Business Context and Reporting Period
This Form 8-K filing by American Express Company (the "Company") was submitted on December 15, 2017, under Item 7.01 Regulation FD Disclosure. The report provides supplemental delinquency and write-off statistics for the U.S. Consumer Services (USCS) and U.S. Small Business Card Member lending portfolios for the months ended September 30, October 31, and November 30, 2017. It also includes credit performance data for the American Express Credit Account Master Trust (the "Lending Trust") for the same periods.
Key Financial Metrics
U.S. Consumer Services (USCS) Card Member Loans
- Total Loans: Increased from $49.3 billion (Sept) to $51.5 billion (Nov).
- 30+ Days Past Due: Remained stable at 1.3% of total loans across all three months.
- Average Loans: Rose from $49.4 billion to $50.8 billion.
- Net Write-off Rate (Principal Only): Increased from 1.6% in September to 1.9% in November.
U.S. Small Business Card Member Loans
- Total Loans: Grew from $10.5 billion (Sept) to $10.8 billion (Nov).
- 30+ Days Past Due: Increased slightly from 1.1% to 1.2% in November.
- Average Loans: Rose from $10.5 billion to $10.7 billion.
- Net Write-off Rate (Principal Only): Increased from 1.4% in September to 1.6% in October and November.
Lending Trust Performance
- Ending Total Principal Balance: Increased from $23.5 billion to $24.0 billion.
- Annualized Default Rate (Net of Recoveries): Declined from 1.4% to 1.3% in November.
- Total 30+ Days Delinquent: Remained constant at $0.2 billion.
Material Changes
Between September and November 2017, total loan balances for both USCS and Small Business segments showed consistent growth. However, credit quality metrics indicated a slight deterioration in write-off rates for both segments. The USCS net write-off rate rose by 30 basis points (from 1.6% to 1.9%), while the Small Business rate increased by 20 basis points (from 1.4% to 1.6%). Conversely, the Lending Trust reported a marginal improvement in its annualized default rate, dropping from 1.4% to 1.3%.
Management Commentary and Risks
The filing notes that the statistics provided are additional to data reported in the Lending Trust's monthly Form 10-D. Management highlights that the Lending Trust portfolio does not possess identical characteristics to the total USCS or Small Business portfolios, which include both securitized and non-securitized loans. Differences in credit performance between the Trust and the broader portfolios may arise from variations in loan mix, vintage, aging, and calculation mechanics (e.g., end-of-period balances vs. average balances). The filing does not provide specific forward-looking guidance or management commentary beyond the statistical disclosure.
Investor Verification Checklist
- Verify the trend in net write-off rates for USCS and Small Business segments against historical quarterly averages.
- Compare the Lending Trust's default rates with the broader portfolio rates to assess securitization impact.
- Review the upcoming quarterly earnings report to see if these monthly trends influenced the full-quarter credit cost provisions.
- Confirm the total loan balance growth rates align with the Company's broader lending strategy.