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Allowance for Credit Losses and Reserve for Unfunded Lending Commitments (Tables)
 9 Months Ended
Sep. 30, 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 and nine months ended September 30, 2023 and 2022. Our allowance for credit losses increased by $1.7 billion to $15.0 billion as of September 30, 2023 from December 31, 2022.
Table 4.1: Allowance for Credit Losses and Reserve for Unfunded Lending Commitments Activity
Three Months Ended September 30, 2023
(Dollars in millions)Credit CardConsumer BankingCommercial BankingTotal
Allowance for credit losses:
Balance as of June 30, 2023$10,976 $2,185 $1,485 $14,646 
Charge-offs
(1,925)(596)(60)(2,581)
Recoveries(1)
333 247 2 582 
Net charge-offs(1,592)(349)(58)(1,999)
Provision for credit losses1,953 213 155 2,321 
Allowance build (release) for credit losses361 (136)97 322 
Other changes(2)
(13)0 0 (13)
Balance as of September 30, 202311,324 2,049 1,582 14,955 
Reserve for unfunded lending commitments:
Balance as of June 30, 20230 0 197 197 
Provision (benefit) for losses on unfunded lending commitments0 0 (39)(39)
Balance as of September 30, 20230 0 158 158 
Combined allowance and reserve as of September 30, 2023$11,324 $2,049 $1,740 $15,113 
Nine Months Ended September 30, 2023
(Dollars in millions)Credit CardConsumer BankingCommercial BankingTotal
Allowance for credit losses:
Balance as of December 31, 2022$9,545 $2,237 $1,458 $13,240 
Cumulative effects of accounting standards adoption(3)
(63)0 0 (63)
Balance as of January 1, 20239,482 2,237 1,458 13,177 
Charge-offs
(5,481)(1,653)(462)(7,596)
Recoveries(1)
992 718 5 1,715 
Net charge-offs(4,489)(935)(457)(5,881)
Provision for credit losses6,298 747 581 7,626 
Allowance build (release) for credit losses1,809 (188)124 1,745 
Other changes(2)
33 0 0 33 
Balance as of September 30, 202311,324 2,049 1,582 14,955 
Reserve for unfunded lending commitments:
Balance as of December 31, 20220 0 218 218 
Provision (benefit) for losses on unfunded lending commitments0 0 (60)(60)
Balance as of September 30, 20230 0 158 158 
Combined allowance and reserve as of September 30, 2023$11,324 $2,049 $1,740 $15,113 
Three Months Ended September 30, 2022
(Dollars in millions)Credit CardConsumer BankingCommercial BankingTotal
Allowance for credit losses:
Balance as of June 30, 2022$8,166 $2,047 $1,278 $11,491 
Charge-offs(1,047)(410)(13)(1,470)
Recoveries(1)
352 186 1 539 
Net charge-offs(695)(224)(12)(931)
Provision for credit losses
1,261 285 119 1,665 
Allowance build for credit losses
566 61 107 734 
Other changes(2)
(16)0 0 (16)
Balance as of September 30, 20228,716 2,108 1,385 12,209 
Reserve for unfunded lending commitments:
Balance as of June 30, 20220 0 239 239 
Provision for losses on unfunded lending commitments0 0 4 4 
Balance as of September 30, 20220 0 243 243 
Combined allowance and reserve as of September 30, 2022$8,716 $2,108 $1,628 $12,452 
Nine Months Ended September 30, 2022
(Dollars in millions)Credit CardConsumer BankingCommercial BankingTotal
Allowance for credit losses:
Balance as of December 31, 2021$8,345 $1,918 $1,167 $11,430 
Charge-offs(3,011)(1,090)(73)(4,174)
Recoveries(1)
1,031 584 16 1,631 
Net charge-offs(1,980)(506)(57)(2,543)
Provision for credit losses
2,387 696 275 3,358 
Allowance build for credit losses
407 190 218 815 
Other changes(2)
(36)0 0 (36)
Balance as of September 30, 20228,716 2,108 1,385 12,209 
Reserve for unfunded lending commitments:
Balance as of December 31, 20210 0 165 165 
Provision for losses on unfunded lending commitments0 0 78 78 
Balance as of September 30, 20220 0 243 243 
Combined allowance and reserve as of September 30, 2022$8,716 $2,108 $1,628 $12,452 
__________
(1)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.
