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Allowance for Credit Losses and Reserve for Unfunded Lending Commitments (Tables) | 3 Months Ended
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Mar. 31, 2020
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] |
Allowance for Credit Losses on Financing Receivables | The table below summarizes changes in the allowance for credit losses and reserve for unfunded lending commitments by portfolio segment for the three months ended March 31, 2020 and 2019. The allowance balance as of March 31, 2020 reflects the cumulative effects from adoption of the CECL standard and the change to include finance charge and fee reserve in the allowance for credit losses. The reserve for unfunded lending commitments balance as of March 31, 2020 also reflects the cumulative effects from adoption of the CECL standard, including the component of loss sharing agreements with the GSEs on multifamily commercial real estate loans that are within the scope of the CECL standard. When developing an estimate of expected credit losses, we use both quantitative and qualitative methods in considering all available information relevant to assessing collectability. Management will consider and may make adjustments for qualitative factors, which represent management’s judgment of the imprecision and risks inherent in the processes and assumptions used in establishing the allowance for credit losses. Our allowance for credit losses increased by $6.9 billion to $14.1 billion as of March 31, 2020 from December 31, 2019, driven by adoption of the CECL standard and the allowance build due to the COVID-19 pandemic. Our allowance build reflects our expectation of economic worsening, including an increase in unemployment, and significant uncertainty in financial markets. Table 4.1: Allowance for Credit Losses and Reserve for Unfunded Lending Commitments Activity
|  | Three Months Ended March 31, 2020
(Dollars in millions) |  | Credit Card |  | Consumer Banking |  | Commercial Banking |  | Total
Allowance for credit losses: |  |  |  |  |  |  |  |
Balance as of December 31, 2019 |  | $ | 5,395 |  |  | $ | 1,038 |  |  | $ | 775 |  |  | $ | 7,208 |
Cumulative effects from adoption of the CECL standard |  | 2,241 |  |  | 502 |  |  | 102 |  |  | 2,845 |
Finance charge and fee reserve reclassification(1) |  | 462 |  |  | 0 |  |  | 0 |  |  | 462 |
Balance as of January 1, 2020 |  | 8,098 |  |  | 1,540 |  |  | 877 |  |  | 10,515 |
Charge-offs |  | (1,849 | ) |  | (496 | ) |  | (112 | ) |  | (2,457 | )
Recoveries(2) |  | 413 |  |  | 250 |  |  | 3 |  |  | 666 |
Net charge-offs |  | (1,436 | ) |  | (246 | ) |  | (109 | ) |  | (1,791 | )
Provision for credit losses |  | 3,702 |  |  | 860 |  |  | 805 |  |  | 5,367 |
Allowance build for credit losses |  | 2,266 |  |  | 614 |  |  | 696 |  |  | 3,576 |
Other changes(3) |  | (18 | ) |  | 0 |  |  | 0 |  |  | (18 | )
Balance as of March 31, 2020 |  | 10,346 |  |  | 2,154 |  |  | 1,573 |  |  | 14,073 |
Reserve for unfunded lending commitments: |  |  |  |  |  |  |  |
Balance as of December 31, 2019 |  | 0 |  |  | 5 |  |  | 130 |  |  | 135 |
Cumulative effects from adoption of the CECL standard |  | 0 |  |  | (5 | ) |  | 42 |  |  | 37 |
Balance as of January 1, 2020 |  | 0 |  |  | 0 |  |  | 172 |  |  | 172 |
Provision for losses on unfunded lending commitments |  | 0 |  |  | 0 |  |  | 51 |  |  | 51 |
Balance as of March 31, 2020 |  | 0 |  |  | 0 |  |  | 223 |  |  | 223 |
Combined allowance and reserve as of March 31, 2020 |  | $ | 10,346 |  |  | $ | 2,154 |  |  | $ | 1,796 |  |  | $ | 14,296 |
|  | Three Months Ended March 31, 2019
(Dollars in millions) |  | Credit Card |  | Consumer Banking |  | Commercial Banking |  | Total
Allowance for loan and lease losses: |  |  |  |  |  |  |  |
Balance as of December 31, 2018 |  | $ | 5,535 |  |  | $ | 1,048 |  |  | $ | 637 |  |  | $ | 7,220 |
Charge-offs |  | (1,782 | ) |  | (471 | ) |  | (20 | ) |  | (2,273 | )
Recoveries(2) |  | 418 |  |  | 250 |  |  | 6 |  |  | 674 |
Net charge-offs |  | (1,364 | ) |  | (221 | ) |  | (14 | ) |  | (1,599 | )
Provision for loan and lease losses |  | 1,389 |  |  | 235 |  |  | 60 |  |  | 1,684 |
Allowance build for loan and lease losses |  | 25 |  |  | 14 |  |  | 46 |  |  | 85 |
Other changes(3) |  | 8 |  |  | 0 |  |  | 0 |  |  | 8 |
Balance as of March 31, 2019 |  | 5,568 |  |  | 1,062 |  |  | 683 |  |  | 7,313 |
Reserve for unfunded lending commitments: |  |  |  |  |  |  |  |
Balance as of December 31, 2018 |  | 0 |  |  | 4 |  |  | 118 |  |  | 122 |
Provision for losses on unfunded lending commitments |  | 0 |  |  | 0 |  |  | 9 |  |  | 9 |
Balance as of March 31, 2019 |  | 0 |  |  | 4 |  |  | 127 |  |  | 131 |
Combined allowance and reserve as of March 31, 2019 |  | $ | 5,568 |  |  | $ | 1,066 |  |  | $ | 810 |  |  | $ | 7,444 |
_________
(1) | Concurrent with our adoption of the CECL standard in the first quarter of 2020, we reclassified our finance charge and fee reserve to our allowance for credit losses, with a corresponding increase to credit card loans held for investment.
(2) | The amount and timing of recoveries is impacted by our collection strategies, which are based on customer behavior and risk profile and include direct customer communications, repossession of collateral, the periodic sale of charged off loans as well as additional strategies, such as litigation.
(3) Represents foreign currency translation adjustments.
Schedule of Loss Sharing Arrangement Impact | The table below summarizes the changes in the estimated reimbursements from these partners for the three months ended March 31, 2020 and 2019. Table 4.2: Summary of Credit Card Partnership Loss Sharing Arrangements Impacts
|  | Three Months Ended March 31,
(Dollars in millions) |  | 2020 |  | 2019
Estimated reimbursements from partners, beginning of period(1) |  | $ | 2,166 |  |  | $ | 379 |
Amounts due from partners which reduced net charge-offs |  | (302 | ) |  | (108 | )
Amounts estimated to be charged to partners which reduced provision for credit losses |  | 789 |  |  | 171 |
Estimated reimbursements from partners, end of period |  | $ | 2,653 |  |  | $ | 442 |
__________ (1) Includes effects from adoption of the CECL standard in the first quarter of 2020.

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