Business Context and Reporting Period
This Form 8-K filing by American Express Company (AXP) was submitted on June 15, 2020, under Item 7.01 Regulation FD Disclosure. The report provides 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 March 31, April 30, and May 31, 2020.
Key Financial Metrics
The filing details credit performance metrics for total loans, delinquency rates, and net write-off rates for the specified periods.
| Metric | May 31, 2020 | April 30, 2020 | March 31, 2020 |
|---|---|---|---|
| U.S. Consumer Total Loans ($B) | 50.4 | 50.5 | 55.6 |
| Consumer 30+ Days Past Due (%) | 1.6% | 1.7% | 1.7% |
| Consumer Net Write-off Rate (%) | 3.0% | 2.7% | 2.8% |
| U.S. Small Business Total Loans ($B) | 12.1 | 12.4 | 13.4 |
| Small Business 30+ Days Past Due (%) | 1.6% | 1.6% | 1.4% |
| Small Business Net Write-off Rate (%) | 2.5% | 2.0% | 2.0% |
| Total Card Member Loans ($B) | 62.5 | 62.9 | 69.0 |
Lending Trust Metrics (Securitized Loans):
- Ending Principal Balance (May 2020): $24.5 billion
- Annualized Default Rate (May 2020): 2.1%
- Total 30+ Days Delinquent (May 2020): $0.3 billion
Material Changes
From March to May 2020, total Card Member loans declined from $69.0 billion to $62.5 billion. The U.S. Consumer net write-off rate increased to 3.0% in May from 2.8% in March. Similarly, the U.S. Small Business net write-off rate rose to 2.5% in May from 2.0% in March. The 30+ days past due ratio for U.S. Consumer loans decreased slightly to 1.6% in May, while the Small Business ratio increased to 1.6% from 1.4% in March.
Management Commentary and Risks
The Company implemented a Customer Pandemic Relief Program in the first quarter of 2020 for customers impacted by COVID-19. Under this program, delinquency status is frozen at enrollment, and loans current at enrollment do not age regardless of payment status. Aging resumes upon exiting the program. The filing notes that credit performance statistics for the Lending Trust may differ from the total portfolio due to differences in loan mix, vintage, and calculation mechanics (e.g., end-of-period balances vs. average balances).
Investor Verification Checklist
- Verify the impact of the Customer Pandemic Relief Program on future delinquency aging once customers exit the program.
- Monitor the trend in net write-off rates for both Consumer and Small Business segments, which showed an increase in May 2020.
- Compare the Lending Trust default rates against the broader portfolio to assess securitization risk exposure.
- Review subsequent Form 10-D filings for the Lending Trust to track monthly changes in defaulted amounts.