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Allowance for Credit Losses and Reserve for Unfunded Lending Commitments (Tables)

9 Months Ended

Sep. 30, 2024

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 and nine months ended September 30, 2024 and 2023. Our allowance for credit losses increased by $1.2 billion to $16.5 billion as of September 30, 2024 from December 31, 2023.

Table 5.1: Allowance for Credit Losses and Reserve for Unfunded Lending Commitments Activity


	Three Months Ended September 30, 2024
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking		Total




























Allowance for credit losses:
Balance as of June 30, 2024	$	13,040	$	2,065	$	1,544	$	16,649


Charge-offs	(2,632)		(707)		(88)		(3,427)
Recoveries(1)	478		306		39		823
Net charge-offs	(2,154)		(401)		(49)		(2,604)
Provision for credit losses	2,084		351		35		2,470
Allowance release for credit losses	(70)		(50)		(14)		(134)
Other changes(2)	19		0		0		19
Balance as of September 30, 2024	12,989		2,015		1,530		16,534
Reserve for unfunded lending commitments:
Balance as of June 30, 2024	0		0		129		129
Provision for losses on unfunded lending commitments	0		0		13		13
Balance as of September 30, 2024	0		0		142		142
Combined allowance and reserve as of September 30, 2024	$	12,989	$	2,015	$	1,672	$	16,676


	Nine Months Ended September 30, 2024
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking		Total




























Allowance for credit losses:
Balance as of December 31, 2023	$	11,709	$	2,042	$	1,545	$	15,296


Charge-offs	(7,892)		(2,003)		(166)		(10,061)
Recoveries(1)	1,273		869		55		2,197
Net charge-offs	(6,619)		(1,134)		(111)		(7,864)
Provision for credit losses	7,888		1,107		96		9,091
Allowance build (release) for credit losses(3)	1,269		(27)		(15)		1,227
Other changes(2)	11		0		0		11
Balance as of September 30, 2024	12,989		2,015		1,530		16,534
Reserve for unfunded lending commitments:
Balance as of December 31, 2023	0		0		158		158
Provision (benefit) for losses on unfunded lending commitments	0		0		(16)		(16)
Balance as of September 30, 2024	0		0		142		142
Combined allowance and reserve as of September 30, 2024	$	12,989	$	2,015	$	1,672	$	16,676


	Three Months Ended September 30, 2023
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking		Total
Allowance for credit losses:
Balance as of June 30, 2023	$	10,976	$	2,185	$	1,485	$	14,646
Charge-offs	(1,925)		(596)		(60)		(2,581)
Recoveries(1)	333		247		2		582
Net charge-offs	(1,592)		(349)		(58)		(1,999)
Provision for credit losses	1,953		213		155		2,321
Allowance build (release) for credit losses	361		(136)		97		322
Other changes(2)	(13)		0		0		(13)
Balance as of September 30, 2023	11,324		2,049		1,582		14,955
Reserve for unfunded lending commitments:
Balance as of June 30, 2023	0		0		197		197
Provision (benefit) for losses on unfunded lending commitments	0		0		(39)		(39)
Balance as of September 30, 2023	0		0		158		158
Combined allowance and reserve as of September 30, 2023	$	11,324	$	2,049	$	1,740	$	15,113


	Nine Months Ended September 30, 2023
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking		Total
Allowance for credit losses:
Balance as of December 31, 2022	$	9,545	$	2,237	$	1,458	$	13,240
Cumulative effects of accounting standards adoption(4)	(63)		0		0		(63)
Balance as of January 1, 2023	9,482		2,237		1,458		13,177
Charge-offs	(5,481)		(1,653)		(462)		(7,596)
Recoveries(1)	992		718		5		1,715
Net charge-offs	(4,489)		(935)		(457)		(5,881)
Provision for credit losses	6,298		747		581		7,626
Allowance build (release) for credit losses	1,809		(188)		124		1,745
Other changes(2)	33		0		0		33
Balance as of September 30, 2023	11,324		2,049		1,582		14,955
Reserve for unfunded lending commitments:
Balance as of December 31, 2022	0		0		218		218
Provision (benefit) for losses on unfunded lending commitments	0		0		(60)		(60)
Balance as of September 30, 2023	0		0		158		158
Combined allowance and reserve as of September 30, 2023	$	11,324	$	2,049	$	1,740	$	15,113

________

(1)The amount and timing of recoveries are 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.

(2)Primarily represents foreign currency translation adjustments in the three and nine months ended September 30, 2024 as well as the three months ended September 30, 2023. Primarily represents the initial allowance for purchased credit-deteriorated (“PCD”) loans in the nine months ended September 30, 2023. The initial allowance of PCD loans was $0 million and $32 million for the nine months ended September 30, 2024 and 2023, respectively.

(3)The termination of our Walmart program agreement, effective May 21, 2024, (“Walmart Program Termination”) resulted in an allowance for credit losses build in Domestic Card of $826 million in the second quarter of 2024.

