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

12 Months Ended

Dec. 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 years ended December 31, 2023, 2022 and 2021. Our allowance for credit losses increased by $2.1 billion to $15.3 billion as of December 31, 2023 from 2022.

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

	Year Ended December 31, 2023
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking		Total
Allowance for credit losses:
Balance as of December 31, 2020	$	11,191	$	2,715	$	1,658	$	15,564
Charge-offs	(3,481)		(1,211)		(48)		(4,740)
Recoveries(1)	1,525		935		46		2,506
Net charge-offs	(1,956)		(276)		(2)		(2,234)
Benefit for credit losses	(902)		(521)		(489)		(1,912)
Allowance release for credit losses	(2,858)		(797)		(491)		(4,146)
Other changes(2)	12		0		0		12
Balance as of December 31, 2021	8,345		1,918		1,167		11,430
Reserve for unfunded lending commitments:
Balance as of December 31, 2020	0		0		195		195
Provision (benefit) for losses on unfunded lending commitments	0		0		(30)		(30)
Balance as of December 31, 2021	0		0		165		165
Combined allowance and reserve as of December 31, 2021	$	8,345	$	1,918	$	1,332	$	11,595

	Year Ended December 31, 2023
(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	(4,362)		(1,614)		(88)		(6,064)
Recoveries(1)	1,314		760		17		2,091
Net charge-offs	(3,048)		(854)		(71)		(3,973)
Provision (benefit) for credit losses	4,265		1,173		362		5,800
Allowance build for credit losses	1,217		319		291		1,827
Other changes(2)	(17)		0		0		(17)
Balance as of December 31, 2022	9,545		2,237		1,458		13,240
Reserve for unfunded lending commitments:
Balance as of December 31, 2021	0		0		165		165
Provision for losses on unfunded lending commitments	0		0		53		53
Balance as of December 31, 2022	0		0		218		218
Combined allowance and reserve as of December 31, 2022	$	9,545	$	2,237	$	1,676	$	13,458
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, 2023	9,482		2,237		1,458		13,177
Charge-offs	(7,787)		(2,327)		(588)		(10,702)
Recoveries(1)	1,315		963		10		2,288
Net charge-offs	(6,472)		(1,364)		(578)		(8,414)
Provision for credit losses	8,651		1,169		665		10,485
Allowance build (release) for credit losses	2,179		(195)		87		2,071
Other changes(2)	48		0		0		48
Balance as of December 31, 2023	11,709		2,042		1,545		15,296
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		(60)		(60)
Balance as of December 31, 2023	0		0		158		158
Combined allowance and reserve as of December 31, 2023	$	11,709	$	2,042	$	1,703	$	15,454

________

(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 PCD loans and foreign currency translation adjustments. The initial allowance of PCD loans was $32 million, $10 million and $6 million for the years ended December 31, 2023, 2022 and 2021, respectively.

(3)Impact from the adoption of ASU No. 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 December 31, 2023 and 2022.

Table 3.3: Credit Card Delinquency Status

	December 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	$	140,521	$	339	$	140,860	$	126,811	$	255	$	127,066
30-59 days	1,940		28		1,968		1,388		17		1,405
60-89 days	1,454		17		1,471		964		11		975
Greater than 90 days	3,339		28		3,367		2,121		14		2,135
Total domestic credit card	147,254		412		147,666		131,284		297		131,581
International card businesses:
Current	6,521		31		6,552		5,866		29		5,895
30-59 days	112		4		116		83		3		86
60-89 days	72		4		76		55		3		58
Greater than 90 days	132		5		137		106		4		110
Total international card businesses	6,837		44		6,881		6,110		39		6,149
Total credit card	$	154,091	$	456	$	154,547	$	137,394	$	336	$	137,730

The table below presents our consumer banking portfolio of loans held for investment by credit quality indicator as of December 31, 2023 and 2022. We present our auto loan portfolio by Fair Isaac Corporation (“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

