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Loan Receivables (Tables)

3 Months Ended

Mar. 31, 2020

The Company's classes of receivables within the two portfolio segments are depicted in the following table (dollars in millions):

	March 31, 2020			December 31, 2019
Credit card loans⁽¹⁾⁽²⁾	$	73,811		$	77,181
Other loans⁽³⁾
Private student loans⁽⁴⁾	9,957			9,653
Personal loans	7,651			7,687
Other	1,544			1,373
Total other loans	19,152			18,713
Total loan receivables	92,963			95,894
Allowance for credit losses⁽⁵⁾	(6,913		)	(3,383		)
Net loan receivables	$	86,050		$	92,511


(1)	Amounts include carrying values of $18.4 billion and $18.9 billion underlying investors' interest in trust debt at March 31, 2020 and December 31, 2019, respectively, and $10.8 billion and $12.7 billion in seller's interest at March 31, 2020 and December 31, 2019, respectively. See Note 4: Credit Card and Student Loan Securitization Activities for additional information.


(2)	Unbilled accrued interest receivable on credit card loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $425 million and $471 million at March 31, 2020 and December 31, 2019, respectively.


(3)	Accrued interest receivable on private student, personal and other loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $495 million, $53 million and $5 million, respectively, at March 31, 2020 and $461 million, $53 million and $4 million, respectively, at December 31, 2019.


(4)	Amounts include carrying values of $287 million and $292 million in loans pledged as collateral against the note issued from a student loan securitization trust at March 31, 2020 and December 31, 2019, respectively. See Note 4: Credit Card and Student Loan Securitization Activities for additional information.

(5)

Prior to adoption of ASU No. 2016-13 on January 1, 2020, credit losses were estimated using the incurred loss approach.

Schedule of Credit Risk Profile by FICO Score and Origination Year

The following table provides the distribution of the most recent FICO scores available for the Company's customers by the amortized cost basis (excluding accrued interest receivable presented in other assets) for credit card, private student and personal loan receivables (dollars in millions):

	Credit Risk Profile by FICO Score
	March 31, 2020								December 31, 2019
	660 and Above				Less than 660 or No Score				660 and Above				Less than 660 or No Score
	$		%		$		%		$		%		$		%
Credit card loans⁽¹⁾	$	58,598	79	%	$	15,213	21	%	$	61,997	80	%	$	15,184	20	%
Private student loans by origination year⁽²⁾⁽³⁾
2020	$	207	97	%	$	6	3	%
2019	1,690		94	%	112		6	%	$	1,176	93	%	$	92	7	%
2018	1,465		95	%	81		5	%	1,518		95	%	79		5	%
2017	1,144		94	%	70		6	%	1,198		95	%	69		5	%
2016	883		94	%	58		6	%	934		94	%	58		6	%
Prior	3,955		93	%	286		7	%	4,229		93	%	300		7	%
Total private student loans	$	9,344	94	%	$	613	6	%	$	9,055	94	%	$	598	6	%
Personal loans by origination year
2020	$	923	100	%	$	4	—	%
2019	3,171		97	%	90		3	%	$	3,529	98	%	$	62	2	%
2018	1,666		92	%	141		8	%	1,941		93	%	140		7	%
2017	974		89	%	120		11	%	1,167		90	%	136		10	%
2016	380		87	%	55		13	%	475		88	%	65		12	%
Prior	105		83	%	22		17	%	145		84	%	27		16	%
Total personal loans	$	7,219	94	%	$	432	6	%	$	7,257	94	%	$	430	6	%


(1)	Amounts include $1.0 billion and $956 million of revolving line-of-credit arrangements that were converted to term loans as a result of a TDR program as of March 31, 2020 and December 31, 2019, respectively.


(2)	A majority of student loans originations occur in the third quarter and disbursements can span across multiple calendar years.

(3)

FICO score represents the higher credit score of the cosigner or borrower.

Schedule of Delinquent Loans by Origination Year

The amortized cost basis (excluding accrued interest receivable presented in other assets) of delinquent loans in the Company's loan portfolio is shown below for credit card, private student and personal loan receivables (dollars in millions):

	March 31, 2020						December 31, 2019
	30-89 Days Delinquent		90 or More Days Delinquent		Total Past Due		30-89 Days Delinquent		90 or More Days Delinquent		Total Past Due
Credit card loans	$	919	$	1,016	$	1,935	$	999	$	1,020	$	2,019
Private student loans by origination year⁽¹⁾⁽²⁾
2020	$	—	$	—	$	—
2019	1		—		1		$	1	$	—	$	1
2018	8		4		12		4		1		5
2017	11		6		17		11		2		13
2016	13		7		20		14		5		19
Prior	93		31		124		106		37		143
Total private student loans	$	126	$	48	$	174	$	136	$	45	$	181
Personal loans by origination year
2020	$	—	$	—	$	—
2019	18		5		23		$	11	$	3	$	14
2018	26		11		37		27		11		38
2017	18		8		26		22		10		32
2016	7		3		10		10		5		15
Prior	2		2		4		4		2		6
Total personal loans	$	71	$	29	$	100	$	74	$	31	$	105


(1)	Student loans may include a deferment period, during which customers are not required to make payments while enrolled in school at least half time as determined by the school.

(2)

Includes PCD loans for all periods presented.

