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Reserves for Losses
 9 Months Ended
Sep. 30, 2014
Reserves For Losses Card Member Receivables And Loans 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 losses inherent 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. For information on the Company’s reserves for losses and the related accounting policies, refer to Note 5 on pages 77 – 78 of the Annual Report.

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)  20142013
Balance, January 1  $386$428
Provisions(a)  594474
Net write-offs(b)  (527)(507)
Other(c)  (21)1
Balance, September 30  $432$396

  • Provisions for principal (resulting from authorized transactions) and fee reserve components.
  • Consists of principal (resulting from authorized transactions) and fee components, less recoveries of $269 million and $304 million, including net write-offs from TDRs of $14 million and $16 million, for the nine months ended September 30, 2014 and 2013, respectively.
  • Beginning in first quarter 2014, reserves for card related fraud losses of $(7) million are reflected in other liabilities. All periods include foreign currency translation adjustments of $(6) million and $(3) million for the nine months ended September 30, 2014 and 2013, respectively, and other items of $(8) million and $4 million for the nine months ended September 30, 2014 and 2013, 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, 2014 and December 31, 2013:

(Millions)  20142013
Card Member receivables evaluated individually for impairment(a)$44$50
Related reserves (a)$32$38
Card Member receivables evaluated collectively for impairment$45,073$44,113
Related reserves (b)$400$348

  • Represents receivables modified in a TDR and related reserves. Refer to the Impaired Card Member Loans and Receivables discussion in Note 4 on pages 74 – 76 of the Annual Report for further information.
  • 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 nine months ended September 30:

(Millions)  20142013
Balance, January 1  $1,261$1,471
Provisions(a)  797825
Net write-offs
Principal(b)(786)(888)
Interest and fees(b)  (124)(113)
Other(c)  (2)(14)
Balance, September 30  $1,146$1,281

  • Provisions for principal (resulting from authorized transactions), interest and fee reserves components.
  • Consists of principal write-offs (resulting from authorized transactions), less recoveries of $324 million and $343 million, including net write-offs from TDRs of $(5) million and $6 million, for the nine months ended September 30, 2014 and 2013, respectively. Recoveries of interest and fees were de minimis.
  • Beginning in first quarter 2014, reserves for card related fraud losses of $(6) million are reflected in other liabilities. All periods include foreign currency translation adjustments of $(7) million and $(8) million for the nine months ended September 30, 2014 and 2013, respectively, and other items of $11 million and $(6) million for the nine months ended September 30, 2014 and 2013, respectively.

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, 2014 and December 31, 2013:

(Millions)  20142013
Card Member loans evaluated individually for impairment(a)$309$378
Related reserves (a)$70$84
Card Member loans evaluated collectively for impairment(b)$65,748$66,860
Related reserves (b)$1,076$1,177

  • Represents loans modified in a TDR and related reserves. Refer to the Impaired Card Member Loans and Receivables discussion in Note 4 on pages 74 – 76 of the Annual Report for further information.
  • 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.