	December 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	$	12,219	$	12,593	$	9,505	$	3,124	$	1,213	$	309	$	38,963	$	0	$	0	$	38,963
621-660	4,863		4,432		3,346		1,337		592		192		14,762		0		0		14,762
620 or below	6,647		5,539		4,283		2,349		1,131		401		20,350		0		0		20,350
Total auto	23,729		22,564		17,134		6,810		2,936		902		74,075		0		0		74,075
Retail banking—Delinquency status:
Current	98		157		57		65		117		468		962		363		4		1,329
30-59 days	1		0		1		1		0		1		4		11		0		15
60-89 days	0		0		0		0		0		1		1		2		0		3
Greater than 90 days	0		0		0		0		0		8		8		6		1		15
Total retail banking	99		157		58		66		117		478		975		382		5		1,362
Total consumer banking	$	23,828	$	22,721	$	17,192	$	6,876	$	3,053	$	1,380	$	75,050	$	382	$	5	$	75,437

	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 December 31, 2023 and 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

	December 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	$	3,068	$	4,665	$	2,773	$	1,019	$	2,104	$	3,670	$	17,299	$	12,565	$	25	$	29,889
Criticized performing	148		1,494		706		284		463		904		3,999		133		0		4,132
Criticized nonperforming	65		26		124		0		47		163		425		0		0		425
Total commercial and multifamily real estate	3,281		6,185		3,603		1,303		2,614		4,737		21,723		12,698		25		34,446
Commercial and industrial
Noncriticized	6,909		11,935		6,994		3,566		2,359		5,117		36,880		14,822		167		51,869
Criticized performing	353		706		655		237		348		349		2,648		1,189		0		3,837
Criticized nonperforming	13		53		30		18		123		68		305		31		0		336
Total commercial and industrial	7,275		12,694		7,679		3,821		2,830		5,534		39,833		16,042		167		56,042
Total commercial banking	$	10,556	$	18,879	$	11,282	$	5,124	$	5,444	$	10,271	$	61,556	$	28,740	$	192	$	90,488

	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	$	5,860	$	4,807	$	1,676	$	2,879	$	1,927	$	3,474	$	20,623	$	13,254	$	25	$	33,902
Criticized performing	359		487		212		535		378		1,196		3,167		113		0		3,280
Criticized nonperforming	1		22		0		94		19		135		271		0		0		271
Total commercial and multifamily real estate	6,220		5,316		1,888		3,508		2,324		4,805		24,061		13,367		25		37,453
Commercial and industrial
Noncriticized	13,485		7,993		4,466		3,420		1,797		5,349		36,510		17,187		21		53,718
Criticized performing	482		686		216		336		228		163		2,111		964		0		3,075
Criticized nonperforming	30		29		0		156		82		57		354		76		0		430
Total commercial and industrial	13,997		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 year ended December 31, 2023.

Table 4.2: Gross Charge-Offs by Vintage Year

	Year Ended December 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		$	7,261	$	87	$	7,348
International card business	N/A		N/A		N/A		N/A		N/A		N/A		N/A		425		14		439
Total credit card	N/A		N/A		N/A		N/A		N/A		N/A		N/A		7,686		101		7,787
Consumer Banking
Auto	$	141	$	780	$	710	$	327	$	183	$	111	$	2,252	0		0		2,252
Retail banking	0		0		2		0		0		0		2		72		1		75
Total consumer banking	141		780		712		327		183		111		2,254		72		1		2,327
Commercial Banking
Commercial and multifamily real estate	0		33		60		22		158		219		492		0		0		492
Commercial and industrial	2		9		0		0		57		11		79		17		0		96
Total commercial banking	2		42		60		22		215		230		571		17		0		588
Total	$	143	$	822	$	772	$	349	$	398	$	341	$	2,825	$	7,775	$	102	$	10,702

Schedule of Loss Sharing Arrangement Impact

The table below summarizes the changes in the estimated reimbursements from these partners for the years ended December 31, 2023, 2022 and 2021.

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

	Year Ended December 31,
(Dollars in millions)	2023		2022		2021
Estimated reimbursements from partners, beginning of period	$	1,558	$	1,450	$	2,159
Amounts due from partners for charged off loans	(980)		(515)		(438)
Change in estimated partner reimbursements that decreased (increased) provision for credit losses(1)	1,436		623		(271)
Estimated reimbursements from partners, end of period	$	2,014	$	1,558	$	1,450

__________

(1)Includes adjustments for PCD loans acquired in the first quarter of 2023.