| 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 nine-month periods ended September 30, 2021 and 2020.
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| (dollar amounts in millions) |
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Commercial |
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Consumer |
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Total |
| Three-month period ended September 30, 2021: |
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| ALLL balance, beginning of period |
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$ |
1,618 |
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$ |
600 |
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$ |
2,218 |
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| Loan and lease charge-offs |
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(74) |
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(32) |
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(106) |
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| Recoveries of loans and leases previously charged-off |
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27 |
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24 |
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51 |
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| Provision (benefit) for loan and lease losses |
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(22) |
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(34) |
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(56) |
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| ALLL balance, end of period |
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$ |
1,549 |
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$ |
558 |
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$ |
2,107 |
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| AULC balance, beginning of period |
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$ |
76 |
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$ |
28 |
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$ |
104 |
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| Provision for unfunded lending commitments |
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2 |
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(8) |
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(6) |
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| AULC balance, end of period |
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$ |
78 |
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$ |
20 |
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$ |
98 |
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| ACL balance, end of period |
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$ |
1,627 |
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$ |
578 |
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$ |
2,205 |
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| Nine-month period ended September 30, 2021: |
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| ALLL balance, beginning of period |
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$ |
1,236 |
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$ |
578 |
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$ |
1,814 |
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| Loan and lease charge-offs |
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(213) |
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(90) |
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(303) |
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| Recoveries of loans and leases previously charged-off |
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58 |
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64 |
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122 |
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| Provision for loan and lease losses (1) |
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94 |
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(52) |
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42 |
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| Allowance on loans and leases purchased with credit deterioration |
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374 |
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58 |
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432 |
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| ALLL balance, end of period |
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$ |
1,549 |
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$ |
558 |
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$ |
2,107 |
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| AULC balance, beginning of period |
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$ |
34 |
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$ |
18 |
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$ |
52 |
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| Provision for unfunded lending commitments (2) |
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45 |
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2 |
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47 |
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| Unfunded lending commitment losses |
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(1) |
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— |
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(1) |
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| AULC balance, end of period |
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$ |
78 |
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$ |
20 |
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$ |
98 |
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| ACL balance, end of period |
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$ |
1,627 |
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$ |
578 |
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$ |
2,205 |
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| (dollar amounts in millions) |
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Commercial |
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Consumer |
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Total |
| Three-month period ended September 30, 2020: |
| ALLL balance, beginning of period |
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$ |
1,169 |
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$ |
533 |
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$ |
1,702 |
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| Loan and lease charge-offs |
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(101) |
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(40) |
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(141) |
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| Recoveries of loans and leases previously charged-off |
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12 |
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16 |
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28 |
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| Provision for loan and lease losses |
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183 |
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24 |
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207 |
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| ALLL balance, end of period |
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$ |
1,263 |
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$ |
533 |
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$ |
1,796 |
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| AULC balance, beginning of period |
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$ |
81 |
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$ |
38 |
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$ |
119 |
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| Provision (reduction in allowance) for unfunded lending commitments |
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(27) |
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(3) |
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(30) |
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| Unfunded lending commitment losses |
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(7) |
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— |
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(7) |
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| AULC balance, end of period |
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$ |
47 |
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$ |
35 |
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$ |
82 |
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| ACL balance, end of period |
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$ |
1,310 |
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$ |
568 |
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$ |
1,878 |
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| Nine-month period ended September 30, 2020: |
| ALLL balance, beginning of period |
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$ |
552 |
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$ |
231 |
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$ |
783 |
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| Cumulative-effect of change in accounting principle for financial instruments - credit losses (3) |
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|
180 |
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|
211 |
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|
391 |
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| Loan and lease charge-offs |
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(272) |
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(128) |
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(400) |
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| Recoveries of loans and leases previously charged-off |
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20 |
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43 |
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63 |
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| Provision for loan and lease losses |
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|
783 |
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176 |
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959 |
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| ALLL balance, end of period |
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$ |
1,263 |
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$ |
533 |
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$ |
1,796 |
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| AULC balance, beginning of period |
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$ |
102 |
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$ |
2 |
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$ |
104 |
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| Cumulative-effect of change in accounting principle for financial instruments - credit losses (3) |
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(38) |
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|
40 |
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2 |
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| Provision (reduction in allowance) for unfunded lending commitments |
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(7) |
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(7) |
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(14) |
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| Unfunded lending commitment losses |
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(10) |
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— |
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(10) |
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| AULC balance, end of period |
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$ |
47 |
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$ |
35 |
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$ |
82 |
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| ACL balance, end of period |
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$ |
1,310 |
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$ |
568 |
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$ |
1,878 |
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(1)Includes $234 million of TCF acquisition initial provision for credit losses related to non-PCD loans and leases.
(2)Includes $60 million from acquired unfunded lending commitments.
(3)Relates to day one impact of the CECL adjustment as a result of the implementation of ASU 2016-13.
At September 30, 2021, the ACL was $2.2 billion, an increase of $339 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 economic scenarios used in the September 30, 2021 ACL determination contained significant judgmental assumptions and the ultimate impact of COVID-19 remains uncertain, including how long economic activities will be impacted and what effect the unprecedented levels of government fiscal and monetary actions will have on the economy and our credit losses. Given the uncertainty associated with key economic scenario assumptions, the September 30, 2021 ACL included a material general reserve component as well as additional industry specific risk profiles, including profiles relating to the commercial real estate portfolio, to capture economic uncertainty not addressed within the quantitative transaction reserve.
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