Cabela's 2013 Annual Report Download - page 62

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52
The table below shows delinquent, non-accrual, and restructured loans as a percentage of our credit card
loans, including any accrued interest and fees, at the years ended:
2013 2012 2011
Number of days delinquent and still accruing (1):
Greater than 30 days 0.57% 0.57% 0.64%
Greater than 60 days 0.35 0.36 0.38
Greater than 90 days 0.19 0.19 0.20
(1) Excludes non-accrual and restructured loans which are presented below.
Non-accrual 0.13 0.17 0.20
Restructured 0.95 1.35 1.91
Allowance for Loan Losses and Charge-offs
The allowance for loan losses represents management’s estimate of probable losses inherent in the credit card
loan portfolio. The allowance for loan losses is established through a charge to the provision for loan losses and is
regularly evaluated by management for adequacy. Loans on a payment plan or non-accrual are segmented from the
rest of the credit card loan portfolio into a restructured credit card loan segment before establishing an allowance
for loan losses as these loans have a higher probability of loss. Management estimates losses inherent in the credit
card loans segment and restructured credit card loans segment based on a model which tracks historical loss
experience on delinquent accounts, bankruptcies, death, and charge-offs, net of estimated recoveries. The Financial
Services segment uses a migration analysis and historical bankruptcy and death rates to estimate the likelihood
that a credit card loan in the credit card loan segment will progress through the various stages of delinquency and
to charge-off. This analysis estimates the gross amount of principal that will be charged off over the next twelve
months, net of recoveries. The Financial Services segment uses historical charge-off rates to estimate the likelihood
that a restructured credit card loan will charge-off over the life of the loan, net of recoveries. This estimate is
used to derive an estimated allowance for loan losses. In addition to these methods of measurement, management
also considers other factors such as general economic and business conditions affecting key lending areas, credit
concentration, changes in origination and portfolio management, and credit quality trends. Since the evaluation
of the inherent loss with respect to these factors is subject to a high degree of uncertainty, the measurement of
the overall allowance is subject to estimation risk, and the amount of actual losses can vary significantly from the
estimated amounts.
Charge-offs consist of the uncollectible principal, interest, and fees on a customer’s account. Recoveries are
the amounts collected on previously charged-off accounts. Most bankcard issuers charge off accounts at 180 days.
We charge off credit card loans on a daily basis after an account becomes at a minimum 130 days contractually
delinquent to allow us to manage the collection process more efficiently. Accounts relating to cardholder
bankruptcies, cardholder deaths, and fraudulent transactions are charged off earlier. The Financial Services
segment records charged-off cardholder fees and accrued interest receivable directly against interest and fee
income included in Financial Services revenue.