NOTE 4 - ALLOWANCE FOR CREDIT LOSSES

The allowance for credit losses consists of the ALLL and the reserve for unfunded commitments. Activity in the allowance for credit losses is summarized in the table below:



	Three Months Ended June 30						Six Months Ended June 30
(Dollars in millions)	2012			2011			2012			2011
Balance at beginning of period		$2,400			$2,908			$2,505			$3,032
Provision for loan losses	302			395			615			846
Provision/(benefit) for unfunded commitments	(2		)	(3		)	2			(7		)
Loan charge-offs	(397		)	(563		)	(860		)	(1,178		)
Loan recoveries	47			58			88			102
Balance at end of period		$2,350			$2,795			$2,350			$2,795
Components:
ALLL		$2,300			$2,744
Unfunded commitments reserve¹	50			51
Allowance for credit losses		$2,350			$2,795

¹The unfunded commitments reserve is recorded in other liabilities in the Consolidated Balance Sheets.

Activity in the ALLL by segment is presented in the tables below:



	Three Months Ended June 30, 2012
(Dollars in millions)	Commercial			Residential			Consumer			Total
Balance at beginning of period		$901			$1,315			$132			$2,348
Provision for loan losses	49			230			23			302
Loan charge-offs	(94		)	(274		)	(29		)	(397		)
Loan recoveries	31			6			10			47
Balance at end of period		$887			$1,277			$136			$2,300

	Three Months Ended June 30, 2011
(Dollars in millions)	Commercial			Residential			Consumer			Total
Balance at beginning of period		$1,255			$1,440			$159			$2,854
Provision for loan losses	124			252			19			395
Loan charge-offs	(220		)	(303		)	(40		)	(563		)
Loan recoveries	41			6			11			58
Balance at end of period		$1,200			$1,395			$149			$2,744

	Six Months Ended June 30, 2012
(Dollars in millions)	Commercial			Residential			Consumer			Total
Balance at beginning of period		$964			$1,354			$139			$2,457
Provision for loan losses	87			488			40			615
Loan charge-offs	(220		)	(576		)	(64		)	(860		)
Loan recoveries	56			11			21			88
Balance at end of period		$887			$1,277			$136			$2,300

	Six Months Ended June 30, 2011
(Dollars in millions)	Commercial			Residential			Consumer			Total
Balance at beginning of period		$1,303			$1,498			$173			$2,974
Provision for loan losses	232			574			40			846
Loan charge-offs	(405		)	(688		)	(85		)	(1,178		)
Loan recoveries	70			11			21			102
Balance at end of period		$1,200			$1,395			$149			$2,744

As discussed in Note 1, “Significant Accounting Policies,” to the Company's Annual Report on Form 10-K for the year ended December 31, 2011, the ALLL is composed of both specific allowances for certain nonaccrual loans and TDRs and general allowances grouped into loan pools based on similar characteristics. No allowance is required for loans carried at fair value. Additionally, the Company records an immaterial allowance for loan products that are guaranteed by government agencies, as there is nominal risk of principal loss.

The Company’s LHFI portfolio and related ALLL is shown in the tables below:



	As of June 30, 2012
	Commercial				Residential				Consumer				Total
(Dollars in millions)	Carrying Value		Associated ALLL		Carrying Value		Associated ALLL		Carrying Value		Associated ALLL		Carrying Value		Associated ALLL
Individually evaluated		$318		$18		$3,016		$355		$51		$8		$3,385		$381
Collectively evaluated	57,495		869		42,781		922		20,493		128		120,769		1,919
Total evaluated	57,813		887		45,797		1,277		20,544		136		124,154		2,300
LHFI at fair value	1		—		405		—		—		—		406		—
Total LHFI		$57,814		$887		$46,202		$1,277		$20,544		$136		$124,560		$2,300

	As of December 31, 2011
	Commercial				Residential				Consumer				Total
(Dollars in millions)	Carrying Value		Associated ALLL		Carrying Value		Associated ALLL		Carrying Value		Associated ALLL		Carrying Value		Associated ALLL
Individually evaluated		$412		$34		$3,141		$405		$39		$9		$3,592		$448
Collectively evaluated	55,458		930		43,088		949		19,924		130		118,470		2,009
Total evaluated	55,870		964		46,229		1,354		19,963		139		122,062		2,457
LHFI at fair value	2		—		431		—		—		—		433		—
Total LHFI		$55,872		$964		$46,660		$1,354		$19,963		$139		$122,495		$2,457