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The delinquency rates of credit card loans over 30-day and over 90-day delinquent have both decreased at November 30,
2010 as compared to November 30, 2009 on a non-GAAP as-adjusted basis. The delinquency rates on personal loans also
experienced improvement in 2010 as compared to 2009. Similar to 2011, the decline in delinquency rates for both credit card
and personal loans is due to improvements in customer financial performance and proactive customer account management.
Loan receivables not accruing interest at November 30, 2010 decreased as compared to November 30, 2009 on a non-GAAP
as-adjusted basis, as a result of a decrease in bankruptcy notifications. Restructured loans at November 30, 2010 increased as
compared to November 30, 2009 due to the volume that entered a permanent program as a result of an increased focus on
collection in 2010.
Maturities and Sensitivities of Loan Receivables to Changes in Interest Rates
Our loan portfolio had the following maturity distribution(1) at November 30, 2011 (dollars in thousands):
Credit card loans
Personal loans
Private student loans (excluding PCI)
PCI private student loans
Other consumer loans
Total loan portfolio
Due One
Year or
Less
$ 14,892,116
27,703
306,492
14,068
273
$ 15,240,652
Due After
One Year
Through
Five Years
$ 24,928,752
1,939,777
220,587
311,456
12
$ 27,400,584
Due After
Five Years
$ 6,817,757
680,571
1,541,922
4,924,864
16,405
$ 13,981,519
Total
$ 46,638,625
2,648,051
2,069,001
5,250,388
16,690
$ 56,622,755
(1) Because of the uncertainty regarding loan repayment patterns, the above amounts have been calculated using contractually required minimum payments. Historically, actual
loan repayments have been higher than such minimum payments and, therefore, the above amounts may not necessarily be indicative of our actual loan repayments.
At November 30, 2011, approximately $28.0 billion of our loan portfolio due after one year had interest rates tied to an
index and approximately $13.4 billion were fixed rate loans.
Modified and Restructured Loans
We have loan modification programs that provide for temporary or permanent hardship relief for our credit card loans to
borrowers experiencing financial difficulties. The temporary hardship program primarily consists of a reduced minimum
payment and an interest rate reduction, both lasting for a period no longer than twelve months. The permanent workout
program involves changing the structure of the loan to a fixed payment loan with a maturity no longer than 60 months and
reducing the interest rate on the loan. The permanent programs do not normally provide for the forgiveness of unpaid principal,
but may allow for the reversal of certain unpaid interest or fee assessments. We also make loan modifications for customers
who request financial assistance through external sources, such as a consumer credit counseling agency program. These loans
continue to be subject to the original minimum payment terms and do not normally include waiver of unpaid principal, interest
or fees. For additional information regarding the accounting treatment for these loans as well as amounts recorded in the
financial statements related to these loans, see Note 6: Loan Receivables to our consolidated financial statements.
For student loan borrowers, in certain situations we offer payment forbearance to borrowers who are experiencing
temporary financial difficulties and are willing to resume making payments. When a delinquent borrower is granted a second
forbearance period, we classify these loans as troubled debt restructurings. Approximately $5.4 million of loans in our student
loan portfolio are considered troubled debt restructurings. Borrower performance after using forbearance is monitored and the
method has proven effective in helping to prevent defaults and in assisting customers experiencing temporary financial
difficulties. We plan to continue to use forbearance, and as a result, we expect to have additional loans classified as troubled
debt restructurings in the future.
For personal loan customers, in certain situations we offer various payment programs, including temporary and
permanent programs. The temporary programs normally consist of a reduction of the minimum payment for a period of no
longer than twelve months with a final balloon payment required at the end of the loan term. The permanent program involves
changing the terms of the loan in order to payoff the outstanding balance over the new term for a period no longer than four
years. The total term may not exceed nine years. We also allow loan modifications for customers who request financial
assistance through external sources, similar to our credit card customers discussed above. Payments are modified based on the
new terms agreed upon with the credit counseling agency. Personal loans included in permanent programs are accounted for as
troubled debt restructurings.
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