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Allowance for Credit Losses and Reserve for Unfunded Lending Commitments (Tables)
 3 Months Ended
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.