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Loan Receivables
6 Months Ended
Jun. 30, 2015
Loans and Leases Receivable Disclosure [Abstract]  
Loan Receivables
Loan Receivables
The Company has three loan portfolio segments: credit card loans, other loans and purchased credit-impaired ("PCI") loans.
The Company's classes of receivables within the three portfolio segments are depicted in the table below (dollars in millions):
 
June 30,
2015
 
December 31,
2014
Loan receivables
 
 
 
Credit card loans(1)
$
54,949

 
$
56,128

Other loans
 
 
 
Personal loans
5,183

 
5,007

Private student loans
5,139

 
4,850

Mortgage loans held for sale(2)
155

 
122

Other(3)
221

 
202

Total other loans
10,698

 
10,181

Purchased credit-impaired loans(4)
3,381

 
3,660

Total loan receivables
69,028

 
69,969

Allowance for loan losses
(1,735
)
 
(1,746
)
Net loan receivables
$
67,293

 
$
68,223

 
 
 
 
(1)
Amounts include $21.7 billion underlying investors’ interest in trust debt at June 30, 2015 and December 31, 2014 and $7.0 billion and $8.6 billion in seller's interest at June 30, 2015 and December 31, 2014, respectively. See Note 5: Credit Card and Student Loan Securitization Activities for further information.
(2)
Substantially all mortgage loans held for sale are pledged as collateral against the warehouse line of credit used to fund consumer residential loans.
(3)
Other includes home equity loans.
(4)
Amounts include $1.8 billion and $2.0 billion of loans pledged as collateral against the notes issued from the Student Loan Corporation ("SLC") securitization trusts at June 30, 2015 and December 31, 2014, respectively. See Note 5: Credit Card and Student Loan Securitization Activities.
Credit Quality Indicators
The Company regularly reviews its collection experience (including delinquencies and net charge-offs) in determining its allowance for loan losses.
Information related to the delinquent and non-accruing loans in the Company’s loan portfolio is shown below by each class of loan receivables except for mortgage loans held for sale and PCI student loans, which is shown under the heading “— Purchased Credit-Impaired Loans” (dollars in millions):
  
30-89 Days
Delinquent
 
90 or
More Days
Delinquent
 
Total Past
Due
 
90 or
More Days
Delinquent
and
Accruing
 
Total
Non-accruing(1)
At June 30, 2015
 
 
 
 
 
 
 
 
 
Credit card loans(2)
$
436

 
$
414

 
$
850

 
$
369

 
$
171

Other loans
 
 
 
 


 
 
 
 
Personal loans(3)
27

 
10

 
37

 
9

 
6

Private student loans (excluding PCI)(4)
66

 
25

 
91

 
25

 

Other
1

 
1

 
2

 

 
23

Total other loans (excluding PCI)
94

 
36

 
130

 
34

 
29

Total loan receivables (excluding PCI)
$
530

 
$
450

 
$
980

 
$
403

 
$
200

 
 
 
 
 
 
 
 
 
 
At December 31, 2014
 
 
 
 
 
 
 
 
 
Credit card loans(2)
$
491

 
$
480

 
$
971

 
$
442

 
$
157

Other loans
 
 
 
 


 
 
 
 
Personal loans(3)
29

 
11

 
40

 
10

 
5

Private student loans (excluding PCI)(4)
62

 
25

 
87

 
25

 

Other
1

 
1

 
2

 

 
21

Total other loans (excluding PCI)
92

 
37

 
129

 
35

 
26

Total loan receivables (excluding PCI)
$
583

 
$
517

 
$
1,100

 
$
477

 
$
183

 
 
 
 
 
 
 
 
 
 
 
(1)
The Company estimates that the gross interest income that would have been recorded in accordance with the original terms of non-accruing credit card loans was $7 million and $6 million for the three months ended June 30, 2015 and 2014, respectively, and $14 million and $13 million for the six months ended June 30, 2015 and 2014, respectively. The Company does not separately track the amount of gross interest income that would have been recorded in accordance with the original terms of loans. This amount was estimated based on customers' current balances and most recent interest rates.
(2)
Credit card loans that are 90 or more days delinquent and accruing interest include $38 million and $43 million of loans accounted for as troubled debt restructurings at June 30, 2015 and December 31, 2014, respectively.
(3)
Personal loans that are 90 or more days delinquent and accruing interest include $3 million of loans accounted for as troubled debt restructurings at June 30, 2015 and December 31, 2014.
(4)
Private student loans that are 90 or more days delinquent and accruing interest include $3 million and $5 million of loans accounted for as troubled debt restructurings at June 30, 2015 and December 31, 2014, respectively.
Net Charge-offs
Information related to the net charge-offs in the Company's loan portfolio is shown below by each class of loan receivables except for mortgage loans held for sale and PCI student loans, which is shown under the heading "— Purchased Credit-Impaired Loans" (dollars in millions):
 
