v3.26.1
Allowance for Credit Losses and Reserve for Unfunded Lending Commitments
 3 Months Ended
Mar. 31, 2026
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]  
Allowance for Credit Losses and Reserve for Unfunded Lending Commitments
NOTE 5—ALLOWANCE FOR CREDIT LOSSES AND RESERVE FOR UNFUNDED LENDING COMMITMENTS
Our allowance for credit losses represents management’s current estimate of expected credit losses over the contractual terms of our loans held for investment as of each balance sheet date. Expected recoveries of amounts previously charged off or expected to be charged off are recognized within the allowance. Significant judgment is applied in our estimation of lifetime credit losses. When developing an estimate of expected credit losses, we use both quantitative and qualitative methods in considering all available information relevant to assessing collectibility. This may include internal information, external information, or a combination of both relating to past events, current conditions and reasonable and supportable forecasts. Our estimate of expected credit losses includes a reasonable and supportable forecast period of one year and then reverts over a one-year period to historical losses at each relevant loss component of the estimate. Management will consider and may qualitatively adjust for conditions, changes and trends in loan portfolios that may not be captured in modeled results. These adjustments are referred to as qualitative factors and represent management’s judgment of the imprecision and risks inherent in the processes and assumptions used in establishing the allowance for credit losses.
We have unfunded lending commitments in our Commercial Banking business that are not unconditionally cancellable by us and for which we estimate expected credit losses in establishing a reserve. This reserve is measured using the same measurement objectives as the allowance for loans held for investment. We build or release the reserve for unfunded lending commitments through the provision for credit losses in our consolidated statements of income. The related reserve for unfunded lending commitments is included in other liabilities on our consolidated balance sheets.
See “Part II—Item 8. Financial Statements and Supplementary Data—Note 1—Summary of Significant Accounting Policies” in our 2025 Form 10-K for further discussion of the methodology and policies for determining our allowance for credit losses, as well as information on our reserve for unfunded lending commitments.
Allowance for Credit Losses and Reserve for Unfunded Lending Commitments Activity
The table below summarizes changes in the allowance for credit losses and reserve for unfunded lending commitments by segment for the three months ended March 31, 2026 and 2025. Our allowance for credit losses increased by $221 million to $23.6 billion as of March 31, 2026 from December 31, 2025.
Table 5.1: Allowance for Credit Losses and Reserve for Unfunded Lending Commitments Activity
Three Months Ended March 31, 2026
(Dollars in millions)Credit CardConsumer BankingCommercial BankingTotal
Allowance for credit losses:
Balance as of December 31, 2025$20,066 $1,892 $1,451 $23,409 
Charge-offs
(4,641)(735)(69)(5,445)
Recoveries(1)
1,222 371 5 1,598 
Net charge-offs(3,419)(364)(64)(3,847)
Provision for credit losses
3,411 519 147 4,077 
Allowance build (release) for credit losses(8)155 83 230 
Other changes(2)
(9)0 0 (9)
Balance as of March 31, 202620,049 2,047 1,534 23,630 
Reserve for unfunded lending commitments:
Balance as of December 31, 20250 0 142 142 
Provision (benefit) for losses on unfunded lending commitments0 0 (9)(9)
Balance as of March 31, 20260 0 133 133 
Combined allowance and reserve as of March 31, 2026$20,049 $2,047 $1,667 $23,763 

Three Months Ended March 31, 2025
(Dollars in millions)Credit CardConsumer BankingCommercial BankingTotal
Allowance for credit losses:
Balance as of December 31, 2024$12,974 $1,884 $1,400 $16,258 
Charge-offs
(2,978)(676)(38)(3,692)
Recoveries(1)
579 363 14 956 
Net charge-offs(2,399)(313)(24)(2,736)
Provision for credit losses
1,926 301 141 2,368 
Allowance build (release) for credit losses
(473)(12)117 (368)
Other changes(2)
9 0 0 9 
Balance as of March 31, 202512,510 1,872 1,517 15,899 
Reserve for unfunded lending commitments:
Balance as of December 31, 20240 0 143 143 
Provision (benefit) for losses on unfunded lending commitments0 0 1 1 
Balance as of March 31, 20250 0 144 144 
Combined allowance and reserve as of March 31, 2025$12,510 $1,872 $1,661 $16,043 
_________
(1)Third-party collection expenses of $244 million and $108 million for the three months ended March 31, 2026 and 2025, respectively, are included in other non-interest expense.
(2)Primarily represents foreign currency translation adjustments.
We charge off loans when we determine that the loan is uncollectible. The amortized cost basis, excluding accrued interest, is charged off as a reduction to the allowance for credit losses in accordance with our accounting policies. For more information, see “Part II—Item 8. Financial Statements and Supplementary Data—Note 1—Summary of Significant Accounting Policies” in our 2025 Form 10-K.
Expected recoveries of amounts previously charged off or expected to be charged off are recognized within the allowance, with a corresponding reduction to our provision for credit losses.
The table below presents gross charge-offs for loans held for investment by vintage year during the three months ended March 31, 2026.
Table 5.2: Gross Charge-Offs by Vintage Year
Three Months Ended March 31, 2026
Term Loans by Vintage Year
(Dollars in millions)20262025202420232022PriorTotal Term LoansRevolving LoansRevolving Loans Converted to TermTotal
Credit Card
Domestic credit cardN/AN/AN/AN/AN/AN/AN/A$4,257 $113 $4,370 
Personal loans
$0 $24 $41 $35 $15 $6 $121 N/AN/A121 
International card businessN/AN/AN/AN/AN/AN/AN/A145 5 150 
Total credit card0 24 41 35 15 6 121 4,402 118 4,641 
Consumer Banking
Auto3 207 197 125 102 77 711 0 0 711 
Retail banking0 0 0 0 0 1 1 23 0 24 
Total consumer banking3 207 197 125 102 78 712 23 0 735 
Commercial Banking
Commercial and multifamily real estate0 0 0 0 0 3 3 0 0 3 
Commercial and industrial0 0 0 0 10 52 62 4 0 66 
Total commercial banking0 0 0 0 10 55 65 4 0 69 
Total$3 $231 $238 $160 $127 $139 $898 $4,429 $118 $5,445 
Credit Card Partnership Loss Sharing Arrangements
We have certain credit card partnership agreements that are presented within our consolidated financial statements on a net basis, in which our partner agrees to share a portion of the credit losses on the underlying loan portfolio. The expected reimbursements from these partners are netted against our allowance for credit losses. Our methodology for estimating reimbursements is consistent with the methodology we use to estimate the allowance for credit losses on our credit card loan receivables. These expected reimbursements result in reductions in net charge-offs and the provision for credit losses. See “Part II—Item 8. Financial Statements and Supplementary Data—Note 1—Summary of Significant Accounting Policies” in our 2025 Form 10-K for further discussion of our credit card partnership agreements.
The table below summarizes the changes in the estimated reimbursements from these partners for the three months ended March 31, 2026 and 2025.
Table 5.3: Summary of Credit Card Partnership Loss Sharing Arrangements Impacts
Three Months Ended March 31,
(Dollars in millions)20262025
Estimated reimbursements from partners, beginning of period$1,103 $1,010 
Amounts due from partners for charged off loans(173)(171)
Change in estimated partner reimbursements that decreased provision for credit losses
337 251 
Estimated reimbursements from partners, end of period$1,267 $1,090