Business Context and Reporting Period
This Form 8-K filing by American Express Company (AXP) was submitted on August 15, 2019, under Item 7.01 (Regulation FD Disclosure). The report provides monthly delinquency and write-off statistics for the U.S. Consumer Card Member and U.S. Small Business Card Member lending portfolios for the months ended May 31, June 30, and July 31, 2019.
Key Financial Metrics
U.S. Consumer Card Member Loans
- Total Loans (July 31, 2019): $59.7 billion
- 30+ Days Past Due: 1.4% of total loans (consistent across May, June, and July 2019)
- Net Write-off Rate (Principal Only): 2.2% for July and June 2019; 2.5% for May 2019
U.S. Small Business Card Member Loans
- Total Loans (July 31, 2019): $13.2 billion
- 30+ Days Past Due: 1.3% for July and June 2019; 1.2% for May 2019
- Net Write-off Rate (Principal Only): 1.9% for July 2019; 1.7% for June 2019; 2.0% for May 2019
American Express Credit Account Master Trust (Lending Trust)
- Ending Principal Balance (July 31, 2019): $30.5 billion
- Annualized Default Rate (Net of Recoveries): 1.5% for July and June 2019; 1.6% for May 2019
- Total 30+ Days Delinquent: $0.3 billion for all three months
Material Changes
From May to July 2019, total combined Card Member loans (Consumer and Small Business) increased from $72.0 billion to $72.8 billion. The U.S. Consumer net write-off rate improved from 2.5% in May to 2.2% in June and July. Conversely, the U.S. Small Business net write-off rate fluctuated, rising from 1.7% in June to 1.9% in July. Delinquency rates remained relatively stable across both segments during the period.
Management Commentary and Risks
The filing notes that the statistics provided are additional to data reported by the American Express Credit Account Master Trust in its monthly Form 10-D reports. Management highlights that loans securitized through the Lending Trust do not possess identical characteristics to the total portfolios, which include both securitized and non-securitized loans. Differences in loan mix, vintage, aging, and calculation mechanics (end-of-period balances vs. average balances) may cause the Lending Trust's reported credit performance to vary month-to-month compared to the broader portfolio statistics.
Investor Verification Checklist
- Verify the trend in net write-off rates for U.S. Small Business loans, which increased in July 2019.
- Compare the Lending Trust's annualized default rate (1.5%) against the broader portfolio net write-off rates to understand securitization impacts.
- Review the corresponding Form 10-D filings for the Lending Trust to cross-reference defaulted amounts and delinquency figures.
- Confirm that the reported loan balances align with the company's broader quarterly earnings reports for the second quarter of 2019.