Business Context and Reporting Period
This Form 8-K, filed on January 17, 2012, 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 October 31, November 30, and December 31, 2011, as well as the three-month period ended December 31, 2011.
Key Financial Metrics
The filing focuses on credit performance metrics for the USCS lending portfolio and the American Express Credit Account Master Trust (Lending Trust). Specific revenue, profit, cash flow, or debt figures for the broader company are not included in this report.
U.S. Card Services (USCS) Portfolio
| Metric | Oct 31, 2011 | Nov 30, 2011 | Dec 31, 2011 (Prelim) | 3 Months Ended Dec 31, 2011 |
|---|---|---|---|---|
| Total Loans ($ Billions) | 50.6 | 51.4 | 53.7 | 53.7 |
| 30+ Days Past Due (%) | 1.5% | 1.5% | 1.4% | 1.4% |
| Average Loans ($ Billions) | 50.2 | 51.0 | 52.5 | 51.4 |
| Net Write-off Rate (Principal Only) | 2.3% | 2.4% | 2.3% | 2.3% |
Lending Trust Portfolio
| Metric | Sept 24 - Oct 25, 2011 | Oct 26 - Nov 24, 2011 | Nov 25 - Dec 25, 2011 |
|---|---|---|---|
| Ending Total Principal Balance ($ Billions) | 31.3 | 31.4 | 33.3 |
| Defaulted Amount, Net of Recoveries ($ Billions) | 0.1 | 0.1 | 0.1 |
| Annualized Default Rate, Net of Recoveries | 2.2% | 2.5% | 2.3% |
| Total 30+ Days Delinquent ($ Billions) | 0.5 | 0.5 | 0.5 |
Material Changes
For the USCS portfolio, total loans increased from $50.6 billion in October to $53.7 billion in December 2011. The 30+ days past due ratio improved slightly from 1.5% in October and November to 1.4% in December. The net write-off rate remained stable at 2.3% for the quarter, following a slight increase to 2.4% in November. For the Lending Trust, the ending principal balance grew from $31.3 billion to $33.3 billion over the three reporting periods, while the annualized default rate fluctuated between 2.2% and 2.5%.
Outlook, Risks, and Unusual Items
The filing notes that credit performance statistics for the Lending Trust may differ from the total USCS portfolio on a month-to-month basis. These differences arise from variations in loan mix and vintage (including a larger proportion of small business loans in the non-securitized portion), reporting period mechanics, and calculation methodologies (end-of-period balances vs. average balances). No specific forward guidance or management commentary regarding future outlook is provided in this document.
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 the impact of the larger proportion of small business loans in the non-securitized portion on overall delinquency rates.
- Review the calculation methodology differences, specifically the use of average loan balances for USCS versus end-of-period balances for the Lending Trust.
- Monitor the stability of the net write-off rate, which held steady at 2.3% for the quarter despite loan growth.