Allowance for Credit Losses and Reserve for Unfunded Lending Commitments (Tables)

3 Months Ended

Mar. 31, 2023

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

Allowance for Credit Losses on Financing Receivables

The table below summarizes changes in the allowance for credit losses and reserve for unfunded lending commitments by portfolio segment for the three months ended March 31, 2023 and 2022. Our allowance for credit losses increased by $1.1 billion to $14.3 billion as of March 31, 2023 from December 31, 2022.

Table 4.1: Allowance for Credit Losses and Reserve for Unfunded Lending Commitments Activity

	Three Months Ended March 31, 2023
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking		Total
Allowance for credit losses:
Balance as of December 31, 2022	$	9,545	$	2,237	$	1,458	$	13,240
Cumulative effects of accounting standards adoption(1)	(63)		0		0		(63)
Balance as of January 1, 2023	9,482		2,237		1,458		13,177
Charge-offs	(1,688)		(531)		(24)		(2,243)
Recoveries(2)	319		224		3		546
Net charge-offs	(1,369)		(307)		(21)		(1,697)
Provision for credit losses	2,261		275		266		2,802
Allowance build (release) for credit losses	892		(32)		245		1,105
Other changes(3)	36		0		0		36
Balance as of March 31, 2023	10,410		2,205		1,703		14,318
Reserve for unfunded lending commitments:
Balance as of December 31, 2022	0		0		218		218
Provision (benefit) for losses on unfunded lending commitments	0		0		(7)		(7)
Balance as of March 31, 2023	0		0		211		211
Combined allowance and reserve as of March 31, 2023	$	10,410	$	2,205	$	1,914	$	14,529

	Three Months Ended March 31, 2022
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking		Total
Allowance for credit losses:
Balance as of December 31, 2021	$	8,345	$	1,918	$	1,167	$	11,430
Charge-offs	(955)		(349)		(17)		(1,321)
Recoveries(2)	348		203		3		554
Net charge-offs	(607)		(146)		(14)		(767)
Provision (benefit) for credit losses	545		130		(27)		648
Allowance build (release) for credit losses	(62)		(16)		(41)		(119)
Other changes(3)	(3)		0		0		(3)
Balance as of March 31, 2022	8,280		1,902		1,126		11,308
Reserve for unfunded lending commitments:
Balance as of December 31, 2021	0		0		165		165
Provision for losses on unfunded lending commitments	0		0		35		35
Balance as of March 31, 2022	0		0		200		200
Combined allowance and reserve as of March 31, 2022	$	8,280	$	1,902	$	1,326	$	11,508

__________

(1)Impact from the adoption of ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures as of January 1, 2023.

(2)The amount and timing of recoveries are 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.

(3)Primarily represents the initial allowance for purchased credit-deteriorated loans and foreign currency translation adjustments. The initial allowance of purchased credit-deteriorated loans was $32 million for the three months ended March 31, 2023.

Credit Quality Indicator

The table below presents our credit card portfolio by delinquency status as of March 31, 2023 and December 31, 2022.

Table 3.3: Credit Card Delinquency Status

	March 31, 2023						December 31, 2022
(Dollars in millions)	Revolving Loans		Revolving Loans Converted to Term		Total		Revolving Loans		Revolving Loans Converted to Term		Total
Credit Card:
Domestic credit card:
Current	$	125,911	$	278	$	126,189	$	126,811	$	255	$	127,066
30-59 days	1,390		16		1,406		1,388		17		1,405
60-89 days	1,022		11		1,033		964		11		975
Greater than 90 days	2,338		14		2,352		2,121		14		2,135
Total domestic credit card	130,661		319		130,980		131,284		297		131,581
International card businesses:
Current	5,869		29		5,898		5,866		29		5,895
30-59 days	86		3		89		83		3		86
60-89 days	57		2		59		55		3		58
Greater than 90 days	113		3		116		106		4		110
Total international card businesses	6,125		37		6,162		6,110		39		6,149
Total credit card	$	136,786	$	356	$	137,142	$	137,394	$	336	$	137,730

The table below presents our consumer banking portfolio of loans held for investment by credit quality indicator as of March 31, 2023 and December 31, 2022. We present our auto loan portfolio by FICO scores at origination and our retail banking loan portfolio by delinquency status, which includes all past due loans, both performing and nonperforming.

