Quarterly report pursuant to Section 13 or 15(d)

ALLOWANCE FOR CREDIT LOSSES

v3.21.2
ALLOWANCE FOR CREDIT LOSSES
 6 Months Ended
Jun. 30, 2021
Credit Loss [Abstract]  
Allowance for Credit Losses ALLOWANCE FOR CREDIT LOSSES
Allowance for Credit Losses - Roll-forward
The following tables present ACL activity by portfolio segment for the three-month and six-month periods ended June 30, 2021 and 2020.

(dollar amounts in millions) Commercial Consumer Total
Three-month period ended June 30, 2021:
ALLL balance, beginning of period $ 1,197  $ 506  $ 1,703 
Loan and lease charge-offs (1) (78) (24) (102)
Recoveries of loans and leases previously charged-off 19  21  40 
Provision for loan and lease losses (2) 106  39  145 
Allowance on loans and leases purchased with credit deterioration 374  58  432 
ALLL balance, end of period $ 1,618  $ 600  $ 2,218 
AULC balance, beginning of period $ 27  $ 11  $ 38 
Provision for unfunded lending commitments (3) 49  17  66 
AULC balance, end of period $ 76  $ 28  $ 104 
ACL balance, end of period $ 1,694  $ 628  $ 2,322 
Six-month period ended June 30, 2021:
ALLL balance, beginning of period $ 1,236  $ 578  $ 1,814 
Loan and lease charge-offs (1) (139) (58) (197)
Recoveries of loans and leases previously charged-off 31  40  71 
Provision for loan and lease losses (2) 116  (18) 98 
Allowance on loans and leases purchased with credit deterioration 374  58  432 
ALLL balance, end of period $ 1,618  $ 600  $ 2,218 
AULC balance, beginning of period $ 34  $ 18  $ 52 
Provision for unfunded lending commitments (3) 43  10  53 
Unfunded lending commitment losses (1) —  (1)
AULC balance, end of period $ 76  $ 28  $ 104 
ACL balance, end of period $ 1,694  $ 628  $ 2,322 
(dollar amounts in millions) Commercial Consumer Total
Three-month period ended June 30, 2020:
ALLL balance, beginning of period $ 996  $ 508  $ 1,504 
Loan and lease charge-offs (84) (39) (123)
Recoveries of loans and leases previously charged-off 4  12  16 
Provision for loan and lease losses 253  52  305 
ALLL balance, end of period $ 1,169  $ 533  $ 1,702 
AULC balance, beginning of period $ 58  $ 41  $ 99 
Provision (reduction in allowance) for unfunded lending commitments 25  (3) 22 
Unfunded lending commitment losses (2) —  (2)
AULC balance, end of period $ 81  $ 38  $ 119 
ACL balance, end of period $ 1,250  $ 571  $ 1,821 
Six-month period ended June 30, 2020:
ALLL balance, beginning of period $ 552  $ 231  $ 783 
Cumulative-effect of change in accounting principle for financial instruments - credit losses (4) 180  211  391 
Loan and lease charge-offs (172) (87) (259)
Recoveries of loans and leases previously charged-off 9  26  35 
Provision for loan and lease losses 600  152  752 
ALLL balance, end of period $ 1,169  $ 533  $ 1,702 
AULC balance, beginning of period $ 102  $ 2  $ 104 
Cumulative-effect of change in accounting principle for financial instruments - credit losses (4) 2  —  2 
Provision (reduction in allowance) for unfunded lending commitments (20) 36  16 
Unfunded lending commitment losses (3) —  (3)
AULC balance, end of period $ 81  $ 38  $ 119 
ACL balance, end of period $ 1,250  $ 571  $ 1,821 
(1)Loan and lease charge-offs for the three and six-month periods ended June 30, 2021 exclude $80 million of charge-offs recognized upon completion of the TCF acquisition related to required purchase accounting treatment. The initial ALLL recognized on PCD assets included these amounts and after charging these amounts off upon acquisition, the net impact was $432 million of additional ALLL for PCD loans.
(2)Includes $234 million of TCF acquisition initial provision for credit losses related to non-PCD loans and leases.
(3)Includes $60 million from acquired unfunded lending commitments.
(4)Relates to day one impact of the CECL adjustment as a result of the implementation of ASU 2016-13.
At June 30, 2021, the ACL was $2.3 billion, an increase of $456 million from the December 31, 2020 balance of $1.9 billion. The increase was primarily related to the addition of $432 million of allowance for loans purchased with credit deterioration and the TCF acquisition initial provision for credit losses of $294 million ($234 million from non-PCD loans and leases and $60 million from acquired unfunded lending commitments), partially offset by improvement in the forecasted macroeconomic environment resulting from anticipated lower unemployment and higher GDP.
The suite of CECL models are generally dependent on the rate of change in unemployment rather than the absolute unemployment levels. Additionally, the economic scenarios used in the June 30, 2021 ACL determination contained significant judgmental assumptions around the ultimate impact of COVID-19 cases and the economic impact of additional stimulus spending enacted into law during the first quarter 2021. Given the impact of the unemployment variable utilized within the models and the uncertainty associated with key economic scenario assumptions, the June 30, 2021 ACL included a material general reserve component as well as additional industry specific risk profiles to capture economic uncertainty not addressed within the quantitative transaction reserve.