For the Three Months Ended June 30,
 
2015
 
2014
  
Net
Charge-offs
 
Net 
Charge-off
Rate
 
Net
Charge-offs
 
Net 
Charge-off
Rate
Credit card loans
$
307

 
2.28
%
 
$
300

 
2.33
%
Other loans
 
 
 
 
 
 
 
Personal loans
27

 
2.10
%
 
22

 
1.95
%
Private student loans (excluding PCI)
13

 
1.02
%
 
14

 
1.30
%
Other

 
%
 
1

 
0.90
%
Total other loans (excluding PCI)
40

 
1.51
%
 
37

 
1.59
%
Net charge-offs as a percentage of total loans (excluding PCI)
$
347

 
2.16
%
 
$
337

 
2.22
%
Net charge-offs as a percentage of total loans (including PCI)
$
347

 
2.05
%
 
$
337

 
2.08
%
 
 
 
 
 
 
 
For the Six Months Ended June 30,
 
2015
 
2014
  
Net
Charge-offs
 
Net 
Charge-off
Rate
 
Net
Charge-offs
 
Net 
Charge-off
Rate
Credit card loans
$
626

 
2.34
%
 
$
594

 
2.32
%
Other loans
 
 
 
 
 
 
 
Personal loans
55

 
2.16
%
 
43

 
2.01
%
Private student loans (excluding PCI)
26

 
1.02
%
 
28

 
1.31
%
Other

 
%
 
1

 
1.07
%
Total other loans (excluding PCI)
81

 
1.54
%
 
72

 
1.63
%
Net charge-offs as a percentage of total loans (excluding PCI)
$
707

 
2.21
%
 
$
666

 
2.22
%
Net charge-offs as a percentage of total loans (including PCI)
$
707

 
2.10
%
 
$
666

 
2.08
%
 
 
 
 
 
 
 
 

As part of credit risk management activities, on an ongoing basis, the Company reviews information related to the performance of a customer’s account with the Company as well as information from credit bureaus, such as FICO or other credit scores, relating to the customer’s broader credit performance. FICO scores are generally obtained at origination of the account and are refreshed monthly or quarterly thereafter to assist in predicting customer behavior. Historically, the Company has noted that a significant proportion of delinquent accounts have FICO scores below 660.
 The following table provides the most recent FICO scores available for the Company’s customers as a percentage of each class of loan receivables:
 
Credit Risk Profile
by FICO Score
 
660 and 
Above
 
Less than 660
or No Score
At June 30, 2015
 
 
 
Credit card loans
83
%
 
17
%
Personal loans
97
%
 
3
%
Private student loans (excluding PCI)(1)
96
%
 
4
%
 
 
 
 
At December 31, 2014
 
 
 
Credit card loans
83
%
 
17
%
Personal loans
96
%
 
4
%
Private student loans (excluding PCI)(1)
96
%
 
4
%
 
 
 
 
(1)
PCI loans are discussed under the heading "— Purchased Credit-Impaired Loans."
For private student loans, additional credit risk management activities include monitoring the amount of loans in forbearance. Forbearance allows borrowers experiencing temporary financial difficulties and willing to make payments, the ability to temporarily suspend payments. Eligible borrowers have a lifetime cap on forbearance of 12 months. At June 30, 2015 and December 31, 2014, there were $50 million and $49 million of private student loans, including PCI, in forbearance, respectively. In addition, at June 30, 2015 and December 31, 2014, there were 0.8% of private student loans in forbearance as a percentage of student loans in repayment and forbearance.
Allowance for Loan Losses
The following tables provide changes in the Company’s allowance for loan losses (dollars in millions): 
 
For the Three Months Ended June 30, 2015
 
Credit Card
 
Personal Loans
 
Student Loans(1)
 