Table 3.4: Consumer Banking Portfolio by Vintage Year

	March 31, 2023
	Term Loans by Vintage Year
(Dollars in millions)	2023		2022		2021		2020		2019		Prior		Total Term Loans		Revolving Loans		Revolving Loans Converted to Term		Total
Auto—At origination FICO scores:(1)
Greater than 660	$	3,015	$	16,404	$	12,968	$	4,729	$	2,193	$	985	$	40,294	$	0	$	0	$	40,294
621-660	1,275		5,760		4,598		1,998		1,001		525		15,157		0		0		15,157
620 or below	1,812		7,179		5,904		3,463		1,851		992		21,201		0		0		21,201
Total auto	6,102		29,343		23,470		10,190		5,045		2,502		76,652		0		0		76,652
Retail banking—Delinquency status:
Current	37		150		112		77		128		567		1,071		397		5		1,473
30-59 days	0		0		1		0		0		1		2		5		0		7
60-89 days	0		0		0		1		0		0		1		2		0		3
Greater than 90 days	0		0		1		0		0		10		11		4		1		16
Total retail banking	37		150		114		78		128		578		1,085		408		6		1,499
Total consumer banking	$	6,139	$	29,493	$	23,584	$	10,268	$	5,173	$	3,080	$	77,737	$	408	$	6	$	78,151

	December 31, 2022
	Term Loans by Vintage Year
(Dollars in millions)	2022		2021		2020		2019		2018		Prior		Total Term Loans		Revolving Loans		Revolving Loans Converted to Term		Total
Auto—At origination FICO scores:(1)
Greater than 660	$	17,872	$	14,246	$	5,354	$	2,595	$	1,032	$	328	$	41,427	$	0	$	0	$	41,427
621-660	6,212		5,060		2,257		1,167		513		185		15,394		0		0		15,394
620 or below	7,717		6,501		3,898		2,144		914		378		21,552		0		0		21,552
Total auto	31,801		25,807		11,509		5,906		2,459		891		78,373		0		0		78,373
Retail banking—Delinquency status:
Current	166		128		82		133		127		470		1,106		408		4		1,518
30-59 days	2		1		0		0		0		2		5		8		0		13
60-89 days	0		1		0		0		0		1		2		2		0		4
Greater than 90 days	0		0		0		0		3		8		11		4		2		17
Total retail banking	168		130		82		133		130		481		1,124		422		6		1,552
Total consumer banking	$	31,969	$	25,937	$	11,591	$	6,039	$	2,589	$	1,372	$	79,497	$	422	$	6	$	79,925

__________

(1)Amounts represent period-end loans held for investment in each credit score category. Auto credit scores generally represent average FICO scores obtained from three credit bureaus at the time of application and are not refreshed thereafter. Balances for which no credit score is available or the credit score is invalid are included in the 620 or below category.

The following table presents our commercial banking portfolio of loans held for investment by internal risk ratings as of March 31, 2023 and December 31, 2022. The internal risk rating status includes all past due loans, both performing and nonperforming.

Table 3.5: Commercial Banking Portfolio by Internal Risk Ratings

	March 31, 2023
	Term Loans by Vintage Year
(Dollars in millions)	2023		2022		2021		2020		2019		Prior		Total Term Loans		Revolving Loans		Revolving Loans Converted to Term		Total
Internal risk rating:(1)
Commercial and multifamily real estate
Noncriticized	$	2,106	$	8,585	$	3,630	$	825	$	1,363	$	3,064	$	19,573	$	13,445	$	25	$	33,043
Criticized performing	533		906		415		137		367		1,283		3,641		112		0		3,753
Criticized nonperforming	0		81		26		0		77		152		336		0		0		336
Total commercial and multifamily real estate	2,639		9,572		4,071		962		1,807		4,499		23,550		13,557		25		37,132
Commercial and industrial
Noncriticized	4,497		19,171		5,118		2,456		1,301		3,103		35,646		17,150		125		52,921
Criticized performing	365		939		437		91		120		169		2,121		965		0		3,086
Criticized nonperforming	26		195		17		21		69		21		349		55		0		404
Total commercial and industrial	4,888		20,305		5,572		2,568		1,490		3,293		38,116		18,170		125		56,411
Total commercial banking	$	7,527	$	29,877	$	9,643	$	3,530	$	3,297	$	7,792	$	61,666	$	31,727	$	150	$	93,543

