Investor Presentaiton
Allowance for Credit Losses ("ACL") Build Over the Last Four Quarters
Over the last five quarters we have increased our total ACL by a net $162 million. A large part of this increase was attributable to our $9.8
billion cumulative combined growth in total outstanding loans and unfunded loan commitments. The increase in our overall ACL percentage
from 0.83% of total outstanding loans and unfunded loan commitments at June 30, 2022 to 1.00% at September 30, 2023 primarily reflected
changes in economic assumptions as the Fed increased the Fed funds target rate by 525 bps. Over the last five quarters, we maintained a
cautious outlook on macroeconomic conditions. Accordingly, in calculating our ACL, we have more heavily weighted the collective downside
scenarios, specifically Moody's S4 (Alternative Adverse Downside) and S6 (Stagflation) scenarios, than Moody's Baseline scenario. All of this
has resulted in cumulative provision expense of $194 million even as our cumulative net charge-offs were only $32 million.
ACL Period End Balances and Quarterly Growth
($ millions)
$500
1.10%
1.00%
$462
$450
0.95%
1.00%
$35
0.92%
0.87%
$33
$400
0.85%
0.90%
0.83%
$28
$350
$30
0.80%
$300
$36
$300
0.70%
$250
$200
0.50%
ACL at
6/30/2022
3Q22
4Q22
1Q23
2Q23
3Q23
ACL at
9/30/2023
Total ACL at Period End
ACL Build During Period
Total ACL % at Period End
0.60%
ACL % of Total Loans + Unfunded Commitment
We are particularly pleased to have reported record net income and record diluted earnings per share in each of the last four quarters
while achieving a substantial build in our ACL.
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