Annual report pursuant to Section 13 and 15(d)

ALLOWANCE FOR CREDIT LOSSES

v3.25.0.1
ALLOWANCE FOR CREDIT LOSSES
 12 Months Ended
Dec. 31, 2024
Credit Loss [Abstract]  
ALLOWANCE FOR CREDIT LOSSES ALLOWANCE FOR CREDIT LOSSES
The following table presents ACL activity by portfolio segment.
(dollar amounts in millions) Commercial Consumer Total
Year Ended December 31, 2024:
ALLL balance, beginning of period $ 1,563  $ 692  $ 2,255 
Loan and lease charge-offs (311) (220) (531)
Recoveries of loans and leases previously charged-off 94  65  159 
Provision for loan and lease losses 138  223  361 
ALLL balance, end of period $ 1,484  $ 760  $ 2,244 
AULC balance, beginning of period $ 66  $ 79  $ 145 
Provision (benefit) for unfunded lending commitments
 78  (21) 57 
AULC balance, end of period $ 144  $ 58  $ 202 
ACL balance, end of period $ 1,628  $ 818  $ 2,446 
Year Ended December 31, 2023:
ALLL balance, beginning of period $ 1,424  $ 697  $ 2,121 
Loan and lease charge-offs (270) (184) (454)
Recoveries of loans and leases previously charged-off 112  69  181 
Provision for loan and lease losses
 297  110  407 
ALLL balance, end of period $ 1,563  $ 692  $ 2,255 
AULC balance, beginning of period $ 71  $ 79  $ 150 
Provision (benefit) for unfunded lending commitments
 (5) —  (5)
AULC balance, end of period $ 66  $ 79  $ 145 
ACL balance, end of period $ 1,629  $ 771  $ 2,400 
Year Ended December 31, 2022:
ALLL balance, beginning of period $ 1,462  $ 568  $ 2,030 
Loan and lease charge-offs (129) (184) (313)
Recoveries of loans and leases previously charged-off 114  78  192 
Provision (benefit) for loan and lease losses (23) 235  212 
ALLL balance, end of period $ 1,424  $ 697  $ 2,121 
AULC balance, beginning of period $ 41  $ 36  $ 77 
Provision for unfunded lending commitments 30  43  73 
AULC balance, end of period $ 71  $ 79  $ 150 
ACL balance, end of period $ 1,495  $ 776  $ 2,271 
At December 31, 2024, the ACL was $2.4 billion, an increase of $46 million from December 31, 2023. The increase in the total ACL was driven by loan and lease growth throughout 2024, partially offset by a modest reduction in overall coverage ratios reflective of the current macroeconomic environment.
The Commercial ACL was $1.6 billion at December 31, 2024, a decrease of $1 million from December 31, 2023. C&I loan and lease growth of $6.2 billion was offset by the combination of a modest reduction in the C&I coverage ratios due to improvement in the macroeconomic environment and a $1.3 billion decrease in CRE loans and leases.
The Consumer ACL was $818 million at December 31, 2024, an increase of $47 million from the December 31, 2023 balance. The increase was primarily due to a $3.0 billion increase in consumer loans.
The baseline economic scenario used in the December 31, 2024 ACL determination assumes the labor market has softened with the unemployment rate projected at 4.2% for the fourth quarter of 2024. Marginal improvement is expected moving forward with unemployment returning to 4% by 2026. The Federal Reserve is projected to continue the cycle of rate cuts that started in September 2024, with gradual cuts forecast throughout 2025 and 2026 until reaching a federal funds rate of 3% by mid-2026. Inflation is forecasted to approach the Federal Reserve’s target level of 2% by the end of 2024 and stabilize in 2025. GDP is forecast to show marginal improvement from the estimated fourth quarter 2024 level of 2.0%, ending the fourth quarter of 2025 at 2.1%.
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 December 31, 2024 ACL included a general reserve that consists of various risk profile components to address uncertainty not measured within the quantitative transaction reserve.