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Loan Receivables (Tables)
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3 Months Ended |
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Mar. 31, 2015
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| Loans and Leases Receivable Disclosure [Abstract] |
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| Schedule of Loan Receivables |
The Company's classes of receivables within the three portfolio segments are depicted in the table below (dollars in millions): | | | | | | | | | | March 31,
2015 | | December 31,
2014 | Loan receivables | | | | Credit card loans(1) | $ | 53,499 |
| | $ | 56,128 |
| Other loans | | | | Personal loans | 5,065 |
| | 5,007 |
| Private student loans | 5,177 |
| | 4,850 |
| Mortgage loans held for sale(2) | 180 |
| | 122 |
| Other(3) | 208 |
| | 202 |
| Total other loans | 10,630 |
| | 10,181 |
| Purchased credit-impaired loans(4) | 3,519 |
| | 3,660 |
| Total loan receivables | 67,648 |
| | 69,969 |
| Allowance for loan losses | (1,776 | ) | | (1,746 | ) | Net loan receivables | $ | 65,872 |
| | $ | 68,223 |
| | | | |
| | (1) | Amounts include $21.7 billion underlying investors’ interest in trust debt at March 31, 2015 and December 31, 2014 and $6.7 billion and $8.6 billion in seller's interest at March 31, 2015 and December 31, 2014, respectively. See Note 4: Credit Card and Student Loan Securitization Activities for further information. |
| | (2) | Substantially all mortgage loans held for sale are pledged as collateral against the warehouse line of credit used to fund consumer residential loans. |
| | (3) | Other includes home equity loans. |
| | (4) | Amounts include $1.9 billion and $2.0 billion of loans pledged as collateral against the notes issued from the Student Loan Corporation ("SLC") securitization trusts at March 31, 2015 and December 31, 2014, respectively. See Note 4: Credit Card and Student Loan Securitization Activities. |
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| Schedule of Delinquent and Non-Accruing Loans |
Information related to the delinquent and non-accruing loans in the Company’s loan portfolio is shown below by each class of loan receivables except for mortgage loans held for sale and PCI student loans, which is shown under the heading “— Purchased Credit-Impaired Loans” (dollars in millions): | | | | | | | | | | | | | | | | | | | | | | 30-89 Days Delinquent | | 90 or More Days Delinquent | | Total Past Due | | 90 or More Days Delinquent and Accruing | | Total Non-accruing(1) | At March 31, 2015 | | | | | | | | | | Credit card loans(2) | $ | 421 |
| | $ | 458 |
| | $ | 879 |
| | $ | 411 |
| | $ | 167 |
| Other loans | | | | |
|
| | | | | Personal loans(3) | 28 |
| | 11 |
| | 39 |
| | 10 |
| | 6 |
| Private student loans (excluding PCI)(4) | 56 |
| | 30 |
| | 86 |
| | 30 |
| | — |
| Other | 1 |
| | 1 |
| | 2 |
| | — |
| | 23 |
| Total other loans (excluding PCI) | 85 |
| | 42 |
| | 127 |
| | 40 |
| | 29 |
| Total loan receivables (excluding PCI) | $ | 506 |
| | $ | 500 |
| | $ | 1,006 |
| | $ | 451 |
| | $ | 196 |
| | | | | | | | | | | At December 31, 2014 | | | | | | | | | | Credit card loans(2) | $ | 491 |
| | $ | 480 |
| | $ | 971 |
| | $ | 442 |
| | $ | 157 |
| Other loans | | | | |
|
| | | | | Personal loans(3) | 29 |
| | 11 |
| | 40 |
| | 10 |
| | 5 |
| Private student loans (excluding PCI)(4) | 62 |
| | 25 |
| | 87 |
| | 25 |
| | — |
| Other | 1 |
| | 1 |
| | 2 |
| | — |
| | 21 |
| Total other loans (excluding PCI) | 92 |
| | 37 |
| | 129 |
| | 35 |
| | 26 |
| Total loan receivables (excluding PCI) | $ | 583 |
| | $ | 517 |
| | $ | 1,100 |
| | $ | 477 |
| | $ | 183 |
