Business Context and Reporting Period
This Form 8-K filing by American Express Company (the "Company") was submitted on November 16, 2015, pursuant to Item 7.01 (Regulation FD Disclosure). The report provides supplemental delinquency and write-off statistics for the U.S. Card Services ("USCS") operating segment's lending portfolio for the months ended August 31, September 30, and October 31, 2015.
Key Financial Metrics
USCS Operating Segment (Total Portfolio)
| Metric | Aug 31, 2015 | Sep 30, 2015 | Oct 31, 2015 |
|---|---|---|---|
| Total Loans ($ Billions) | $62.6 | $62.1 | $62.7 |
| Average Loans ($ Billions) | $62.2 | $62.4 | $62.4 |
| 30+ Days Past Due (% of Total) | 0.9% | 1.0% | 1.0% |
| Net Write-off Rate (Principal Only) | 1.3% | 1.2% | 1.3% |
American Express Credit Account Master Trust (Lending Trust)
| Metric | Aug 2015 | Sep 2015 | Oct 2015 |
|---|---|---|---|
| Ending Total Principal Balance ($ Billions) | $27.2 | $26.6 | $26.6 |
| Defaulted Amount ($ Billions) | $0.04 | $0.04 | $0.04 |
| Annualized Default Rate (Net of Recoveries) | 1.1% | 1.0% | 1.1% |
| Total 30+ Days Delinquent ($ Billions) | $0.2 | $0.2 | $0.2 |
Material Changes
- USCS Total Loans: The total loan balance decreased slightly from $62.6 billion in August to $62.1 billion in September, before recovering to $62.7 billion in October.
- Delinquency Rates: The 30+ days past due ratio for the USCS total portfolio increased from 0.9% in August to 1.0% in September and remained at 1.0% in October.
- Write-off Rates: The net write-off rate for the USCS total portfolio fluctuated between 1.2% and 1.3% across the three-month period.
- Lending Trust Balance: The ending principal balance for the Lending Trust declined from $27.2 billion in August to $26.6 billion in September, stabilizing at $26.6 billion in October.
Management Commentary and Risks
The filing clarifies that the USCS total portfolio statistics include both securitized and non-securitized Card Member loans, whereas the Lending Trust statistics apply only to securitized loans. Management notes that the credit performance of the Lending Trust may differ from the total portfolio on a month-to-month basis due to:
- Differences in the mix and vintage of loans (e.g., a larger proportion of small business loans in the non-securitized portion).
- Calculation methodologies: The Lending Trust uses end-of-period principal balances, while the total portfolio uses average loan balances over the reporting period.
- Mechanics of the Lending Trust net write-off rate, which can be impacted by additions to the securitization trust within a specific period.
The filing does not provide specific guidance, outlook, or commentary on future revenue, profit, or liquidity beyond the historical credit statistics presented.
Investor Verification Checklist
- Verify the distinction between the USCS total portfolio (securitized + non-securitized) and the Lending Trust (securitized only) when analyzing credit quality.
- Confirm the calculation basis for write-off rates (average balances for USCS vs. end-of-period balances for the Trust).
- Review the corresponding Form 10-D filings for the Lending Trust to cross-reference the defaulted amounts and delinquency figures.
- Monitor the trend of the 30+ days past due ratio, which showed a slight increase from August to September 2015.