Other
 
Total
Balance at beginning of period
$
1,492

 
$
123

 
$
142

 
$
19

 
$
1,776

Additions
 
 
 
 
 
 
 
 
 
Provision for loan losses
256

 
35

 
14

 
1

 
306

Deductions
 
 
 
 
 
 
 
 
 
Charge-offs
(423
)
 
(31
)
 
(15
)
 

 
(469
)
Recoveries
116

 
4

 
2

 

 
122

Net charge-offs
(307
)
 
(27
)
 
(13
)
 

 
(347
)
Balance at end of period
$
1,441

 
$
131

 
$
143

 
$
20

 
$
1,735

 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended June 30, 2014
 
Credit Card
 
Personal Loans
 
Student Loans(1)
 
Other
 
Total
Balance at beginning of period
$
1,342

 
$
109

 
$
122

 
$
18

 
$
1,591

Additions
 
 
 
 
 
 
 
 
 
Provision for loan losses
317

 
22

 
20

 
1

 
360

Deductions
 
 
 
 
 
 
 
 
 
Charge-offs
(415
)
 
(24
)
 
(15
)
 
(1
)
 
(455
)
Recoveries
115

 
2

 
1

 

 
118

Net charge-offs
(300
)
 
(22
)
 
(14
)
 
(1
)
 
(337
)
Balance at end of period
$
1,359

 
$
109

 
$
128

 
$
18

 
$
1,614

 
 
 
 
 
 
 
 
 
 
 
For the Six Months Ended June 30, 2015
 
Credit Card
 
Personal Loans
 
Student Loans(1)
 
Other
 
Total
Balance at beginning of period
$
1,474

 
$
120

 
$
135

 
$
17

 
$
1,746

Additions
 
 
 
 
 
 
 
 
 
Provision for loan losses
593

 
66

 
34

 
3

 
696

Deductions
 
 
 
 
 
 
 
 
 
Charge-offs
(851
)
 
(62
)
 
(30
)
 

 
(943
)
Recoveries
225

 
7

 
4

 

 
236

Net charge-offs
(626
)
 
(55
)
 
(26
)
 

 
(707
)
Balance at end of period
$
1,441

 
$
131

 
$
143

 
$
20

 
$
1,735

 
 
 
 
 
 
 
 
 
 
 
For the Six Months Ended June 30, 2014
 
Credit Card
 
Personal Loans
 
Student Loans(1)
 
Other
 
Total
Balance at beginning of period
$
1,406

 
$
112

 
$
113

 
$
17

 
$
1,648

Additions
 
 
 
 
 
 
 
 
 
Provision for loan losses
547

 
40

 
43

 
2

 
632

Deductions
 
 
 
 
 
 
 
 
 
Charge-offs
(823
)
 
(48
)
 
(30
)
 
(1
)
 
(902
)
Recoveries
229

 
5

 
2

 

 
236

Net charge-offs
(594
)
 
(43
)
 
(28
)
 
(1
)
 
(666
)
Balance at end of period
$
1,359

 
$
109

 
$
128

 
$
18

 
$
1,614

 
 
 
 
 
 
 
 
 
 

(1)
Includes both PCI and non-PCI private student loans.
Net charge-offs of principal are recorded against the allowance for loan losses, as shown in the preceding table. Information regarding net charge-offs of interest and fee revenues on credit card and other loans is as follows (dollars in millions): 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
Interest and fees accrued subsequently charged off, net of recoveries (recorded as a reduction of interest income)
$
70

 
$
70

 
$
145

 
$
142

Fees accrued subsequently charged off, net of recoveries (recorded as a reduction to other income)
$
17

 
$
17

 
$
37

 
$
34

 
 
 
 
 
 
 
 

The following tables provide additional detail of the Company’s allowance for loan losses and recorded investment in its loan portfolio by impairment methodology (dollars in millions):
 
Credit Card
 
Personal
Loans
 
Student
Loans(3)
 
Other
Loans(4)
 
Total
At June 30, 2015
 
 
 
 
 
 
 
 
 
Allowance for loans evaluated for impairment as
 
 
 
 
 
 
 
 
 
Collectively evaluated for impairment in accordance with ASC 450-20
$
1,284

 
$
126

 
$
102

 
$
1

 
$
1,513

Evaluated for impairment in accordance with
ASC 310-10-35(1)(2)
157

 
5

 
13

 
19

 
194

Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30

 

