Allowance for Loan and Lease Losses

9 Months Ended

Sep. 30, 2023

NOTE 5 — ALLOWANCE FOR LOAN AND LEASE LOSSES

The ALLL is reported as a separate line item on the Consolidated Balance Sheets, while the reserve for off-balance sheet credit exposure is included in other liabilities as further discussed in Note 13—Other Liabilities. The provision or benefit for credit losses related to (i) loans and leases (ii) off-balance sheet credit exposure, and (iii) investment securities available for sale is reported in the Consolidated Statements of Income as provision or benefit for credit losses.

The initial ALLL for PCD loans and leases acquired in the SVBB Acquisition and the CIT Merger (the “Initial PCD ALLL”) were established through a PCD Gross-Up and there were no corresponding increases to the provision for credit losses. The PCD Gross-Ups are discussed further in Note 1—Significant Accounting Policies and Basis of Presentation. The initial ALLL for Non-PCD loans and leases acquired in the SVBB Acquisition and the CIT Merger were established through corresponding increases to the provision for credit losses (the “day 2 provision for loan and lease losses”). The initial reserve for off-balance sheet credit exposure acquired in the SVBB Acquisition and the CIT Merger were established through a corresponding increase to the provision for off-balance sheet credit exposure (the “day 2 provision for off-balance sheet credit exposure”).

The ALLL activity for loans and leases is summarized in the following table.

Allowance for Loan and Lease Losses


dollars in millions	Three Months Ended September 30, 2023								Nine Months Ended September 30, 2023
	Commercial		Consumer		SVB		Total		Commercial		Consumer		SVB		Total
Balance at beginning of period	$	915	$	156	$	566	$	1,637	$	789	$	133	$	—	$	922
Initial PCD ALLL	—		—		—		—		—		—		220		220
Day 2 provision for loan and lease losses	—		—		—		—		—		—		462		462
Provision (benefit) for loan and lease losses	149		(11)		74		212		379		18		55		452
Total provision (benefit) for loan and lease losses	149		(11)		74		212		379		18		517		914
Charge-offs	(85)		(7)		(107)		(199)		(209)		(20)		(208)		(437)
Recoveries	12		4		7		23		32		11		11		54

Balance at September 30, 2023	$	991	$	142	$	540	$	1,673	$	991	$	142	$	540	$	1,673

	Three Months Ended September 30, 2022								Nine Months Ended September 30, 2022
	Commercial		Consumer		SVB		Total		Commercial		Consumer		SVB		Total
Balance at beginning of period	$	740	$	110	$	—	$	850	$	80	$	98	$	—	$	178
Initial PCD ALLL	—		—		—		—		258		14		—		272
Day 2 provision for loan and lease losses	—		—		—		—		432		22		—		454
Provision (benefit) for loan and lease losses	43		7		—		50		53		(20)		—		33
Total provision for loan and lease losses	43		7		—		50		485		2		—		487
Charge-offs	(28)		(5)		—		(33)		(92)		(15)		—		(107)
Recoveries	11		4		—		15		35		17		—		52
Balance at September 30, 2022	$	766	$	116	$	—	$	882	$	766	$	116	$	—	$	882

The following table presents the components of the provision for credit losses:

Provision for Credit Losses


dollars in millions	Three Months Ended		Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Day 2 provision for loan and lease losses	$	—	$	—	$	462	$	454
Provision for loan and lease losses	212		50		452		33
Total provision for loan and lease losses	212		50		914		487
Day 2 provision for off-balance sheet credit exposure	—		—		254		59
(Benefit) provision for off-balance sheet credit exposure	(17)		10		(42)		20
Total (benefit) provision for off-balance sheet credit exposure	(17)		10		212		79
Benefit for investment securities available for sale credit losses	(3)		—		—		—
Provision for credit losses	$	192	$	60	$	1,126	$	566