Accounts Receivable and Loans

9 Months Ended

Sep. 30, 2014

Loans Notes Trade And Other Receivables Disclosure [Abstract]

Accounts Receivable and Loans

3.Accounts Receivable and Loans

The Company’s charge and lending payment card products result in the generation of Card Member receivables and Card Member loans, respectively. For information on the Company’s accounts receivable and loans and the related accounting policies, refer to Note 4 on pages 72 – 76 of the Annual Report.

Accounts receivable by segment as of September 30, 2014 and December 31, 2013 consisted of:

(Millions)	2014		2013
U.S. Card Services(a)	$	21,253	$	21,842
International Card Services		7,273		7,771
Global Commercial Services(b)		16,440		14,391
Global Network & Merchant Services(c)		151		159
Card Member receivables(d)		45,117		44,163
Less: Reserve for losses		432		386
Card Member receivables, net	$	44,685	$	43,777
Other receivables, net(e)	$	2,631	$	3,408

• Includes $6.3 billion and $7.3billion of gross Card Member receivables available to settle obligations of a consolidated variable interest entity (VIE) as of September 30, 2014 and December 31, 2013, respectively.
• Includes$672 million and $836 million due from airlines, of which Delta Air Lines (Delta) comprises $642 million and $628 million as of September 30, 2014 and December 31, 2013, respectively.
• Includes receivables primarily related to the Company’s International Currency Card portfolios.
• Includes approximately $13.5 billion and $13.8 billionof Card Member receivables outside the U.S. as of September 30, 2014 and December 31, 2013, respectively.
• Other receivables primarily represent amounts related to (i) certain merchants for billed discount revenue and(ii) Global Network Services (GNS) partner banks for items such as royalty and franchise fees. Additionally, for 2013 only, the balance also included purchased GNS joint venture receivables. Other receivables are presented net of reserves for losses of $44 million and $71 million as of September 30, 2014 and December 31, 2013, respectively.

Loans as of September 30, 2014 and December 31, 2013 consisted of:

(Millions)		2014		2013
U.S. Card Services(a)	$	58,012	$	58,395
International Card Services		7,999		8,790
Global Commercial Services		46		53
Card Member loans		66,057		67,238
Less: Reserve for losses		1,146		1,261
Card Member loans, net	$	64,911	$	65,977
Other loans, net(b)	$	855	$	608

• Includes approximately $28.3 billion and $31.2billion of gross Card Member loans availableto settle obligations of a consolidated VIE as of September 30, 2014 and December 31, 2013, respectively.
• Other loans primarily represent loans to merchants and a store card loan portfolio. Other loans arepresented net of reserves for losses of $11 millionand $13 million as ofSeptember 30, 2014 and December 31, 2013, respectively.

Card Member Loans and Card Member Receivables Aging

Generally, a Card Member account is considered past due if payment is not received within 30 days after the billing statement date. The following table presents the aging of Card Member loans and receivables as of September 30, 2014 and December 31, 2013:

				30-59		60-89		90+
				Days		Days		Days
				Past		Past		Past
2014 (Millions)		Current		Due		Due		Due		Total
Card Member Loans:
U.S. Card Services	$	57,447	$	175	$	121	$	269	$	58,012
International Card Services		7,869		41		29		60		7,999
Card Member Receivables:
U.S. Card Services	$	20,907	$	125	$	74	$	147	$	21,253
International Card Services(a)		7,174		30		22		47		7,273
Global Commercial Services		(b)		(b)		(b)		125		16,440
				30-59		60-89		90+
				Days		Days		Days
				Past		Past		Past
2013 (Millions)		Current		Due		Due		Due		Total
Card Member Loans:
U.S. Card Services	$	57,772	$	183	$	134	$	306	$	58,395
International Card Services		8,664		43		28		55		8,790
Card Member Receivables:
U.S. Card Services	$	21,488	$	125	$	69	$	160	$	21,842
International Card Services		(b)		(b)		(b)		83		7,771
Global Commercial Services		(b)		(b)		(b)		132		14,391

• Beginning in first quarter 2014, as a result of system enhancements, delinquency data is now available and presented on a prospective basis for the indicated aging categories. Comparable data for prior periods is not available. For risk management purposes, the Company has historically utilized 90 days past billing for the International Card Services (ICS) segment, as described below in (b).
• Delinquency data for periods other than 90 days past billing is not available due to systemconstraints. Therefore, such data has not been utilized for risk management purposes. The balances that are current to 89 days past due can be derived as the difference between the Total and the 90+ Days Past Due balances. For Card Member receivables in GCS as of September 30, 2014and ICS and GCS as of December 31, 2013, delinquency data is tracked based on days past billing status rather than days past due. A Card Member account is considered 90 days past billing if payment has not been received within 90 days of the Card Member’s billing statement date. In addition, if the Company initiates collection procedures on an account prior to the account becoming 90 days past billing, the associated Card Member receivable balance is classified as 90 days past billing. These amounts are shown above as 90+ Days Past Due for presentation purposes.

