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Accounts Receivable and Loans | 3 Months Ended
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Mar. 31, 2013
Loans Notes Trade And Other Receivables Disclosure [Abstract] |
Accounts Receivable and Loans | 3. Accounts Receivable and Loans As described below, t he Company's charge and lending payment card products result in the generation of cardmember receivables and cardmember loans, respectively. Cardmem ber and Other Receivables Cardmember receivables, repre senting amounts due from charge card product customers, are recorded at the time a cardmember enters into a point-of-sale transaction with a merchant. Each charge card transaction is authorized based on its likely economics reflecting a cardmember's most recent credit information and spend patterns. Additionally, g lobal spend limits are established to limit the maximum exposure for the Company. Charge card customers generally must pay the full amount billed each month. Cardmember receivable balances are presented on the Consolidated Balance Sheets net of reserves for losses (refer to Note 4), and include principal and any related accrued fees. Accounts receivable as of March 31, 2013 and December 31, 2012 consisted of:
(Millions) |  | 2013 |  | 2012
U.S. Card Services(a) |  | $ | 20,369 |  | $ | 21,124
International Card Services |  |  | 7,115 |  |  | 7,778
Global Commercial Services(b) |  |  | 15,704 |  |  | 13,671
Global Network & Merchant Services(c) |  |  | 183 |  |  | 193
Cardmember receivables(d) |  |  | 43,371 |  |  | 42,766
Less: Reserve for losses |  |  | 410 |  |  | 428
Cardmember receivables, net |  | $ | 42,961 |  | $ | 42,338
Other receivables, net(e) |  | $ | 3,143 |  | $ | 3,576
Includes $6.5 b illion and $7.5 billion of gross cardmember receivables available to settle obligations of a consolidated VIE as of March 31, 2013 and December 31, 2012, respectively. Includes $449 m illion and $476 million of gross cardmember receivables available to settle obligations of a consolidated VIE as of March 31, 2013 and December 31, 2012, respectively. Also i ncludes $896 million and $913 million due from airlines, of which Delta Air Lines (Delta) comprises $645 million and $676 million as of March 31, 2013 and December 31, 2012, respectively. Includes receivables primarily related to the Company's International Currency Card portfolios. Includes approximately $13.6 billion and $13.7 billion of cardmember receivables outside the United States as of March 31, 2013 and December 31, 2012, respectively. Other receivables primarily represent amounts related to (i) purchased joint venture receivables, (ii) certain merchants for billed discount revenue, (iii) the Company's travel customers and suppliers, and (iv) other receivables due to the Company in the ordinary course of business. Other receivables are presented net of reserves for losses of $86 million as of both March 31, 2013 and December 31, 2012. Cardmember and Other Loans Cardmember loans, represent ing amounts due from lending card product customers, are recorded at the time a cardmember enters into a point-of-sale transaction with a merchant or when a charge card customer enters into an extended payment arrangement with the Company. The Company's len ding portfolios primarily include revolving loans to cardmembers obta i ned through either their credit card accounts or the lending on charge feature of their charge card accounts. These loans have a range of terms such as credit limits, interest rates, fees and payment structures, which can be revised over time based on new information about cardmembers and in accordance with applicable regulations and the respective product's terms and conditions. Cardmembers holding revolving loans are typically required to make monthly payments based on pre-established amounts. The amounts that cardmembers choose to revolve are subject to f inance c harges. Cardmember loans are presented on the Consolidated Balance Sheets net of reserves for losses (refer to Note 4), and include principa l, accrued interest and fees receivable. The Company's policy generally is to cease accruing interest on a cardmember loan at the time the account is written off, and establish reserves for interest that the Company believes will not be collected. Loans as of March 31, 2013 and December 31, 2012 consisted of:
(Millions) |  |  | 2013 |  |  | 2012
U.S. Card Services(a) |  | $ | 53,606 |  | $ | 55,953
