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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Cardmember Receivables Evaluated Separately and
Collectively for Impairment
The following table presents cardmember receivables evaluated
separately and collectively for impairment and related reserves as
of December 31:
(Millions) 2011 2010 2009
Cardmember receivables evaluated
separately for impairment(a) $ 174 $ 114 $ 94
Reserves on cardmember receivables
evaluated separately for impairment(a) $ 118 $63$64
Cardmember receivables evaluated
collectively for impairment $ 40,716 $ 37,152 $ 33,649
Reserves on cardmember receivables
evaluated collectively for impairment $ 320 $ 323 $ 482
(a) Represents receivables modified in a TDR and related reserves. Refer to the
Impaired Loans and Receivables discussion in Note 4 for further
information.
Changes in Cardmember Loans Reserve for Losses
The following table presents changes in the cardmember loans
reserve for losses for the years ended December 31:
(Millions) 2011 2010 2009
Balance, January 1 $ 3,646 $ 3,268 $ 2,570
Reserves established for consolidation of a
variable interest entity(a) –2,531 –
Total adjusted balance, January 1 3,646 5,799 2,570
Additions:
Cardmember loans provisions(b) 145 1,445 4,209
Cardmember loans provisions – other(c) 108 82 57
Total provision 253 1,527 4,266
Deductions:
Cardmember loans net write-offs –
principal(d) (1,720) (3,260) (2,949)
Cardmember loans net write-offs –
interest and fees(d) (201) (359) (448)
Cardmember loans – other(e) (104) (61) (171)
Balance, December 31 $ 1,874 $ 3,646 $ 3,268
(a) Represents the establishment of cardmember reserves for losses for
cardmember loans issued by the American Express Credit Account Master
Trust (the Lending Trust) for the securitized loan portfolio that was
consolidated under accounting guidance for consolidation of VIEs effective
January 1, 2010. The establishment of the $2.5 billion reserve for losses for
the securitized loan portfolio was determined by applying the same
methodology as is used for the Company’s unsecuritized loan portfolio.
There was no incremental reserve required nor were any charge-offs
recorded in conjunction with the consolidation of the Lending Trust.
(b) Represents loss provisions for cardmember loans consisting of principal
(resulting from authorized transactions), interest and fee reserves
components.
(c) Primarily represents loss provisions for cardmember loans resulting from
unauthorized transactions.
(d) Cardmember loans net write-offs — principal for 2011, 2010 and 2009
include recoveries of $578 million, $568 million and $327 million,
respectively. Recoveries of interest and fees were de minimis.
(e) These amounts include net write-offs related to unauthorized transactions
and foreign currency translation adjustments.
Cardmember Loans Evaluated Separately and
Collectively for Impairment
The following table presents cardmember loans evaluated
separately and collectively for impairment and related reserves as
of December 31:
(Millions) 2011 2010 2009
Cardmember loans evaluated separately for
impairment(a) $ 744 $ 1,087 $ 721
Reserves on cardmember loans evaluated
separately for impairment(a) $ 176 $ 279 $ 187
Cardmember loans evaluated collectively for
impairment(b) $ 61,877 $ 59,763 $ 32,051
Reserves on cardmember loans evaluated
collectively for impairment(b) $ 1,698 $ 3,367 $ 3,081
(a) Represents loans modified in a TDR and related reserves. Refer to the
Impaired Loans and Receivables discussion in Note 4 for further
information.
(b) Represents current loans and loans less than 90 days past due, loans over 90
days past due and accruing interest, and non-accrual loans and related
reserves. The reserves include the results of analytical models that are
specific to individual pools of loans and reserves for external environmental
factors that apply broadly to all loans collectively evaluated for impairment
and are not specific to any individual pool of loans.
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