Business Context and Reporting Period
This Form 8-K filing by American Express Company (the "Company") was submitted on July 16, 2012, pursuant to Regulation FD. The report provides supplemental delinquency and write-off statistics for the U.S. Card Services ("USCS") operating segment's lending portfolio. The data covers the months ended April 30, May 31, and June 30, 2012, as well as the three-month period ended June 30, 2012.
Key Financial Metrics
The filing focuses exclusively on credit performance metrics for the USCS segment and the American Express Credit Account Master Trust ("Lending Trust"). It does not report consolidated revenue, profit, cash flow, or liquidity metrics.
USCS Cardmember Lending Portfolio
| Metric | April 30, 2012 | May 31, 2012 | June 30, 2012 (Preliminary) | Three Months Ended June 30, 2012 |
|---|---|---|---|---|
| Total Loans ($ Billions) | $51.7 | $52.6 | $52.5 | $52.5 |
| 30+ Days Past Due (% of Total) | 1.3% | 1.2% | 1.2% | 1.2% |
| Average Loans ($ Billions) | $51.6 | $52.2 | $52.5 | $52.1 |
| Net Write-off Rate (Principal Only) | 2.4% | 2.2% | 2.0% | 2.2% |
Lending Trust Performance
Statistics for the Lending Trust are reported on a monthly basis ending approximately on the 24th or 25th of the month.
| Metric | Mar 26 - Apr 24, 2012 | Apr 25 - May 25, 2012 | May 26 - Jun 24, 2012 |
|---|---|---|---|
| Ending Total Principal Balance ($ Billions) | $30.9 | $30.9 | $31.0 |
| Defaulted Amount, Net of Recoveries ($ Billions) | $0.1 | $0.1 | $0.1 |
| Annualized Default Rate, Net of Recoveries | 2.6% | 2.2% | 2.2% |
| Total 30+ Days Delinquent ($ Billions) | $0.4 | $0.4 | $0.4 |
Material Changes and Trends
- USCS Delinquency: The percentage of loans 30 days past due decreased from 1.3% in April to 1.2% in May and remained at 1.2% in June.
- USCS Write-offs: The net write-off rate (principal only) improved sequentially, declining from 2.4% in April to 2.2% in May, and further to 2.0% in June. The quarterly average was 2.2%.
- Lending Trust Defaults: The annualized default rate for the Lending Trust improved from 2.6% in the period ending April 24 to 2.2% in the subsequent two periods.
- Portfolio Size: Total USCS loans grew from $51.7 billion in April to $52.6 billion in May, settling at $52.5 billion in June.
Management Commentary and Risks
The Company notes that the statistics presented for the total USCS portfolio differ from those reported by the Lending Trust in its Form 10-D filings. These differences arise because the Lending Trust portfolio does not possess identical characteristics to the total USCS portfolio, which includes both securitized and non-securitized loans.
Key factors contributing to potential discrepancies include:
- Differences in the mix and vintage of loans, specifically a larger proportion of small business loans in the non-securitized portion of the total portfolio.
- Differences in reporting periods (calendar month for USCS vs. monthly period starting around the 25th for the Lending Trust).
- Calculation mechanics, such as the use of end-of-period principal 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 data and methodological notes.
Investor Verification Checklist
- Verify the distinction between the total USCS portfolio (securitized and non-securitized) and the Lending Trust portfolio when analyzing credit trends.
- Confirm that the net write-off rates provided are based on principal only, excluding interest and fees.
- Review the corresponding Form 10-D filings for the Lending Trust to compare the specific reporting periods and calculation methodologies.
- Note that June 2012 data for the USCS segment is marked as preliminary.