Schedule of Changes in the Allowance for Credit Losses

The following tables provide changes in the Company's allowance for credit losses (dollars in millions):

	For the Three Months Ended March 31, 2020
	Credit Card			Student Loans			Personal Loans			Other		Total
Balance at December 31, 2019⁽¹⁾	$	2,883		$	148		$	348		$	4	$	3,383
Cumulative effect of ASU No. 2016-13 adoption⁽²⁾	1,667			505			265			24		2,461
Balance at January 1, 2020	4,550			653			613			28		5,844
Additions
Provision for credit losses⁽³⁾	1,439			129			263			7		1,838
Deductions
Charge-offs	(869		)	(22		)	(84		)	—		(975		)
Recoveries	186			5			15			—		206
Net charge-offs	(683		)	(17		)	(69		)	—		(769		)
Balance at March 31, 2020	$	5,306		$	765		$	807		$	35	$	6,913

	For the Three Months Ended March 31, 2019
	Credit Card			Student Loans			Personal Loans			Other		Total
Balance at December 31, 2018⁽¹⁾	$	2,528		$	169		$	338		$	6	$	3,041
Additions
Provision for credit losses⁽¹⁾	710			15			84			—		809
Deductions
Charge-offs	(774		)	(19		)	(94		)	—		(887		)
Recoveries	158			4			10			—		172
Net charge-offs⁽⁴⁾	(616		)	(15		)	(84		)	—		(715		)
Other⁽⁵⁾	—			(1		)	—			—		(1		)
Balance at March 31, 2019⁽¹⁾	$	2,622		$	168		$	338		$	6	$	3,134


(1)	Prior to adoption of ASU No. 2016-13 on January 1, 2020, credit losses were estimated using the incurred loss approach.


(2)	Represents the adjustment to allowance for credit losses as a result of adoption of ASU No. 2016-13 on January 1, 2020.


(3)	Excludes a $31 million release of the liability for expected credit losses on unfunded commitments for the three months ended March 31, 2020 as the liability is recorded in accrued expenses and other liabilities in the Company's condensed consolidated statements of financial condition.


(4)	Prior to adoption of ASU No. 2016-13 on January 1, 2020, net charge-offs on PCD loans generally did not result in a charge to earnings.

(5)

Net change in reserves on PCD pools having no remaining non-accretable difference (prior to adoption of ASU No. 2016-13 on January 1, 2020).

Schedule of Net Charge-offs of Interest and Fee Revenues on Loan Receivables

Net charge-offs of principal are recorded against the allowance for credit 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 March 31,
	2020		2019
Interest and fees accrued subsequently charged off, net of recoveries (recorded as a reduction of interest income)	$	143	$	127
Fees accrued subsequently charged off, net of recoveries (recorded as a reduction to other income)	$	35	$	31

Schedule of Delinquent and Non-Accruing Loans

The amortized cost basis (excluding accrued interest receivable presented in other assets) of delinquent and non-accruing loans in the Company's loan portfolio is shown below by each class of loan receivables (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 March 31, 2020
Credit card loans	$	919	$	1,016	$	1,935	$	940	$	238
Other loans
Private student loans⁽²⁾	126		48		174		46		15
Personal loans	71		29		100		27		12
Other	7		2		9		—		8
Total other loans	204		79		283		73		35
Total loan receivables	$	1,123	$	1,095	$	2,218	$	1,013	$	273

At December 31, 2019
Credit card loans	$	999	$	1,020	$	2,019	$	940	$	237
Other loans
Private student loans⁽²⁾	136		45		181		45		11
Personal loans	74		31		105		29		12
Other	5		2		7		—		6
Total other loans	215		78		293		74		29
Total loan receivables	$	1,214	$	1,098	$	2,312	$	1,014	$	266

(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 $10 million and $12 million for the three months ended March 31, 2020 and 2019, 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)

Includes PCD loans for all periods presented.

Schedule of Loans That Entered a Modification Program During the Period

The following table provides information on loans that entered a TDR program during the period (dollars in millions):

	For the Three Months Ended March 31,
	2020			2019
	Number of Accounts	Balances		Number of Accounts	Balances
Accounts that entered a TDR program during the period
Credit card loans⁽¹⁾	92,736	$	609	92,356	$	592
Private student loans	1,718	$	32	1,576	$	31
Personal loans	2,548	$	34	2,600	$	35

(1)

Accounts that entered a credit card TDR program include $210 million and $163 million that were converted from revolving line-of-credit arrangements to term loans during the three months ended March 31, 2020 and 2019, respectively.

Schedule of Troubled Debt Restructurings That Subsequently Defaulted

The following table presents the carrying value of loans that experienced a payment default during the period that had been modified in a TDR during the 15 months preceding the end of each period (dollars in millions):

	For the Three Months Ended March 31,
	2020			2019
	Number of Accounts	Aggregated Outstanding Balances Upon Default		Number of Accounts	Aggregated Outstanding Balances Upon Default
TDRs that subsequently defaulted
Credit card loans⁽¹⁾⁽²⁾	20,485	$	117	15,652	$	90
Private student loans⁽³⁾	358	$	7	280	$	5
Personal loans⁽²⁾	1,200	$	18	848	$	13


(1)	Terms revert back to the pre-modification terms for customers who default from a temporary program and charging privileges remain suspended in most cases.


(2)	For credit card loans and personal loans, a customer defaults from a TDR program after two consecutive missed payments. The outstanding balance upon default is generally the loan balance at the end of the month prior to default.

(3)

For student loans, defaults have been defined as loans that are 60 or more days delinquent. The outstanding balance upon default is generally the loan balance at the end of the month prior to default.