(2)Primarily represents the initial allowance for purchased credit-deteriorated (“PCD”) loans and foreign currency translation adjustments. The initial allowance of purchased credit-deteriorated loans was $0 million and $32 million for the three and nine months ended September 30, 2023, respectively, and $10 million for both the three and nine months ended September 30, 2022.
(3)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.
Credit Quality Indicator
The table below presents our credit card portfolio by delinquency status as of September 30, 2023 and December 31, 2022.
Table 3.3: Credit Card Delinquency Status
September 30, 2023December 31, 2022
(Dollars in millions)Revolving LoansRevolving Loans Converted to TermTotalRevolving LoansRevolving Loans Converted to TermTotal
Credit Card:
Domestic credit card:
Current
$133,953 $314 $134,267 $126,811 $255 $127,066 
30-59 days
1,796 24 1,820 1,388 17 1,405 
60-89 days
1,312 17 1,329 964 11 975 
Greater than 90 days
2,879 25 2,904 2,121 14 2,135 
Total domestic credit card139,940 380 140,320 131,284 297 131,581 
International card businesses:
Current
6,140 30 6,170 5,866 29 5,895 
30-59 days
101 4 105 83 3 86 
60-89 days
64 3 67 55 3 58 
Greater than 90 days
117 4 121 106 4 110 
Total international card businesses6,422 41 6,463 6,110 39 6,149 
Total credit card$146,362 $421 $146,783 $137,394 $336 $137,730 
The table below presents our consumer banking portfolio of loans held for investment by credit quality indicator as of September 30, 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
September 30, 2023
Term Loans by Vintage Year
(Dollars in millions)20232022202120202019PriorTotal Term LoansRevolving LoansRevolving Loans Converted to TermTotal
Auto—At origination FICO scores:(1)
Greater than 660$9,809 $13,757 $10,562 $3,608 $1,499 $471 $39,706 $0 $0 $39,706 
621-6603,891 4,840 3,724 1,535 713 277 14,980 0 0 14,980 
620 or below5,359 6,053 4,775 2,682 1,345 556 20,770 0 0 20,770 
Total auto19,059 24,650 19,061 7,825 3,557 1,304 75,456 0 0 75,456 
Retail banking—Delinquency status:
Current73 153 78 69 121 497 991 361 5 1,357 
30-59 days0 0 0 0 0 3 3 12 0 15 
60-89 days0 0 0 0 0 1 1 2 0 3 
Greater than 90 days0 0 0 0 0 8 8 4 1 13 
Total retail banking73 153 78 69 121 509 1,003 379 6 1,388 
Total consumer banking$19,132 $24,803 $19,139 $7,894 $3,678 $1,813 $76,459 $379 $6 $76,844 
December 31, 2022
Term Loans by Vintage Year
(Dollars in millions)20222021202020192018PriorTotal Term LoansRevolving LoansRevolving Loans Converted to TermTotal
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 
621-6606,212 5,060 2,257 1,167 513 185 15,394 0 0 15,394 
620 or below7,717 6,501 3,898 2,144 914 378 21,552 0 0 21,552 
Total auto31,801 25,807 11,509 5,906 2,459 891 78,373 0 0 78,373 
Retail banking—Delinquency status:
Current166 128 82 133 127 470 1,106 408 4 1,518 
30-59 days2 1 0 0 0 2 5 8 0 13 
60-89 days0 1 0 0 0 1 2 2 0 4 
Greater than 90 days0 0 0 0 3 8 11 4 2 17 
Total retail banking168 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 Fair Isaac Corporation (“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 September 30, 2023 and December 31, 2022. The internal risk rating status includes all past due loans, both performing and nonperforming. Certain amounts as of December 31, 2022 have been reclassified between vintage years to reflect our revised methodology for loans impacted by LIBOR transition.