(4)Impact from the adoption of ASU No. 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings (“TDR”) and Vintage Disclosures as of January 1, 2023.

Credit Quality Indicator

The table below presents our credit card portfolio by delinquency status as of September 30, 2024 and December 31, 2023.

Table 4.3: Credit Card Delinquency Status


	September 30, 2024						December 31, 2023
(Dollars in millions)	Revolving Loans		Revolving Loans Converted to Term		Total		Revolving Loans		Revolving Loans Converted to Term		Total
Credit Card:
Domestic credit card:
Current	$	142,201	$	432	$	142,633	$	140,521	$	339	$	140,860
30-59 days	1,952		30		1,982		1,940		28		1,968
60-89 days	1,450		19		1,469		1,454		17		1,471
Greater than 90 days	3,289		27		3,316		3,339		28		3,367
Total domestic credit card	148,892		508		149,400		147,254		412		147,666

International card businesses:
Current	6,877		37		6,914		6,521		31		6,552
30-59 days	111		5		116		112		4		116
60-89 days	71		4		75		72		4		76
Greater than 90 days	142		4		146		132		5		137
Total international card businesses	7,201		50		7,251		6,837		44		6,881
Total credit card	$	156,093	$	558	$	156,651	$	154,091	$	456	$	154,547

The table below presents our consumer banking portfolio of loans held for investment by credit quality indicator as of September 30, 2024 and December 31, 2023. We present our auto loan portfolio by Fair Isaac Corporation (“FICO”) scores at origination and our retail banking loan portfolio by delinquency status, which includes all past due loans, both performing and nonperforming.

Table 4.4: Consumer Banking Portfolio by Vintage Year


	September 30, 2024
	Term Loans by Vintage Year
(Dollars in millions)	2024		2023		2022		2021		2020		Prior		Total Term Loans		Revolving Loans		Revolving Loans Converted to Term		Total

Auto—At origination FICO scores:(1)
Greater than 660	$	12,790	$	9,219	$	9,214	$	6,501	$	1,832	$	578	$	40,134	$	0	$	0	$	40,134
621-660	4,316		3,827		3,262		2,291		811		330		14,837		0		0		14,837
620 or below	6,045		5,331		4,071		2,935		1,453		699		20,534		0		0		20,534
Total auto	23,151		18,377		16,547		11,727		4,096		1,607		75,505		0		0		75,505

Retail banking—Delinquency status:
Current	113		78		92		52		54		494		883		342		4		1,229
30-59 days	0		0		0		0		0		2		2		11		0		13
60-89 days	0		0		0		0		0		0		0		2		0		2
Greater than 90 days	0		0		0		0		1		7		8		1		0		9
Total retail banking	113		78		92		52		55		503		893		356		4		1,253
Total consumer banking	$	23,264	$	18,455	$	16,639	$	11,779	$	4,151	$	2,110	$	76,398	$	356	$	4	$	76,758


	December 31, 2023
	Term Loans by Vintage Year
(Dollars in millions)	2023		2022		2021		2020		2019		Prior		Total Term Loans		Revolving Loans		Revolving Loans Converted to Term		Total

Auto—At origination FICO scores:(1)
Greater than 660	$	12,219	$	12,593	$	9,505	$	3,124	$	1,213	$	309	$	38,963	$	0	$	0	$	38,963
621-660	4,863		4,432		3,346		1,337		592		192		14,762		0		0		14,762
620 or below	6,647		5,539		4,283		2,349		1,131		401		20,350		0		0		20,350
Total auto	23,729		22,564		17,134		6,810		2,936		902		74,075		0		0		74,075

Retail banking—Delinquency status:
Current	98		157		57		65		117		468		962		363		4		1,329
30-59 days	1		0		1		1		0		1		4		11		0		15
60-89 days	0		0		0		0		0		1		1		2		0		3
Greater than 90 days	0		0		0		0		0		8		8		6		1		15
Total retail banking	99		157		58		66		117		478		975		382		5		1,362
Total consumer banking	$	23,828	$	22,721	$	17,192	$	6,876	$	3,053	$	1,380	$	75,050	$	382	$	5	$	75,437

__________

(1)Amounts represent period-end loans held for investment in each credit score category. Auto credit scores generally represent average FICO scores obtained from three credit bureaus at the time of application and are not refreshed thereafter. Balances for which no credit score is available or the credit score is invalid are included in the 620 or below category.

The following table presents our commercial banking portfolio of loans held for investment by internal risk ratings as of September 30, 2024 and December 31, 2023. The internal risk rating status includes all past due loans, both performing and nonperforming.

