Business Context and Reporting Period
This Form 8-K filing by American Express Company (the "Company") was submitted on April 15, 2011, pursuant to Regulation FD. The report provides preliminary delinquency and write-off statistics for the U.S. Card Services ("USCS") operating segment's lending portfolio for the months ended January 31, February 28, and March 31, 2011, as well as the three-month period ended March 31, 2011.
Key Financial Metrics
The filing focuses on credit performance metrics for the USCS segment rather than consolidated revenue or profit figures. Key statistics for the USCS portfolio (in billions, except percentages) are as follows:
- Total Loans: $49.2 billion as of March 31, 2011.
- 30 Days Past Due Loans: 1.8% of total loans for the three months ended March 31, 2011.
- Average Loans: $49.6 billion for the three months ended March 31, 2011.
- Net Write-off Rate: 3.7% for the three months ended March 31, 2011.
Additionally, the filing includes data for the American Express Credit Account Master Trust (the "Lending Trust"), which covers securitized loans. For the period ending March 25, 2011, the Lending Trust reported an ending total principal balance of $31.4 billion and an annualized default rate, net of recoveries, of 3.9%.
Material Changes Versus Prior Period
For the USCS segment, the 30 days past due loans percentage decreased slightly from 2.0% in January and February 2011 to 1.8% in March 2011. Similarly, the net write-off rate improved marginally from 3.8% in January and February to 3.7% in March 2011. Total loans fluctuated, ending at $49.2 billion in March after a dip to $48.3 billion in February.
For the Lending Trust, the annualized default rate, net of recoveries, decreased to 3.9% for the period ending March 25, 2011, compared to 4.2% for the period ending February 22, 2011.
Guidance, Outlook, and Risks
The filing does not contain forward-looking guidance, management commentary on future outlook, or specific risk factors beyond the disclosure of credit performance statistics. However, the Company notes that the credit performance of the Lending Trust may differ from the total USCS portfolio on a month-to-month basis due to differences in loan mix, vintage, and calculation mechanics (e.g., end-of-period balances vs. average balances).
Important Facts for Investors to Verify
- Verify the distinction between the total USCS portfolio statistics and the Lending Trust statistics, as they utilize different calculation methodologies and loan mixes.
- Confirm the trend of the net write-off rate stabilizing at 3.7% for the quarter ended March 31, 2011.
- Note that the data presented is preliminary and based on U.S. GAAP for the total portfolio.
- Review the Lending Trust's Form 10-D reports for granular details on securitized loan performance, as the 8-K only summarizes the most recent three periods.