BANK OF AMERICA CORP /DE/ | 2013 | FY | 3

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.

The table below presents the allowance and the carrying value of outstanding loans and leases by portfolio segment at December 31, 2013 and 2012.
 
 
 
 
 
 
 
 
Allowance and Carrying Value by Portfolio Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2013
(Dollars in millions)
Home
Loans
 
Credit Card
and Other
Consumer
 
Commercial
 
Total
Impaired loans and troubled debt restructurings (1)
 

 
 

 
 

 
 

Allowance for loan and lease losses (2)
$
1,231

 
$
579

 
$
277

 
$
2,087

Carrying value (3)
31,458

 
2,079

 
3,048

 
36,585

Allowance as a percentage of carrying value
3.91
%
 
27.85
%
 
9.09
%
 
5.70
%
Loans collectively evaluated for impairment
 

 
 

 
 

 
 

Allowance for loan and lease losses
$
4,794

 
$
4,326

 
$
3,728

 
$
12,848

Carrying value (3, 4)
285,015

 
185,969

 
385,357

 
856,341

Allowance as a percentage of carrying value (4)
1.68
%
 
2.33
%
 
0.97
%
 
1.50
%
Purchased credit-impaired loans
 

 
 
 
 

 
 

Valuation allowance
$
2,493

 
n/a

 
n/a

 
$
2,493

Carrying value gross of valuation allowance
25,265

 
n/a

 
n/a

 
25,265

Valuation allowance as a percentage of carrying value
9.87
%
 
n/a

 
n/a

 
9.87
%
Total
 

 
 

 
 

 
 

Allowance for loan and lease losses
$
8,518

 
$
4,905

 
$
4,005

 
$
17,428

Carrying value (3, 4)
341,738

 
188,048

 
388,405

 
918,191

Allowance as a percentage of carrying value (4)
2.49
%
 
2.61
%
 
1.03
%
 
1.90
%
 
December 31, 2012
Impaired loans and troubled debt restructurings (1)
 

 
 

 
 

 
 

Allowance for loan and lease losses (2)
$
1,700

 
$
1,139

 
$
475

 
$
3,314

Carrying value (3)
30,250

 
3,946

 
4,881

 
39,077

Allowance as a percentage of carrying value
5.62
%
 
28.86
%
 
9.73
%
 
8.48
%
Loans collectively evaluated for impairment
 

 
 

 
 

 
 
Allowance for loan and lease losses
$
7,697

 
$
5,001

 
$
2,631

 
$
15,329

Carrying value (3, 4)
304,701

 
187,419

 
341,502

 
833,622

Allowance as a percentage of carrying value (4)
2.53
%
 
2.67
%
 
0.77
%
 
1.84
%
Purchased credit-impaired loans
 

 
 

 
 

 
 
Valuation allowance
$
5,536

 
n/a

 
n/a

 
$
5,536

Carrying value gross of valuation allowance
26,118

 
n/a

 
n/a

 
26,118

Valuation allowance as a percentage of carrying value
21.20
%
 
n/a

 
n/a

 
21.20
%
Total
 

 
 

 
 

 
 
Allowance for loan and lease losses
$
14,933

 
$
6,140

 
$
3,106

 
$
24,179

Carrying value (3, 4)
361,069

 
191,365

 
346,383

 
898,817

Allowance as a percentage of carrying value (4)
4.14
%
 
3.21
%
 
0.90
%
 
2.69
%
(1) 
Impaired loans include nonperforming commercial loans and all TDRs, including both commercial and consumer TDRs. Impaired loans exclude nonperforming consumer loans unless they are TDRs, and all consumer and commercial loans accounted for under the fair value option.
(2) 
Allowance for loan and lease losses includes $36 million and $97 million related to impaired U.S. small business commercial loans at December 31, 2013 and 2012.
(3) 
Amounts are presented gross of the allowance for loan and lease losses.
(4) 
Outstanding loan and lease balances and ratios do not include loans accounted for under the fair value option of $10.0 billion and $9.0 billion at December 31, 2013 and 2012.
n/a = not applicable

us-gaap:AllowanceForCreditLossesTextBlock