American Express 2015 Annual Report Download - page 125

CREDIT QUALITY INDICATORS FOR CARD MEMBER LOANS AND RECEIVABLES
The following tables present the key credit quality indicators as of or for the years ended December 31:
2015 2014
Net Write-Off Rate Net Write-Off Rate
Principal
Only (a)
Principal,
Interest, &
Fees (a)
30+
Days Past Due
as a % of
Total Principal Only (a)
Principal,
Interest, &
Fees (a)
30+
Days Past Due
as a % of
Total
Card Member Loans:
U.S. Card Services ............................ 1.4% 1.6% 1.0% 1.5% 1.7% 1.0%
International Card Services .................... 1.9% 2.4% 1.6% 2.0% 2.4% 1.6%
Card Member Receivables:
U.S. Card Services ............................ 1.7% 1.9% 1.5% 1.6% 1.8% 1.7%
International Card Services .................... 2.0% 2.2% 1.4% 1.9% 2.1% 1.3%
2015 2014
Net Loss
Ratio as
a%of
Charge
Volume
90+
Days Past Billing
as a % of
Receivables
Net Loss
Ratio as
a%of
Charge
Volume
90+
Days Past Billing
as a % of
Receivables
Card Member Receivables:
Global Commercial Services .................... 0.09% 0.9% 0.09% 0.8%
(a) The Company presents a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry
convention. In addition, because the Company considers uncollectible interest and/or fees in estimating its reserves for credit losses, a net
write-off rate including principal, interest and/or fees is also presented. The year ended December 31, 2015, reflects the impact of a change in
the timing of charge-offs for Card Member loans and receivables in certain modification programs from 180 days past due to 120 days past due,
which was fully recognized during the three months ended March 31, 2015.
Refer to Note 4 for additional indicators, including external environmental qualitative factors, management
considers in its monthly evaluation process for reserves for losses.
IMPAIRED CARD MEMBER LOANS AND RECEIVABLES
Impaired loans and receivables are individual larger balance or homogeneous pools of smaller balance loans and
receivables for which it is probable that the Company will be unable to collect all amounts due according to the original
contractual terms of the Card Member agreement. The Company considers impaired loans and receivables to include:
(i) loans over 90 days past due still accruing interest, (ii) nonaccrual loans and (iii) loans and receivables modified as
troubled debt restructurings (TDRs).
The Company may modify, through various programs, Card Member loans and receivables in instances where the
Card Member is experiencing financial difficulty in order to minimize losses and improve collectability, while providing
Card Members with temporary or permanent financial relief. The Company has classified Card Member loans and
receivables in these modification programs as TDRs. Beginning January 1, 2015, on a prospective basis the Company
continues to classify Card Member accounts that have exited a modification program as a TDR, with such accounts
identified as “Out of Program TDRs.”
Such modifications to the loans and receivables primarily include (i) temporary interest rate reductions (possibly
as low as zero percent, in which case the loan is characterized as non-accrual in the Company’s TDR disclosures),
(ii) placing the Card Member on a fixed payment plan not to exceed 60 months and (iii) suspending delinquency fees
until the Card Member exits the modification program. Upon entering the modification program, the Card Member’s
ability to make future purchases is either cancelled, or in certain cases suspended until the Card Member successfully
exits the modification program. In accordance with the modification agreement with the Card Member, loans may
revert back to the original contractual terms (including the contractual interest rate) when the Card Member exits the
modification program, which is (i) when all payments have been made in accordance with the modification agreement
or, (ii) when the Card Member defaults out of the modification program. The Company establishes a reserve for Card
Member interest charges and fees considered to be uncollectible.
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