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Allowance for Credit Losses
 3 Months Ended
Mar. 31, 2013
Receivables [Abstract]  
Allowance for Credit Losses
NOTE 6 – Allowance for Credit Losses

The table below summarizes the changes in the allowance for credit losses by portfolio segment for the three months ended March 31, 2013 and 2012.

 
Three Months Ended March 31, 2013
(Dollars in millions)
Home Loans
 
Credit Card
and Other
Consumer
 
Commercial
 
Total
Allowance for loan and lease losses, January 1
$
14,933

 
$
6,140

 
$
3,106

 
$
24,179

Loans and leases charged off
(1,193
)
 
(1,553
)
 
(316
)
 
(3,062
)
Recoveries of loans and leases previously charged off
126

 
318

 
101

 
545

Net charge-offs
(1,067
)
 
(1,235
)
 
(215
)
 
(2,517
)
Provision for loan and lease losses
484

 
1,007

 
240

 
1,731

Write-offs of PCI loans
(839
)
 
—

 
—

 
(839
)
Other (1)
(73
)
 
(38
)
 
(2
)
 
(113
)
Allowance for loan and lease losses, March 31
13,438

 
5,874

 
3,129

 
22,441

Reserve for unfunded lending commitments, January 1
—

 
—

 
513

 
513

Provision for unfunded lending commitments
—

 
—

 
(18
)
 
(18
)
Other (2)
—

 
—

 
(9
)
 
(9
)
Reserve for unfunded lending commitments, March 31
—

 
—

 
486

 
486

Allowance for credit losses, March 31
$
13,438

 
$
5,874

 
$
3,615

 
$
22,927

 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2012
Allowance for loan and lease losses, January 1
$
21,079

 
$
8,569

 
$
4,135

 
$
33,783

Loans and leases charged off
(2,007
)
 
(2,242
)
 
(531
)
 
(4,780
)
Recoveries of loans and leases previously charged off
136

 
426

 
162

 
724

Net charge-offs
(1,871
)
 
(1,816
)
 
(369
)
 
(4,056
)
Provision for loan and lease losses
1,765

 
879

 
(187
)
 
2,457

Other (1)
—

 
32

 
(5
)
 
27

Allowance for loan and lease losses, March 31
20,973

 
7,664

 
3,574

 
32,211

Reserve for unfunded lending commitments, January 1
—

 
—

 
714

 
714

Provision for unfunded lending commitments
—

 
—

 
(39
)
 
(39
)
Other (2)
—

 
—

 
(24
)
 
(24
)
Reserve for unfunded lending commitments, March 31
—

 
—

 
651

 
651

Allowance for credit losses, March 31
$
20,973

 
$
7,664

 
$
4,225

 
$
32,862

(1) 
Primarily represents the net impact of portfolio sales, consolidations and deconsolidations, and foreign currency translation adjustments.
(2) 
Primarily represents accretion of the Merrill Lynch purchase accounting adjustment.

During the three months ended March 31, 2013 and 2012, for the PCI loan portfolios, the Corporation recorded a provision benefit of $207 million and provision expense of $487 million with a corresponding change in the valuation allowance included as part of the allowance for loan and lease losses. Subsequent to the substantial fulfillment of the principal reduction commitments associated with the National Mortgage Settlement, the Corporation reviewed certain PCI loans that were ineligible for the program but had similar characteristics as the eligible PCI loans. Based on this review, the Corporation updated its estimates as to the likelihood of any proceeds being received from the ineligible PCI loans and wrote off the loans where the expectation of future cash proceeds is now considered remote. This primarily resulted in write-offs in the PCI loan portfolios of $839 million with a corresponding decrease in the PCI valuation allowance during the three months ended March 31, 2013. The valuation allowance associated with the PCI loan portfolios was $4.5 billion and $5.5 billion at March 31, 2013 and December 31, 2012.

The table below presents the allowance and the carrying value of outstanding loans and leases by portfolio segment at March 31, 2013 and December 31, 2012.