International Card Services |  |  | 8,631 |  |  | 9,236
Global Commercial Services |  |  | 49 |  |  | 40
Cardmember loans |  |  | 62,286 |  |  | 65,229
Less: Reserve for losses |  |  | 1,367 |  |  | 1,471
Cardmember loans, net |  | $ | 60,919 |  | $ | 63,758
Other loans, net(b) |  | $ | 541 |  | $ | 551
I ncludes approximately $30.1 billion and $32.7 billion of gross cardmember loans available to settle obligations of a consolidated VIE as of March 31, 2013 and December 31, 2012, respectively. Other loans primarily represent loans to merchants and a store card loan portfolio whose billed b usiness is not processed on the Company's network. Other loans are presented net of reserves for losses of $18 million and $20 million as of March 31, 2013 and December 31, 2012, respectively. Cardmember Loans and C ardmemb er Receivables A ging Generally, a cardmember account is considered past due if payment is not received within 30 days af ter the billing statement date. T he following table represents the aging of cardmember loans and receivables as of March 31, 2013 and December 31, 2012:
|  |  |  |  |  | 30-59 |  |  | 60-89 |  |  | 90+ |  |  |
|  |  |  |  |  | Days |  |  | Days |  |  | Days |  |  |
|  |  |  |  |  | Past |  |  | Past |  |  | Past |  |  |
2013(Millions) |  |  | Current |  |  | Due |  |  | Due |  |  | Due |  |  | Total
Cardmember Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  | $ | 52,947 |  | $ | 182 |  | $ | 143 |  | $ | 334 |  | $ | 53,606
International Card Services |  |  | 8,487 |  |  | 50 |  |  | 32 |  |  | 62 |  |  | 8,631
Cardmember Receivables: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  | $ | 19,992 |  | $ | 107 |  | $ | 83 |  | $ | 187 |  | $ | 20,369
International Card Services(a) |  |  | (b) |  |  | (b) |  |  | (b) |  |  | 80 |  |  | 7,115
Global Commercial Services(a) |  |  | (b) |  |  | (b) |  |  | (b) |  |  | 111 |  |  | 15,704
|  |  |  |  |  | 30-59 |  |  | 60-89 |  |  | 90+ |  |  |
|  |  |  |  |  | Days |  |  | Days |  |  | Days |  |  |
|  |  |  |  |  | Past |  |  | Past |  |  | Past |  |  |
2012(Millions) |  |  | Current |  |  | Due |  |  | Due |  |  | Due |  |  | Total
Cardmember Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  | $ | 55,281 |  | $ | 200 |  | $ | 147 |  | $ | 325 |  | $ | 55,953
International Card Services |  |  | 9,099 |  |  | 47 |  |  | 30 |  |  | 60 |  |  | 9,236
Cardmember Receivables: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  | $ | 20,748 |  | $ | 116 |  | $ | 76 |  | $ | 184 |  | $ | 21,124
International Card Services(a) |  |  | (b) |  |  | (b) |  |  | (b) |  |  | 74 |  |  | 7,778
Global Commercial Services(a) |  |  | (b) |  |  | (b) |  |  | (b) |  |  | 112 |  |  | 13,671
For c ardmember receivables in International Card Services (ICS) and Global Commercial Services (GCS), delinquency data is tracked based on days past billing status rather than days past due. A cardmember account is considered 90 days past billing if payment has not been received within 90 days of the cardmember's billing statement date. In addition, if the Company initiates collection procedures on an account prior to the account becoming 90 days past billing the associated cardmember receivable balance is considered as 90 days past billing. These amounts are shown above as 90+ Days Past Due for presentation purposes. D ata for periods prior to 90 days past billing are not available due to financial reporting system constraints. Therefore, it has not been relied upon for risk management purposes. The balances that are current to 89 days past due can be derived as the difference between the Total and the 90+ Days Past Due balances. Credit Quality Indicators for Cardmember Loans and R eceivables The following table s prese nt the key credit quality indicators as of or for the three months ended March 31:
|  | 2013 |  | 2012 |
|  | Net Write-Off Rate |  |  |  | Net Write-Off Rate |  |  |
|  |  |  |  |  | 30 Days |  |  |  |  |  | 30 Days |
|  |  |  | Principal, |  | Past Due |  |  |  | Principal, |  | Past Due |
|  | Principal |  | Interest, & |  | as a % of |  | Principal |  | Interest, & |  | as a % of |
|  | Only | (a) | Fees | (a) | Total |  | Only | (a) | Fees | (a) | Total |
Cardmember Loans: |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  | 2.0 | % | 2.2 | % | 1.2 | % | 2.3 | % | 2.6 | % | 1.3 | %
International Card Services |  | 1.8 | % | 2.3 | % | 1.7 | % | 2.1 | % | 2.7 | % | 1.8 | %
Cardmember Receivables: |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  | 2.0 | % | 2.2 | % | 1.9 | % | 2.3 | % | 2.5 | % | 1.9 | %