 
28

 

 
28

Total allowance for loan losses
$
1,441

 
$
131

 
$
143

 
$
20

 
$
1,735

Recorded investment in loans evaluated for impairment as
 
 
 
 
 
 
 
 
 
Collectively evaluated for impairment in accordance with ASC 450-20
$
53,939

 
$
5,122

 
$
5,096

 
$
160

 
$
64,317

Evaluated for impairment in accordance with
ASC 310-10-35(1)(2)
1,010

 
61

 
43

 
61

 
1,175

Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30

 

 
3,381

 

 
3,381

Total recorded investment
$
54,949

 
$
5,183

 
$
8,520

 
$
221

 
$
68,873

 
 
 
 
 
 
 
 
 
 
At December 31, 2014
 
 
 
 
 
 
 
 
 
Allowance for loans evaluated for impairment as
 
 
 
 
 
 
 
 
 
Collectively evaluated for impairment in accordance with ASC 450-20
$
1,314

 
$
114

 
$
96

 
$
1

 
$
1,525

Evaluated for impairment in accordance with
ASC 310-10-35(1)(2)
160

 
6

 
11

 
16

 
193

Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30

 

 
28

 

 
28

Total allowance for loan losses
$
1,474

 
$
120

 
$
135

 
$
17

 
$
1,746

Recorded investment in loans evaluated for impairment as
 
 
 
 
 
 
 
 
 
Collectively evaluated for impairment in accordance with ASC 450-20
$
55,091

 
$
4,952

 
$
4,812

 
$
142

 
$
64,997

Evaluated for impairment in accordance with
ASC 310-10-35(1)(2)
1,037

 
55

 
38

 
60

 
1,190

Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30

 

 
3,660

 

 
3,660

Total recorded investment
$
56,128

 
$
5,007

 
$
8,510

 
$
202

 
$
69,847

 
 
 
 
 
 
 
 
 
 

(1)
Loan receivables evaluated for impairment in accordance with Accounting Standards Codification ("ASC") 310-10-35 include credit card loans, personal loans and student loans collectively evaluated for impairment in accordance with ASC Subtopic 310-40, Receivables, which consists of modified loans accounted for as troubled debt restructurings. Other loans are individually evaluated for impairment and generally do not represent troubled debt restructurings.
(2)
The unpaid principal balance of credit card loans was $858 million and $878 million at June 30, 2015 and December 31, 2014, respectively. The unpaid principal balance of personal loans was $61 million and $54 million at June 30, 2015 and December 31, 2014, respectively. The unpaid principal balance of student loans was $42 million and $37 million at June 30, 2015 and December 31, 2014, respectively. All loans accounted for as troubled debt restructurings have a related allowance for loan losses.
(3)
Includes both PCI and non-PCI private student loans.
(4)
Excludes mortgage loans held for sale. Certain other loans, including non-performing Diners Club licensee loans, are individually evaluated for impairment.
Troubled Debt Restructurings
The Company has internal loan modification programs that provide relief to credit card, personal loan and student loan borrowers who are experiencing financial hardship. The internal loan modification programs include both temporary and permanent programs which vary by product. External loan modification programs are also available for credit card and personal loans. Temporary and permanent modifications on credit card and personal loans, as well as temporary modifications on student loans and certain grants of student loan forbearance, are considered to be individually impaired. In addition, loans that defaulted or graduated from modification programs or forbearance are considered to be individually impaired. As a result, the above mentioned loans are accounted for as troubled debt restructurings.
For credit card customers, the temporary hardship program primarily consists of a reduced minimum payment and an interest rate reduction, both lasting for a period no longer than 12 months. The permanent workout program involves changing the structure of the loan to a fixed payment loan with a maturity no longer than 60 months and reducing the interest rate on the loan. The permanent modification program does not normally provide for the forgiveness of unpaid principal, but may allow for the reversal of certain unpaid interest or fee assessments. The Company also makes loan modifications for customers who request financial assistance through external sources, such as a consumer credit counseling agency program (referred to here as external programs). These loans typically receive a reduced interest rate but continue to be subject to the original minimum payment terms and do not normally include waiver of unpaid principal, interest or fees.
To assist student loan borrowers who are experiencing temporary financial difficulties but are willing to resume making payments, the Company may offer hardship forbearance periods of up to 12 months over the life of the loan. Forbearance provides borrowers a deferment in making payments, during which time loan interest continues to accrue at contractual rates. The Company does not anticipate significant shortfalls in the contractual amount due for borrowers using a first hardship forbearance period as the historical performance of these borrowers is not significantly different from the overall portfolio. However, when a borrower is 30 or more days delinquent and granted a second hardship forbearance period, the forbearance is considered a troubled debt restructuring. In addition, the Company offers temporary reduced payment programs, which normally consist of a reduction of the minimum payment for a period of no longer than 12 months. When a student loan borrower is enrolled in a temporary reduced payment program for 12 months or fewer over the life of the loan, the modification is not considered a troubled debt restructuring. No loans have been in a temporary modification program for greater than 12 months.
For personal loan customers, in certain situations the Company offers various payment programs, including temporary and permanent programs. The temporary programs normally consist of a reduction of the minimum payment for a period of no longer than 12 months with the option of a final balloon payment required at the end of the loan term or an extension of the maturity date with the total term not exceeding nine years. Further, in certain circumstances the interest rate on the loan is reduced. The permanent program involves changing the terms of the loan in order to pay off the outstanding balance over a longer term and also in certain circumstances reducing the interest rate on the loan. Similar to the temporary programs, the total term may not exceed nine years. The Company also allows loan modifications for customers who request financial assistance through external sources, similar to the credit card customers discussed above. Payments are modified based on the new terms agreed upon with the credit counseling agency. Personal loans included in temporary and permanent programs are accounted for as troubled debt restructurings.
The Company monitors borrower performance after using payment programs or forbearance and the Company believes the programs help to prevent defaults and are useful in assisting customers experiencing financial difficulties. The Company plans to continue to use payment programs and forbearance and, as a result, expects to have additional loans classified as troubled debt restructurings in the future.
Additional information about modified loans classified as troubled debt restructurings is shown below (dollars in millions):
 
