Business Context and Reporting Period
This Form 8-K filing by American Express Company, dated June 15, 2018, provides Regulation FD disclosure regarding credit performance statistics. The report covers the months ended March 31, April 30, and May 31, 2018, focusing on the U.S. Consumer Services (USCS) and U.S. Small Business Card Member lending portfolios.
Key Financial Metrics
U.S. Consumer Services (USCS) Card Member Loans
- Total Loans (May 2018): $54.4 billion
- Average Loans (May 2018): $53.8 billion
- 30+ Days Past Due: 1.3% (May 2018), down from 1.4% in March 2018
- Net Write-off Rate (Principal Only): 2.2% (May 2018), down from 2.3% in April 2018
U.S. Small Business Card Member Loans
- Total Loans (May 2018): $11.6 billion
- Average Loans (May 2018): $11.4 billion
- 30+ Days Past Due: 1.2% (May 2018), down from 1.3% in March 2018
- Net Write-off Rate (Principal Only): 1.9% (May 2018), up from 1.8% in March 2018
American Express Credit Account Master Trust (Lending Trust)
- Ending Principal Balance (May 2018): $23.4 billion
- Annualized Default Rate (Net of Recoveries): 1.5% (May 2018), down from 1.7% in April 2018
- Total 30+ Days Delinquent: $0.2 billion (consistent across March, April, and May 2018)
Material Changes
From March to May 2018, total Card Member loans for U.S. Consumer and Small Business segments increased from $63.9 billion to $65.9 billion. Delinquency rates (30+ days past due) improved slightly in both segments, declining from 1.4% to 1.3% for USCS and from 1.3% to 1.2% for Small Business. The Lending Trust's annualized default rate improved from 1.7% in April to 1.5% in May.
Management Commentary and Risks
The filing notes that the reported statistics include both securitized and non-securitized loans, whereas the Lending Trust reports only on securitized assets. Management highlights that credit performance between the Lending Trust and the total portfolios may differ due to variations in loan mix, vintage, aging, and calculation mechanics (e.g., end-of-period balances vs. average balances). No specific guidance or outlook for future periods is provided in this filing.
Investor Verification Checklist
- Verify the trend in net write-off rates for USCS and Small Business segments against historical quarterly averages.
- Confirm the distinction between total portfolio statistics and Lending Trust statistics to avoid double-counting or misinterpretation of credit quality.
- Review subsequent Form 10-D filings for the Lending Trust to track the consistency of the 1.5% default rate.
- Assess the impact of the $2 billion increase in total loans over the three-month period on future provisioning requirements.