Bank of America 2013 Annual Report Download - page 197

Bank of America 2013 195
NOTE 5 Allowance for Credit Losses
The table below summarizes the changes in the allowance for credit losses by portfolio segment for 2013, 2012 and 2011.
2013
(Dollars in millions)
Home
Loans
Credit Card
and Other
Consumer Commercial
Total
Allowance
Allowance for loan and lease losses, January 1 $ 14,933 $ 6,140 $ 3,106 $ 24,179
Loans and leases charged off (3,766)(5,495)(1,108) (10,369)
Recoveries of loans and leases previously charged off 879 1,141 452 2,472
Net charge-offs (2,887)(4,354)(656) (7,897)
Write-offs of PCI loans (2,336)——
(2,336)
Provision for loan and lease losses (1,124) 3,139 1,559 3,574
Other (68) (20) (4)(92)
Allowance for loan and lease losses, December 31 8,518 4,905 4,005 17,428
Reserve for unfunded lending commitments, January 1 — — 513 513
Provision for unfunded lending commitments ——(18) (18)
Other ——(11) (11)
Reserve for unfunded lending commitments, December 31 — — 484 484
Allowance for credit losses, December 31 $ 8,518 $ 4,905 $ 4,489 $ 17,912
2012
Allowance for loan and lease losses, January 1 $ 21,079 $ 8,569 $ 4,135 $ 33,783
Loans and leases charged off (7,849) (7,727) (2,096) (17,672)
Recoveries of loans and leases previously charged off 496 1,519 749 2,764
Net charge-offs (7,353) (6,208) (1,347) (14,908)
Write-offs of PCI loans (2,820) — — (2,820)
Provision for loan and lease losses 4,073 3,899 338 8,310
Other (46) (120) (20) (186)
Allowance for loan and lease losses, December 31 14,933 6,140 3,106 24,179
Reserve for unfunded lending commitments, January 1 — — 714 714
Provision for unfunded lending commitments — — (141) (141)
Other — — (60) (60)
Reserve for unfunded lending commitments, December 31 — — 513 513
Allowance for credit losses, December 31 $ 14,933 $ 6,140 $ 3,619 $ 24,692
2011
Allowance for loan and lease losses, January 1 $ 19,252 $ 15,463 $ 7,170 $ 41,885
Loans and leases charged off (9,291) (12,247) (3,204) (24,742)
Recoveries of loans and leases previously charged off 894 2,124 891 3,909
Net charge-offs (8,397) (10,123) (2,313) (20,833)
Provision for loan and lease losses 10,300 4,025 (696) 13,629
Other (76) (796) (26) (898)
Allowance for loan and lease losses, December 31 21,079 8,569 4,135 33,783
Reserve for unfunded lending commitments, January 1 — — 1,188 1,188
Provision for unfunded lending commitments — — (219) (219)
Other — — (255) (255)
Reserve for unfunded lending commitments, December 31 — — 714 714
Allowance for credit losses, December 31 $ 21,079 $ 8,569 $ 4,849 $ 34,497
In 2013, for the PCI loan portfolio, the Corporation recorded a
benefit of $707 million in the provision for credit losses with a
corresponding decrease in the valuation allowance included as
part of the allowance for loan and lease losses. This compared to
a benefit of $103 million in 2012 and expense of $2.2 billion in
2011. Write-offs in the PCI loan portfolio totaled $2.3 billion and
$2.8 billion with a corresponding decrease in the PCI valuation
allowance during 2013 and 2012. There were no write-offs in the
PCI loan portfolio in 2011. Write-offs in 2013 included certain PCI
loans that were ineligible for the National Mortgage Settlement,
but had characteristics similar to the eligible loans and the
expectation of future cash proceeds was considered remote. Write-
offs of PCI loans in 2012 primarily related to the National Mortgage
Settlement. The valuation allowance associated with the PCI loan
portfolio was $2.5 billion, $5.5 billion and $8.5 billion at
December 31, 2013, 2012 and 2011, respectively.
The “Other” amount under allowance for loan and lease losses
primarily represents the net impact of portfolio sales,
consolidations and deconsolidations, and foreign currency
translation adjustments. The 2011 amount also includes a $449
million reduction in the allowance for loan and lease losses related
to Canadian consumer card loans that were transferred to LHFS.
The “Other” amount under the reserve for unfunded lending
commitments primarily represents accretion of the Merrill Lynch
& Co., Inc. (Merrill Lynch) purchase accounting adjustment.