American Express 2015 Annual Report Download - page 183

Summary of Loan Loss Experience — Analysis of the Allowance for Loan Losses
The following table summarizes the changes to the Company’s allowance for Card Member loan losses. The table
segregates such changes between U.S. and non-U.S. borrowers.
Years Ended December 31, (Millions, except percentages) 2015 2014 2013 2012 2011
Card Member loans
Allowance for loan losses at beginning of year
U.S. loans ................................................................. $ 1,036 $ 1,083 $ 1,274 $ 1,611 $ 3,153
Non-U.S. loans ............................................................ 165 178 197 263 493
Total allowance for losses ................................................... 1,201 1,261 1,471 1,874 3,646
Card Member lending provisions (a)
U.S. loans ................................................................. 1,032 944 916 882 79
Non-U.S. loans ............................................................ 158 194 199 148 66
Total Card Member lending provisions ................................... 1,190 1,138 1,115 1,030 145
Write-offs
U.S. loans ................................................................. (1,321) (1,346) (1,463) (1,621) (2,105)
Non-U.S. loans ............................................................ (226) (269) (280) (309) (394)
Total write-offs ......................................................... (1,547) (1,615) (1,743) (1,930) (2,499)
Recoveries
U.S. loans ................................................................. 359 356 368 395 477
Non-U.S. loans ............................................................ 59 72 84 98 101
Total recoveries ........................................................ 418 428 452 493 578
Net write-offs (b) ............................................................ (1,129) (1,187) (1,291) (1,437) (1,921)
Transfer of reserves on HFS loans portfolios
U.S. loans ................................................................. (224) ——— —
Other (c)
U.S. loans ................................................................. —(1) (12) 7 7
Non-U.S. loans ............................................................ (10) (10) (22) (3) (3)
Total other ................................................................. (10) (11) (34) 4 4
Allowance for loan losses at end of year
U.S. loans ................................................................. 882 1,036 1,083 1,274 1,611
Non-U.S. loans ............................................................ 146 165 178 197 263
Total allowance for losses ................................................... $ 1,028 $ 1,201 $ 1,261 $ 1,471 $ 1,874
Principal only net write-offs / average Card Member loans outstanding (d) (e) .... 1.4% 1.5% 1.8% 2.1% 2.9%
Principal, interest and fees net write-offs /
average Card Member loans outstanding (d) (e) .............................. 1.7% 1.8% 2.0% 2.3% 3.3%
(a) Refer to Note 4 to the Consolidated Financial Statements for a discussion of management’s process for evaluating the allowance for loan losses.
(b) Net write-offs include principal, interest and fees balances.
(c) Includes foreign currency translation adjustments and other items. Additionally, 2014 includes an adjustment related to reserves for card-
related fraud losses of $(6) million, which was reclassified to Other liabilities.
(d) The net write-off rate presented is on a worldwide basis and is based on principal losses only (i.e., excluding interest and fees) to be consistent
with industry convention. In addition, because the Company considers uncollectible interest and fees in estimating its reserves for credit losses,
a net write-off rate including principal, interest and 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 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.
(e) Average Card Member loans outstanding are based on month end balances.
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