Average recorded investment in loans
 
Interest income recognized during period loans were impaired(1)
 
Gross interest income that would have been recorded with original terms(2)
For the Three Months Ended June 30, 2015
 
 
 
 
 
Credit card loans
 
 
 
 
 
Modified credit card loans(3)
$
256

 
$
12

 
$
1

Internal programs
$
450

 
$
3

 
$
15

External programs
$
311

 
$
6

 
$
3

Personal loans
$
60

 
$
1

 
$

Private student loans
$
42

 
$
1

 
N/A

 
 
 
 
 
 
For the Three Months Ended June 30, 2014
 
 
 
 
 
Credit card loans
 
 
 
 
 
Modified credit card loans(3)
$
249

 
$
12

 
$
1

Internal programs
$
452

 
$
3

 
$
16

External programs
$
373

 
$
7

 
$
3

Personal loans
$
46

 
$
1

 
$
1

Private student loans
$
31

 
$

 
N/A

 
 
 
 
 
 
For the Six Months Ended June 30, 2015
 
 
 
 
 
Credit card loans
 
 
 
 
 
Modified credit card loans(3)
$
256

 
$
23

 
$
2

Internal programs
$
451

 
$
6

 
$
30

External programs
$
317

 
$
12

 
$
6

Personal loans
$
58

 
$
3

 
$
1

Private student loans
$
41

 
$
2

 
N/A

 
 
 
 
 
 
For the Six Months Ended June 30, 2014
 
 
 
 
 
Credit card loans
 
 
 
 
 
Modified credit card loans(3)
$
253

 
$
23

 
$
2

Internal programs
$
453

 
$
6

 
$
31

External programs
$
384

 
$
14

 
$
6

Personal loans
$
45

 
$
2

 
$
1

Private student loans
$
30

 
$
1

 
N/A

 
 
 
 
 
 
