Reserves for Losses

3 Months Ended

Mar. 31, 2017

3. Reserves for Losses

Reserves for losses relating to Card Member receivables and loans represent management’s best estimate of the probable inherent losses in Credco’s outstanding portfolio of receivables and loans, 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 receivables HFS as of March 31, 2016; Credco did not have any Card Member receivables HFS as of March 31, 2017 and December 31, 2016.

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)		2017		2016
Balance, January 1		$	110	$	114
	Provisions		60		34
	Other credits^(a)		10		6
	Net write-offs^(b)		(47)		(36)
	Other debits^(c)		(5)		―
Balance, March 31		$	128	$	118

Primarily reserve balances related to participation interests in Card Member receivables purchased from affiliates. Participation interests in Card Member receivables purchased totaled $2.6 billion and $1.1 billion for the three months ended March 31, 2017 and 2016, respectively.
Net of recoveries of $23 million and $25 million for the three months ended March 31, 2017 and 2016, respectively.
Primarily reserve balances related to participation interests in Card Member receivables sold to an affiliate. Participation interests in Card Member receivables sold totaled $1.0 billion and nil for the three months ended March 31, 2017 and 2016, respectively.

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)		2017		2016
Balance, January 1		$	5	$	4
	Provisions		2		2
	Net write-offs^(a)		(2)		(1)
Balance, March 31		$	5	$	5

Net of recoveries of $0.2 million for both the three months ended March 31, 2017 and 2016.