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Allowance for Credit Losses

12 Months Ended

Dec. 31, 2011

Loans, Allowance for Credit Losses and Loans Held for Sale [Abstract]

9. Allowance for Credit Losses

An analysis of the allowance for credit losses is presented in the following table.


	2011			2010			2009
	(In millions)
Balance at beginning of year	$	852		$	1,602		$	1,027
Provision for credit losses		258			34			1,431
Charge-offs		(386	)		(806	)		(933	)
Recoveries		65			53			76
Allowance on loans transferred to held for sale		(46	)		(33	)		(12	)
Allowance related to bulk loan purchase from HSBC Finance		-			-			13
Other		-			2			-

Balance at end of year	$	743		$	852		$	1,602

The following table summarizes the changes in the allowance for credit losses by product and the related loan balance by product during the years ended December 31, 2011, 2010 and 2009:


	Commercial												Consumer
	Construction and Other Real Estate			Business Banking and Middle Market Enterprises			Global Banking			Other Comm’l			Residential Mortgage, Excl Home Equity Mortgages			Home Equity Mortgages			Credit Card			Auto Finance			Other Consumer			Total
	(in millions)
Year Ended December 31, 2011:
Allowance for credit losses – beginning of period	$	243		$	132		$	116		$	32		$	167		$	77		$	58		$	-		$	27		$	852
Provision charged to income		11			(3	)		31			(28	)		133			49			46			-			19			258
Charge offs		(51	)		(53	)		-			(6	)		(106	)		(70	)		(71	)		-			(29	)		(386	)
Recoveries		9			12			-			23			5			-			12			-			4			65

Net charge offs		(42	)		(41	)		-			17			(101	)		(70	)		(59	)		-			(25	)		(321	)
Allowance on loans transferred to held for sale		-			(10	)		(16	)		-			(7	)		(4	)		(6	)		-			(3	)		(46	)
Other		-			-			-			-			-			-			-			-			-			-

Allowance for credit losses – end of period	$	212		$	78		$	131		$	21		$	192		$	52		$	39		$	-		$	18		$	743

Ending balance: collectively evaluated for impairment	$	98		$	66		$	41		$	21		$	104		$	48		$	32		$	-		$	18		$	428
Ending balance: individually evaluated for impairment⁽¹⁾		114			12			90			-			88			4			7			-			-			315

Total allowance for credit losses	$	212		$	78		$	131		$	21		$	192		$	52		$	39		$	-		$	18		$	743

Loans:
Collectively evaluated for impairment	$	7,127		$	9,515		$	12,521		$	3,399		$	12,817		$	2,550		$	807		$	-		$	714		$	49,450
Individually evaluated for impairment		733			127			137			90			547			13			21			-			-			1,668
Loans carried at fair value less cost to sell		-			-			-			-			749			-			-			-			-			749

Total loans	$	7,860		$	9,642		$	12,658		$	3,489		$	14,113		$	2,563		$	828		$	-		$	714		$	51,867

Year Ended December 31, 2010:
Allowance for credit losses – beginning of period	$	303		$	184		$	301		$	119		$	347		$	185		$	80		$	36		$	47		$	1,602
Provision charged to income		101			19			(163	)		(35	)		(14	)		13			68			35			10			34
Charge offs		(173	)		(88	)		(24	)		(59	)		(170	)		(121	)		(98	)		(37	)		(36	)		(806	)
Recoveries		12			17			2			5			4			-			8			(1	)		6			53

Net charge offs		(161	)		(71	)		(22	)		(54	)		(166	)		(121	)		(90	)		(38	)		(30	)		(753	)
Allowance on loans transferred to held for sale		-			-			-			-			-			-			-			(33	)		-			(33	)
Other		-			-			-			2			-			-			-			-			-			2

Allowance for credit losses – end of period	$	243		$	132		$	116		$	32		$	167		$	77		$	58		$	-		$	27		$	852

Ending balance: collectively evaluated for impairment	$	159		$	106		$	44		$	26		$	118		$	74		$	49		$	-		$	27		$	603
Ending balance: individually evaluated for impairment⁽¹⁾		84			26			72			6			49			3			9			-			-			249

Total allowance for credit losses	$	243		$	132		$	116		$	32		$	167		$	77		$	58		$	-		$	27		$	852

Loans:
Collectively evaluated for impairment	$	7,473		$	7,793		$	10,640		$	2,970		$	12,411		$	3,812		$	1,223		$	-		$	1,039		$	47,361
Individually evaluated for impairment		755			152			105			115			394			8			27			-			-			1,556
Loans carried at fair value less cost to sell		-			-			-			-			892			-			-			-			-			892

Total loans	$	8,228		$	7,945		$	10,745		$	3,085		$	13,697		$	3,820		$	1,250		$	-		$	1,039		$	49,809

Year Ended December 31, 2009:
Allowance for credit losses – beginning of period	$	186		$	189		$	131		$	31		$	207		$	167		$	74		$	5		$	37		$	1,027
Provision charged to income		177			137			215			93			364			195			100			104			46			1,431
Charge offs		(64	)		(158	)		(45	)		(8	)		(235	)		(189	)		(100	)		(92	)		(42	)		(933	)
Recoveries		4			16			-			3			11			12			6			18			6			76

Net charge offs		(60	)		(142	)		(45	)		(5	)		(224	)		(177	)		(94	)		(74	)		(36	)		(857	)
Allowance on loans transferred to held for sale		-			-			-			-			-			-			-			(12	)		-			(12	)
Other		-			-			-			-			-			-						13			-			13

Allowance for credit losses – end of period	$	303		$	184		$	301		$	119		$	347		$	185		$	80		$	36		$	47		$	1,602

Ending balance: collectively evaluated for impairment	$	201		$	154		$	190		$	26		$	314		$	183		$	76		$	36		$	47		$	1,227
Ending balance: individually evaluated for impairment⁽¹⁾		102			30			111			93			33			2			4			-			-			375

Total allowance for credit losses	$	303		$	184		$	301		$	119		$	347		$	185		$	80		$	36		$	47		$	1,602

Loans:
Collectively evaluated for impairment	$	8,162		$	7,375		$	9,280		$	3,664		$	13,146		$	4,159		$	1,253		$	1,701		$	1,188		$	49,928
Individually evaluated for impairment		696			146			445			246			168			5			20			-			-			1,726
Loans carried at fair value less cost to sell		-			-			-			-			408			-			-			-			-			408

Total loans	$	8,858		$	7,521		$	9,725		$	3,910		$	13,722		$	4,164		$	1,273		$	1,701		$	1,188		$	52,062

⁽¹⁾

For consumer loans, these amounts represent TDR Loans for which we evaluate reserves using a discounted cash flow methodology. Each loan is individually identified as a TDR Loan and then grouped together with other TDR Loans with similar characteristics. The discounted cash flow analysis is then applied to these groups of TDR Loans.