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Reserves for Losses
 3 Months Ended
Mar. 31, 2016
Reserves For Losses Card Member Receivables And Loans Disclosure [Abstract]  
Reserve for Losses

4. Reserves for Losses

Reserves for losses relating to Card Member receivables and loans 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 March 31, 2016 and December 31, 2015.

Changes in Card Member Receivables Reserve for Losses

The following table presents changes in the Card Member receivables reserve for losses for the three months ended March 31:

(Millions)  20162015
Balance, January 1  $462$465
Provisions(a)  169174
Net write-offs(b)  (186)(199)
Other(c)  1(11)
Balance, March 31  $446$429

  • Provisions for principal and fee reserve components.
  • Consists of principal and fee components, less recoveries of $101 million and $99 million, including net write-offs from TDRs of $10 million and $31 million, for the three months ended March 31, 2016 and 2015, respectively.
  • Includes foreign currency translation adjustments of $2 million and $(7) million for the three months ended March 31, 2016 and 2015, respectively, and other adjustments of $(1) million and $(4) million for the three months ended March 31, 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 March 31, 2016 and December 31, 2015:

(Millions)  20162015
Card Member receivables evaluated individually for impairment(a)$38$33
Related reserves (a)$20$20
Card Member receivables evaluated collectively for impairment$44,435$44,100
Related reserves (b)$426$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.

Changes in Card Member Loans Reserve for Losses

The following table presents changes in the Card Member loans reserve for losses for the three months ended March 31:

(Millions)  20162015
Balance, January 1  $1,028$1,201
Provisions(a)  227235
Net write-offs
Principal(b)(214)(259)
Interest and fees(b)  (40)(43)
Other(c)  11(4)
Balance, March 31  $1,012$1,130

  • Provisions for principal, interest and fee reserve components.
  • Consists of principal write-offs, less recoveries of $88 million and $103 million, including net write-offs/(recoveries) from TDRs of $13 million and $16 million, for the three months ended March 31, 2016 and 2015, respectively. Recoveries of interest and fees were de minimis.
  • Includes foreign currency translation adjustments of $2 million and $(7) million and other adjustments of $2 million and $3 million for the three months ended March 31, 2016 and 2015, respectively. The three months ended March 31, 2016 also includes the transfer of reserves of $7 million associated with $20 million of Card Member loans transferred from HFS to held for investment.

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 March 31, 2016 and December 31, 2015:

(Millions)  20162015
Card Member loans evaluated individually for impairment(a)$288$279
Related reserves (a)$52$53
Card Member loans evaluated collectively for impairment(b)$57,118$58,294
Related reserves (b)$960$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.