	December 31, 2022
	Term Loans by Vintage Year
(Dollars in millions)	2022		2021		2020		2019		2018		Prior		Total Term Loans		Revolving Loans		Revolving Loans Converted to Term		Total
Internal risk rating:(1)
Commercial and multifamily real estate
Noncriticized	$	9,527	$	4,086	$	1,161	$	1,671	$	1,280	$	2,898	$	20,623	$	13,254	$	25	$	33,902
Criticized performing	814		376		202		412		302		1,061		3,167		113		0		3,280
Criticized nonperforming	101		22		0		13		19		116		271		0		0		271
Total commercial and multifamily real estate	10,442		4,484		1,363		2,096		1,601		4,075		24,061		13,367		25		37,453
Commercial and industrial
Noncriticized	22,105		6,031		2,934		1,809		973		2,658		36,510		17,187		21		53,718
Criticized performing	992		560		156		160		167		76		2,111		964		0		3,075
Criticized nonperforming	196		21		5		87		40		5		354		76		0		430
Total commercial and industrial	23,293		6,612		3,095		2,056		1,180		2,739		38,975		18,227		21		57,223
Total commercial banking	$	33,735	$	11,096	$	4,458	$	4,152	$	2,781	$	6,814	$	63,036	$	31,594	$	46	$	94,676

__________

(1)Criticized exposures correspond to the “Special Mention,” “Substandard” and “Doubtful” asset categories defined by bank regulatory authorities.

The table below presents gross charge-offs for loans held for investment by vintage year during the three months ended March 31, 2023.

Table 4.2: Gross Charge-Offs by Vintage Year

	March 31, 2023
	Term Loans by Vintage Year
(Dollars in millions)	2023		2022		2021		2020		2019		Prior		Total Term Loans		Revolving Loans		Revolving Loans Converted to Term		Total
Credit Card
Domestic credit card	N/A		N/A		N/A		N/A		N/A		N/A		N/A		$	1,569	$	18	$	1,587
International card business	N/A		N/A		N/A		N/A		N/A		N/A		N/A		97		3		100
Total credit card	N/A		N/A		N/A		N/A		N/A		N/A		N/A		1,666		21		1,687
Consumer Banking
Auto	$	1	$	160	$	175	$	88	$	53	$	38	$	515	0		0		515
Retail Banking	0		0		0		0		0		0		0		16		0		16
Total consumer banking	1		160		175		88		53		38		515		16		0		531
Commercial Banking
Commercial and multifamily real estate	0		4		0		0		14		0		18		0		0		18
Commercial and industrial	2		2		0		0		0		0		4		2		0		6
Total commercial banking	2		6		0		0		14		0		22		2		0		24
Total	$	3	$	166	$	175	$	88	$	67	$	38	$	537	$	1,684	$	21	$	2,242

Schedule of Loss Sharing Arrangement Impact

The table below summarizes the changes in the estimated reimbursements from these partners for the three months ended March 31, 2023 and 2022.

Table 4.3: Summary of Credit Card Partnership Loss Sharing Arrangements Impacts

	Three Months Ended March 31,
(Dollars in millions)	2023		2022
Estimated reimbursements from partners, beginning of period	$	1,558	$	1,450
Amounts due from partners for charged off loans	(201)		(107)
Change in estimated partner reimbursements that decreased/(increased) provision for credit losses(1)	484		23
Estimated reimbursements from partners, end of period	$	1,841	$	1,366