Credit Quality Indicators for Card Member Loans and Receivables

The following tables present the key credit quality indicators as of or for the nine months endedSeptember 30:

	2014						2013
	Net Write-Off Rate						Net Write-Off Rate
					30 Days						30 Days
			Principal,		Past Due				Principal,		Past Due
	Principal		Interest, &		as a % of		Principal		Interest, &		as a % of
	Only	(a)	Fees	(a)	Total		Only	(a)	Fees	(a)	Total
Card Member Loans:
U.S. Card Services	1.6	%	1.8	%	1.0	%	1.9	%	2.1	%	1.1	%
International Card Services(b)	2.0	%	2.4	%	1.6	%	1.9	%	2.3	%	1.5	%
Card Member Receivables:
U.S. Card Services	1.7	%	1.9	%	1.6	%	1.8	%	1.9	%	1.7	%
International Card Services(b)	2.0	%	2.1	%	1.4	%	(c)		(c)		(c)
					2014				2013
					Net Loss				Net Loss
					Ratio as		90 Days		Ratio as		90 Days
					a % of		Past Billing		a % of		Past Billing
					Charge		as a % of		Charge		as a % of
					Volume		Receivables		Volume		Receivables
Card Member Receivables:
International Card Services					(c)		(c)		0.20	%	1.1	%
Global Commercial Services					0.09	%	0.8	%	0.07	%	0.8	%

• The Company presents a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention. In addition, because the Company considers uncollectible interest and/or fees in estimating its reserves for credit losses, a net write-off rate including principal, interest and/or fees is also presented.
• Beginning in2014, write-offs for certain installment loan products have been reclassified from Card Member receivables to Card Memberloans. Prior period write-offs have not been reclassified.
• Historically, net loss ratio as a % of charge volume and 90 days past billings as a % of receivables were presented. Beginning in first quarter2014, as a result of system enhancements, 30 days past due as a % of total, Net write-off rate (principal only) and Net write-off rate (principal and fees) have been presented.

Refer to Note 5 on pages 77 – 78 of the Annual Report for additional indicators, including external environmental qualitative factors, management considers in its evaluation process for reserves for losses.

Impaired Card Member Loans and Receivables

Impaired loans and receivables are individual larger balance or homogeneous pools of smaller balance loans and receivables for which it is probable that the Company will be unable to collect all amounts due according to the original contractual terms of the Card Member agreement. For information on impaired Card Member loans and receivables and the related accounting policies, refer to Note 4 on pages 74 – 76 of the Annual Report.

The following table provides additional information with respect to the Company’s impaired Card Member loans, which are not significant for GCS, and Card Member receivables, which are not significant for ICS and GCS, as ofSeptember 30,2014 and December 31,2013:

	Loans over
		90 Days						Loans &			Total
		Past Due			Non-		Receivables				Impaired		Unpaid
	& Accruing				Accrual			Modified			Loans &	Principal				Allowance
2014 (Millions)		Interest	(a)		Loans	(b)		as a TDR	(c)	Receivables			Balance	(d)		for TDRs	(e)
Card Member Loans:
U.S. Card Services	$	160		$	188		$	309		$	657	$	594		$	70
International Card Services		60			―			―			60		59			―
Card Member Receivables:
U.S. Card Services		―			―			44			44		43			32
Total	$	220		$	188		$	353		$	761	$	696		$	102
	Loans over
		90 Days						Loans &			Total
		Past Due			Non-		Receivables				Impaired		Unpaid
	& Accruing				Accrual			Modified			Loans &	Principal				Allowance
2013 (Millions)		Interest	(a)		Loans	(b)		as a TDR	(c)	Receivables			Balance	(d)	for TDRs		(e)
Card Member Loans:
U.S. Card Services	$	170		$	244		$	373		$	787	$	731		$	84
International Card Services		54			4			5			63		62			―
Card Member Receivables:
U.S. Card Services		―			―			50			50		49			38
Total	$	224		$	248		$	428		$	900	$	842		$	122

• The Company’s policy is generally to accrue interest through the date of write-off (i.e., at 180 days past due). The Company establishes reserves for interest that the Company believes will not be collected. Amounts presented exclude loans modified as a troubled debt restructuring (TDR).
• Non-accrual loans not in modification programs include certain Card Member loans placed with outside collection agencies for which the Company has ceased accruing interest.
• Total loans and receivables modified as a TDR includes $87 million and $92 million that are non-accrual and $20 million and $26 million that are past due 90 days and still accruing interest as ofSeptember 30, 2014 and December 31, 2013, respectively.
• Unpaid principal balance consists of Card Member charges billed and excludes other amounts charged directly by the Company such as interest and fees.
• Represents the reserve for losses for TDRs, which are evaluated individually for impairment. The Company records a reserve for losses for all impaired loans. Refer to Card Member Loans Evaluated Individually and Collectively for Impairment in Note 4 for further information regarding the reserve for losses on loans over 90 days past due and accruing interest and non-accrual loans, which are evaluated collectively for impairment.

