Business Context and Reporting Period
This Form 8-K filing by American Express Company (the "Company") was submitted on August 17, 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 for the months ended May 31, June 30, and July 31, 2015. The data covers the total portfolio of Card Member loans, including both securitized and non-securitized loans, in accordance with U.S. GAAP.
Key Financial Metrics
U.S. Card Services (USCS) Total Portfolio
| Metric | May 31, 2015 | June 30, 2015 | July 31, 2015 |
|---|---|---|---|
| Total Loans (Billions) | $61.8 | $61.7 | $61.8 |
| Average Loans (Billions) | $61.1 | $61.8 | $61.7 |
| 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 | May 2015 | June 2015 | July 2015 |
|---|---|---|---|
| Ending Total Principal Balance (Billions) | $27.6 | $27.3 | $27.1 |
| Defaulted Amount (Billions) | $0.05 | $0.05 | $0.05 |
| Annualized Default Rate (Net of Recoveries) | 1.1% | 1.2% | 1.1% |
| Total 30+ Days Delinquent (Billions) | $0.2 | $0.2 | $0.2 |
Material Changes and Comparisons
Credit performance metrics for the USCS total portfolio remained stable across the three-month period, with the 30-day delinquency rate and net write-off rate holding constant at 0.9% and 1.3%, respectively. Total loan balances fluctuated slightly between $61.7 billion and $61.8 billion.
The filing notes that the Lending Trust's reported credit performance may differ from the total USCS portfolio on a month-to-month basis. These differences arise from variations in loan mix (including a larger proportion of small business loans in the non-securitized portion), vintage, and calculation mechanics (end-of-period balances for the Trust versus average balances for the total portfolio).
Management Commentary and Risks
The Company clarifies that the statistics provided are additional to the data reported in the Lending Trust's monthly Form 10-D filings. Management highlights that the Lending Trust does not possess identical characteristics to the total USCS portfolio. Consequently, investors should not assume the Trust's performance is a perfect proxy for the total portfolio's credit quality due to structural differences in the loan composition and calculation methodologies.
Investor Verification Checklist
- Verify the distinction between the USCS total portfolio statistics and the Lending Trust (Form 10-D) statistics, as they utilize different calculation bases (average vs. end-of-period balances).
- Confirm the stability of the 1.3% net write-off rate and 0.9% delinquency rate against the Company's broader quarterly earnings reports.
- Review the composition of the non-securitized portfolio to understand the impact of small business loans on overall credit metrics.
- Check subsequent Form 10-D filings for the Lending Trust to monitor trends in the annualized default rate, which fluctuated between 1.1% and 1.2% during this period.