Business Context and Reporting Period
This Form 8-K filing by American Express Company (the "Company") was submitted on November 15, 2010, pursuant to Regulation FD. The report provides supplemental credit performance statistics for the U.S. Card Services ("USCS") operating segment for the months ended August 31, September 30, and October 31, 2010. The data covers the total portfolio of cardmember loans, including both securitized and non-securitized loans.
Key Financial Metrics
U.S. Card Services (USCS) Total Portfolio
| Metric | Aug 31, 2010 | Sep 30, 2010 | Oct 31, 2010 |
|---|---|---|---|
| Total Loans ($ Billions) | $49.6 | $48.7 | $49.1 |
| Average Loans ($ Billions) | $49.3 | $49.2 | $48.9 |
| 30+ Days Past Due (% of Total) | 2.4% | 2.5% | 2.3% |
| Net Write-off Rate | 5.5% | 4.7% | 4.7% |
American Express Credit Account Master Trust (Lending Trust)
| Metric | Period Ended Aug 25 | Period Ended Sep 24 | Period Ended Oct 25 |
|---|---|---|---|
| Ending Total Principal Balance ($ Billions) | $32.7 | $32.2 | $32.3 |
| Defaulted Amount, Net of Recoveries ($ Billions) | $0.2 | $0.1 | $0.1 |
| Annualized Default Rate, Net of Recoveries | 5.4% | 5.3% | 4.5% |
| Total 30+ Days Delinquent ($ Billions) | $0.9 | $0.8 | $0.8 |
Material Changes
- USCS Delinquency: The percentage of loans 30 days past due decreased to 2.3% in October 2010 from 2.5% in September 2010.
- USCS Write-offs: The net write-off rate improved significantly from 5.5% in August 2010 to 4.7% in September and remained stable at 4.7% in October 2010.
- Lending Trust Defaults: The annualized default rate for the Lending Trust declined from 5.4% in the period ending August 25 to 4.5% in the period ending October 25.
- Loan Balances: USCS total loans fluctuated slightly, ending October at $49.1 billion, while the Lending Trust principal balance remained relatively stable around $32.2 billion to $32.7 billion.
Management Commentary and Risks
The filing clarifies that the USCS total portfolio statistics differ from the Lending Trust data reported in Form 10-D filings. Differences in credit performance metrics between the two datasets may arise due to:
- Differences in the mix and vintage of loans, including a larger proportion of small business loans in the non-securitized portion of the total portfolio.
- Variations in reporting periods (calendar month for USCS vs. monthly periods starting around the 25th for the Lending Trust).
- Calculation methodologies, specifically the use of end-of-period principal balances for the Lending Trust versus average loan balances for the total portfolio.
- Mechanics of the Lending Trust net write-off rate calculation, which is impacted by additions to the securitization trust.
The filing does not provide forward-looking guidance, revenue, profit, or cash flow figures for the Company as a whole.
Investor Verification Checklist
- Verify the trend in net write-off rates for the USCS segment to confirm the stabilization at 4.7%.
- Compare the USCS total portfolio delinquency rates against the Lending Trust rates to understand the impact of non-securitized loans.
- Review subsequent Form 10-D filings for the Lending Trust to track the annualized default rate trend beyond October 2010.
- Confirm the composition of the non-securitized portfolio, specifically the exposure to small business loans, as noted in the filing.