STI 2018 Annual Report

43 ALLOWANCE FOR CREDIT LOSSES The allowance for credit losses consists of the ALLL and the reserve for unfunded commitments. A rollforward of our allowance for credit losses and summarized credit loss experience is shown in Table 9. See Note 1, "Significant Accounting Policies," and Note 8, "Allowance for Credit Losses," to the Consolidated Financial Statements in this Form 10-K as well as the “Critical Accounting Policies” section of this MD&A for further information regarding our ALLL accounting policy, determination, and allocation. Summary of Credit Losses Experience Table 9 Year Ended December 31 (Dollars in millions) 2018 2017 2016 2015 2014 Allowance for Credit Losses Balance - beginning of period $1,814 $1,776 $1,815 $1,991 $2,094 (Benefit)/provision for unfunded commitments (10) 12 4 9 4 Provision for loan losses: Commercial LHFI 86 108 329 133 111 Consumer LHFI 132 289 111 23 227 Total provision for loan losses 218 397 440 156 338 Charge-offs: Commercial LHFI (131) (167) (287) (117) (128) Consumer LHFI (322) (324) (304) (353) (479) Total charge-offs (453) (491) (591) (470) (607) Recoveries: Commercial LHFI 24 40 35 45 57 Consumer LHFI 91 84 73 84 105 Total recoveries 115 124 108 129 162 Net charge-offs (338) (367) (483) (341) (445) Other 1 — (4) — — — Balance - end of period $1,684 $1,814 $1,776 $1,815 $1,991 Components: ALLL $1,615 $1,735 $1,709 $1,752 $1,937 Unfunded commitments reserve 2 69 79 67 63 54 Allowance for credit losses $1,684 $1,814 $1,776 $1,815 $1,991 Average LHFI $145,714 $144,216 $141,118 $133,558 $130,874 Period-end LHFI outstanding 151,839 143,181 143,298 136,442 133,112 Ratios: ALLL to period-end LHFI 3 1.06% 1.21% 1.19% 1.29% 1.46% ALLL to NPLs 4 3.10x 2.59x 2.03x 2.62x 3.07x Net charge-offs to total average LHFI 0.23% 0.25% 0.34% 0.26% 0.34% 1 Related to loans disposed in connection with the sale of PAC. For additional information regarding the sale of PAC, see Note 3, “Acquisitions/Dispositions” to the Consolidated Financial Statements in this Form 10-K. 2 The unfunded commitments reserve is recorded in Other liabilities in the Consolidated Balance Sheets. 3 $163 million, $196 million, $222 million, $257 million, and $272 million of LHFI measured at fair value at December 31, 2018, 2017, 2016, 2015, and 2014, respectively, were excluded from period-end LHFI in the calculation, as no allowance is recorded for loans measured at fair value. We believe that this presentation more appropriately reflects the relationship between the ALLL and loans that attract an allowance. 4 $5 million, $4 million, $3 million, $3 million, and $3 million of NPLs measured at fair value at December 31, 2018, 2017, 2016, 2015, and 2014, respectively, were excluded from NPLs in the calculation, as no allowance is recorded for NPLs measured at fair value. We believe that this presentation more appropriately reflects the relationship between the ALLL and NPLs that attract an allowance.