Quarterly report pursuant to Section 13 or 15(d)

ALLOWANCE FOR CREDIT LOSSES

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ALLOWANCE FOR CREDIT LOSSES
 3 Months Ended
Mar. 31, 2021
Credit Loss [Abstract]  
Allowance for Credit Losses ALLOWANCE FOR CREDIT LOSSES
Allowance for Loan and Lease Losses and Allowance for Credit Losses - Roll-forward
The following tables present ALLL and AULC activity by portfolio segment for the three-month periods ended March 31, 2021 and 2020.
(dollar amounts in millions) Commercial Consumer Total
Three-month period ended March 31, 2021:
ALLL balance, beginning of period $ 1,236  $ 578  $ 1,814 
Loan charge-offs (61) (34) (95)
Recoveries of loans previously charged-off 12  19  31 
Provision for loan and lease losses 10  (57) (47)
ALLL balance, end of period $ 1,197  $ 506  $ 1,703 
AULC balance, beginning of period $ 34  $ 18  $ 52 
Provision (reduction in allowance) for unfunded loan commitments and letters of credit (6) (7) (13)
Unfunded commitment losses (1) —  (1)
AULC balance, end of period $ 27  $ 11  $ 38 
ACL balance, end of period $ 1,224  $ 517  $ 1,741 
(dollar amounts in millions) Commercial Consumer Total
Three-month period ended March 31, 2020:
ALLL balance, beginning of period $ 552  $ 231  $ 783 
Cumulative-effect of change in accounting principle for financial instruments - credit losses (1) 180 211 391
Loan charge-offs (88) (48) (136)
Recoveries of loans previously charged-off 5  14  19 
Provision for loan and lease losses 347  100  447 
ALLL balance, end of period $ 996  $ 508  $ 1,504 
AULC balance, beginning of period $ 102  $ 2  $ 104 
Cumulative-effect of change in accounting principle for financial instruments - credit losses (1) (38) 40  2 
Provision (reduction in allowance) for unfunded loan commitments and letters of credit (5) (1) (6)
Unfunded commitment losses (1) —  (1)
AULC balance, end of period $ 58  $ 41  $ 99 
ACL balance, end of period $ 1,054  $ 549  $ 1,603 
(1)Relates to day one impact of the CECL adjustment as a result of the implementation of ASU 2016-13.
At March 31, 2021, the ACL was $1.7 billion, a decrease of $125 million from the December 31, 2020 balance of $1.9 billion. The decrease was primarily related to a reduction in credit reserves reflecting an improvement in the economic outlook. NCOs decreased $48 million, or 43%, in for the three-month period ended March 31, 2021. The decrease was driven by both commercial and consumer NCOs.
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 March 31, 2021 ACL determination contained significant judgmental assumptions around the ultimate number of COVID-19 cases and the economic impact of additional stimulus spending enacted into law during the first quarter. Given the impact of the unemployment variable utilized within the models and the uncertainty associated with key economic scenario assumptions, the March 31, 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.