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| | (1) | The Company estimates that the gross interest income that would have been recorded in accordance with the original terms of non-accruing credit card loans was $7 million for the three months ended March 31, 2015 and 2014. The Company does not separately track the amount of gross interest income that would have been recorded in accordance with the original terms of loans. This amount was estimated based on customers' current balances and most recent interest rates. |
| | (2) | Credit card loans that are 90 or more days delinquent and accruing interest include $43 million of loans accounted for as troubled debt restructurings at March 31, 2015 and December 31, 2014. |
| | (3) | Personal loans that are 90 or more days delinquent and accruing interest include $3 million of loans accounted for as troubled debt restructurings at March 31, 2015 and December 31, 2014. |
| | (4) | Private student loans that are 90 or more days delinquent and accruing interest include $5 million of loans accounted for as troubled debt restructurings at March 31, 2015 and December 31, 2014. |
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| Schedule of Net Charge-offs |
Information related to the net charge-offs in the Company's loan portfolio is shown below by each class of loan receivables except for mortgage loans held for sale and PCI student loans, which is shown under the heading "— Purchased Credit-Impaired Loans" (dollars in millions): | | | | | | | | | | | | | | | | For the Three Months Ended March 31, | | 2015 | | 2014 | | Net
Charge-offs | | Net Charge-off
Rate | | Net
Charge-offs | | Net Charge-off
Rate | Credit card loans | $ | 319 |
| | 2.40 | % | | $ | 294 |
| | 2.32 | % | Other loans | | | | | | | | Personal loans | 28 |
| | 2.22 | % | | 21 |
| | 2.07 | % | Private student loans (excluding PCI) | 13 |
| | 1.03 | % | | 14 |
| | 1.31 | % | Total other loans (excluding PCI) | 41 |
| | 1.58 | % | | 35 |
| | 1.67 | % | Net charge-offs as a percentage of total loans (excluding PCI) | $ | 360 |
| | 2.26 | % | | $ | 329 |
| | 2.22 | % | Net charge-offs as a percentage of total loans (including PCI) | $ | 360 |
| | 2.14 | % | | $ | 329 |
| | 2.08 | % | | | | | | | | |
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| Schedule of Credit Risk Profile by FICO Score |
The following table provides the most recent FICO scores available for the Company’s customers as a percentage of each class of loan receivables: | | | | | | | | Credit Risk Profile
by FICO Score | | 660 and Above | | Less than 660 or No Score | At March 31, 2015 | | | | Credit card loans | 83 | % | | 17 | % | Personal loans | 96 | % | | 4 | % | Private student loans (excluding PCI)(1) | 96 | % | | 4 | % | | | | | At December 31, 2014 | | | | Credit card loans | 83 | % | | 17 | % | Personal loans | 96 | % | | 4 | % | Private student loans (excluding PCI)(1) | 96 | % | | 4 | % | | | | |
| | (1) | PCI loans are discussed under the heading "— Purchased Credit-Impaired Loans." |
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| Schedule of Changes in the Allowance for Loan Losses |
The following tables provide changes in the Company’s allowance for loan losses (dollars in millions): | | | | | | | | | | | | | | | | | | | | | | For the Three Months Ended March 31, 2015 | | Credit Card | | Personal Loans | | Student Loans(1) | | Other | | Total | Balance at beginning of period | $ | 1,474 |
| | $ | 120 |
| | $ | 135 |
| | $ | 17 |
| | $ | 1,746 |
| Additions: | | | | | | | | | | Provision for loan losses | 337 |
| | 31 |
| | 20 |
| | 2 |
| | 390 |
| Deductions: | | | | | | | | | | Charge-offs | (428 | ) | | (31 | ) | | (15 | ) | | — |
| | (474 | ) | Recoveries | 109 |
| | 3 |
| | 2 |
| | — |
| | 114 |
| Net charge-offs | (319 | ) | | (28 | ) | | (13 | ) | | — |
| | (360 | ) | Balance at end of period | $ | 1,492 |
| | $ | 123 |
| | $ | 142 |
| | $ | 19 |
| | $ | 1,776 |
| | | | | | | | | | | | For the Three Months Ended March 31, 2014 | | Credit Card | | Personal Loans | | Student Loans(1) | | Other | | Total | Balance at beginning of period | $ | 1,406 |
| | $ | 112 |
| | $ | 113 |
| | $ | 17 |