Table 3.5: Commercial Banking Portfolio by Internal Risk Ratings
September 30, 2023
Term Loans by Vintage Year
(Dollars in millions)20232022202120202019PriorTotal Term LoansRevolving LoansRevolving Loans Converted to TermTotal
Internal risk rating:(1)
Commercial and multifamily real estate
Noncriticized$2,919 $4,848 $3,092 $1,247 $2,421 $3,796 $18,323 $13,215 $25 $31,563 
Criticized performing230 1,217 560 258 419 901 3,585 15 0 3,600 
Criticized nonperforming0 0 46 0 127 286 459 0 0 459 
Total commercial and multifamily real estate3,149 6,065 3,698 1,505 2,967 4,983 22,367 13,230 25 35,622 
Commercial and industrial
Noncriticized4,704 12,196 7,329 3,796 2,595 5,319 35,939 15,352 114 51,405 
Criticized performing242 815 575 270 344 457 2,703 1,060 0 3,763 
Criticized nonperforming0 25 22 25 154 81 307 56 0 363 
Total commercial and industrial4,946 13,036 7,926 4,091 3,093 5,857 38,949 16,468 114 55,531 
Total commercial banking$8,095 $19,101 $11,624 $5,596 $6,060 $10,840 $61,316 $29,698 $139 $91,153 
December 31, 2022
Term Loans by Vintage Year
(Dollars in millions)20222021202020192018PriorTotal Term LoansRevolving LoansRevolving Loans Converted to TermTotal
Internal risk rating:(1)
Commercial and multifamily real estate
Noncriticized$5,860 $4,807 $1,676 $2,879 $1,927 $3,474 $20,623 $13,254 $25 $33,902 
Criticized performing359 487 212 535 378 1,196 3,167 113 0 3,280 
Criticized nonperforming1 22 0 94 19 135 271 0 0 271 
Total commercial and multifamily real estate6,220 5,316 1,888 3,508 2,324 4,805 24,061 13,367 25 37,453 
Commercial and industrial
Noncriticized13,485 7,993 4,466 3,420 1,797 5,349 36,510 17,187 21 53,718 
Criticized performing482 686 216 336 228 163 2,111 964 0 3,075 
Criticized nonperforming30 29 0 156 82 57 354 76 0 430 
Total commercial and industrial13,997 8,708 4,682 3,912 2,107 5,569 38,975 18,227 21 57,223 
Total commercial banking$20,217 $14,024 $6,570 $7,420 $4,431 $10,374 $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 nine months ended September 30, 2023.
Table 4.2: Gross Charge-Offs by Vintage Year
Nine Months Ended September 30, 2023
Term Loans by Vintage Year
(Dollars in millions)20232022202120202019PriorTotal Term LoansRevolving LoansRevolving Loans Converted to TermTotal
Credit Card
Domestic credit cardN/AN/AN/AN/AN/AN/AN/A$5,100 $56 $5,156 
International card businessN/AN/AN/AN/AN/AN/AN/A315 10 325 
Total credit cardN/AN/AN/AN/AN/AN/AN/A5,415 66 5,481 
Consumer Banking
Auto$52 $551 $523 $246 $141 $89 $1,602 0 0 1,602 
Retail banking0 0 1 0 0 1 2 49 0 51 
Total consumer banking52 551 524 246 141 90 1,604 49 0 1,653 
Commercial Banking
Commercial and multifamily real estate0 29 47 22 105 201 404 0 0 404 
Commercial and industrial2 9 0 0 29 3 43 15 0 58 
Total commercial banking2 38 47 22 134 204 447 15 0 462 
Total$54 $589 $571 $268 $275 $294 $2,051 $5,479 $66 $7,596 
Schedule of Loss Sharing Arrangement Impact
The table below summarizes the changes in the estimated reimbursements from these partners for the three and nine months ended September 30, 2023 and 2022.
Table 4.3: Summary of Credit Card Partnership Loss Sharing Arrangements Impacts
Three Months Ended September 30,
(Dollars in millions)20232022
Estimated reimbursements from partners, beginning of period$1,908 $1,302 
Amounts due from partners for charged off loans(249)(127)
Change in estimated partner reimbursements that decreased provision for credit losses319 237 
Estimated reimbursements from partners, end of period$1,978 $1,412 
Nine Months Ended September 30,
(Dollars in millions)20232022
Estimated reimbursements from partners, beginning of period$1,558 $1,450 
Amounts due from partners for charged off loans(681)(353)
Change in estimated partner reimbursements that decreased provision for credit losses(1)
1,101 315 
Estimated reimbursements from partners, end of period$1,978 $1,412 
__________
(1)Includes adjustments for purchased credit-deteriorated (“PCD”) loans acquired in the first quarter of 2023.