Quarterly report pursuant to Section 13 or 15(d)

ALLOWANCE FOR CREDIT LOSSES

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ALLOWANCE FOR CREDIT LOSSES
 9 Months Ended
Sep. 30, 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 and nine-month periods ended September 30, 2023 and 2022.
(dollar amounts in millions) Commercial Consumer Total
Three months ended September 30, 2023
ALLL balance, beginning of period $ 1,483  $ 694  $ 2,177 
Loan and lease charge-offs (85) (46) (131)
Recoveries of loans and leases previously charged-off 40  18  58 
Provision for loan and lease losses 66  38  104 
ALLL balance, end of period $ 1,504  $ 704  $ 2,208 
AULC balance, beginning of period $ 78  $ 87  $ 165 
Provision for unfunded lending commitments (2) (3) (5)
AULC balance, end of period $ 76  $ 84  $ 160 
ACL balance, end of period $ 1,580  $ 788  $ 2,368 
Nine months ended September 30, 2023
ALLL balance, beginning of period $ 1,424  $ 697  $ 2,121 
Loan and lease charge-offs (190) (132) (322)
Recoveries of loans and leases previously charged-off 89  54  143 
Provision for loan and lease losses 181  85  266 
ALLL balance, end of period $ 1,504  $ 704  $ 2,208 
AULC balance, beginning of period $ 71  $ 79  $ 150 
Provision for unfunded lending commitments 5  5  10 
AULC balance, end of period $ 76  $ 84  $ 160 
ACL balance, end of period $ 1,580  $ 788  $ 2,368 
(dollar amounts in millions) Commercial Consumer Total
Three months ended September 30, 2022
ALLL balance, beginning of period $ 1,342  $ 732  $ 2,074 
Loan and lease charge-offs (35) (48) (83)
Recoveries of loans and leases previously charged-off 20  19  39 
Provision (benefit) for loan and lease losses 87  (7) 80 
ALLL balance, end of period $ 1,414  $ 696  $ 2,110 
AULC balance, beginning of period $ 53  $ 41  $ 94 
Provision (benefit) for unfunded lending commitments 8  18  26 
AULC balance, end of period $ 61  $ 59  $ 120 
ACL balance, end of period $ 1,475  $ 755  $ 2,230 
Nine months ended September 30, 2022
ALLL balance, beginning of period $ 1,462  $ 568  $ 2,030 
Loan and lease charge-offs (77) (139) (216)
Recoveries of loans and leases previously charged-off 83  62  145 
Provision (benefit) for loan and lease losses (54) 205  151 
ALLL balance, end of period $ 1,414  $ 696  $ 2,110 
AULC balance, beginning of period $ 41  $ 36  $ 77 
Provision for unfunded lending commitments 20  23  43 
AULC balance, end of period $ 61  $ 59  $ 120 
ACL balance, end of period $ 1,475  $ 755  $ 2,230 
At September 30, 2023, the ACL was $2.4 billion, an increase of $97 million compared to December 31, 2022.
The commercial ACL was $1.6 billion at September 30, 2023 and $1.5 billion at December 31, 2022. The increase of $85 million since year end was due to a combination of C&I loan growth and increased coverage levels in the commercial real estate portfolio during 2023.
The consumer ACL was $788 million, relatively flat compared to the December 31, 2022 balance of $776 million. The modest increase is attributable to loan and lease growth in the consumer portfolio.
The baseline economic scenario used in the September 30, 2023 ACL determination included the federal funds rate projected to peak in the third quarter of 2023 as the Federal Reserve continues to address inflation levels and tightness in the labor market. As a result, inflation is forecast to drop from an average of 4.1% in 2023 to 2.7% by 2024. However, unemployment is expected to gradually increase to a projected level of 4.2% 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 September 30, 2023 ACL included a general reserve that consists of various risk profile components to capture uncertainty not addressed within the quantitative transaction reserve.