| | $ | 1,648 |
| Additions: | | | | | | | | | | Provision for loan losses | 230 |
| | 18 |
| | 23 |
| | 1 |
| | 272 |
| Deductions: | | | | | | | | | | Charge-offs | (408 | ) | | (24 | ) | | (15 | ) | | — |
| | (447 | ) | Recoveries | 114 |
| | 3 |
| | 1 |
| | — |
| | 118 |
| Net charge-offs | (294 | ) | | (21 | ) | | (14 | ) | | — |
| | (329 | ) | Balance at end of period | $ | 1,342 |
| | $ | 109 |
| | $ | 122 |
| | $ | 18 |
| | $ | 1,591 |
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| | (1) | Includes both PCI and non-PCI private student loans. |
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| Schedule of Net Charge-offs of Interest and Fee Revenues on Loan Receivables |
Net charge-offs of principal are recorded against the allowance for loan losses, as shown in the table above. Information regarding net charge-offs of interest and fee revenues on credit card and other loans is as follows (dollars in millions): | | | | | | | | | | For the Three Months Ended March 31, | | 2015 | | 2014 | Interest and fees accrued subsequently charged off, net of recoveries (recorded as a reduction of interest income) | $ | 75 |
| | $ | 72 |
| Fees accrued subsequently charged off, net of recoveries (recorded as a reduction to other income) | $ | 20 |
| | $ | 17 |
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| Schedule of Allowance for Loan Losses and Recorded Investment in its Loan Portfolio by Impairment Methodology |
The following tables provide additional detail of the Company’s allowance for loan losses and recorded investment in its loan portfolio by impairment methodology (dollars in millions): | | | | | | | | | | | | | | | | | | | | | | Credit Card | | Personal Loans | | Student Loans(3) | | Other Loans(4) | | Total | At March 31, 2015 | | | | | | | | | | Allowance for loans evaluated for impairment as: | | | | | | | | | | Collectively evaluated for impairment in accordance with ASC 450-20 | $ | 1,334 |
| | $ | 118 |
| | $ | 101 |
| | $ | 1 |
| | $ | 1,554 |
| Evaluated for impairment in accordance with ASC 310-10-35(1)(2) | 158 |
| | 5 |
| | 13 |
| | 18 |
| | 194 |
| Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | — |
| | — |
| | 28 |
| | — |
| | 28 |
| Total allowance for loan losses | $ | 1,492 |
| | $ | 123 |
| | $ | 142 |
| | $ | 19 |
| | $ | 1,776 |
| Recorded investment in loans evaluated for impairment as: | | | | | | | | | | Collectively evaluated for impairment in accordance with ASC 450-20 | $ | 52,475 |
| | $ | 5,007 |
| | $ | 5,136 |
| | $ | 147 |
| | $ | 62,765 |
| Evaluated for impairment in accordance with ASC 310-10-35(1)(2) | 1,024 |
| | 58 |
| | 41 |
| | 61 |
| | 1,184 |
| Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | — |
| | — |
| | 3,519 |
| | — |
| | 3,519 |
| Total recorded investment | $ | 53,499 |
| | $ | 5,065 |
| | $ | 8,696 |
| | $ | 208 |
| | $ | 67,468 |
| | | | | | | | | | | At December 31, 2014 | | | | | | | | | | Allowance for loans evaluated for impairment as: | | | | | | | | | | Collectively evaluated for impairment in accordance with ASC 450-20 | $ | 1,314 |
| | $ | 114 |
| | $ | 96 |
| | $ | 1 |
| | $ | 1,525 |
| Evaluated for impairment in accordance with ASC 310-10-35(1)(2) | 160 |
| | 6 |
| | 11 |
| | 16 |
| | 193 |
| Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | — |
| | — |
| | 28 |
| | — |
| | 28 |
| Total allowance for loan losses | $ | 1,474 |
| | $ | 120 |
| | $ | 135 |
| | $ | 17 |
| | $ | 1,746 |
| Recorded investment in loans evaluated for impairment as: | | | | | | | | | | Collectively evaluated for impairment in accordance with ASC 450-20 | $ | 55,091 |
| | $ | 4,952 |
| | $ | 4,812 |
| | $ | 142 |
| | $ | 64,997 |
| Evaluated for impairment in accordance with ASC 310-10-35(1)(2) | 1,037 |
| | 55 |
| | 38 |
| | 60 |
| | 1,190 |
| Acquired with deteriorated credit quality, evaluated in accordance with ASC 310-30 | — |
| | — |
| | 3,660 |
| | — |
| | 3,660 |
| Total recorded investment | $ | 56,128 |
