XML 30 R13.htm IDEA: XBRL DOCUMENT v3.10.0.1
Allowance for Loan and Lease Losses
 12 Months Ended
Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]  
Allowance for Loans and Lease Losses
NOTE 5—ALLOWANCE FOR LOAN AND LEASE LOSSES AND RESERVE FOR UNFUNDED LENDING COMMITMENTS
Our allowance for loan and lease losses represents management’s best estimate of incurred loan and lease losses inherent in our loans held for investment portfolio as of each balance sheet date. In addition to the allowance for loan and lease losses, we also estimate probable losses related to unfunded lending commitments, such as letters of credit, financial guarantees and binding unfunded loan commitments. The provision for losses on unfunded lending commitments is included in the provision for credit losses in our consolidated statements of income and the related reserve for unfunded lending commitments is included in other liabilities on our consolidated balance sheets. See “Note 1—Summary of Significant Accounting Policies” for further discussion of our methodology and policy for determining the allowance for loan and lease losses for each of our loan portfolio segments, as well as information on our reserve for unfunded lending commitments.
Allowance for Loan and Lease Losses and Reserve for Unfunded Lending Commitments Activity
The table below summarizes changes in the allowance for loan and lease losses and reserve for unfunded lending commitments by portfolio segment for the years ended December 31, 2018, 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)(2)
 
Total
Allowance for loan and lease losses:
 
 
 
 
 
 
 
 
 
 
Balance as of December 31, 2015
 
$
3,654

 
$
868

 
$
604

 
$
4

 
$
5,130

Charge-offs
 
(5,019
)
 
(1,226
)
 
(307
)
 
(3
)
 
(6,555
)
Recoveries(3)
 
1,066

 
406

 
15

 
6

 
1,493

Net charge-offs
 
(3,953
)
 
(820
)
 
(292
)
 
3

 
(5,062
)
Provision (benefit) for loan and lease losses
 
4,926

 
1,055

 
515

 
(5
)
 
6,491

Allowance build (release) for loan and lease losses
 
973

 
235

 
223

 
(2
)
 
1,429

Other changes(4)
 
(21
)
 
(1
)
 
(34
)
 
0

 
(56
)
Balance as of December 31, 2016
 
4,606

 
1,102

 
793

 
2

 
6,503

Reserve for unfunded lending commitments:
 
 
 
 
 
 
 
 
 
 
Balance as of December 31, 2015
 
0

 
7

 
161

 
0

 
168

Benefit for losses on unfunded lending commitments
 
0

 
0

 
(32
)
 
0

 
(32
)
Balance as of December 31, 2016
 
0

 
7

 
129

 
0

 
136

Combined allowance and reserve as of December 31, 2016
 
$
4,606

 
$
1,109

 
$
922

 
$
2

 
$
6,639

Allowance for loan and lease losses:
 
 
 
 
 
 
 
 
 
 
Balance as of December 31, 2016
 
$
4,606

 
$
1,102

 
$
793

 
$
2

 
$
6,503

Charge-offs
 
(6,321
)
 
(1,677
)
 
(481
)
 
(34
)
 
(8,513
)
Recoveries(3)
 
1,267

 
639

 
16

 
29

 
1,951

Net charge-offs
 
(5,054
)
 
(1,038
)
 
(465
)
 
(5
)
 
(6,562
)
Provision for loan and lease losses
 
6,066

 
1,180

 
313

 
4

 
7,563

Allowance build (release) for loan and lease losses
 
1,012

 
142

 
(152
)
 
(1
)
 
1,001

Other changes(4)
 
30

 
(2
)
 
(30
)
 
0

 
(2
)
Balance as of December 31, 2017
 
5,648

 
1,242

 
611

 
1

 
7,502

Reserve for unfunded lending commitments:
 
 
 
 
 
 
 
 
 
 
Balance as of December 31, 2016
 
0

 
7

 
129

 
0

 
136

Benefit for losses on unfunded lending commitments
 
0

 
0

 
(12
)
 
0

 
(12
)
Balance as of December 31, 2017
 
0

 
7

 
117

 
0

 
124

Combined allowance and reserve as of December 31, 2017
 
$
5,648

 
$
1,249

 
$
728

 
$
1

 
$
7,626

 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
Credit Card
 
Consumer
Banking
 
Commercial Banking
 
Other(1)(2)
 
Total
Allowance for loan and lease losses:
 
 
 
 
 
 
 
 
 
 
Balance as of December 31, 2017
 
$
5,648

 
$
1,242

 
$
611

 
$
1

 
$
7,502

Charge-offs
 
(6,657
)
 
(1,832
)
 
(119
)
 
(7
)
 
(8,615
)
Recoveries(3)
 
1,588

 
851

 
63

 
1

 
2,503

Net charge-offs
 
(5,069
)
 
(981
)
 
(56
)
 
(6
)
 
(6,112
)
Provision (benefit) for loan and lease losses
 
4,984

 
841

 
82

 
(49
)
 
5,858

Allowance build (release) for loan and lease losses
 
(85
)
 
(140
)
 
26

 
(55
)
 
(254
)
Other changes(1)(4)
 
(28
)
 