|  |  |  |  |  | 2013 |  | 2012 |
|  |  |  |  |  | Net Loss |  |  |  | Net Loss |  |  |
|  |  |  |  |  | Ratio as |  | 90 Days |  | Ratio as |  | 90 Days |
|  |  |  |  |  | a % of |  | Past Billing |  | a % of |  | Past Billing |
|  |  |  |  |  | Charge |  | as a % of |  | Charge |  | as a % of |
|  |  |  |  |  | Volume |  | Receivables |  | Volume |  | Receivables |
Cardmember Receivables: |  |  |  |  |  |  |  |  |
International Card Services |  | 0.18 | % | 1.1 | % | 0.15 | % | 1.0 | %
Global Commercial Services | 0.08 | % | 0.7 | % | 0.08 | % | 0.6 | %
The Company presents a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention. In addition, b ecause the Company's practice is to include uncollectible interest and/or fees as part of its total provision for losses, a net write-off rate includi ng principal, interest and/or fees is also presented. Refer to Note 4 for additional indicators, including external environmental qualitative factors, management considers in its monthly evaluation process for reserves for losses. Impaired Cardmember Loans and R eceivables Impaired loans and receivables are defined by GAAP as individual larger balance or homogeneous pools of smaller balance restructured loans and receivables for which it is probable that the Company will be unable to collect all amounts due according to the original contractual terms of the loan and receivable agreement. The Company considers impaired loans and receivables to include: (i) loans over 90 days past due still accruing interest, (ii) non-accrual loans, and (iii) loans and receivables modified as troubled debt restructuring s (TDR s). The Company may modify, through various company sponsored programs, cardmember loans and receivables in instances where the cardmember is experiencing financial difficulty to minimize losses while providing cardmembers with temporary or permanent financial relief. The Company has classified cardmember loans and receivables in these modification programs as TDRs. Such modifications to the loans and receivables may include (i) reducing the interest rate (as low as zero percent, in which case the loan is characterized as non-accrual in the Company's TDR disclosures), (ii) reducing the outstanding balance (in the event of a settlement), (iii) suspending delinquenc y fees until the cardmember exits the modification program and (iv) placing the cardmember on a fixed payment plan not to exceed 60 months. Upon entering the modification program, the c ardmember's ability to make future purchases is either cancelled or in certain cases suspended until the cardmember successfully exits the modification program. In accordance with the modification agreement with the cardmember, loans revert back to the original contractual terms (including the contractual inter est rate) when the cardmember exit s the modification program, either (i) when all payments have been made in accordance with the modification agree ment or (ii) the cardmembe r defaults out of the modification program. In either case, the Company establishes a reserve for cardmember interest charges considered to be uncollectible. The performance of a loan or a receivable modified as a TDR is closely monitored to understand its impa ct on the Company's reserve for losses. Thou gh the ultimate success of modification programs remains uncertain, the Company believes the programs improve the cumulative loss performance of such loans and receivables. Reserves for cardmember loans and receivables modified as TDR s are determined by the difference between the cash flows expected to be received from the cardmember (taking into consideration the probability of subsequent defaults), discounted at the original effective interest rates, and the carrying value of the cardmember loan or receivable balance. The Company determines the original effective interest rate as the interest rate in effect prior to the imposition of any penalty interest r ate. All changes in the impairment measurement, including the compo nent due to the passage of time, are included in the provision for losses i n the Consolidated Statements of Income. The following table provide s additional information with respect to the Company's impaired cardmember loans and receivables, which are not significant for ICS and GCS, as of March 31, 2013 and December 31, 2012:
|  |  | Loans over |  |  |  |  |  |  |  |  |  |  |
|  |  | 90 Days |  |  |  |  |  | Loans & |  |  | Total |  |