The following table provides information with respect to the Company’s interest income recognized and average balances of impaired Card Member loans, which are not significant for GCS, and Card Member receivables, which are not significant for ICS and GCS,for the three and nine months endedSeptember 30:

	Three Months Ended				Nine Months Ended
	September 30, 2014				September 30, 2014
	Interest Income		Average		Interest Income		Average
2014 (Millions)	Recognized		Balance		Recognized		Balance
Card Member Loans:
U.S. Card Services	$	12	$	675	$	37	$	734
International Card Services		4		63		12		63
Card Member Receivables:
U.S. Card Services		―		44		―		47
Total	$	16	$	782	$	49	$	844
	Three Months Ended				Nine Months Ended
	September 30, 2013				September 30, 2013
	Interest Income		Average		Interest Income		Average
2013 (Millions)	Recognized		Balance		Recognized		Balance
Card Member Loans:
U.S. Card Services	$	11	$	859	$	34	$	982
International Card Services		4		66		12		68
Card Member Receivables:
U.S. Card Services		―		62		―		89
Total	$	15	$	987	$	46	$	1,139

Card Member Loans and Receivables Modified as TDRs

The following table provides additional information with respect to the U.S. Card Services (USCS) Card Member loans and receivables modified as TDRsfor the three and nine months endedSeptember 30. The ICS and GCS Card Member loans and receivables modifications were not significant. For information on TDRs and the related accounting policies, refer to Note 4 on pages 74 – 76 of the Annual Report.

	Three Months Ended					Nine Months Ended
	September 30, 2014					September 30, 2014
					Average					Average
				Average	Payment				Average	Payment
	Number of	Outstanding		Interest Rate	Term	Number of	Outstanding		Interest Rate	Term
	Accounts	Balances(a)(b)		Reduction	Extension	Accounts	Balances(a)(b)		Reduction	Extension
	(in thousands)	($ in millions)		(% Points)	(# of Months)	(in thousands)	($ in millions)		(% Points)	(# of Months)
Troubled Debt Restructurings:
Card Member Loans	11	$	83	9	(c)	35	$	261	11	(c)
Card Member Receivables	4		41	(c)	12	11		129	(c)	12
Total	15	$	124			46	$	390
	Three Months Ended					Nine Months Ended
	September 30, 2013					September 30, 2013
					Average					Average
				Average	Payment				Average	Payment
	Number of	Outstanding		Interest Rate	Term	Number of	Outstanding		Interest Rate	Term
	Accounts	Balances(a)(b)		Reduction	Extension	Accounts	Balances(a)(b)		Reduction	Extension
	(in thousands)	($ in millions)		(% Points)	(# of Months)	(in thousands)	($ in millions)		(% Points)	(# of Months)
Troubled Debt Restructurings:
Card Member Loans	12	$	91	10	(c)	47	$	357	11	(c)
Card Member Receivables	4		49	(c)	12	16		204	(c)	12
Total	16	$	140			63	$	561

• Represents the outstanding balance immediately prior to modification. Modifications did not reduce the aggregate principal balances except for the nine months endedSeptember 30, 2013, where aggregate principal balances were reduced by $4 million.
• The outstanding balance includes principal, fees and accrued interest on Card Member loans and principal and fees on Card Member receivables.
• For Card Member loans, there have been no payment term extensions. The Company does not offer interest rate reduction programs for Card Member receivables as the receivables are non-interest bearing.

The following table provides information for the three and nine months endedSeptember 30, 2014 and 2013, with respect to the USCS Card Member loans and receivables modified as TDRs that subsequently defaulted within 12 months of modification.ACard Memberis considered to have been in default from a modification program after one and up to two consecutive missed payments, depending on the terms of the modification program. For all Card Members that defaulted from a modification program, the probability of default is factored into the reserves for Card Member loans and receivables. The defaulted ICS Card Member loan and receivable modifications were not significant.

	Three Months Ended				Nine Months Ended
	September 30, 2014				September 30, 2014
				Aggregated				Aggregated
			Outstanding				Outstanding
		Number of		Balances		Number of		Balances
(Accounts in thousands, Dollars in millions)		Accounts	Upon Default(a)			Accounts	Upon Default(a)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans		2	$	20		6	$	60
Card Member Receivables		1		9		2		27
Total		3	$	29		8	$	87
	Three Months Ended				Nine Months Ended
	September 30, 2013				September 30, 2013
				Aggregated				Aggregated
			Outstanding				Outstanding
		Number of		Balances		Number of		Balances
(Accounts in thousands, Dollars in millions)		Accounts	Upon Default(a)			Accounts	Upon Default(a)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans		4	$	37		15	$	138
Card Member Receivables		1		8		3		33
Total		5	$	45		18	$	171

• The outstanding balance includes principal, fees and accrued interest on Card Member loans and principal and fees on Card Member receivables.