Business Context and Reporting Period
This Form 8-K filing by American Express Company (the "Company") was submitted on February 15, 2018, under Item 7.01 Regulation FD Disclosure. The report provides delinquency and write-off statistics for the Card Member lending portfolios of the U.S. Consumer Services (USCS) and U.S. Small Business segments for the months ended November 30, 2017, December 31, 2017, and January 31, 2018. It also includes credit performance data for the American Express Credit Account Master Trust (the "Lending Trust").
Key Financial Metrics
U.S. Consumer Services (USCS) Card Member Loans
- Total Loans (Jan 31, 2018): $53.2 billion
- 30 Days Past Due (Jan 31, 2018): 1.4% of total loans
- Average Loans (Jan 31, 2018): $53.5 billion
- Net Write-off Rate (Jan 31, 2018): 1.7% (principal only)
U.S. Small Business Card Member Loans
- Total Loans (Jan 31, 2018): $10.9 billion
- 30 Days Past Due (Jan 31, 2018): 1.3% of total loans
- Average Loans (Jan 31, 2018): $10.9 billion
- Net Write-off Rate (Jan 31, 2018): 1.4% (principal only)
Combined U.S. Consumer and Small Business Loans
- Total Loans (Jan 31, 2018): $64.1 billion
American Express Credit Account Master Trust (Lending Trust)
- Ending Principal Balance (Jan 31, 2018): $23.9 billion
- Defaulted Amount (Jan 2018): $0.04 billion
- Annualized Default Rate (Jan 2018): 1.3% (net of recoveries)
- Total 30+ Days Delinquent (Jan 2018): $0.2 billion
Material Changes Versus Prior Period
- USCS Delinquency: The 30 days past due rate increased slightly from 1.3% in December 2017 to 1.4% in January 2018.
- USCS Write-offs: The net write-off rate improved (decreased) from 2.0% in December 2017 to 1.7% in January 2018.
- Small Business Delinquency: The 30 days past due rate increased from 1.2% in December 2017 to 1.3% in January 2018.
- Small Business Write-offs: The net write-off rate improved from 1.6% in December 2017 to 1.4% in January 2018.
- Lending Trust Defaults: The annualized default rate decreased from 1.4% in December 2017 to 1.3% in January 2018.
Management Commentary and Risks
The filing notes that the statistics provided are additional to data reported by the Lending Trust in its monthly Form 10-D reports. Management highlights that Card Member loans securitized through the Lending Trust do not possess identical characteristics to the total USCS or U.S. Small Business portfolios, which include both securitized and non-securitized loans.
Consequently, the reported credit performance of the Lending Trust may vary month-to-month compared to the broader portfolios due to differences in loan mix, vintage, aging, and calculation mechanics (e.g., end-of-period principal balances versus average loan balances).
Investor Verification Checklist
- Verify the trend in net write-off rates for USCS and Small Business segments over the last three months.
- Compare the Lending Trust's annualized default rate 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 the defaulted amounts and delinquency figures.
- Confirm that the reported loan balances align with the Company's quarterly earnings reports for the respective periods.