for unfunded commitments is reported in other liabilities. The provision or benefit for credit losses related to both (i) loans and leases and (ii) unfunded commitments is reported in the Consolidated Statements of Income as provision or benefit for credit losses. The ACL is calculated using a variety of factors, including, but not limited to, charge-off and recovery activity, loan growth, changes in macroeconomic factors, collateral type, estimated loan life and changes in credit quality. Forecasted economic conditions are developed using third party macroeconomic scenarios and may be adjusted based on management’s expectations over the lives of the portfolios. Significant macroeconomic factors used in estimating the expected losses include unemployment, gross domestic product (“GDP”), home price index, commercial real estate index, corporate profits, and credit spreads.

The processes and methodologies we utilized to determine the ACL at September 30, 2022 were consistent with those utilized to determine the ACL at June 30, 2022. As previously disclosed in our Quarterly Report on Form 10-Q as of and for the quarterly period ended March 31, 2022, we changed certain aspects of our ACL methodology during the three month period ended March 31, 2022. BancShares made these changes to integrate the ACL methodologies of CIT and BancShares. The most significant changes in the ACL methodology compared to that utilized to determine the ACL at December 31, 2021 include the following: (i) utilized economic scenario forecasts over the lives of the loan portfolios instead of using a two year reasonable and supportable period with a one year reversion period followed by a historical long run average economic forecast for the remainder of the portfolio life; and (ii) implemented scenario weighting of a range of economic scenarios, including baseline, upside, and downside scenarios instead of utilizing just the consensus baseline scenario as the basis of the quantitative ACL estimate.

The initial ACL for PCD loans and leases acquired in the CIT Merger (the “Initial PCD ACL”) of $272 million was established through the PCD Gross-Up and there was no corresponding increase to the provision for credit losses. The PCD Gross-Up is discussed further in Note 2 — Business Combinations. The initial ACL for Non-PCD loans and leases acquired in the CIT Merger was established through a corresponding increase of $454 million to the provision for credit losses (the “Initial Non-PCD Provision”).
The ACL activity for loans and leases and the ACL for unfunded commitments is summarized in the following tables.

ACL for Loans and Leases
dollars in millionsThree Months Ended September 30, 2022Nine Months Ended September 30, 2022
CommercialConsumerTotalCommercialConsumerTotal
Balance at beginning of period$740 $110 $850 $80 $98 $178 
Initial PCD ACL(1)
— — — 258 14 272 
Initial Non-PCD Provision— — — 432 22 454 
Provision (benefit) for credit losses - loans and leases
43 7 50 53 (20)33 
Total provision for credit losses- loans and leases43 7 50 485 2 487 
Charge-offs(1)
(28)(5)(33)(92)(15)(107)
Recoveries11 4 15 35 17 52 
Balance at September 30, 2022$766 $116 $882 $766 $116 $882 
Three Months Ended September 30, 2021Nine Months Ended September 30, 2021
CommercialConsumerTotalCommercialConsumerTotal
Balance at beginning of period$86 $103 $189 $92 $133 $225 
Provision (benefit) for credit losses - loans and leases— (1)(1)(3)(29)(32)
Charge-offs(7)(4)(11)(14)(13)(27)
Recoveries3 3 6 7 10 17 
Balance at September 30, 2021$82 $101 $183 $82 $101 $183 
(1)     The Initial PCD ACL related to the CIT Merger was $272 million, net of an additional $243 million for loans that CIT charged-off prior to the Merger Date (whether full or partial) which met BancShares’ charge-off policy at the Merger Date.

ACL for Unfunded Commitments
dollars in millionsThree Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Beginning balance$81 $11 $12 $13 
Provision (benefit) for credit losses - unfunded commitments10 — 79 (2)
Ending balance$91 $11 $91 $11 

For the period ended September 30, 2022, the increase in the ACL for unfunded commitments compared to September 30, 2021 primarily reflected the additional commitments acquired in the CIT Merger.