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Reserves for Losses
 6 Months Ended
Jun. 30, 2016
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.

This Note is presented excluding amounts associated with the Card Member loans and receivables HFS as of December 31, 2015; the Company did not have any Card Member loans and receivables HFS as of June 30, 2016.

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)  20162015
Balance, January 1  $1,028$1,201
Provisions(a)  512520
Net write-offs
Principal(b)(437)(502)
Interest and fees(b)  (80)(85)
Other(c)  68(2)
Balance, June 30  $1,091$1,132

  • Provisions for principal, interest and fee reserve components.
  • Consists of principal write-offs, less recoveries of $179 million and $212 million, including net write-offs from TDRs of $17 million and $22 million, for the six months ended June 30, 2016 and 2015, respectively. Recoveries of interest and fees were de minimis.
  • Includes foreign currency translation adjustments of $(2) million and $(8) million and other adjustments of $3 million and $6 million for the six months ended June 30, 2016 and 2015, 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 the respective sales of the JetBlue Airways Corporation (JetBlue) and Costco Wholesale Corporation in the United States (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, 2016 and December 31, 2015:

(Millions)  20162015
Card Member loans evaluated individually for impairment(a)$342$279
Related reserves (a)$62$53
Card Member loans evaluated collectively for impairment(b)$59,545$58,294
Related reserves (b)$1,029$975

  • 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)  20162015
Balance, January 1  $462$465
Provisions(a)  322339
Net write-offs(b)  (359)(370)
Other(c)  (2)(14)
Balance, June 30  $423$420

  • Provisions for principal and fee reserve components.
  • Consists of principal and fee components, less recoveries of $202 million and $201 million, including net write-offs from TDRs of $16 million and $42 million, for the six months ended June 30, 2016 and 2015, respectively.
  • Includes foreign currency translation adjustments of $(1) million and $(7) million and other adjustments of $(1) million and $(7) million for the six months ended June 30, 2016 and 2015, 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, 2016 and December 31, 2015:

(Millions)  20162015
Card Member receivables evaluated individually for impairment(a)$37$33
Related reserves (a)$19$20
Card Member receivables evaluated collectively for impairment$45,186$44,100
Related reserves (b)$404$442

  • 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.