American Express 2015 Annual Report Download - page 129

The following table provides information for the years ended December 31, 2015, 2014 and 2013, with respect to
the USCS Card Member loans and receivables modified as TDRs that subsequently defaulted within 12 months of
modification. A Card Member is considered in default of a modification program after one and up to two consecutive
missed payments, depending on the terms of the modification program. For all Card Members that defaulted from a
modification program, the probability of default is factored into the reserves for Card Member loans and receivables.
2015
Number of
Accounts
(thousands)
Outstanding
Balances
Upon
Default
(millions) (a)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans ............................................................ 8 $52
Card Member Receivables ....................................................... 35
Total ........................................................................... 11 $57
2014
Number of
Accounts
(thousands) (b)
Outstanding
Balances
Upon
Default
(millions) (a)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans .......................................................... 8 $52
Card Member Receivables ..................................................... 3 12
Total ......................................................................... 11 $64
2013
Number of
Accounts
(thousands)
Outstanding
Balances
Upon
Default
(millions) (a) (b)
Troubled Debt Restructurings That Subsequently Defaulted:
Card Member Loans ............................................................ 18 $141
Card Member Receivables ....................................................... 3 25
Total ........................................................................... 21 $166
(a) The outstanding balances upon default include principal, fees and accrued interest on Card Member loans, and principal and fees on Card
Member receivables.
(b) The number of accounts and outstanding balances upon default have been revised to reflect the exclusion of written off accounts, which are not
material.
NOTE 4
RESERVES FOR LOSSES
Reserves for losses relating to Card Member receivables and loans represent management’s best estimate of the
probable inherent losses in the Company’s outstanding portfolio of loans and receivables, as of the balance sheet date.
Management’s evaluation process requires certain estimates and judgments.
Reserves for losses are primarily based upon statistical and analytical models that analyze portfolio performance
and reflect management’s judgment regarding the quantitative components of the reserve. The models take into
account several factors, including delinquency-based loss migration rates, loss emergence periods and average losses
and recoveries over an appropriate historical period. Management considers whether to adjust the quantitative
reserves for certain external and internal qualitative factors, which may increase or decrease the reserves for losses on
Card Member receivables and loans. These external factors include employment, spend, sentiment, housing and
credit, and changes in the legal and regulatory environment, while the internal factors include increased risk in certain
portfolios, impact of risk management initiatives, changes in underwriting requirements and overall process stability.
As part of this evaluation process, management also considers various reserve coverage metrics, such as reserves as
a percentage of past due amounts, reserves as a percentage of Card Member receivables or loans, and net write-off
coverage ratios.
Card Member receivables and loans balances are written off when management considers amounts to be
uncollectible, which is generally determined by the number of days past due and is typically no later than 180 days past
due. Card Member receivables and loans in bankruptcy or owed by deceased individuals are generally written off upon
notification, and recoveries are recognized as they are collected.
This Note is presented excluding amounts associated with the Card Member loans and receivables HFS as of
December 31, 2015.
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