Business Context and Reporting Period
This Form 8-K, filed on April 15, 2013, by American Express Company, provides Regulation FD disclosure regarding delinquency and write-off statistics for the U.S. Card Services (USCS) operating segment. The data covers the months ended January 31, February 28, and March 31, 2013, as well as the three-month period ended March 31, 2013.
Key Financial Metrics
U.S. Card Services (USCS) Portfolio
| Metric | Jan 31, 2013 | Feb 28, 2013 | Mar 31, 2013 | 3 Months Ended Mar 31, 2013 |
|---|---|---|---|---|
| Total Loans ($ Billions) | 53.9 | 52.4 | 53.6 | 53.6 |
| 30+ Days Past Due (% of Total) | 1.3% | 1.3% | 1.2% | 1.2% |
| Average Loans ($ Billions) | 54.9 | 53.2 | 53.0 | 54.0 |
| Net Write-off Rate (Principal Only) | 1.9% | 2.1% | 2.0% | 2.0% |
American Express Credit Account Master Trust (Lending Trust)
| Metric | Dec 26, 2012 - Jan 25, 2013 | Jan 26, 2013 - Feb 22, 2013 | Feb 23, 2013 - Mar 25, 2013 |
|---|---|---|---|
| Ending Total Principal Balance ($ Billions) | 30.4 | 29.5 | 29.6 |
| Defaulted Amount, Net of Recoveries ($ Billions) | 0.1 | 0.1 | 0.1 |
| Annualized Default Rate, Net of Recoveries | 2.0% | 2.4% | 2.0% |
| Total 30+ Days Delinquent ($ Billions) | 0.4 | 0.4 | 0.4 |
Material Changes and Trends
- Delinquency Improvement: The USCS 30+ days past due ratio improved from 1.3% in January and February to 1.2% in March 2013.
- Write-off Stability: The USCS net write-off rate (principal only) stabilized at 2.0% for March and the quarter, following a slight increase to 2.1% in February.
- Portfolio Balance: Total USCS loans fluctuated slightly, ending at $53.6 billion in March after a dip to $52.4 billion in February.
- Lending Trust Variance: The Lending Trust annualized default rate peaked at 2.4% in the period ending February 22, 2013, before returning to 2.0% in the period ending March 25, 2013.
Management Commentary and Risks
The filing clarifies that USCS statistics include both securitized and non-securitized cardmember 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 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 total USCS 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 metrics.
- Confirm the impact of the 2.1% write-off rate in February on the full-year credit loss projections.
- Review the composition of the non-securitized portfolio to understand the drivers of the 1.2% delinquency rate.
- Monitor the Lending Trust's default rate volatility, which ranged from 2.0% to 2.4% over the three reporting periods.