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Reserves for Losses
 6 Months Ended
Jun. 30, 2017
Reserves For Losses Card Member Loans and Receivables Disclosure [Abstract]  
Reserve for Losses

4. Reserves for Losses

Reserves for losses relating to Card Member loans and receivables represent management’s best estimate of the probable inherent losses in the Company’s outstanding portfolio of loans and receivables as of the balance sheet date. Management’s evaluation process requires certain estimates and judgments.

Changes in Card Member Loans Reserve for Losses

The following table presents changes in the Card Member loans reserve for losses for the six months ended June 30:

(Millions)  20172016
Balance, January 1  $1,223$1,028
Provisions(a)  741512
Net write-offs(b)
Principal(557)(437)
Interest and fees  (106)(80)
Other(c)  1968
Balance, June 30  $1,320$1,091

  • Provisions for principal, interest and fee reserve components.
  • Principal write-offs are presented less recoveries of $205 million and $179 million, and include net write-offs from TDRs of $21 million and $17 million, for the six months ended June 30, 2017 and 2016, respectively. Recoveries of interest and fees were de minimis.
  • Includes foreign currency translation adjustments of $10 million and $(2) million and other adjustments of $9 million and $3 million for the six months ended June 30, 2017 and 2016, respectively. The six months ended June 30, 2016 also includes reserves of $7 million in the first quarter and $60 million in the second quarter associated with $20 million and $245 million of retained Card Member loans, respectively, reclassified from HFS to held for investment during those periods as a result of retaining certain loans in connection with the respective sales of JetBlue and Costco cobrand card portfolios.

Card Member Loans Evaluated Individually and Collectively for Impairment

The following table presents Card Member loans evaluated individually and collectively for impairment and related reserves as of June 30, 2017 and December 31, 2016:

(Millions)  20172016
Card Member loans evaluated individually for impairment(a)$338$346
Related reserves (a)$56$60
Card Member loans evaluated collectively for impairment(b)$65,633$64,919
Related reserves (b)$1,264$1,163

  • Represents loans modified as a TDR and related reserves.
  • Represents current loans and loans less than 90 days past due, loans over 90 days past due and accruing interest, and non-accrual loans. The reserves include the quantitative results of analytical models that are specific to individual pools of loans, and reserves for internal and external qualitative risk factors that apply to loans that are collectively evaluated for impairment.

Changes in Card Member Receivables Reserve for Losses

The following table presents changes in the Card Member receivables reserve for losses for the six months ended June 30:

(Millions)  20172016
Balance, January 1  $467$462
Provisions(a)  376322
Net write-offs(b)  (373)(359)
Other(c)  5(2)
Balance, June 30  $475$423

  • Provisions for principal and fee reserve components.
  • Principal and fee components are presented less recoveries of $181 million and $202 million, including net write-offs from TDRs of $7 million and $16 million, for the six months ended June 30, 2017 and 2016, respectively.
  • Includes foreign currency translation adjustments of $14 and $(1) million and other adjustments of $(9) million and $(1) million for the six months ended June 30, 2017 and 2016, respectively.

Card Member Receivables Evaluated Individually and Collectively for Impairment

The following table presents Card Member receivables evaluated individually and collectively for impairment, and related reserves, as of June 30, 2017 and December 31, 2016:

(Millions)  20172016
Card Member receivables evaluated individually for impairment(a)$58$55
Related reserves (a)$13$28
Card Member receivables evaluated collectively for impairment$49,347$47,253
Related reserves (b)$462$439

  • Represents receivables modified as a TDR and related reserves.
  • The reserves include the quantitative results of analytical models that are specific to individual pools of receivables, and reserves for internal and external qualitative risk factors that apply to receivables that are collectively evaluated for impairment.