Quarterly report pursuant to Section 13 or 15(d)

ALLOWANCE FOR CREDIT LOSSES

v3.24.2
ALLOWANCE FOR CREDIT LOSSES
 6 Months Ended
Jun. 30, 2024
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.
(dollar amounts in millions) Commercial Consumer Total
Three months ended June 30, 2024
ALLL balance, beginning of period $ 1,589  $ 691  $ 2,280 
Loan and lease charge-offs (95) (50) (145)
Recoveries of loans and leases previously charged-off 38  17  55 
Provision for loan and lease losses 55  59  114 
ALLL balance, end of period $ 1,587  $ 717  $ 2,304 
AULC balance, beginning of period $ 69  $ 66  $ 135 
Provision (benefit) for unfunded lending commitments (5) (11) (16)
AULC balance, end of period $ 64  $ 55  $ 119 
ACL balance, end of period $ 1,651  $ 772  $ 2,423 
Three months ended June 30, 2023
ALLL balance, beginning of period $ 1,457  $ 685  $ 2,142 
Loan and lease charge-offs (53) (39) (92)
Recoveries of loans and leases previously charged-off 26  17  43 
Provision for loan and lease losses 53  31  84 
ALLL balance, end of period $ 1,483  $ 694  $ 2,177 
AULC balance, beginning of period $ 75  $ 82  $ 157 
Provision for unfunded lending commitments 3  5  8 
AULC balance, end of period $ 78  $ 87  $ 165 
ACL balance, end of period $ 1,561  $ 781  $ 2,342 
(dollar amounts in millions) Commercial Consumer Total
Six months ended June 30, 2024
ALLL balance, beginning of period $ 1,563  $ 692  $ 2,255 
Loan and lease charge-offs (169) (104) (273)
Recoveries of loans and leases previously charged-off 57  34  91 
Provision for loan and lease losses 136  95  231 
ALLL balance, end of period $ 1,587  $ 717  $ 2,304 
AULC balance, beginning of period $ 66  $ 79  $ 145 
Provision (benefit) for unfunded lending commitments (2) (24) (26)
AULC balance, end of period $ 64  $ 55  $ 119 
ACL balance, end of period $ 1,651  $ 772  $ 2,423 
Six months ended June 30, 2023
ALLL balance, beginning of period $ 1,424  $ 697  $ 2,121 
Loan and lease charge-offs (105) (86) (191)
Recoveries of loans and leases previously charged-off 49  36  85 
Provision for loan and lease losses 115  47  162 
ALLL balance, end of period $ 1,483  $ 694  $ 2,177 
AULC balance, beginning of period $ 71  $ 79  $ 150 
Provision for unfunded lending commitments 7  8  15 
AULC balance, end of period $ 78  $ 87  $ 165 
ACL balance, end of period $ 1,561  $ 781  $ 2,342 
At June 30, 2024, the ACL was $2.4 billion, a marginal increase of $23 million compared to December 31, 2023. The increase in the total ACL was primarily driven by loan and lease portfolio growth.
The commercial ACL was $1.7 billion at June 30, 2024 and $1.6 billion at December 31, 2023. The increase of $22 million since year end was primarily due to loan growth in the commercial portfolio.
The consumer ACL was $772 million, at June 30, 2024, relatively consistent compared to $771 million at December 31, 2023.
The baseline economic scenario used in the June 30, 2024 ACL determination projected the Federal Reserve to complete two 25 basis point rate cuts by the end of 2024. Further subsequent cuts of 25 basis points per quarter are expected in 2025 and 2026 until reaching 3% by 2027. Inflation is forecasted to approach the Federal Reserve’s target level of 2% by the end of 2024. Unemployment is projected to gradually increase, peaking at 4.1% in the first quarter of 2025 before marginally improving to 4.0% by 2026.
The economic scenarios used included elevated levels of economic uncertainty including the impact of specific challenges in the commercial real estate Industry, recent inflation levels, the U.S. labor market, the expected path of interest rate changes by the Federal Reserve, and the impact of significant conflicts on-going around the world. Given the uncertainty associated with key economic scenario assumptions, the June 30, 2024 ACL included a general reserve that consists of various risk profile components to address uncertainty not measured within the quantitative transaction reserve.