Table 4.5: Commercial Banking Portfolio by Internal Risk Ratings


	September 30, 2024
	Term Loans by Vintage Year
(Dollars in millions)	2024		2023		2022		2021		2020		Prior		Total Term Loans		Revolving Loans		Revolving Loans Converted to Term		Total
Internal risk rating:(1)
Commercial and multifamily real estate
Noncriticized	$	1,262	$	2,300	$	3,643	$	2,265	$	965	$	5,096	$	15,531	$	12,591	$	50	$	28,172
Criticized performing	53		91		1,525		294		128		1,048		3,139		161		97		3,397
Criticized nonperforming	23		0		14		141		83		341		602		28		0		630
Total commercial and multifamily real estate	1,338		2,391		5,182		2,700		1,176		6,485		19,272		12,780		147		32,199
Commercial and industrial
Noncriticized	4,106		6,046		10,197		5,770		2,762		7,001		35,882		14,637		144		50,663
Criticized performing	6		193		781		811		118		367		2,276		978		0		3,254
Criticized nonperforming	62		13		128		17		189		120		529		189		0		718
Total commercial and industrial	4,174		6,252		11,106		6,598		3,069		7,488		38,687		15,804		144		54,635
Total commercial banking	$	5,512	$	8,643	$	16,288	$	9,298	$	4,245	$	13,973	$	57,959	$	28,584	$	291	$	86,834


	December 31, 2023
	Term Loans by Vintage Year
(Dollars in millions)	2023		2022		2021		2020		2019		Prior		Total Term Loans		Revolving Loans		Revolving Loans Converted to Term		Total
Internal risk rating:(1)
Commercial and multifamily real estate
Noncriticized	$	3,068	$	4,665	$	2,773	$	1,019	$	2,104	$	3,670	$	17,299	$	12,565	$	25	$	29,889
Criticized performing	148		1,494		706		284		463		904		3,999		133		0		4,132
Criticized nonperforming	65		26		124		0		47		163		425		0		0		425
Total commercial and multifamily real estate	3,281		6,185		3,603		1,303		2,614		4,737		21,723		12,698		25		34,446
Commercial and industrial
Noncriticized	6,909		11,935		6,994		3,566		2,359		5,117		36,880		14,822		167		51,869
Criticized performing	353		706		655		237		348		349		2,648		1,189		0		3,837
Criticized nonperforming	13		53		30		18		123		68		305		31		0		336
Total commercial and industrial	7,275		12,694		7,679		3,821		2,830		5,534		39,833		16,042		167		56,042
Total commercial banking	$	10,556	$	18,879	$	11,282	$	5,124	$	5,444	$	10,271	$	61,556	$	28,740	$	192	$	90,488

__________

(1)Criticized exposures correspond to the “Special Mention,” “Substandard” and “Doubtful” asset categories defined by bank regulatory authorities.

The table below presents gross charge-offs for loans held for investment by vintage year during the nine months ended September 30, 2024.

Table 5.2: Gross Charge-Offs by Vintage Year


	Nine Months Ended September 30, 2024
	Term Loans by Vintage Year
(Dollars in millions)	2024		2023		2022		2021		2020		Prior		Total Term Loans		Revolving Loans		Revolving Loans Converted to Term		Total
Credit Card
Domestic credit card	N/A		N/A		N/A		N/A		N/A		N/A		N/A		$	7,425	$	84	$	7,509
International card business	N/A		N/A		N/A		N/A		N/A		N/A		N/A		373		10		383
Total credit card	N/A		N/A		N/A		N/A		N/A		N/A		N/A		7,798		94		7,892
Consumer Banking
Auto	$	70	$	474	$	630	$	457	$	184	$	126	$	1,941	0		0		1,941
Retail banking	1		0		0		0		0		3		4		57		1		62
Total consumer banking	71		474		630		457		184		129		1,945		57		1		2,003
Commercial Banking
Commercial and multifamily real estate	0		0		5		31		0		49		85		0		0		85
Commercial and industrial	0		0		46		5		16		4		71		10		0		81
Total commercial banking	0		0		51		36		16		53		156		10		0		166
Total	$	71	$	474	$	681	$	493	$	200	$	182	$	2,101	$	7,865	$	95	$	10,061

Schedule of Loss Sharing Arrangement Impact

The table below summarizes the changes in the estimated reimbursements from these partners for the three and nine months ended September 30, 2024 and 2023.

Table 5.3: Summary of Credit Card Partnership Loss Sharing Arrangements Impacts



	Three Months Ended September 30,
(Dollars in millions)	2024		2023
Estimated reimbursements from partners, beginning of period	$	1,210	$	1,908
Amounts due from partners for charged off loans	(157)		(249)
Change in estimated partner reimbursements that decreased provision for credit losses	102		319
Estimated reimbursements from partners, end of period	$	1,155	$	1,978


	Nine Months Ended September 30,
(Dollars in millions)	2024		2023
Estimated reimbursements from partners, beginning of period	$	2,014	$	1,558
Amounts due from partners for charged off loans	(734)		(681)
Change in estimated partner reimbursements that (increased) decreased provision for credit losses	(125)		1,101
Estimated reimbursements from partners, end of period	$	1,155	$	1,978