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## Delinquencies 

Table 6 shows the Company’s consumer loan delinquency trends for the years presented on a reported and managed basis. The entire balance of an account is contractually delinquent if the minimum payment is not received by the payment due date. Delinquencies not only have the potential to impact earnings if the account charges off, but they also result in additional costs in terms of the personnel and other resources dedicated to resolving the delinquencies. 

## Table 6: Delinquencies 

The 30-plus day delinquency rate for the managed consumer loan portfolio was 5.60% as of December 31, 2002, up 65 basis points from 4.95% as of December 31, 2001. The 30-plus day delinquency rate for the reported consumer loan portfolio increased to 6.51% as of December 31, 2002, from 4.84% as of December 31, 2001. Both reported and managed consumer loan delinquency rate increases as of December 31, 2002, as compared to December 31, 2001, principally reflect a continued seasoning of a portion of subprime accounts added during 2001 and the first quarter of 2002, along with slower growth of the portfolio during the second half of 2002 as the mix changed towards more lower yielding, higher credit quality loans. 

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Reported and managed delinquency rates include 28 basis point and 13 basis point increases, respectively, related to the one-time impact of the 2002 change in recoveries assumption. 

## Net Charge-Offs 

Net charge-offs include the principal amount of losses (excluding accrued and unpaid finance charges, fees and fraud losses) less current period principal recoveries. The Company charges off credit card loans (net of any collateral) at 180 days past the due date and generally charges off other consumer loans at 120 days past the due date. Costs to recover previously charged-off accounts are recorded as collection expenses in non-interest expense. During the year, the Company changed its financial statement presentation of recoveries of charged-off loan balances in accordance with the guidelines that were published by the FFIEC. Under the new presentation, principal amounts collected on previously charged-off accounts reduce 

current period charge-offs and recoveries of finance charges and fees are treated as revenue and are reflected in the appropriate income statement line item. All periods in the accompanying consolidated financial statements have been adjusted to properly account for this change in presentation. 

## 30 + DAY DELINQUENCY RATE (%) 

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