| | $ | 5,007 |
| | $ | 8,510 |
| | $ | 202 |
| | $ | 69,847 |
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| | (1) | Loan receivables evaluated for impairment in accordance with Accounting Standards Codification ("ASC") 310-10-35 include credit card loans, personal loans and student loans collectively evaluated for impairment in accordance with ASC Subtopic 310-40, Receivables, which consists of modified loans accounted for as troubled debt restructurings. Other loans are individually evaluated for impairment and generally do not represent troubled debt restructurings. |
| | (2) | The unpaid principal balance of credit card loans was $868 million and $878 million at March 31, 2015 and December 31, 2014, respectively. The unpaid principal balance of personal loans was $58 million and $54 million at March 31, 2015 and December 31, 2014, respectively. The unpaid principal balance of student loans was $40 million and $37 million at March 31, 2015 and December 31, 2014, respectively. All loans accounted for as troubled debt restructurings have a related allowance for loan losses. |
| | (3) | Includes both PCI and non-PCI private student loans. |
| | (4) | Excludes mortgage loans held for sale. Certain other loans, including non-performing Diners Club licensee loans, are individually evaluated for impairment. |
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| Schedule of Troubled Debt Restructurings |
Additional information about modified loans classified as troubled debt restructurings is shown below (dollars in millions): | | | | | | | | | | | | | | Average recorded investment in loans | | Interest income recognized during period loans were impaired(1) | | Gross interest income that would have been recorded with original terms(2) | For the Three Months Ended March 31, 2015 | | | | | | Credit card loans | | | | | | Modified credit card loans(3) | $ | 255 |
| | $ | 11 |
| | $ | 1 |
| Internal programs | $ | 452 |
| | $ | 3 |
| | $ | 15 |
| External programs | $ | 323 |
| | $ | 6 |
| | $ | 3 |
| Personal loans | $ | 57 |
| | $ | 2 |
| | $ | 1 |
| Private student loans | $ | 40 |
| | $ | 1 |
| | N/A |
| | | | | | | For the Three Months Ended March 31, 2014 | | | | | | Credit card loans | | | | | | Modified credit card loans(3) | $ | 256 |
| | $ | 11 |
| | $ | 1 |
| Internal programs | $ | 454 |
| | $ | 3 |
| | $ | 15 |
| External programs | $ | 394 |
| | $ | 7 |
| | $ | 3 |
| Personal loans | $ | 44 |
| | $ | 1 |
| | $ | — |
| Private student loans | $ | 29 |
| | $ | 1 |
| | N/A |
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| | (1) | The Company does not separately track interest income on loans in modification programs. Amounts shown are estimated by applying an average interest rate to the average loans in the various modification programs. |
| | (2) | The Company does not separately track the amount of gross interest income that would have been recorded if the loans in modification programs had not been restructured and interest had instead been recorded in accordance with the original terms. Amounts shown are estimated by applying the difference between the average interest rate earned on non-impaired credit card loans and the average interest rate earned on loans in the modification programs to the average loans in the modification programs. |
| | (3) | This balance is considered impaired, but is excluded from the internal and external program amounts reflected in this table. Represents credit card loans that were modified in troubled debt restructurings, but are no longer enrolled in troubled debt restructuring program due to noncompliance with the terms of the modification or successful completion of a program. |
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| Schedule of Loans That Entered a Modification Program During the Period |
