Allowance for Loan and Lease Losses (Tables)

3 Months Ended

Mar. 31, 2017

Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]

Allowance for Credit Losses on Financing Receivables

The table below presents the components of our allowance for loan and lease losses by portfolio segment and impairment methodology with the recorded investment of the related loans as of March 31, 2017 and December 31, 2016.

Table 5.2: Components of Allowance for Loan and Lease Losses by Impairment Methodology



	March 31, 2017
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking		Other		Total
Allowance for loan and lease losses:
Collectively evaluated⁽¹⁾	$	4,796	$	1,076	$	603	$	2	$	6,477
Asset-specific⁽²⁾	262		57		156		0		475
PCI loans⁽³⁾	0		30		2		0		32
Total allowance for loan and lease losses	$	5,058	$	1,163	$	761	$	2	$	6,984
Loans held for investment:
Collectively evaluated⁽¹⁾	$	98,478	$	59,760	$	65,379	$	73	$	223,690
Asset-specific⁽²⁾	735		714		1,347		0		2,796
PCI loans⁽³⁾	0		13,508		594		0		14,102
Total loans held for investment	$	99,213	$	73,982	$	67,320	$	73	$	240,588
Allowance coverage ratio⁽⁴⁾	5.10%		1.57%		1.13%		2.74%		2.90%



	December 31, 2016
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking		Other		Total
Allowance for loan and lease losses:
Collectively evaluated⁽¹⁾	$	4,367	$	1,016	$	622	$	2	$	6,007
Asset-specific⁽²⁾	239		57		169		0		465
PCI loans⁽³⁾	0		29		2		0		31
Total allowance for loan and lease losses	$	4,606	$	1,102	$	793	$	2	$	6,503
Loans held for investment:
Collectively evaluated⁽¹⁾	$	104,835	$	57,862	$	64,794	$	64	$	227,555
Asset-specific⁽²⁾	715		736		1,509		0		2,960
PCI loans⁽³⁾	2		14,456		613		0		15,071
Total loans held for investment	$	105,552	$	73,054	$	66,916	$	64	$	245,586
Allowance coverage ratio⁽⁴⁾	4.36%		1.51%		1.19%		3.13%		2.65%

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⁽¹⁾

The component of the allowance for loan and lease losses for credit card and other consumer loans that we collectively evaluate for impairment is based on a statistical calculation supplemented by management judgment and interpretation. The component of the allowance for loan and lease losses for commercial loans that we collectively evaluate for impairment is based on historical loss experience for loans with similar characteristics and consideration of credit quality supplemented by management judgment and interpretation.


⁽²⁾	The asset-specific component of the allowance for loan and lease losses for smaller-balance impaired loans is calculated on a pool basis using historical loss experience for the respective class of assets. The asset-specific component of the allowance for loan and lease losses for larger-balance commercial loans is individually calculated for each loan.


⁽³⁾	The PCI loans component of the allowance for loan and lease losses is accounted for based on expected cash flows. See “Note 1—Summary of Significant Accounting Policies” in our 2016 Form 10-K for details on these loans.


⁽⁴⁾	Allowance coverage ratio is calculated by dividing the period-end allowance for loan and lease losses by period-end loans held for investment within the specified loan category.

The table below summarizes changes in the allowance for loan and lease losses and reserve for unfunded lending commitments by portfolio segment for the three months ended March 31, 2017 and 2016.

Table 5.1: Allowance for Loan and Lease Losses and Reserve for Unfunded Lending Commitments Activity



(Dollars in millions)	Credit Card			Consumer Banking			Commercial Banking			Other⁽¹⁾			Total
Allowance for loan and lease losses:
Balance as of December 31, 2016	$	4,606		$	1,102		$	793		$	2		$	6,503
Charge-offs	(1,601		)	(364		)	(26		)	0			(1,991		)
Recoveries	330			146			3			2			481
Net charge-offs	(1,271		)	(218		)	(23		)	2			(1,510		)
Provision (benefit) for loan and lease losses	1,717			279			(6		)	(2		)	1,988
Allowance build (release) for loan and lease losses	446			61			(29		)	0			478
Other changes⁽²⁾	6			0			(3		)	0			3
Balance as of March 31, 2017	5,058			1,163			761			2			6,984
Reserve for unfunded lending commitments:
Balance as of December 31, 2016	0			7			129			0			136
Provision (benefit) for losses on unfunded lending commitments	0			0			4			0			4
Balance as of March 31, 2017	0			7			133			0			140
Combined allowance and reserve as of March 31, 2017	$	5,058		$	1,170		$	894		$	2		$	7,124



(Dollars in millions)	Credit Card			Consumer Banking			Commercial Banking			Other⁽¹⁾			Total
Allowance for loan and lease losses:
Balance as of December 31, 2015	$	3,654		$	868		$	604		$	4		$	5,130
Charge-offs	(1,222		)	(291		)	(48		)	(1		)	(1,562		)
Recoveries	272			108			2			2			384
Net charge-offs	(950		)	(183		)	(46		)	1			(1,178		)
Provision (benefit) for loan and lease losses	1,071			229			171			(2		)	1,469
Allowance build (release) for loan and lease losses	121			46			125			(1		)	291
Other changes⁽²⁾	10			0			(15		)	0			(5		)
Balance as of March 31, 2016	3,785			914			714			3			5,416
Reserve for unfunded lending commitments:
Balance as of December 31, 2015	0			7			161			0			168
Provision (benefit) for losses on unfunded lending commitments	0			1			57			0			58
Balance as of March 31, 2016	0			8			218			0			226
Combined allowance and reserve as of March 31, 2016	$	3,785		$	922		$	932		$	3		$	5,642

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⁽¹⁾	Primarily consists of the legacy loan portfolio of our discontinued GreenPoint mortgage operations.


⁽²⁾	Represents foreign currency translation adjustments and the net impact of loan transfers and sales.

Schedule of Loss sharing arrangement impact

The table below summarizes the changes in the expected reimbursements from these partners for the three months ended March 31, 2017 and 2016.

Table 5.3: Summary of Loss Sharing Arrangements Impacts



	Three Months Ended March 31,
(Dollars in millions)	2017			2016
Expected reimbursements from loss sharing partners:
Balance as of beginning of the period	$	228		$	194
Impact to net charge-offs	(65		)	(52		)
Impact to provision for credit losses	72			55
Balance as of end of the period	$	235		$	197