Business Context and Reporting Period
This Form 8-K, filed on May 16, 2016, by American Express Company, discloses Regulation FD information regarding delinquency and write-off statistics for the months ended February 29, March 31, and April 30, 2016. The data covers the U.S. Consumer Services (USCS) and U.S. Small Business Card Member loans held for investment. Effective December 1, 2015, loans related to cobrand partnerships with Costco and JetBlue (HFS Portfolios) were reclassified to loans held for sale and are excluded from these statistics.
Key Financial Metrics
Loans Held for Investment (USCS and U.S. Small Business)
| Metric | Feb 29, 2016 | Mar 31, 2016 | Apr 30, 2016 |
|---|---|---|---|
| Total Loans (Billions) | $49.7 | $50.7 | $51.4 |
| USCS 30+ Days Past Due % | 1.0% | 1.0% | 0.9% |
| USCS Net Write-off Rate % | 1.4% | 1.5% | 1.5% |
| Small Business 30+ Days Past Due % | 1.1% | 1.0% | 1.0% |
| Small Business Net Write-off Rate % | 1.4% | 1.4% | 1.4% |
American Express Credit Account Master Trust (Securitized Loans)
| Metric | Feb 2016 | Mar 2016 | Apr 2016 |
|---|---|---|---|
| Ending Principal Balance (Billions) | $25.6 | $25.5 | $25.4 |
| Annualized Default Rate % | 1.4% | 1.2% | 1.3% |
| Total 30+ Days Delinquent (Billions) | $0.2 | $0.2 | $0.2 |
Material Changes
- Loan Growth: Total U.S. Consumer and Small Business loans held for investment increased from $49.7 billion in February to $51.4 billion in April 2016.
- Credit Quality: USCS delinquency rates improved slightly from 1.0% to 0.9% in April, while net write-off rates remained stable at 1.5% for March and April.
- Small Business Stability: U.S. Small Business delinquency and write-off rates remained consistent at 1.0% and 1.4% respectively across the three-month period.
Outlook, Risks, and Contingencies
The filing notes that credit performance statistics for loans held for investment differ from those of the securitized Lending Trust due to differences in loan mix, vintage, and calculation mechanics (e.g., end-of-period balances vs. average balances). The filing does not provide forward-looking guidance, management commentary on future performance, or specific risk factors beyond the inherent differences in loan portfolio characteristics.
Investor Verification Checklist
- Verify the exclusion of HFS Portfolios (Costco and JetBlue) from the "held for investment" statistics due to the December 2015 reclassification.
- Compare the reported net write-off rates (principal only) against the company's historical annualized trends to assess seasonality.
- Review the separate Form 10-D filings for the American Express Credit Account Master Trust to analyze the performance of securitized loans, which are not included in the primary table.
- Confirm the distinction between "loans held for investment" and "loans held for sale" when assessing total credit exposure.