Business Context and Reporting Period
This Form 8-K, filed on September 16, 2013, by American Express Company, 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, 2013.
Key Financial Metrics
U.S. Card Services (USCS) Portfolio
| Metric | June 30, 2013 | July 31, 2013 | August 31, 2013 |
|---|---|---|---|
| Total Loans ($ Billions) | $54.6 | $54.6 | $55.0 |
| Average Loans ($ Billions) | $54.4 | $54.6 | $54.8 |
| 30 Days Past Due (% of Total) | 1.1% | 1.1% | 1.0% |
| Net Write-off Rate (Principal Only) | 1.9% | 1.8% | 1.7% |
American Express Credit Account Master Trust (Lending Trust)
| Metric | May 25 - June 24, 2013 | June 25 - July 25, 2013 | July 26 - Aug 25, 2013 |
|---|---|---|---|
| Ending Total Principal Balance ($ Billions) | $29.6 | $29.4 | $29.5 |
| Defaulted Amount, Net of Recoveries ($ Billions) | $0.1 | $0.1 | $0.1 |
| Annualized Default Rate, Net of Recoveries | 2.0% | 1.9% | 1.8% |
| Total 30+ Days Delinquent ($ Billions) | $0.3 | $0.3 | $0.3 |
Material Changes
- USCS Portfolio Growth: Total loans increased from $54.6 billion in June and July to $55.0 billion in August.
- Improving Credit Quality (USCS): The 30 days past due ratio declined from 1.1% to 1.0% in August. The net write-off rate (principal only) improved sequentially from 1.9% in June to 1.7% in August.
- Lending Trust Stability: The Lending Trust's ending principal balance remained relatively stable, fluctuating between $29.4 billion and $29.6 billion. The annualized default rate improved from 2.0% to 1.8% over the three reporting periods.
Management Commentary and Risks
The filing clarifies that USCS statistics include both securitized and non-securitized cardmember 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. monthly period starting around the 25th for the Lending Trust).
- Calculation mechanics, specifically the use of end-of-period balances for the Lending Trust versus average loan balances for the total portfolio.
The filing does not provide specific guidance, outlook, or discussion of unusual items beyond the statistical disclosure.
Investor Verification Checklist
- Verify the trend in net write-off rates for the USCS segment against the broader economic environment.
- Confirm the composition of the non-securitized portfolio to understand the impact of small business loans on overall credit metrics.
- Compare the Lending Trust's annualized default rate with the USCS net write-off rate to assess the risk profile of securitized versus non-securitized assets.
- Review subsequent Form 10-D filings from the Lending Trust to monitor the stability of the $29.5 billion principal balance.