Business Context and Reporting Period
This Form 8-K filing by American Express Company, dated October 15, 2014, provides Regulation FD disclosure regarding credit performance statistics. The report focuses on the U.S. Card Services (USCS) operating segment for the months ended July 31, August 31, and September 30, 2014, as well as the three-month period ended September 30, 2014.
Key Financial Metrics
U.S. Card Services (USCS) Portfolio
| Metric | July 31, 2014 | August 31, 2014 | Sept 30, 2014 (Prelim) | 3 Months Ended Sept 30 |
|---|---|---|---|---|
| Total Loans ($ Billions) | 57.8 | 58.5 | 58.0 | 58.0 |
| 30+ Days Past Due (%) | 0.9% | 0.9% | 1.0% | 1.0% |
| Average Loans ($ Billions) | 57.8 | 58.2 | 58.3 | 58.0 |
| Net Write-off Rate (Principal Only) | 1.5% | 1.5% | 1.2% | 1.4% |
American Express Credit Account Master Trust (Lending Trust)
| Metric | June 25 - July 25 | July 26 - Aug 25 | Aug 26 - Sept 24 |
|---|---|---|---|
| Ending Total Principal Balance ($ Billions) | 28.0 | 28.2 | 27.7 |
| Defaulted Amount, Net of Recoveries ($ Billions) | 0.06 | 0.05 | 0.05 |
| Annualized Default Rate, Net of Recoveries | 1.6% | 1.5% | 1.3% |
| Total 30+ Days Delinquent ($ Billions) | 0.3 | 0.3 | 0.3 |
Material Changes
- Delinquency Trend: The 30+ days past due ratio for the USCS portfolio increased slightly from 0.9% in July and August to 1.0% in September.
- Write-off Improvement: The USCS net write-off rate (principal only) improved to 1.2% in September from 1.5% in the prior two months, resulting in a 1.4% rate for the quarter.
- Lending Trust Performance: The Lending Trust saw a decline in the annualized default rate to 1.3% in the period ending September 24, down from 1.6% in the period ending July 25.
- Portfolio Balance: Total USCS loans peaked at $58.5 billion in August before settling at $58.0 billion in September.
Management Commentary and Risks
The filing clarifies that USCS statistics include both securitized and non-securitized loans, whereas the Lending Trust reports only on securitized loans. Management notes that credit performance between the two may differ due to:
- Differences in loan mix and vintage (e.g., a larger proportion of small business loans in the non-securitized portion).
- Differences in reporting periods (calendar month for USCS vs. ~25th to ~25th for the Trust).
- Calculation mechanics, specifically the use of end-of-period balances for the Trust versus average balances for the total portfolio.
The filing does not provide specific forward-looking guidance, revenue, profit, or liquidity metrics beyond the credit statistics presented.
Investor Verification Checklist
- Verify the trend of the 1.0% delinquency rate in September to determine if it is a seasonal fluctuation or a sustained increase.
- Confirm the impact of the 1.2% September write-off rate on the full-year credit cost projections.
- Review the composition of the non-securitized portfolio to understand the divergence between USCS and Lending Trust performance.
- Check subsequent Form 10-D filings from the Lending Trust for updated default rates.