STI 2018 Annual Report

44 Provision for Credit Losses The total provision for credit losses includes the provision for loan losses and the (benefit)/provision for unfunded commitments. The provision for loan losses is the result of a detailed analysis performed to estimate an appropriate and adequate ALLL. For 2018, the total provision for loan losses decreased $179 million compared to 2017, driven primarily by lower hurricane-related reserves and net charge-offs as well as improved economic and credit conditions resulting in a lower ALLL. Our quarterly review processes to determine the level of reserves and provision are informed by trends in our LHFI portfolio (including historical loss experience, expected loss calculations, delinquencies, performing status, size and composition of the loan portfolio, and concentrations within the portfolio) combined with a view on economic conditions. In addition to internal credit quality metrics, the ALLL estimate is impacted by other indicators of credit risk associated with the portfolio, such as geopolitical and economic risks, and the increasing availability of credit and resultant higher levels of leverage for consumers and commercial borrowers. Allowance for Loan and Lease Losses ALLL by Loan Segment Table 10 At December 31 (Dollars in millions) 2018 2017 2016 2015 2014 ALLL: Commercial LHFI $1,080 $1,101 $1,124 $1,047 $986 Consumer LHFI 535 634 585 705 951 Total $1,615 $1,735 $1,709 $1,752 $1,937 Segment ALLL as a % of total ALLL: Commercial LHFI 67% 63% 66% 60% 51% Consumer LHFI 33 37 34 40 49 Total 100% 100% 100% 100% 100% Segment LHFI as a % of total LHFI: Commercial LHFI 53% 53% 55% 55% 55% Consumer LHFI 47 47 45 45 45 Total 100% 100% 100% 100% 100% The ALLL decreased $120 million, or 7%, from December 31, 2017, to $1.6 billion at December 31, 2018. The decrease was due primarily to a reduction in the amount of reserves held for hurricane-related losses and improved economic and credit conditions, offset partially by loan growth. TheALLL to period- end LHFI ratio (excluding loans measured at fair value) decreased 15 basis points from December 31, 2017, to 1.06% at December 31, 2018. The ratio of the ALLL to NPLs (excluding NPLs measured at fair value) increased to 3.10x at December 31, 2018, compared to 2.59x at December 31, 2017, due to a decrease in NPLs, offset partially by a decrease in the ALLL.