Quarterly report pursuant to Section 13 or 15(d)

ALLOWANCE FOR CREDIT LOSSES

v3.23.1
ALLOWANCE FOR CREDIT LOSSES
 3 Months Ended
Mar. 31, 2023
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 for the three-month periods ended March 31, 2023 and 2022.

(dollar amounts in millions) Commercial Consumer Total
Three-month period ended March 31, 2023:
ALLL balance, beginning of period $ 1,424  $ 697  $ 2,121 
Loan and lease charge-offs (52) (47) (99)
Recoveries of loans and leases previously charged-off 23  19  42 
Provision for loan and lease losses 62  16  78 
ALLL balance, end of period $ 1,457  $ 685  $ 2,142 
AULC balance, beginning of period $ 71  $ 79  $ 150 
Provision for unfunded lending commitments 4  3  7 
AULC balance, end of period $ 75  $ 82  $ 157 
ACL balance, end of period $ 1,532  $ 767  $ 2,299 
(dollar amounts in millions) Commercial Consumer Total
Three-month period ended March 31, 2022:
ALLL balance, beginning of period $ 1,462  $ 568  $ 2,030 
Loan and lease charge-offs (31) (50) (81)
Recoveries of loans and leases previously charged-off 40  22  62 
Provision (benefit) for loan and lease losses 43  (36) 7 
ALLL balance, end of period $ 1,514  $ 504  $ 2,018 
AULC balance, beginning of period $ 41  $ 36  $ 77 
Provision (benefit) for unfunded lending commitments 16  (2) 14 
AULC balance, end of period $ 57  $ 34  $ 91 
ACL balance, end of period $ 1,571  $ 538  $ 2,109 
At March 31, 2023, the ACL was $2.3 billion, an increase of $28 million compared to December 31, 2022.
The commercial ACL was $1.5 billion at both March 31, 2023 and December 31, 2022. The increase of $37 million since year end was primarily attributable to C&I loan growth.
The consumer ACL was $767 million, a marginal decrease of $9 million from the December 31, 2022 balance of $776 million, primarily attributable to a reduction in other consumer balances at the end of first quarter.
The baseline economic scenario used in the March 31, 2023 ACL determination included the federal funds rate projected to peak at approximately 4.8% in the second quarter of 2023 as the Federal Reserve continues to address elevated inflation levels. As a result, inflation is forecast to drop from an estimated 8.0% in 2022 to 2.4% by 2024. However, unemployment is expected to gradually increase to a projected level of 4.0% by Q4 2024.
The economic scenarios used included elevated levels of economic uncertainty associated with geopolitical instability, high inflation readings, and the expected path of interest rate increases by the Federal Reserve. Given the uncertainty associated with key economic scenario assumptions, the March 31, 2023 ACL included a general reserve that consists of various risk profile components to capture uncertainty not addressed within the quantitative transaction reserve.