|  |  | Past Due |  |  | Non- |  |  | Receivables |  |  | Impaired |  |  | Unpaid |  |  |
|  | & Accruing |  |  | Accrual |  |  | Modified |  |  | Loans & |  |  | Principal |  |  | Allowance
2013(Millions) |  |  | Interest | (a) |  | Loans | (b) |  | as a TDR | (c) |  | Receivables |  |  | Balance | (d) |  | for TDRs(e)
Cardmember Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  | $ | 84 |  | $ | 428 |  | $ | 573 |  | $ | 1,085 |  | $ | 1,032 |  | $ | 143
International Card Services |  |  | 62 |  |  | 4 |  |  | 5 |  |  | 71 |  |  | 70 |  |  | 1
Cardmember Receivables: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  |  | ― |  |  | ― |  |  | 113 |  |  | 113 |  |  | 106 |  |  | 88
Total |  | $ | 146 |  | $ | 432 |  | $ | 691 |  | $ | 1,269 |  | $ | 1,208 |  | $ | 232
|  |  | Loans over |  |  |  |  |  |  |  |  |  |  |
|  |  | 90 Days |  |  |  |  |  | Loans & |  |  | Total |  |
|  |  | Past Due |  |  | Non- |  |  | Receivables |  |  | Impaired |  |  | Unpaid |  |  |
|  | & Accruing |  |  | Accrual |  |  | Modified |  |  | Loans & |  |  | Principal |  |  | Allowance
2012(Millions) |  |  | Interest | (a) |  | Loans | (b) |  | as a TDR | (c) |  | Receivables |  |  | Balance | (d) | for TDRs(e)
Cardmember Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  | $ | 73 |  | $ | 426 |  | $ | 627 |  | $ | 1,126 |  | $ | 1,073 |  | $ | 152
International Card Services |  |  | 59 |  |  | 5 |  |  | 6 |  |  | 70 |  |  | 69 |  |  | 1
Cardmember Receivables: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  |  | ― |  |  | ― |  |  | 117 |  |  | 117 |  |  | 111 |  |  | 91
Total |  | $ | 132 |  | $ | 431 |  | $ | 750 |  | $ | 1,313 |  | $ | 1,253 |  | $ | 244
The Company's policy is generally to accrue inte rest through the date of write-off (at 180 days past due). The Company establishes reserves for interest that the Company believes will not be collected. Excludes loans modified as a TDR. Non-accrual loans not in modification programs include certain cardmember loans placed with outside collection agencies for which the Company has ceased accruing interest. The Company's policy is generally not to resume the accrual of interest on these loans. Payments received are applied against the recorded loan balance. Interest income is recognized on a cash basis for any payments received after the loan balance has been paid in full. Excludes loans modified as a TDR. T otal loans and receivable s modified as a TDR include s $294 million and $320 mil lion that are non-accrual and $5 million and $6 million that are past due 90 days and still accruing interest as of March 31, 2013 and December 31, 2012, respectively. Unpaid principal balance consists of cardmember charges billed and excludes other amounts charged directly by the Company such as interest and fees. Represents the reserve for losses for TDRs, which are evaluated individually fo r impairment. The Company record s a reserve for losses for all impaired loans. Refer to Cardmember Loans Evaluated Individually and Collectively for Impairment in Note 4 for further discussion of the reserve for losses on loans over 90 days past due and accruing interest and non-accrual loans, which are evaluated collectively for impairment. The following table provides information with respect to the Company's interest income recognized and average balances of impaired cardmember loans and receivables, which are not significant for ICS and GCS, during the three months ended March 31:
|  | 2013 |  | 2012
|  |  | Interest |  |  |  |  |  | Interest |  |  |
|  |  | Income |  |  | Average |  |  | Income |  |  | Average
(Millions) |  |  | Recognized |  |  | Balance |  |  | Recognized |  |  | Balance
Cardmember Loans: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  | $ | 15 |  | $ | 1,105 |  | $ | 16 |  | $ | 1,307
International Card Services |  |  | 4 |  |  | 70 |  |  | 4 |  |  | 80
Cardmember Receivables: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  |  | ― |  |  | 115 |  |  | ― |  |  | 160
Total |  | $ | 19 |  | $ | 1,290 |  | $ | 20 |  | $ | 1,547
Cardmember Loans and Receivables Modified as TDRs The following table provides additional information with respect to the cardmember loans and receivables modified as TDRs, which are not significant for ICS, during the three months ended March 31:
|  | 2013 |  | 2012
|  |  |  | Aggregated |  | Aggregated |  |  |  | Aggregated |  | Aggregated
|  |  |  | Pre- |  | Post- |  |  |  | Pre- |  | Post-
