Credit Loss Reserves

The following table summarizes the changes in credit loss reserves by product and the related receivable balance by product during the three and six months ended June 30, 2015 and 2014:



	Real Estate Secured						Personal Non- Credit Card			Total
	First Lien			Second Lien			Personal Non- Credit Card			Total
	(in millions)
Three Months Ended June 30, 2015:
Credit loss reserve rollforward:
Credit loss reserve balances at beginning of period	$	1,839		$	271		$	—		$	2,110
Provision for credit losses⁽¹⁾	167			25			—			192
Net charge-offs:
Charge-offs⁽¹⁾⁽²⁾	(1,808		)	(90		)	—			(1,898		)
Recoveries	2			2			—			4
Total net charge-offs	(1,806		)	(88		)	—			(1,894		)
Credit loss reserve balance at end of period	$	200		$	208		$	—		$	408
Six Months Ended June 30, 2015:
Credit loss reserve rollforward:
Credit loss reserve balance at beginning of period	$	1,898		$	319		$	—		$	2,217
Provision for credit losses⁽¹⁾	204			15			—			219
Net charge-offs:
Charge-offs⁽¹⁾⁽²⁾	(1,916		)	(129		)	—			(2,045		)
Recoveries	14			3			—			17
Total net charge-offs	(1,902		)	(126		)	—			(2,028		)
Credit loss reserve balance at end of period	$	200		$	208		$	—		$	408
Reserve components:
Collectively evaluated for impairment	$	57		$	49		$	—		$	106
Individually evaluated for impairment⁽³⁾	129			159			—			288
Receivables carried at the lower of amortized cost or fair value of the collateral less cost to sell	13			—			—			13
Receivables acquired with deteriorated credit quality	1			—			—			1
Total credit loss reserves	$	200		$	208		$	—		$	408
Receivables:
Collectively evaluated for impairment	$	7,105		$	1,366		$	—		$	8,471
Individually evaluated for impairment⁽³⁾	806			679			—			1,485
Receivables carried at the lower of amortized cost or fair value of the collateral less cost to sell	315			26			—			341
Receivables acquired with deteriorated credit quality	9			1			—			10
Total receivables	$	8,235		$	2,072		$	—		$	10,307
Three Months Ended June 30, 2014:
Credit loss reserve rollforward:
Credit loss reserve balances at beginning of period	$	2,526		$	471		$	—		$	2,997
Provision for credit losses	(115		)	(69		)	(13		)	(197		)
Net charge-offs:
Charge-offs⁽²⁾	(143		)	(52		)	—			(195		)
Recoveries	28			46			13			87
Total net charge-offs	(115		)	(6		)	13			(108		)
Credit loss reserve balance at end of period	$	2,296		$	396		$	—		$	2,692
Six Months Ended June 30, 2014:



	Real Estate Secured						Personal Non- Credit Card			Total
	First Lien			Second Lien			Personal Non- Credit Card			Total
	(in millions)
Credit loss reserve rollforward:
Credit loss reserve balance at beginning of period	$	2,777		$	496		$	—		$	3,273
Provision for credit losses	(139		)	(39		)	(17		)	(195		)
Net charge-offs:
Charge-offs⁽²⁾	(391		)	(115		)	—			(506		)
Recoveries	49			54			17			120
Total net charge-offs	(342		)	(61		)	17			(386		)
Credit loss reserve balance at end of period	$	2,296		$	396		$	—		$	2,692
Reserve components:
Collectively evaluated for impairment	$	299		$	77		$	—		$	376
Individually evaluated for impairment⁽³⁾	1,946			318			—			2,264
Receivables carried at the lower of amortized cost or fair value of the collateral less cost to sell	49			—			—			49
Receivables acquired with deteriorated credit quality	2			1			—			3
Total credit loss reserves	$	2,296		$	396		$	—		$	2,692
Receivables:
Collectively evaluated for impairment	$	11,279		$	1,810		$	—		$	13,089
Individually evaluated for impairment⁽³⁾	9,575			948			—			10,523
Receivables carried at the lower of amortized cost or fair value of the collateral less cost to sell	819			31			—			850
Receivables acquired with deteriorated credit quality	9			2			—			11
Total receivables	$	21,682		$	2,791		$	—		$	24,473

⁽¹⁾

The provision for credit losses and charge-offs for real estate secured receivables during the three and six months ended June 30, 2015 includes $220 million related to the lower of amortized cost or fair value adjustment attributable to credit factors for receivables transferred to held for sale in June 2015. See Note 5, "Receivables Held for Sale," for additional information. The provision for credit losses for real estate secured receivables during the six months ended June 30, 2015 was impacted by a release of approximately $19 million associated with a correction to our credit loss reserve calculation for a segment of our portfolio.

⁽²⁾

For collateral dependent receivables that are transferred to held for sale, existing credit loss reserves at the time of transfer are recognized as a charge-off. We transferred to held for sale certain real estate secured receivables during the three and six months ended June 30, 2015 and 2014 and, accordingly, we recognized the existing credit loss reserves on these receivables as additional charge-off totaling $1,578 million and $1,593 million during the three and six months ended June 30, 2015 compared with $18 million and $38 million during the three and six months ended June 30, 2014, respectively.

⁽³⁾

These amounts represent TDR Loans for which we evaluate reserves using a discounted cash flow methodology. Each loan is individually identified as a TDR Loan and then grouped together with other TDR Loans with similar characteristics. The discounted cash flow impairment analysis is then applied to these groups of TDR Loans. The receivable balance above excludes TDR Loans that are carried at the lower of amortized cost or fair value of the collateral less cost to sell which totaled $256 million and $544 million at June 30, 2015 and 2014, respectively. The reserve component above excludes credit loss reserves totaling $10 million and $34 million at June 30, 2015 and 2014, respectively, for TDR Loans that are carried at the lower of amortized cost or fair value of the collateral less cost to sell. These receivables and credit loss reserves are reflected within receivables and credit loss reserves carried at the lower of amortized cost or fair value of the collateral less cost to sell in the table above.