Business Context and Reporting Period
This Form 8-K filing by American Express Company (the "Company") was submitted on September 15, 2015. The report provides Regulation FD disclosure regarding delinquency and write-off statistics for the U.S. Card Services ("USCS") operating segment. The data covers the months ended June 30, July 31, and August 31, 2015.
Key Financial Metrics
U.S. Card Services (USCS) Total Portfolio
| Metric | June 30, 2015 | July 31, 2015 | August 31, 2015 |
|---|---|---|---|
| Total Loans (Billions) | $61.7 | $61.8 | $62.6 |
| Average Loans (Billions) | $61.8 | $61.7 | $62.2 |
| 30 Days Past Due (% of Total) | 0.9% | 0.9% | 0.9% |
| Net Write-off Rate (Principal Only) | 1.3% | 1.3% | 1.3% |
American Express Credit Account Master Trust (Lending Trust)
| Metric | June 2015 | July 2015 | August 2015 |
|---|---|---|---|
| Ending Total Principal Balance (Billions) | $27.3 | $27.1 | $27.2 |
| Defaulted Amount (Billions) | $0.05 | $0.05 | $0.04 |
| Annualized Default Rate (Net of Recoveries) | 1.2% | 1.1% | 1.1% |
| Total 30+ Days Delinquent (Billions) | $0.2 | $0.2 | $0.2 |
Material Changes
There were no significant material changes in credit performance metrics across the three-month period for the USCS total portfolio. The 30-day past due ratio remained stable at 0.9%, and the net write-off rate held constant at 1.3%. Total loans showed a slight increase from $61.7 billion in June to $62.6 billion in August.
For the Lending Trust, the annualized default rate improved slightly from 1.2% in June to 1.1% in July and August. The defaulted amount decreased marginally to $0.04 billion in August.
Management Commentary and Risks
The filing clarifies that the USCS 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 calculation, which is impacted by additions to the securitization trust within a specific period.
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 stability of the 0.9% delinquency rate and 1.3% write-off rate for the USCS segment over the Q2 and early Q3 2015 period.
- Review the Lending Trust's Form 10-D filings for granular details on the securitized portion of the portfolio.
- Note that the net write-off rate provided excludes interest and fees, focusing on principal only.