Business Context and Reporting Period
This Form 8-K Current Report, filed on April 15, 2016, by American Express Company, provides Regulation FD disclosure regarding credit performance statistics. The report covers the months ended January 31, February 29, and March 31, 2016, and the three-month period ended March 31, 2016. The data focuses on Card Member loans held for investment within the U.S. Consumer Services (USCS) and U.S. Small Business segments. Effective December 1, 2015, loans related to cobrand partnerships with Costco and JetBlue (HFS Portfolios) were reclassified as held for sale and are excluded from these statistics.
Key Financial Metrics
The filing details loan balances, delinquency rates, and net write-off rates for loans held for investment.
| Metric | Jan 31, 2016 | Feb 29, 2016 | Mar 31, 2016 | 3 Months Ended Mar 31, 2016 |
|---|---|---|---|---|
| USCS Total Loans (Billions) | $42.5 | $41.7 | $42.4 | $42.4 |
| USCS 30+ Days Past Due (%) | 1.0% | 1.0% | 1.0% | 1.0% |
| USCS Net Write-off Rate (%) | 1.4% | 1.4% | 1.5% | 1.5% |
| Small Business Total Loans (Billions) | $8.0 | $8.0 | $8.3 | $8.3 |
| Small Business 30+ Days Past Due (%) | 1.0% | 1.1% | 1.0% | 1.0% |
| Small Business Net Write-off Rate (%) | 1.4% | 1.4% | 1.4% | 1.4% |
| Total Loans Held for Investment (Billions) | $50.5 | $49.7 | $50.7 | $50.7 |
Lending Trust Data (Securitized Loans): For the three months ended March 31, 2016, the American Express Credit Account Master Trust reported ending principal balances ranging from $25.5 billion to $26.6 billion, with annualized default rates net of recoveries between 1.2% and 1.4%.
Material Changes
- Loan Balances: Total U.S. Consumer and Small Business loans held for investment increased from $49.7 billion in February to $50.7 billion in March 2016.
- USCS Write-offs: The net write-off rate for USCS loans increased slightly from 1.4% in January and February to 1.5% in March 2016.
- Small Business Delinquency: The 30+ days past due rate for Small Business loans fluctuated slightly, rising to 1.1% in February before returning to 1.0% in March.
- Accounting Reclassification: The filing notes that HFS Portfolio loans are no longer included in the "held for investment" statistics due to a reclassification effective December 1, 2015.
Guidance, Outlook, and Risks
This filing does not contain forward-looking guidance, management commentary on future outlook, or specific risk factors beyond the disclosure of credit statistics. The report includes a cautionary note regarding the comparison of these statistics with the American Express Credit Account Master Trust (Lending Trust) data. Differences in loan mix, vintage, and calculation mechanics (e.g., end-of-period balances vs. average balances) mean the Lending Trust's reported credit performance may differ month-to-month from the USCS and Small Business held-for-investment statistics.
Investor Verification Checklist
- Verify the impact of the December 1, 2015 reclassification of HFS Portfolio loans on year-over-year comparisons of loan balances.
- Confirm the trend in USCS net write-off rates, noting the increase to 1.5% in March 2016.
- Review the attached Exhibit 99.1 for historical context on delinquency and write-off statistics prior to the current reporting period.
- Understand the distinction between loans "held for investment" reported here and securitized loans reported in the Lending Trust's Form 10-D.