(54
)
 
0

 
54

 
(28
)
Balance as of December 31, 2018
 
5,535

 
1,048

 
637

 
0

 
7,220

Reserve for unfunded lending commitments:
 
 
 
 
 
 
 
 
 
 
Balance as of December 31, 2017
 
0

 
7

 
117

 
0

 
124

Provision (benefit) for losses on unfunded lending commitments
 
0

 
(3
)
 
1

 
0

 
(2
)
Balance as of December 31, 2018
 
0

 
4

 
118

 
0

 
122

Combined allowance and reserve as of December 31, 2018
 
$
5,535

 
$
1,052

 
$
755

 
$
0

 
$
7,342

__________
(1) 
In 2018, we sold all of our consumer home loan portfolio and recognized a gain of approximately $499 million in the Other category, including a benefit for credit losses of $46 million.
(2) 
Includes the legacy loan portfolio of our discontinued GreenPoint mortgage operations.  
(3) 
The amount and timing of recoveries is impacted by our collection strategies, which are based on customer behavior and risk profile and include direct customer communications, repossession of collateral, the periodic sale of charged-off loans as well as additional strategies, such as litigation.
(4) 
Represents foreign currency translation adjustments and the net impact of loan transfers and sales where applicable.  

Components of Allowance for Loan and Lease Losses by Impairment Methodology
The table below presents the components of our allowance for loan and lease losses by portfolio segment and impairment methodology as of December 31, 2018 and 2017. See “Note 1—Summary of Significant Accounting Policies” for further discussion of allowance methodologies for each of the loan portfolios.
Table 5.2: Components of Allowance for Loan and Lease Losses by Impairment Methodology
 
 
December 31, 2018
(Dollars in millions)
 
Credit
Card
 
Consumer Banking
 
Commercial Banking
 
Total
Allowance for loan and lease losses:
 
 
 
 
 
 
 
 
Collectively evaluated
 
$
5,258

 
$
1,021

 
$
603

 
$
6,882

Asset-specific
 
277

 
27

 
34

 
338

Total allowance for loan and lease losses
 
$
5,535

 
$
1,048

 
$
637

 
$
7,220

Loans held for investment:
 
 
 
 
 
 
 
 
Collectively evaluated
 
$
115,505

 
$
58,808

 
$
69,607

 
$
243,920

Asset-specific
 
855

 
393

 
596

 
1,844

PCI loans
 
1

 
4

 
130

 
135

Total loans held for investment
 
$
116,361

 
$
59,205

 
$
70,333

 
$
245,899

Allowance coverage ratio(1)
 
4.76
%
 
1.77
%
 
0.91
%
 
2.94
%
 
 
December 31, 2017
(Dollars in millions)
 
Credit
Card
 
Consumer Banking
 
Commercial Banking
 
Other
 
Total
Allowance for loan and lease losses:
 
 
 
 
 
 
 
 
 
 
Collectively evaluated
 
$
5,356

 
$
1,158

 
$
529

 
$
1

 
$
7,044

Asset-specific
 
292

 
53

 
76

 
0

 
421

PCI loans
 
0

 
31

 
6

 
0

 
37

Total allowance for loan and lease losses
 
$
5,648

 
$
1,242

 
$
611

 
$
1

 
$
7,502

Loans held for investment:
 
 
 
 
 
 
 
 
 
 
Collectively evaluated
 
$
113,948

 
$
64,080

 
$
63,237

 
$
58

 
$
241,323

Asset-specific
 
812

 
705

 
858

 
0

 
2,375

PCI loans
 
2

 
10,293

 
480

 
0

 
10,775

Total loans held for investment
 
$
114,762

 
$
75,078

 
$
64,575

 
$
58

 
$
254,473

Allowance coverage ratio(1)
 
4.92
%
 
1.65
%
 
0.95
%
 
1.72
%
 
2.95
%
__________
(1) 
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.
We have certain credit card partnership agreements that are presented within our consolidated financial statements on a net basis, in which our partner agrees to share a portion of the credit losses on the underlying loan portfolio. The expected reimbursements from these partners, which are netted against our allowance for loan and lease losses, result in reductions to net charge-offs and provision for credit losses. See “Note 1—Summary of Significant Accounting Policies” for further discussion of our credit card partnership agreements.
The table below summarizes the changes in the estimated reimbursements from these partners for the years ended December 31, 2018, 2017 and 2016.
Table 5.3: Summary of Loss Sharing Arrangements Impacts
(Dollars in millions)
 
Estimated Reimbursements from Loss Sharing Partners
Balance as of December 31, 2015
 
$
194

Amounts due from partners which reduced net charge-offs
 
(229
)
Amounts estimated to be charged to partners which reduced provision for credit losses
 
263

Balance as of December 31, 2016
 
228

Amounts due from partners which reduced net charge-offs
 
(285
)
Amounts estimated to be charged to partners which reduced provision for credit losses
 
437

Balance as of December 31, 2017
 
380

Amounts due from partners which reduced net charge-offs
 
(382
)
Amounts estimated to be charged to partners which reduced provision for credit losses
 
381

Balance as of December 31, 2018
 
$
379