Business Context and Reporting Period
This Form 8-K filing by American Express Company, dated April 17, 2017, provides Regulation FD disclosure regarding credit performance statistics. The report covers the U.S. Consumer Services (USCS) and U.S. Small Business Card Member lending portfolios for the months ended January 31, February 28, and March 31, 2017, as well as the three-month period ended March 31, 2017.
Key Financial Metrics
U.S. Consumer Services (USCS) Card Member Loans:
- Total Loans: $46.7 billion (March 31, 2017)
- 30+ Days Past Due: 1.2% of total loans (consistent across Jan-Mar 2017)
- Net Write-off Rate (Principal Only): 1.8% for March 2017; 1.7% for the three months ended March 31, 2017
- Average Loans: $46.5 billion (March 2017)
U.S. Small Business Card Member Loans:
- Total Loans: $9.9 billion (March 31, 2017)
- 30+ Days Past Due: 1.2% of total loans (March 2017)
- Net Write-off Rate (Principal Only): 1.8% for March 2017; 1.6% for the three months ended March 31, 2017
- Average Loans: $9.7 billion (March 2017)
American Express Credit Account Master Trust (Lending Trust):
- Ending Principal Balance: $23.7 billion (March 31, 2017)
- Annualized Default Rate (Net of Recoveries): 1.4% (March 2017)
- Total 30+ Days Delinquent: $0.2 billion (March 2017)
Material Changes
For the USCS portfolio, the 30+ days past due rate remained stable at 1.2% throughout the first quarter of 2017. The net write-off rate increased from 1.5% in January to 1.8% in both February and March 2017. Similarly, the U.S. Small Business portfolio saw its net write-off rate rise from 1.4% in January to 1.8% in March 2017, while the delinquency rate fluctuated slightly between 1.2% and 1.3% before returning to 1.2% in March.
Outlook, Risks, and Contingencies
The filing notes that the credit performance of the Lending Trust may differ from the total USCS and Small Business portfolios due to differences in loan mix, vintage, aging, and calculation mechanics (e.g., end-of-period balances vs. average balances). No specific forward-looking guidance or management commentary regarding future credit trends is provided in this specific filing.
Investor Verification Checklist
- Verify the trend of net write-off rates increasing in March 2017 for both USCS and Small Business segments.
- Confirm the distinction between the total portfolio statistics and the Lending Trust statistics, as calculation methodologies differ.
- Review subsequent quarterly earnings reports to determine if the 1.8% write-off rate in March 2017 represents a seasonal anomaly or a sustained trend.
- Check the Lending Trust's Form 10-D filings for granular data on defaulted amounts and recoveries.