Business Context and Reporting Period
This Form 8-K, filed on June 15, 2016, by American Express Company, provides Regulation FD disclosure regarding delinquency and write-off statistics for the months ended March 31, April 30, and May 31, 2016. The data covers the U.S. Consumer Services (USCS) and U.S. Small Business operating segments for loans held for investment. Effective December 1, 2015, loans related to the Costco cobrand partnership were reclassified as held for sale and are excluded from these statistics. Additionally, loans related to the JetBlue Airways cobrand partnership were sold as of March 18, 2016.
Key Financial Metrics
U.S. Consumer Services (USCS) Card Member Loans
- Total loans held for investment: Increased from $42.4 billion (March) to $44.2 billion (May).
- 30 days past due loans: Declined from 1.0% (March) to 0.9% (April and May).
- Net write-off rate (principal only): Increased from 1.5% (March and April) to 1.6% (May).
U.S. Small Business Card Member Loans
- Total loans held for investment: Increased from $8.3 billion (March) to $8.5 billion (May).
- 30 days past due loans: Remained stable at 1.0% for all three months.
- Net write-off rate (principal only): Improved from 1.4% (March and April) to 1.3% (May).
American Express Credit Account Master Trust (Lending Trust)
- Ending total principal balance: Ranged between $25.4 billion and $25.7 billion.
- Annualized default rate, net of recoveries: Increased from 1.2% (March) to 1.3% (April and May).
- Total 30+ days delinquent: Remained constant at $0.2 billion.
Material Changes
From March to May 2016, total U.S. Consumer and Small Business Card Member loans held for investment grew from $50.7 billion to $52.7 billion. While delinquency rates for USCS loans improved slightly, the net write-off rate for USCS loans ticked up to 1.6% in May. Conversely, the U.S. Small Business segment saw a slight improvement in its net write-off rate to 1.3% in May. The Lending Trust reported a slight increase in the annualized default rate to 1.3% in the second and third months of the period.
Guidance, Outlook, and Risks
The filing does not provide forward-looking guidance, management commentary on future outlook, or specific risk factors beyond the disclosure of credit performance statistics. The document notes that credit performance of the Lending Trust may differ from loans held for investment due to differences in loan mix, vintage, and calculation mechanics (e.g., use of end-of-period balances versus average balances).
Investor Verification Checklist
- Verify the trend in USCS net write-off rates, which increased to 1.6% in May 2016.
- Confirm the exclusion of Costco cobrand loans (reclassified to held for sale) and JetBlue loans (sold) from the reported statistics.
- Review the distinction between loans held for investment and the securitized Lending Trust portfolio, as performance metrics may diverge.
- Monitor the stability of the 30 days past due ratio, which remained at 0.9% for USCS and 1.0% for Small Business in May.