The following table provides information on loans that entered a loan modification program during the period (dollars in millions): | | | | | | | | | | | | | | | | For the Three Months Ended March 31, | | 2015 | | 2014 | | Number of Accounts | | Balances | | Number of Accounts | | Balances | Accounts that entered a loan modification program during the period: | | | | | | | | Credit card loans | | | | | | | | Internal programs | 13,243 |
| | $ | 86 |
| | 12,436 |
| | $ | 81 |
| External programs | 7,617 |
| | $ | 39 |
| | 8,431 |
| | $ | 44 |
| Personal loans | 986 |
| | $ | 12 |
| | 712 |
| | $ | 8 |
| Private student loans | 469 |
| | $ | 7 |
| | 307 |
| | $ | 4 |
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| Schedule of Troubled Debt Restructurings That Subsequently Defaulted |
The following table presents the carrying value of loans that experienced a payment default during the period that had been modified in a troubled debt restructuring during the 15 months preceding the end of each period (dollars in millions): | | | | | | | | | | | | | | | | For the Three Months Ended March 31, | | 2015 | | 2014 | | Number of Accounts | | Aggregated Outstanding Balances Upon Default | | Number of Accounts | | Aggregated Outstanding Balances Upon Default | Troubled debt restructurings that subsequently defaulted: | | | | | | | | Credit card loans | | | | | | | | Internal programs(1)(2) | 3,176 |
| | $ | 20 |
| | 2,331 |
| | $ | 14 |
| External programs(1)(2) | 1,643 |
| | $ | 7 |
| | 1,881 |
| | $ | 8 |
| Personal loans(2) | 151 |
| | $ | 2 |
| | 106 |
| | $ | 1 |
| Private student loans(3) | 305 |
| | $ | 4 |
| | 311 |
| | $ | 5 |
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| | (1) | The outstanding balance upon default is the loan balance at the end of the month prior to default. Terms revert back to the pre-modification terms for customers who default from a temporary program and charging privileges remain revoked in most cases. |
| | (2) | A customer defaults from a modification program after two consecutive missed payments. |
| | (3) | Student loan defaults have been defined as loans that are 60 or more days delinquent. |
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| Schedule of Changes in Accretable Yield for the Acquired Loans |
The following table provides changes in accretable yield for the acquired loans during each period (dollars in millions): | | | | | | | | | | For the Three Months Ended March 31, | | 2015 | | 2014 | Balance at beginning of period | $ | 1,341 |
| | $ | 1,580 |
| Accretion into interest income | (59 | ) | | (68 | ) | Other changes in expected cash flows | (101 | ) | | — |
| Balance at end of period | $ | 1,181 |
| | $ | 1,512 |
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| Schedule of Initial Unpaid Principal Balance of Mortgage Loans Sold by Type |
The following table provides a summary of the initial unpaid principal balance of mortgage loans sold during each period, by type of loan (dollars in millions): | | | | | | | | | | | | | | | | For the Three Months Ended March 31, | | 2015 | | 2014 | | Amount | | % | | Amount | | % | Conforming(1) | $ | 993 |
| | 94.21 | % | | $ | 447 |
| | 89.94 | % | FHA(2) | 54 |
| | 5.12 |
| | 48 |
| | 9.66 |
| Jumbo(3) | 6 |
| | 0.57 |
| | 2 |
| | 0.40 |
| VA(4) | 1 |
| | 0.10 |
| | — |
| | — |
| Total | $ | 1,054 |
| | 100.00 | % | | $ | 497 |
| | 100.00 | % | | | | | | | | |
| | (1) | Conforming loans are loans that conform to Government Sponsored Enterprises guidelines. |
| | (2) | FHA loans are loans that are insured by the Federal Housing Administration and are typically made to borrowers with low down payments. The initial loan amount must be within certain limits. |
| | (3) | Jumbo loans are loans with an initial amount larger than the limits set by a Government Sponsored Enterprise. |
| | (4) | VA loans are loans that are insured by and conform to the Department of Veteran Affairs guidelines. |
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