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Reserves for Losses
 9 Months Ended
Sep. 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 September 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 nine months ended September 30:

(Millions)  20162015
Balance, January 1  $1,028$1,201
Provisions(a)  831829
Net write-offs
Principal(b)(687)(733)
Interest and fees(b)  (128)(122)
Other(c)  70(11)
Balance, September 30  $1,114$1,164

  • Provisions for principal, interest and fee reserve components.
  • Consists of principal write-offs, less recoveries of $280 million and $320 million, including net write-offs from TDRs of $24 million and $30 million, for the nine months ended September 30, 2016 and 2015, respectively. Recoveries of interest and fees were de minimis.
  • Includes foreign currency translation adjustments of $(3) million and $(18) million and other adjustments of $6 million and $7 million for the nine months ended September 30, 2016 and 2015, respectively. The nine months ended September 30, 2016 also includes reserves of $67 million associated with $265 million of retained Card Member loans reclassified from HFS to held for investment during the first half of the year.

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 September 30, 2016 and December 31, 2015:

(Millions)  20162015
Card Member loans evaluated individually for impairment(a)$344$279
Related reserves (a)$60$53
Card Member loans evaluated collectively for impairment(b)$60,274$58,294
Related reserves (b)$1,054$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 nine months ended September 30:

(Millions)  20162015
Balance, January 1  $462$465
Provisions(a)  496542
Net write-offs(b)  (518)(544)
Other(c)  (3)(22)
Balance, September 30  $437$441

  • Provisions for principal and fee reserve components.
  • Consists of principal and fee components, less recoveries of $301 million and $302 million, including net write-offs from TDRs of $16 million and $49 million, for the nine months ended September 30, 2016 and 2015, respectively.
  • Includes foreign currency translation adjustments of nil and $(13) million and other adjustments of $(3) million and $(9) million for the nine months ended September 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 September 30, 2016 and December 31, 2015:

(Millions)  20162015
Card Member receivables evaluated individually for impairment(a)$46$33
Related reserves (a)$24$20
Card Member receivables evaluated collectively for impairment$45,212$44,100
Related reserves (b)$413$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.