Quarterly report [Sections 13 or 15(d)]

ALLOWANCE FOR CREDIT LOSSES

v3.25.2
ALLOWANCE FOR CREDIT LOSSES
 6 Months Ended
Jun. 30, 2025
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
Three months ended June 30, 2025
ALLL balance, beginning of period $ 1,520  $ 743  $ 2,263 
Loan and lease charge-offs (56) (55) (111)
Recoveries of loans and leases previously charged-off 25  20  45 
Provision for loan and lease losses 59  75  134 
ALLL balance, end of period $ 1,548  $ 783  $ 2,331 
AULC balance, beginning of period $ 158  $ 57  $ 215 
Provision (benefit) for unfunded lending commitments (34) 3  (31)
AULC balance, end of period $ 124  $ 60  $ 184 
ACL balance, end of period $ 1,672  $ 843  $ 2,515 
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 
Six months ended June 30, 2025
ALLL balance, beginning of period $ 1,484  $ 760  $ 2,244 
Loan and lease charge-offs (130) (114) (244)
Recoveries of loans and leases previously charged-off 55  37  92 
Provision for loan and lease losses 139  100  239 
ALLL balance, end of period $ 1,548  $ 783  $ 2,331 
AULC balance, beginning of period $ 144  $ 58  $ 202 
Provision (benefit) for unfunded lending commitments (20) 2  (18)
AULC balance, end of period $ 124  $ 60  $ 184 
ACL balance, end of period $ 1,672  $ 843  $ 2,515 
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 
At June 30, 2025, the ACL was $2.5 billion, a $69 million increase compared to December 31, 2024. The increase in the ACL was driven by loan and lease growth, partially offset by a modest reduction in overall coverage ratios. The ACL coverage ratio at June 30, 2025 is reflective of the current macro-economic forecast and changes in various risk profiles intended to capture uncertainty not addressed within the quantitative reserve.
The commercial ACL was $1.7 billion at June 30, 2025, a $44 million increase compared to December 31, 2024, with the increase primarily due to loan growth. The consumer ACL was $843 million at June 30, 2025, a $25 million increase compared to December 31, 2024, with the increase primarily due to loan growth.
The baseline economic scenario used in the June 30, 2025 ACL determination assumes the imposition of tariffs impacts global trade and weakens the U.S. economy, with weak near-term GDP growth and increasing unemployment. The unemployment rate is forecasted to increase to 4.4% by the fourth quarter of 2025, continuing to increase to 4.9% through the end of 2026. The Federal Reserve is projected to restart rate cuts beginning in the second half of 2025 and into 2026, until reaching a federal funds rate of 3% by the third quarter of 2026. Inflation starts out at 3.8%, with improvement expected through the remainder of 2025 and into 2026, before ending 2026 at 1.8%. GDP starts out at 0.4%, with improvement through the end of 2026, ending at 1.9%.
The economic scenarios used included elevated levels of economic uncertainty, such as the impact of specific challenges in the commercial real estate Industry, recent inflation levels, the impacts of U.S. trade policies, 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, 2025 ACL included a general reserve that consists of various risk profile components to address uncertainty not measured within the quantitative transaction reserve.