(1)
The Company does not separately track interest income on loans in modification programs. Amounts shown are estimated by applying an average interest rate to the average loans in the various modification programs.
(2)
The Company does not separately track the amount of gross interest income that would have been recorded if the loans in modification programs had not been restructured and interest had instead been recorded in accordance with the original terms. Amounts shown are estimated by applying the difference between the average interest rate earned on non-impaired credit card loans and the average interest rate earned on loans in the modification programs to the average loans in the modification programs.
(3)
This balance is considered impaired, but is excluded from the internal and external program amounts reflected in this table. Represents credit card loans that were modified in troubled debt restructurings, but are no longer enrolled in troubled debt restructuring program due to noncompliance with the terms of the modification or successful completion of a program.
In order to evaluate the primary financial effects that resulted from credit card loans entering into a loan modification program during the three and six months ended June 30, 2015 and 2014, the Company quantified the amount by which interest and fees were reduced during the periods. During the three months ended June 30, 2015 and 2014, the Company forgave approximately $11 million and $9 million, respectively, of interest and fees as a result of accounts entering into a credit card loan modification program. During the six months ended June 30, 2015 and 2014, the Company forgave approximately $22 million and $19 million, respectively, of interest and fees as a result of accounts entering into a credit card loan modification program.
The following table provides information on loans that entered a loan modification program during the period (dollars in millions):
 
For the Three Months Ended June 30,
 
2015
 
2014
 
Number of Accounts
 
Balances
 
Number of Accounts
 
Balances
Accounts that entered a loan modification program during the period
 
 
 
 
 
 
 
Credit card loans:
 
 
 
 
 
 
 
Internal programs
11,989

 
$
78

 
10,648

 
$
71

External programs
7,296

 
$
37

 
7,824

 
$
42

Personal loans
989

 
$
12

 
820

 
$
10

Private student loans
291

 
$
4

 
345

 
$
5

 
 
 
 
 
 
 
 
 
For the Six Months Ended June 30,
 
2015
 
2014
 
Number of Accounts
 
Balances
 
Number of Accounts
 
Balances
Accounts that entered a loan modification program during the period
 
 
 
 
 
 
 
Credit card loans
 
 
 
 
 
 
 
Internal programs
25,232

 
$
164

 
23,084

 
$
152

External programs
14,913

 
$
76

 
16,255

 
$
86

Personal loans
1,975

 
$
24

 
1,532

 
$
18

Private student loans
760

 
$
11

 
652

 
$
9

 
 
 
 
 
 
 
 

The following table presents the carrying value of loans that experienced a payment default during the period that had been modified in a troubled debt restructuring during the 15 months preceding the end of each period (dollars in millions):
 
For the Three Months Ended June 30,
 
2015
 
2014
 
Number of Accounts
 
Aggregated Outstanding Balances Upon Default
 
Number of Accounts
 
Aggregated Outstanding Balances Upon Default
Troubled debt restructurings that subsequently defaulted
 
 
 
 
 
 
 
Credit card loans:
 
 
 
 
 
 
 
Internal programs(1)(2)
3,023

 
$
18

 
2,463

 
$
15

External programs(1)(2)
1,591

 
$
6

 
1,685

 
$
7

Personal loans(2)
134

 
$
1

 
97

 
$
1

Private student loans(3)
279

 
$
4

 
223

 
$
3

 
 
 
 
 
 
 
 
 
For the Six Months Ended June 30,
 
2015
 
2014
 
Number of Accounts
 
Aggregated Outstanding Balances Upon Default
 
Number of Accounts
 
Aggregated Outstanding Balances Upon Default
Troubled debt restructurings that subsequently defaulted
 
 
 
 
 
 
 
Credit card loans
 
 
 
 
 
 
 
Internal programs(1)(2)
6,199

 
$
38

 
4,794

 
$
29

External programs(1)(2)
3,234

 
$
13

 
3,566

 
$
15

Personal loans(2)
285

 
$
3

 
203

 
$
2

Private student loans(3)
584

 
$
8

 
534

 
$
8

 
 
 
 
 
 
 
 

