Business Context and Reporting Period
This Form 8-K, filed on November 17, 2014, by American Express Company, provides Regulation FD disclosure regarding credit performance statistics. The report covers the U.S. Card Services (USCS) operating segment for the months ended August 31, September 30, and October 31, 2014. It also includes comparative data for the American Express Credit Account Master Trust (Lending Trust) for three recent monthly reporting periods.
Key Financial Metrics
U.S. Card Services (USCS) Portfolio
| Metric | Aug 31, 2014 | Sep 30, 2014 | Oct 31, 2014 |
|---|---|---|---|
| Total Loans (Billions) | $58.5 | $58.0 | $58.3 |
| Average Loans (Billions) | $58.2 | $58.3 | $58.2 |
| 30+ Days Past Due (%) | 0.9% | 1.0% | 1.0% |
| Net Write-off Rate (Principal Only, %) | 1.5% | 1.2% | 1.3% |
Lending Trust Portfolio
| Metric | Jul 26 - Aug 25 | Aug 26 - Sep 24 | Sep 25 - Oct 24 |
|---|---|---|---|
| Ending Principal Balance (Billions) | $28.2 | $27.7 | $27.5 |
| Defaulted Amount, Net of Recoveries (Billions) | $0.05 | $0.05 | $0.05 |
| Annualized Default Rate, Net of Recoveries (%) | 1.5% | 1.3% | 1.3% |
| Total 30+ Days Delinquent (Billions) | $0.3 | $0.3 | $0.3 |
Material Changes and Trends
- USCS Delinquency: The percentage of loans 30 days past due increased from 0.9% in August to 1.0% in September and remained at 1.0% in October.
- USCS Write-offs: The net write-off rate (principal only) improved from 1.5% in August to 1.2% in September, before rising slightly to 1.3% in October.
- Lending Trust Defaults: The annualized default rate for the Lending Trust decreased from 1.5% in the July-August period to 1.3% for the subsequent two periods.
- Portfolio Size: USCS total loans fluctuated slightly between $58.0 billion and $58.5 billion, while the Lending Trust principal balance declined from $28.2 billion to $27.5 billion over the reported periods.
Management Commentary and Risks
The filing clarifies that USCS statistics include both securitized and non-securitized loans, whereas the Lending Trust reports only on securitized loans. Management notes that credit performance between the two may differ due to:
- Differences in loan mix and vintage (e.g., a larger proportion of small business loans in the non-securitized USCS portfolio).
- Differences in reporting periods (calendar month for USCS vs. ~25th to ~25th for the Lending Trust).
- Calculation mechanics, specifically the use of end-of-period balances for the Lending Trust versus average balances for the USCS total portfolio.
The filing does not provide specific guidance, outlook, or discussion of unusual items beyond the statistical disclosure.
Investor Verification Checklist
- Verify the distinction between the total USCS portfolio and the securitized Lending Trust portfolio when analyzing credit trends.
- Confirm the impact of the slight increase in 30+ day delinquency rates in the USCS segment on future provisioning.
- Review the Lending Trust's Form 10-D filings for granular details on the securitized portion of the portfolio.
- Note that write-off rates are reported on principal only, excluding interest and fees.