Servicing and Securitization Income Interchange Income Other Non-Interest Income Service Charges and Other Customer-Related Fees In accordance with SFAS 140, the Company records gains or losses on the off- balance sheet securitizations of consumer loan receivables on the date of sale based on the estimated fair value of assets sold and retained and liabilities incurred in the sale. Retained interests in securitized assets include interest- only strips, retained subordinated interests in the transferred pool of receivables, cash collateral accounts and accrued interest and fees on the investors’ share of the pool of receivables. Gains represent the present value of estimated excess cash flows the Company will receive over the estimated life of the receivables and are included in servicing and securitizations income. This excess cash flow essentially represents an interest-only strip, consisting of the following estimates: the excess of finance charges and past-due fees over the sum of the return paid to investors, contractual servicing fees and credit losses. The credit risk exposure on retained interests exceeds the pro rata share of the Company’s interest in the pool of receivables. However, exposure to credit losses on the securitized loans is contractually limited to the retained interests.  Servicing and securitizations income represents servicing fees, excess spread and other fees relating to consumer loan receivables sold through securitization and other sale transactions, as well as gains and losses recognized as a result of the securitization transactions, and fair value adjustments to the interest-only strips. Servicing and securitizations income increased $364.4 million, or 15%, to $2.8 billion for the year ended December 31, 2002, from $2.4 billion in 2001. This increase was primarily due to a 49% increase in the average off-balance sheet loan portfolio offset in part by a reduction in the excess spread generated by the securitized loan portfolio and a $33.1 million decrease in the fair value of interest-only strips.  Servicing and securitizations income increased $1.3 billion, or 112%, to $2.4 billion for the year ended December 31, 2001, from $1.2 billion in 2000. This increase was primarily due to a 64% increase in the average off-balance sheet loan portfolio and a shift in the mix of that portfolio towards higher yielding, lower credit quality loans to more closely reflect the composition of the managed portfolio. Certain estimates inherent in the determination of the fair value of the retained interests are influenced by factors outside the Company’s control, and as a result, such estimates could materially change in the near term. Any future gains that will be recognized in accordance with SFAS 140 will be dependent on the timing and amount of future securitizations. The Company intends to continuously assess the performance of new and existing securitization transactions, and therefore the valuation of retained interests, as estimates of future cash flows change. Service charges and other customer-related fees increased by $401.4 million, or 26%, to $1.9 billion for the year ended December 31, 2002. The increase primarily reflects an increase in the reported loan portfolio of $7.0 billion or 33% over 2001 and a $44.4 million increase related to the one-time impact of the 2002 change in the recoveries estimate (see “Change in Recoveries Classification” above) offset by a shift in the mix of the reported loan portfolio toward a greater composition of lower fee-generating loans. Service charges and other customer-related fees decreased by $110.3 million, or 7%, to $1.5 billion for the year ended December 31, 2001. This decrease was primarily due to the shift in the mix of the reported loan portfolio toward a greater composition of lower fee-generating loans, offset by a 39% increase in the average number of accounts in 2001. Interchange income increased $68.0 million, or 18%, to $447.8 million for the year ended December 31, 2002, from $379.8 million in 2001. This increase is primarily attributable to an increase in annual purchase volume. Total interchange income is net of $104.9 million of costs related to the Company’s rewards programs for the year ended December 31, 2002.  Interchange income increased $142.0 million, or 60%, to $379.8 million for the year ended December 31, 2001, from $237.8 million in 2000. This increase was a result of increased annual purchase volume and new account growth for the year ended December 31, 2001. Total interchange income was net of $110.9 of costs related to the Company’s rewards programs for the year ended December 31, 2001. Other non-interest income includes gains on sale of securities, gains related to the repurchase of senior notes, gains or losses associated with hedging transactions, service provider revenue generated by the Company’s medical procedures lending business and income earned related to the reaffirmation of purchased charged-off loan portfolios.  Other non-interest income increased $169.4 million or 159% to $275.9 million for 2002 compared to $106.5 million for 2001. The increase in other non-interest income was primarily due to $77.5 million of gains on sales of securities realized in 2002 in connection with the Company’s rebalancing of its liquidity portfolio compared to $13.5 million realized in 2001. Other factors in the increase included gains related to senior note repurchases of $27.0 million realized during 2002, an increase in service provider revenue of $9.4 million and an increase in income earned from reaffirmed purchased charged-off loans of $24.1 million during the year ended December 31, 2002. Other non-interest income increased $78.1 million or 275% to $106.5 million for 2001 compared to $28.4 million in 2000. The increase was primarily due to an increase in income earned on reaffirmed purchased charged-off loans of $26.2 million, gains on sales of securities earned in 2001 of $13.5 million compared with no gains in 2000 and a $16.3 million increase in service provider revenue generated by the Company’s medical procedures lending business. 25