Business Context and Reporting Period
This Form 8-K filing by American Express Company (AXP) was submitted on September 15, 2020, under Item 7.01 (Regulation FD Disclosure). The report provides monthly delinquency and write-off statistics for the U.S. Consumer Card Member and U.S. Small Business Card Member lending portfolios for the months ended June 30, July 31, and August 31, 2020. It also includes credit performance data for the American Express Credit Account Master Trust (Lending Trust) for the same periods.
Key Financial Metrics
U.S. Consumer and Small Business Portfolios
| Metric | Aug 31, 2020 | Jul 31, 2020 | Jun 30, 2020 |
|---|---|---|---|
| Total Card Member Loans (Billions) | $61.6 | $61.7 | $62.0 |
| U.S. Consumer Loans (Billions) | $50.0 | $50.0 | $50.3 |
| U.S. Small Business Loans (Billions) | $11.6 | $11.7 | $11.7 |
| Consumer 30+ Days Past Due % | 1.2% | 1.4% | 1.5% |
| Small Business 30+ Days Past Due % | 1.2% | 1.4% | 1.6% |
| Consumer Net Write-off Rate % | 2.5% | 2.6% | 2.6% |
| Small Business Net Write-off Rate % | 2.4% | 2.5% | 2.4% |
Lending Trust Performance
| Metric | Aug 2020 | Jul 2020 | Jun 2020 |
|---|---|---|---|
| Ending Principal Balance (Billions) | $24.3 | $24.4 | $24.5 |
| Defaulted Amount (Billions) | $0.05 | $0.05 | $0.05 |
| Annualized Default Rate % | 1.9% | 1.9% | 1.8% |
| Total 30+ Days Delinquent (Billions) | $0.2 | $0.2 | $0.3 |
Material Changes
- Improving Delinquency Trends: Both U.S. Consumer and U.S. Small Business portfolios showed a sequential decline in 30+ days past due loans from June through August 2020. Consumer delinquency dropped from 1.5% to 1.2%, while Small Business delinquency fell from 1.6% to 1.2%.
- Stabilizing Write-offs: Net write-off rates for the Consumer portfolio decreased slightly from 2.6% in June/July to 2.5% in August. Small Business write-offs remained relatively stable, fluctuating between 2.4% and 2.5%.
- Loan Balance Contraction: Total Card Member loans decreased by $0.4 billion from June ($62.0B) to August ($61.6B), driven primarily by a reduction in the Consumer portfolio.
- Lending Trust Stability: The Lending Trust maintained a consistent defaulted amount of $0.05 billion across the three months, with the annualized default rate holding steady at 1.9% for July and August.
Management Commentary and Risks
Customer Pandemic Relief Program: The filing notes that during Q1 2020, the Company implemented a relief program for customers impacted by COVID-19. Under this program, delinquency status was frozen at enrollment, and loans current at enrollment did not age regardless of payment status. The Company closed this program to new enrollees in the U.S. as of June 2020. Upon exiting the program, delinquency aging resumes from the point of enrollment.
Data Discrepancies: Management highlights that the reported credit performance of the Lending Trust may differ from the total U.S. Consumer or Small Business portfolios due to differences in loan mix, vintage, aging, and calculation mechanics (e.g., end-of-period balances vs. average balances).
Risks: The filing does not explicitly list new risks but implies ongoing monitoring of credit quality as the pandemic relief program exits and delinquency aging resumes for affected customers.
Investor Verification Checklist
- Verify the impact of the June 2020 closure of the Customer Pandemic Relief Program on future delinquency trends as frozen accounts resume aging.
- Compare the Lending Trust's annualized default rate (1.9%) against the broader portfolio net write-off rates (2.4%–2.6%) to understand the risk profile of securitized vs. non-securitized loans.
- Monitor the sequential decline in total loan balances to assess if this trend indicates reduced lending activity or accelerated paydowns.
- Review subsequent monthly Form 10-D filings for the Lending Trust to track the consistency of the $0.05 billion defaulted amount.