(1)
The outstanding balance upon default is the loan balance at the end of the month prior to default. Terms revert back to the pre-modification terms for customers who default from a temporary program and charging privileges remain revoked in most cases.
(2)
A customer defaults from a modification program after two consecutive missed payments.
(3)
Student loan defaults have been defined as loans that are 60 or more days delinquent.
Of the account balances that defaulted as shown above for the three months ended June 30, 2015 and 2014, approximately 45% and 39%, respectively, of the total balances were charged off at the end of the month in which they defaulted. Of the account balances that defaulted as shown above for the six months ended June 30, 2015 and 2014, approximately 44% and 36%, respectively, of the total balances were charged off at the end of the month in which they defaulted. For accounts that have defaulted from a loan modification program and have not been subsequently charged off, the balances are included in the allowance for loan loss analysis discussed above under "— Allowance for Loan Losses."
Purchased Credit-Impaired Loans
Purchased loans with evidence of credit deterioration since origination for which it is probable that not all contractually required payments will be collected are considered impaired at acquisition and are reported as PCI loans. The private student loans acquired in the SLC transaction, as well as the additional acquired private student loan portfolio comprise the Company’s only PCI loans at June 30, 2015 and December 31, 2014. Total PCI student loans had an outstanding balance of $3.6 billion and $3.9 billion, including accrued interest, and a related carrying amount of $3.4 billion and $3.7 billion as of June 30, 2015 and December 31, 2014, respectively.
The following table provides changes in accretable yield for the acquired loans during each period (dollars in millions):
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
Balance at beginning of period
$
1,181

 
$
1,512

 
$
1,341

 
$
1,580

Accretion into interest income
(57
)
 
(66
)
 
(116
)
 
(134
)
Other changes in expected cash flows

 
4

 
(101
)
 
4

Balance at end of period
$
1,124

 
$
1,450

 
$
1,124

 
$
1,450

 
 
 
 
 
 
 
 

Periodically the Company updates the estimate of cash flows expected to be collected based on management's latest expectations of future credit losses, borrower prepayments and certain other assumptions that affect cash flows. No provision expense was recorded during the three and six months ended June 30, 2015 and 2014. The allowance for PCI loan losses at June 30, 2015 and December 31, 2014 was $28 million. For the three months ended June 30, 2015, there were no changes in other cash flow assumptions. For the six months ended June 30, 2015, the changes in expected cash flows from the decrease in accretable yield were primarily related to an increase in the borrower prepayment assumptions on certain pools. For the three and six months ended June 30, 2014, the changes in expected cash flows from the increase in accretable yield were primarily related to a decrease in the borrower prepayment assumptions on certain pools. Changes to accretable yield are recognized prospectively as an adjustment to yield over the remaining life of the pools.
At June 30, 2015, the 30 or more days delinquency and 90 or more days delinquency rates on PCI student loans (which include loans not yet in repayment) were 2.21% and 0.69%, respectively. At December 31, 2014, the 30 or more days delinquency and 90 or more days delinquency rates on PCI student loans (which include loans not yet in repayment) were 2.35% and 0.75%, respectively. These rates include private student loans that are greater than 120 days delinquent that are covered by an indemnification agreement or insurance arrangements through which the Company expects to recover a substantial portion of the loan. The net charge-off rate on PCI student loans was 0.38% and 0.50% for the three months ended June 30, 2015 and 2014, respectively, and 0.44% and 0.62% for the six months ended June 30, 2015 and 2014, respectively.
Mortgage Loans Held For Sale
The following table provides a summary of the initial unpaid principal balance of mortgage loans sold during each period, by type of loan  (dollars in millions):
 
For the Three Months Ended June 30,
 
2015
 
2014
 
Amount
 
%
 
Amount
 
%
Conforming(1)
$
945

 
84.83
%
 
$
572

 
90.51
%
FHA(2)
164

 
14.72

 
49

 
7.75

Jumbo(3)

 

 
11

 
1.74

VA(4)
5

 
0.45

 

 

Total
$
1,114

 
100.00
%
 
$
632

 
100.00
%
 
 
 
 
 
 
 
 
 
For the Six Months Ended June 30,
 
2015
 
2014
 
Amount
 
%
 
Amount
 
%
Conforming(1)
$
1,938

 
89.39
%
 
$
1,019

 
90.26
%
FHA(2)
218

 
10.06

 
97

 
8.59

Jumbo(3)
6

 
0.28

 
13

 
1.15

VA(4)
6

 
0.27

 

 

Total
$
2,168

 
100.00
%
 
$
1,129

 
100.00
%
 
 
 
 
 
 
 
 
(1)
Conforming loans are loans that conform to Government-Sponsored Enterprises guidelines.
(2)
FHA loans are loans that are insured by the Federal Housing Administration and are typically made to borrowers with low down payments. The initial loan amount must be within certain limits.
(3)
Jumbo loans are loans with an initial amount larger than the limits set by a Government-Sponsored Enterprise.
(4)
VA loans are loans that are insured by and conform to the Department of Veteran Affairs guidelines.