Citigroup Inc.

17. ALLOWANCE FOR CREDIT LOSSESIn millions of dollars 2010 2009 2008Allowance for loan losses at beginning of year $ 36,033 $ 29,616 $ 16,117Gross credit losses (34,491) (32,784) (20,760)Gross recoveries 3,632 2,043 1,749Net credit (losses) recoveries (NCLs) $(30,859) $(30,741) $(19,011)NCLs $ 30,859 $ 30,741 $ 19,011Net reserve builds (releases) (6,523) 5,741 11,297Net specific reserve builds (releases) 858 2,278 3,366Total provision for credit losses $ 25,194 $ 38,760 $ 33,674Other, net (1) 10,287 (1,602) (1,164)Allowance for loan losses at end of year $ 40,655 $ 36,033 $ 29,616Allowance for credit losses on unfunded lending commitments at beginning of year (2) $ 1,157 $ 887 $ 1,250Provision for unfunded lending commitments (117) 244 (363)Allowance for credit losses on unfunded lending commitments at end of year (2) $ 1,066 $ 1,157 $ 887Total allowance for loans, leases, and unfunded lending commitments $ 41,721 $ 37,190 $ 30,503(1) 2010 primarily includes an addition of $13.4 billion related to the impact of consolidating entities in connection with Citi’s adoption of SFAS 166/167 (see Note 1 to the Consolidated Financial Statements) andreductions of approximately $2.7 billion related to the sale or transfer to held-for-sale of various U.S. loan portfolios and approximately $290 million related to the transfer of a U.K. first mortgage portfolio to held-forsale.2009 primarily includes reductions to the loan loss reserve of approximately $543 million related to securitizations, approximately $402 million related to the sale or transfers to held-for-sale of U.S. real estatelending loans, and $562 million related to the transfer of the U.K. cards portfolio to held-for-sale. 2008 primarily includes reductions to the loan loss reserve of approximately $800 million related to FX translation,$102 million related to securitizations, $244 million for the sale of the German retail banking operation, and $156 million for the sale of CitiCapital, partially offset by additions of $106 million related to the Cuscatlánand Bank of Overseas Chinese acquisitions.(2) Represents additional credit loss reserves for unfunded lending commitments and letters of credit recorded in Other Liabilities on the Consolidated Balance Sheet.Allowance for Credit Losses and Investment in Loans at December 31, 2010In millions of dollars Corporate Consumer TotalAllowance for loan losses at beginning of yearBeginning balance $ 7,636 $ 28,397 $ 36,033Charge-offs (3,416) (31,075) (34,491)Recoveries 994 2,638 3,632Replenishment of net charge-offs 2,422 28,437 30,859Net reserve builds/(releases) (1,625) (4,898) (6,523)Net specific reserve builds/(releases) (722) 1,580 858Other (79) 10,366 10,287Ending balance $ 5,210 $ 35,445 $ 40,655Allowance for loan lossesDetermined in accordance with ASC 450-20 $ 3,471 $ 27,683 $ 31,154Determined in accordance with ASC 310-10-35 1,689 7,735 9,424Determined in accordance with ASC 310-30 50 27 77Total allowance for loan losses $ 5,210 $ 35,445 $ 40,655Loans, net of unearned incomeLoans collectively evaluated for impairment in accordance with ASC 450-20 $179,924 $428,334 $608,258Loans individually evaluated for impairment in accordance with ASC 310-10-35 8,367 27,328 35,695Loans acquired with deteriorated credit quality in accordance with ASC 310-30 244 225 469Loans held at fair value 2,627 1,745 4,372Total loans, net of unearned income $191,162 $457,632 $648,794222