PNC Bank 2015 Annual Report Download - page 159

During 2015, $82 million of provision recapture was recorded
for purchased impaired loans compared to $91 million of
provision recapture during 2014. Charge-offs (which were
specifically for commercial loans greater than a defined
threshold) during 2015 were $12 million compared to $42
million during 2014. At December 31, 2015 and December 31,
2014, the ALLL on total purchased impaired loans was $.3
billion and $.9 billion, respectively. The decline in ALLL was
primarily due to the change in our derecognition policy. For
purchased impaired loan pools where an allowance has been
recognized, subsequent increases in the net present value of
cash flows will result in a provision recapture of any
previously recorded ALLL to the extent applicable, and/or a
reclassification from non-accretable difference to accretable
yield, which will be recognized prospectively. Individual loan
transactions where final dispositions have occurred (as noted
above) result in removal of the loans from their applicable
pools for cash flow estimation purposes. The cash flow re-
estimation process is completed quarterly to evaluate the
appropriateness of the ALLL associated with the purchased
impaired loans.
Activity for the accretable yield during 2015 and 2014
follows:
Table 66: Purchased Impaired Loans – Accretable Yield
In millions 2015 2014
January 1 $1,558 $2,055
Accretion (including excess cash recoveries) (466) (587)
Net reclassifications to accretable from non-
accretable 226 208
Disposals (68) (118)
December 31 $1,250 $1,558
N
OTE 5A LLOWANCES FOR L OAN AND L EASE
L OSSES AND U NFUNDED L OAN C OMMITMENTS
AND L ETTERS OF C REDIT
Allowance for Loan and Lease Losses
We maintain the ALLL at levels that we believe to be
appropriate to absorb estimated probable credit losses incurred
in the portfolios as of the balance sheet date. We use the two
main portfolio segments – Commercial Lending and
Consumer Lending – and develop and document the ALLL
under separate methodologies for each of these segments as
discussed in Note 1 Accounting Policies. A rollforward of the
ALLL and associated loan data follows.
The PNC Financial Services Group, Inc. – Form 10-K 141