American Express 2010 Annual Report Download - page 34

AMERICAN EXPRESS COMPANY
SELECTED STATISTICAL INFORMATION
As of or for the Years Ended December 31,
(Billions, except percentages and where indicated) 2010 2009 2008
Worldwide cardmember receivables
Total receivables $ 37.3 $ 33.7 $ 33.0
Loss reserves (millions)
Beginning balance $ 546 $ 810 $ 1,149
Provision for losses on
authorized transactions
(a)
439 773 1,363
Net write-offs
(b)
(598) (1,131) (1,552)
Other (1) 94 (150)
Ending balance $ 386 $ 546 $ 810
% of receivables 1.0% 1.6% 2.5%
Net write-off rate — USCS 1.6% 3.8% 3.6%
30 days past due as a % of total — USCS 1.5% 1.8% 3.7%
Net loss ratio as a % of charge
volume — ICS/GCS
(b)(c)
0.16% 0.25% 0.17%
90 days past billing as a % of
total — ICS/GCS
(b)
0.9% 1.6% 2.84%
Worldwide cardmember loans — GAAP basis
portfolio
(d)
Total loans $ 60.9 $ 32.8 $ 42.2
30 days past due as a % of total 2.1% 3.6% 4.4%
Loss reserves (millions)
Beginning balance $ 3,268 $ 2,570 $ 1,831
Adoption of new GAAP
consolidation standard
(e)
2,531 ——
Provision for losses on
authorized transactions 1,445 4,209 4,106
Net write-offs — principal (3,260) (2,949) (2,643)
Write-offs — interest and fees (359) (448) (580)
Other 21 (114) (144)
Ending balance $ 3,646 $ 3,268 $ 2,570
Ending Reserves — principal $ 3,551 $ 3,172 $ 2,379
Ending Reserves — interest and fees $95$ 96 $ 191
% of loans 6.0% 10.0% 6.1%
% of past due 287% 279% 137%
Average loans $ 58.4 $ 34.8 $ 47.6
Net write-off rate 5.6% 8.5% 5.5%
Net interest income divided by average
loans
(f)(g)
8.3% 9.0% 7.7%
Net interest yield on cardmember loans
(f)
9.7% 10.1% 8.6%
Worldwide cardmember loans — Managed
basis portfolio
(d)
Total loans $ 60.9 $ 61.8 $ 72.0
30 days past due as a % of total 2.1% 3.6% 4.6%
Net write-offs — principal (millions) $ 3,260 $ 5,366 $ 4,065
Average loans $ 58.4 $ 63.8 $ 75.0
Net write-off rate 5.6% 8.4% 5.4%
Net interest yield on cardmember loans
(f)
9.7% 10.4% 9.1%
(a) Represents loss provisions for cardmember receivables consisting of
principal (resulting from authorized transactions) and fee reserve
components. Adjustments to cardmember receivables resulting from
unauthorized transactions have been reclassified from this line to “Other”
for all periods presented.
(b) Effective January 1, 2010, the Company revised the time period in which past
due cardmember receivables in International Card Services and Global
Commercial Services are written off to when they are 180 days past due
or earlier, consistent with applicable bank regulatory guidance and the write-
off methodology adopted for U.S. Card Services in the fourth quarter of
2008. Previously, receivables were written off when they were 360 days past
billing or earlier. Therefore, the net write-offs for the first quarter of 2010
included net write-offs of approximately $60 million for International Card
Services and approximately $48 million for Global Commercial Services
resulting from this write-off methodology change, which increased the net
loss ratios and decreased the 90 days past billing metrics for these segments,
but did not have a substantial impact on provisions for losses.
(c) Beginning with the first quarter of 2010, the Company has revised the net
loss ratio to exclude net write-offs related to unauthorized transactions,
consistent with the methodology for calculation of the net write-off rate for
U.S. Card Services. The metrics for prior periods have not been revised for
this change as it was deemed immaterial.
(d) Refer to “Cardmember Loan Portfolio Presentation” on page 54 for
discussion of the GAAP and non-GAAP presentation of the Company’s
U.S. loan portfolio.
(e) Reflects the new GAAP effective January 1, 2010, which resulted in the
consolidation of the American Express Credit Account Master Trust (the
Lending Trust), reflecting $29.0 billion of additional cardmember loans along
with a $2.5 billion loan loss reserve on the Company’s balance sheets.
(f) See below for calculations of net interest yield on cardmember loans, a non-
GAAP measure, and net interest income divided by average loans, a GAAP
measure. Management believes net interest yield on cardmember loans is
useful to investors because it provides a measure of profitability of the
Company’s cardmember loan portfolio.
(g) This calculation includes elements of total interest income and total interest
expense that are not attributable to the cardmember loan portfolio, and thus
is not representative of net interest yield on cardmember loans. The
calculation includes interest income and interest expense attributable to
investment securities and other interest-bearing deposits as well as to
cardmember loans, and interest expense attributable to other activities,
including cardmember receivables.
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AMERICAN EXPRESS COMPANY
2010 FINANCIAL REVIEW