Business Context and Reporting Period
This Form 8-K filing by American Express Company was submitted on September 15, 2017. The report provides Regulation FD disclosure regarding 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 June 30, July 31, and August 31, 2017. 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 Services (USCS) Card Member Loans
| Metric | June 30, 2017 | July 31, 2017 | August 31, 2017 |
|---|---|---|---|
| Total Loans ($ Billions) | $48.3 | $49.0 | $49.5 |
| Average Loans ($ Billions) | $48.4 | $48.7 | $49.2 |
| 30+ Days Past Due (%) | 1.1% | 1.2% | 1.2% |
| Net Write-off Rate (Principal Only, %) | 1.7% | 1.8% | 1.8% |
U.S. Small Business Card Member Loans
| Metric | June 30, 2017 | July 31, 2017 | August 31, 2017 |
|---|---|---|---|
| Total Loans ($ Billions) | $10.2 | $10.2 | $10.4 |
| Average Loans ($ Billions) | $10.2 | $10.2 | $10.3 |
| 30+ Days Past Due (%) | 1.1% | 1.1% | 1.1% |
| Net Write-off Rate (Principal Only, %) | 1.6% | 1.9% | 1.6% |
American Express Credit Account Master Trust
| Metric | June 2017 | July 2017 | August 2017 |
|---|---|---|---|
| Ending Total Principal Balance ($ Billions) | $23.8 | $23.8 | $23.8 |
| Defaulted Amount ($ Billions) | $0.04 | $0.04 | $0.04 |
| Annualized Default Rate, Net of Recoveries (%) | 1.3% | 1.4% | 1.5% |
| Total 30+ Days Delinquent ($ Billions) | $0.2 | $0.2 | $0.2 |
Material Changes
- USCS Portfolio: Total loans increased from $48.3 billion in June to $49.5 billion in August. The 30+ days past due rate rose slightly from 1.1% to 1.2%, while the net write-off rate increased from 1.7% to 1.8%.
- Small Business Portfolio: Total loans remained relatively stable, rising slightly from $10.2 billion to $10.4 billion. The net write-off rate fluctuated, peaking at 1.9% in July before returning to 1.6% in August.
- Lending Trust: The annualized default rate, net of recoveries, showed a gradual increase from 1.3% in June to 1.5% in August, despite the defaulted amount remaining constant at $0.04 billion.
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 Card Member loans securitized through the Lending Trust do not possess identical characteristics to the total USCS or U.S. Small Business portfolios. Differences in credit performance between the Trust and the total portfolios may arise due to:
- Differences in the mix, vintage, and aging of loans.
- Calculation methodologies: The Lending Trust uses end-of-period principal balances, whereas the USCS and Small Business statistics use average loan balances over the reporting period.
- Mechanics of the Lending Trust net write-off rate calculation, which is impacted by additions to the Trust within a specific period.
The filing does not provide specific guidance, outlook, or commentary on future revenue, profit, or liquidity beyond the credit statistics presented.
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 annualized default rate (1.5% in August) with the broader portfolio write-off rates to assess securitization risk.
- Review the subsequent Form 10-Q or 10-K to determine if these monthly credit trends impacted the full quarter's provision for credit losses.
- Confirm the total loan balance growth rates align with the company's broader strategic lending targets.