Business Context and Reporting Period
This Form 8-K filing by American Express Company, dated March 15, 2017, provides Regulation FD disclosure regarding delinquency and write-off statistics. The report covers the U.S. Consumer Services (USCS) and U.S. Small Business Card Member lending portfolios for the months ended December 31, 2016, January 31, 2017, and February 28, 2017. It also includes credit performance data for the American Express Credit Account Master Trust (Lending Trust) for the same periods.
Key Financial Metrics
USCS and U.S. Small Business Card Member Loans
| Metric | Dec 31, 2016 | Jan 31, 2017 | Feb 28, 2017 |
|---|---|---|---|
| Total Loans (Billions) | $58.2 | $56.8 | $55.7 |
| USCS Total Loans (Billions) | $48.8 | $47.3 | $46.2 |
| USCS 30+ Days Past Due (%) | 1.1% | 1.2% | 1.2% |
| USCS Net Write-off Rate (%) | 1.5% | 1.5% | 1.8% |
| Small Business Total Loans (Billions) | $9.5 | $9.5 | $9.5 |
| Small Business 30+ Days Past Due (%) | 1.1% | 1.2% | 1.3% |
| Small Business Net Write-off Rate (%) | 1.6% | 1.4% | 1.5% |
American Express Credit Account Master Trust
| Metric | Dec 2016 | Jan 2017 | Feb 2017 |
|---|---|---|---|
| Ending Principal Balance (Billions) | $25.4 | $24.4 | $23.7 |
| Defaulted Amount (Billions) | $0.04 | $0.04 | $0.04 |
| Annualized Default Rate (%) | 1.1% | 1.2% | 1.5% |
| Total 30+ Days Delinquent (Billions) | $0.2 | $0.2 | $0.2 |
Material Changes
- Portfolio Contraction: Total U.S. Consumer and Small Business Card Member loans decreased from $58.2 billion in December 2016 to $55.7 billion in February 2017.
- USCS Credit Quality: The USCS net write-off rate increased to 1.8% in February 2017 from 1.5% in the prior two months. The 30+ days past due ratio rose slightly to 1.2%.
- Small Business Credit Quality: The 30+ days past due ratio for Small Business loans increased to 1.3% in February 2017 from 1.1% in December 2016. The net write-off rate fluctuated, ending at 1.5% in February.
- Lending Trust Performance: The annualized default rate for the Lending Trust rose to 1.5% in February 2017 from 1.1% in December 2016, while the ending principal balance declined to $23.7 billion.
Management Commentary and Risks
The filing notes that the reported statistics for the USCS and Small Business portfolios include both securitized and non-securitized loans, whereas the Lending Trust data covers only securitized loans. Management highlights that credit performance between the two may differ month-to-month due to variations in loan mix, vintage, aging, and calculation mechanics (e.g., end-of-period balances vs. average balances). No specific forward guidance or outlook was provided in this filing.
Investor Verification Checklist
- Verify the trend in USCS net write-off rates, which accelerated to 1.8% in February 2017.
- Confirm the distinction between the total portfolio statistics and the Lending Trust statistics to avoid double-counting or misinterpreting credit quality.
- Monitor the stability of the Small Business loan portfolio, which maintained a flat balance of $9.5 billion but saw a slight increase in delinquency.
- Review subsequent Form 10-D filings for the Lending Trust to track the annualized default rate trajectory beyond February 2017.