Allowance and Carrying Value by Portfolio Segment
 
 
 
 
 
 
 
 
March 31, 2013
(Dollars in millions)
Home Loans
 
Credit Card
and Other
Consumer
 
Commercial
 
Total
Impaired loans and troubled debt restructurings (1)
 
 
 
 
 
 
 
Allowance for loan and lease losses (2)
$
1,795

 
$
903

 
$
408

 
$
3,106

Carrying value (3)
33,581

 
3,272

 
4,359

 
41,212

Allowance as a percentage of carrying value
5.35
%
 
27.60
%
 
9.36
%
 
7.54
%
Loans collectively evaluated for impairment
 
 
 
 
 
 
 
Allowance for loan and lease losses
$
7,153

 
$
4,971

 
$
2,721

 
$
14,845

Carrying value (3, 4)
296,897

 
180,609

 
354,390

 
831,896

Allowance as a percentage of carrying value (4)
2.41
%
 
2.75
%
 
0.77
%
 
1.78
%
Purchased credit-impaired loans
 
 
 
 
 
 
 
Valuation allowance
$
4,490

 
n/a

 
n/a

 
$
4,490

Carrying value gross of valuation allowance
29,664

 
n/a

 
n/a

 
29,664

Valuation allowance as a percentage of carrying value
15.14
%
 
n/a

 
n/a

 
15.14
%
Total
 
 
 
 
 
 
 
Allowance for loan and lease losses
$
13,438

 
$
5,874

 
$
3,129

 
$
22,441

Carrying value (3, 4)
360,142

 
183,881

 
358,749

 
902,772

Allowance as a percentage of carrying value (4)
3.73
%
 
3.19
%
 
0.87
%
 
2.49
%
 
 
 
 
 
 
 
 
 
December 31, 2012
Impaired loans and troubled debt restructurings (1)
 
 
 
 
 
 
 
Allowance for loan and lease losses (2)
$
1,700

 
$
1,127

 
$
475

 
$
3,302

Carrying value (3)
30,250

 
3,881

 
4,881

 
39,012

Allowance as a percentage of carrying value
5.62
%
 
29.04
%
 
9.74
%
 
8.46
%
Loans collectively evaluated for impairment
 
 
 
 
 
 
 
Allowance for loan and lease losses
$
7,697

 
$
5,013

 
$
2,631

 
$
15,341

Carrying value (3, 4)
304,701

 
187,484

 
341,502

 
833,687

Allowance as a percentage of carrying value (4)
2.53
%
 
2.67
%
 
0.77
%
 
1.84
%
Purchased credit-impaired loans
 
 
 
 
 
 
 
Valuation allowance
$
5,536

 
n/a

 
n/a

 
$
5,536

Carrying value gross of valuation allowance
26,118

 
n/a

 
n/a

 
26,118

Valuation allowance as a percentage of carrying value
21.20
%
 
n/a

 
n/a

 
21.20
%
Total
 
 
 
 
 
 
 
Allowance for loan and lease losses
$
14,933

 
$
6,140

 
$
3,106

 
$
24,179

Carrying value (3, 4)
361,069

 
191,365

 
346,383

 
898,817

Allowance as a percentage of carrying value (4)
4.14
%
 
3.21
%
 
0.90
%
 
2.69
%
(1) 
Impaired loans include nonperforming commercial loans and all TDRs, including both commercial and consumer TDRs. Impaired loans exclude nonperforming consumer loans unless they are TDRs, and all consumer and commercial loans accounted for under the fair value option.
(2) 
Commercial impaired allowance for loan and lease losses includes $80 million and $97 million of renegotiated TDR loans related to U.S. small business commercial at March 31, 2013 and December 31, 2012.
(3) 
Amounts are presented gross of the allowance for loan and lease losses.
(4) 
Outstanding loan and lease balances and ratios do not include loans accounted for under the fair value option of $8.8 billion and $9.0 billion at March 31, 2013 and December 31, 2012.
n/a = not applicable