Business Context and Reporting Period
This Form 8-K filing by American Express Company (the "Company") was submitted on December 15, 2015, under Item 7.01 for Regulation FD Disclosure. The report provides delinquency and write-off statistics for the U.S. Card Services ("USCS") operating segment's lending portfolio for the months ended September 30, October 31, and November 30, 2015.
Key Financial Metrics
U.S. Card Services (USCS) Total Portfolio
| Metric | Sept 30, 2015 | Oct 31, 2015 | Nov 30, 2015 |
|---|---|---|---|
| Total Loans ($ Billions) | $62.1 | $62.7 | $63.9 |
| Average Loans ($ Billions) | $62.4 | $62.4 | $63.3 |
| 30 Days Past Due (% of Total) | 1.0% | 1.0% | 1.0% |
| Net Write-off Rate (Principal Only) | 1.2% | 1.3% | 1.4% |
American Express Credit Account Master Trust (Lending Trust)
| Metric | Sept 2015 | Oct 2015 | Nov 2015 |
|---|---|---|---|
| Ending Total Principal Balance ($ Billions) | $26.6 | $26.6 | $26.8 |
| Defaulted Amount ($ Billions) | $0.04 | $0.04 | $0.04 |
| Annualized Default Rate (Net of Recoveries) | 1.0% | 1.1% | 1.2% |
| Total 30+ Days Delinquent ($ Billions) | $0.2 | $0.2 | $0.2 |
Material Changes
- USCS Portfolio Growth: Total loans in the USCS segment increased from $62.1 billion in September to $63.9 billion in November.
- Credit Quality Trends: While the 30-day delinquency rate remained stable at 1.0% across all three months, the net write-off rate for the USCS total portfolio showed a sequential increase, rising from 1.2% in September to 1.4% in November.
- Lending Trust Performance: The annualized default rate for the securitized Lending Trust increased sequentially from 1.0% to 1.2% over the same period.
Management Commentary and Risks
The filing clarifies that the USCS statistics include both securitized and non-securitized Card Member loans, whereas the Lending Trust statistics apply only to securitized loans. Management notes that the credit performance of the Lending Trust may differ from the total portfolio on a month-to-month basis due to:
- Differences in the mix and vintage of loans (e.g., a larger proportion of small business loans in the non-securitized portion).
- Calculation methodologies: The Lending Trust uses end-of-period principal balances, while the total portfolio uses average loan balances over the reporting period.
- Mechanics of the Lending Trust net write-off rate, which is impacted by additions to the securitization trust within a specific period.
The filing does not provide guidance, outlook, or specific risk factors beyond the operational distinctions noted above.
Investor Verification Checklist
- Verify the trend in net write-off rates for the USCS total portfolio versus the Lending Trust to assess credit quality divergence.
- Confirm the composition of the non-securitized portfolio, specifically the exposure to small business loans, as this impacts the total portfolio statistics.
- Review the corresponding Form 10-D filings for the Lending Trust to cross-reference the defaulted amounts and delinquency figures.
- Note that the net write-off rates provided are based on principal only and exclude interest and fees.