|  |  |  | Modification |  | Modification |  |  |  | Modification |  | Modification
|  | Number of |  | Outstanding |  | Outstanding |  | Number of |  | Outstanding |  | Outstanding
(Accounts in thousands, Dollars in millions) |  | Accounts |  | Balances(a) |  | Balances(a) |  | Accounts |  | Balances(a) |  | Balances(a)
Troubled Debt Restructurings: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services ― Cardmember Loans |  | 23 |  | $ | 172 |  | $ | 170 |  | 32 |  | $ | 229 |  | $ | 223
U.S. Card Services ― Cardmember Receivables |  | 8 |  |  | 104 |  |  | 102 |  | 11 |  |  | 128 |  |  | 125
Total(b) |  | 31 |  | $ | 276 |  | $ | 272 |  | 43 |  | $ | 357 |  | $ | 348
I ncludes principal and accrued interest. The difference between the pre- and post-modification outstanding balance s is attributable to amounts charged off for cardmember loans and receivables being resolved through the Company's short-term settlement programs. As described previously, the Company's cardmember loans and receivables modification programs may include (i) reducing the interest rate, (ii) reducing the outstanding balance, (i ii) suspending delinquency fees and (iv) placing the cardmember on a fixed payment plan not exceeding 60 months. Upon entering the modification program, the c ardmember's ability to make future purchases is either cancelled or in certain cases suspended until successfully exit ing the modification program. The Company has evaluated the primary financial effects of the impact of the changes to an account upon modification as follows: Interest Rate Reduction: For both the three months ended March 31, 2013 and 2012, the average interest rate reduction was 13 percentage points. None of these interest rate reductions had a significant impact on interest on loans in the Consolidated Statements of Income. The Company does not offer interest rate reduction programs for U.S. Card Services (USCS) cardmember r eceivables as these receivables are non-interest bearing. Outstanding Balance Reduction: The table above presents the financial effects to the Company as a result of reducing the outstanding balance for s hort-t erm s ettlement p rograms. The difference between the pre- and post-modification outstanding balances represents the amount that either has been written off or will be written off upon successful completion of the settlement program. Payment Term Extension: For the three months ended March 31, 2013 and 2012, the aver age payment term extension was approximately 12 months and 15 months, respectively, for USCS cardmember r eceivables. For USCS cardmember l oans, there have been no payment term extension s. The following table provides information for the three months ended March 31, 2013 and 2012, with respect to the cardmember loans and receivables modif ied as TDRs that subsequently defaulted w ithin 12 months of modification. A cardmember will default from a modific ation program after one and up to three consecutive missed payments, depending on the terms of the modification program. The defaulted ICS cardmember loan modifications were not significant.
|  | 2013 |  | 2012
|  |  |  |  |  | Aggregated |  |  |  |  |  | Aggregated
|  |  |  |  | Outstanding |  |  |  |  | Outstanding
|  |  | Number of |  |  | Balances |  |  | Number of |  |  | Balances
(Accounts in thousands, Dollars in millions) |  |  | Accounts |  | Upon Default(a) |  |  | Accounts |  | Upon Default(a)
Troubled Debt Restructurings That Subsequently Defaulted: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services ― Cardmember Loans |  |  | 5 |  | $ | 48 |  |  | 9 |  | $ | 63
U.S. Card Services ― Cardmember Receivables |  |  | 1 |  |  | 12 |  |  | 1 |  |  | 12
Total |  |  | 6 |  | $ | 60 |  |  | 10 |  | $ | 75
The outstanding balance include s principal and accrued interest.

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- Definition The entire disclosure for financing receivables. Examples of financing receivables include, but are not limited to, loans, trade accounts receivables, notes receivable, credit cards, and receivables relating to a lessor's right(s) to payment(s) from a lease other than an operating lease that is recognized as assets. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -URI http://asc.fasb.org/subtopic&trid=2196772 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 55 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=7880640&loc=SL6953791-111525 + Details
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